Back in early 2012, an investor asked me how I felt about Xiaomi. I said this homegrown smartpphone startup should be able to survive within short time span, like 5 years, but not sure beyond that. Then he told me his firm already decided to walk away from this investment deal. I thought Xiaom might be worthy of trial and tried to elaborate him Xiaomi’s special appeal to China’s Diaosi generation (often Chinese males define themselves as the opposite type of “Tall, Handsome, Rich”, lead a less privileged life, unaccomplished dreams, seek fulfillment and fantasy via internet while cherish their awkward identity with mixed emotions of self pride and pity…). Unfortunately that man never really got my points and insisted that Xiamo’s knockoff apple phone, parasitic on Android system with cheap pricing strategy would not work for long term. Well, he is not a native mainland Chinese, and I suppose his mindset has troubles in understanding “Diaosi” points. Ever since, I have been starting to monitor the progress of Xiaomi, of course as an outsider, like most people. But maybe outsider sees the most of the games.

Lately Xiaomi is occupying the headlines of major tech blogs in China again, permeated with articles from two distinct opinion camps, either pro and cons for its ultimate success, debate about its profit model whether relies on software or hardware, even attracted comments from western media. How? By pulling two stunts, hiring Hugo Barra from Google and a dashing smart TV priced at just RMB2999 (about USD490) which most Chinese would not have expected to be that low.

From now on, no one should be too surprised to see Xiaomi keep pulling rabbit out of hat, whether it might be Xiaomi ipad, laptop, wearable device, or google-like glasses etc. These stunts are mean to dazzle public and maintain its reputation under the spotlight. These stunts also help to sell its products to Diaosi generation and push the company moving forward, even claim to reach a valuation of 10 billion USD. Yes, 10 billion USD, isn’t it overvalued? Back in 2010, Xiaomi was evaluated at around USD 250 million. But just after 3 years, the figure is rising to 40 times bigger. I often wonder about its computation methodology, just based on some sales statistics offered by Xiaomi itself?

Anyhow, who cares overvalued or not? In business, sometimes it is all about fabricating a dream, as long as you are able to entice others to open wallets for you. In fact, Lei Jun, CEO of Xiaomi, is a master in standing on the center stage, making his parade for Xiaomi’s products and deploying his hungry e-commerce campaign. And no doubt, Lei Jun is the icon of these Diaosi and knows how to speak to their heart.

A rival homegrown smartphone brand called Meizu, though manufactures no less inferior phone than Xiaomi, is now living under the shadow of Xiaomi. It is perhaps because Meizu’s CEO Huang Zhang lacks certain knack of putting on a show and aggrandizing his dream.

Compared with “Tall, Handsome, Rich”, Diaosi, especially those mobile zealots, are often more enthusiastic to support a homegrown smartphone. Xiaomi came at the right timing when heaps of Diaosi had hoped they could purchase a high end Apple like phone yet with customization software and much affordable price. When Apple phone now appeared to reach the innovation halt, this even gives extra growing space for Xiaomi. Gradually and insensibly, Xiaomi phones or its related products have become part of symbols of Diaosi status.

Finally I still hold my view that Xiaomi will survive for short run, like 5 years, under the condition that it maneuvers its trump card of smart phone well (The penetration rate for smart phone in China still has ample growth potentials), playing up its Miui Android customization software and keeping the show time. Beyond 5 years, I am not certain. After all in this country, startups often chase quick and easy money.



By Cécilia Wu
English & Chinese Editorial Manager