Xiaomi to invest in 100 smart hardware firms to build ecosystem

Xiaomi will invest in 100 smart hardware companies to strengthen its ecosystem, founder Lei Jun has said.

Speaking at an entrepreneurs conference, he revealed Xiaomi had invested in 25 companies since the beginning of last year. These include a smart band manufacturer whose products can last 60 days on battery, and a power bank manufacturer whose product price is only 69 yuan ($11) each.

“These two companies have made significant progress. In essence, they reinvented two common products with Xiaomi’s standards and internet thinking.”

The way Xiaomi conducts its sale and marketing has been named as “internet thinking”. While its definition is still loose, internet thinking often involves selling directly to customers on the website and publicising the product through online social networks. As it would be a few weeks before the handset is delivered to the buyer in its early stage, Xiaomi’s approach was interpreted by some to be selling mobile phones as futures.

Nevertheless, “internet thinking” has become a buzzword across all trades in China. From house developers to bankers, people are all talking about how to incorporate internet thinking into their business. It represents a methodology that quickly causes disruption to the establishment in an industry, as with the mobile phone industry where Xiaomi has surged as the third largest smartphone maker in the world.

Despite complaints about the quality of his handsets, Lei Jun attributed Xiaomi’s success to its attention to quality.

“Xiaomi emphasises quality. Its products are already of high quality when they are being launched.”

“Xiaomi is happy to communicate with users. Make friends with them. Get them involved to improve the product together.”

“Xiaomi adopts internet technology such as direct-selling e-commerce to operate efficiently. That allows it to profit at a price so close to the cost.”

Xiaomi has recently launched an air purifier in China with a shockingly low price at 899 yuan ($145). This model was soon accused of copying a Japanese product, because of its resemblance. That Japanese manufacturer, Balmuda, said there was no co-operation between Xiaomi and itself.

Xiaomi has long been criticised for its lack in originality and exaggeration about its pre-order sales. Many suspect that its new models being sold out a few minutes after it started its sales is a marketing trick to draw attention.

With such low prices, Xiaomi tries to make profits from its custom Android firmware, MIUI. App distribution has become an important revenue source for many Chinese handset manufacturers.

Xiaomi has been among the several Chinese tech firms, including Tencent’s WeChat, that are not content with the domestic market and are cracking foreign markets. Yet last week its move in India encountered a huge hurdle when a court there banned the sales of its smartphones in the country because of infringement of Ericsson’s patents.