Xiaomi – Decoding the Xiaomi playbook – The Hindu BusinessLine

Few companies in recent times can even hope to emulate the unprecedented success that is the story of Chinese ‘internet company’ Xiaomi, or Mi as it affectionately calls itself.

The secret sauce fuelling the company’s trajectory to the top is captured in a new book Xiaomi: How a startup disrupted the market and created a cult following by author, Jayadevan PK, a long-time business writer and technology journalist, particularly interested in start-ups.

It was when Jayadevan needed to replace his own troublesome smartphone that he stumbled upon a Xiaomi phone and found to his surprise that it was truly every bit value for money, just as advertised.

An observer of the smartphone industry, he found himself fascinated by the journey of a company, started in 2010, thought of as a cheeky copycat and upstart but which actually used extremely insightful strategies to skyrocket its way into the Fortune 500 list in 2019 as one of its youngest companies in a breathtakingly short period of time.

From China to the world

This book is a short read, rather appropriately matching Xiaomi’s own accelerated journey so far. But right at the outset, the reader is able to understand just how much Xiaomi is shaped by the personality of its founder, Lei Jun, whose “ambitions were never limited to the companies he founded or even to those he invested in,” says the author.

“….since a very early age, Lei was focused on bigger and with every move he has striven towards achieving them. Lei, together with Alibaba founder Jack Ma and Tencent’s Pony Ma, have been called ‘China’s disrupters’ for radically changing how China is perceived today by the rest of the world.”

Xiaomi is not very well understood. Most people still see it as a smartphone company. Xiaomi points out that it is actually an ‘internet company’, and finally, this penny is beginning to drop.

Author Jayadevan explains that unlike Apple’s top-down approach in everything the company does, Xiaomi takes a down-to-up one, starting with having its customers spell out what they want.

This user-centricity is one of its most important strategies. And nowhere are these pages from the playbook clearer than in India.

One might even say that the building blocks carefully laid in India are responsible for how the world sees Chinese products today.

Xiaomi has not broken through into the US market in the same way but has strategically held off until the time is right.

From Beijing to Bengaluru

At some point the author had developed a keen interest in tracking Chinese technology companies and their growth in India. He describes Xiaomi’s global success as something to which its activities in India contributed maximally.

“It is as if someone has masterfully knit together a future-proof strategy, carefully picking elements from many different industries and backed it with heads-down execution,” he writes. He also looks at what Indian companies could have been.

“My admiration was tainted with melancholy because I had seen Bengaluru, India’s Silicon Valley, evolve into an urban mess just like most Indian cities that once held promise.

At the same time, China seemed to have pulled ahead to become a global superpower.”

Make it Indian

In India, Xiaomi has taken particular care to understand the market, the user, and the political environment. There are lessons aplenty for other companies working the Indian market, particularly on how Xiaomi timed the entry of its products in the country, how it engaged users, and how it used its India-special ‘Honest Pricing’ strategy.

At one time, no one was able to even pronounce the name Xiaomi. Shortened to Mi, this has obviously become easier for Indians who barely even think of Xiaomi as a Chinese company anymore. Hugo Barra joined the company in 2013 and was often to be found in India where he brought sheer star power to the brand and connected with the media, users and partners to very successfully evangelise Xiaomi.

By then the company began to bring in products that were outside of its smartphone portfolio.

Soon air purifiers, lamps, smart lights, water testers and more joined the ecosystem of products.

When Barra exited Xiaomi in 2017, Manu Kumar Jain, Global Vice-President, took up the mantle to focus on joining the government’s Make in India programme, expanding Mi stores, and leveraging the company’s social media presence to great advantage. This book gives readers a glimpse into all of these strategies and their execution.

‘Mi Fans’

The most unusual and impressive of the company’s strategies is perhaps the manner in which Xiaomi has built up a strong community of ‘Mi Fans’ who act as ambassadors for the company without too much prompting.

Contrary to critical opinion, Xiaomi doesn’t pay its fans or win them over with free phones — it gives them nothing more than minor freebies.

Instead it has built up a sense of ownership for customers who see it as a company that listens, responds and even acts on suggestions. On top of that is Xiaomi’s ‘Honest Pricing’ strategy which steers them towards making their profits from services rather than taking high margins from the sale of products.

In this, Xiaomi certainly doesn’t copy Apple, which it’s often accused of doing.

The story of Xiaomi as told in this book will come across to many as one-sided. But Jayadevan points out that he is not in the business of judging companies to be good or evil.

Rather, he lays it out for the benefit of other businesses, aspects of Xiaomi that have made it the success it is today.