Xiaomi held its 2018 annual meeting on February 7. Company founder Lei Jun said 2017 was “the year of the reverse and breakthrough”. In October 2017, Xiaomi’s revenue exceeded 100 billion yuan ($15.88 billion). It took Xiaomi seven years to reach this level, which could be compared to Alibaba, Tencent and Huawei.
Lei said Xiaomi is highly likely to rank among the Fortune Global 500 in 2018. China’s mobile phone market will decline this year for the first time in more than a decade, he said, the concentration of brands would be further intensified, and the competition in the industry will be even fiercer. He also set a new target for Xiaomi, which is to return to the top in China within 10 quarters.
The following is Lei’s speech:
Happy New Year!
2017 was an unusual year for all Xiaomi staff. This was Xiaomi’s “year of reversal and breakthrough,” and a key year for the new journey of Xiaomi.
I. 100 billion yuan threshold
In October 2017, we achieved a target revenue exceeding 100 billion yuan ($15.88 billion) ahead of schedule. It took Xiaomi just seven years to pass the 100 billion threshold. It took Apple 20 years, Facebook 12 years, Google nine years, Alibaba 17 years, Tencent 17 years and Huawei 21 years to break the 100 billion record. And now, Xiaomi is highly likely to rank among the Fortune Global 500.
II. Sales of Xiaomi phones have turned around
Since Q2, 2017, our shipments have increased significantly. Our market share is once again among the world’s Top 5, creating a new record for consecutive quarterly shipments. According to IDC, Xiaomi was the fourth in the world in Q4 last year. When the overall market declined 6.3 percent, our sales volume was up 96.9 percent year on year. Xiaomi was the only brand still growing. This shows that after setbacks, Xiaomi has gained more extensive and firm support and recognition from users.
What made Xiaomi turn around? We’ve been “looking at innovation through a telescope, and looking at quality with a microscope.” Innovation determines how high we can fly, and quality determines how far we can go.
1. Always adhere to technical innovation. We released the Surge S1 processor, and the MIX 2 continues to lead the direction of full-screen technology.
Xiaomi has an engineering culture, and technological innovation is our key pursuit. Compared with the previous innovation of single items in single products, we began to pursue systematic technological innovation in 2017.
Early last year, Xiaomi released the Surge S1, which was the first mobile phone chip independently researched and developed by Xiaomi. We succeeded in mass producing the S1. Thus, Xiaomi has become one of the four companies that can independently design and manufacture both mobile phone chips and phones.
We released the full screen 2.0 MIX 2 in the third quarter of last year. We led the industry to develop the full screen technology. It was the first time a Chinese consumer electronics company led the direction of global technology evolution.
In addition, we also built the world’s largest IoT platform, using a large and advanced intelligent hardware chain and cloud services. Xiaomi has gained ground in AI domestically.
At present, we have accumulated more than 24,000 patent applications globally, and the total authorized amount reached 5,920, of which about half are global patents.
2. Value quality and enhance significance
Quality is the lifeblood of company development. At the beginning of 2017, Xiaomi established a quality management committee, and I serve as the chairman. I regard product and service quality as the most important tasks of the company, and will strengthen the product quality at all costs.
After one year’s efforts, our quality has been significantly improved on the original basis, and Xiaomi products have gained wider recognition. Not long ago, Xiaomi received a Top 10 Quality Award of Made in China 2025. I was also awarded the 2017 Quality Figure, and was selected as vice president of the China Quality Association.
3. Rapid internationalization
At present, we have entered more than 70 countries and regions, and we are among the Top 5 phone makers in 16 countries. Xiaomi had particularly prominent performance in the Indian market. According to data issued by several research institutions, since the third quarter of last year, we have been the leader of the Indian market. In addition, we have strong growth momentum in ASEAN countries represented by Indonesia, the Eastern European market represented by Russia, and the Southwest European market represented by Spain.
III. Grand slam design
Design is an important component of user experience, and Xiaomi attaches great importance to design. Two of our co-founders have a strong background in industrial design. In 2017, Xiaomi’s long-term investment in design won it the world’s four major design awards. The Xiaomi MIX, MIX 2 and three other phones received top international design awards. The Xiaomi MIX series mobile phones are collected by several top museums, including the Culture Center of Ponpieer, International Design Museum in Munich, Finland National Design Museum.
Xiaomi is moving from “made in China” to “designed in China”!
Xiaomi’s successful reversal is a triumph of Xiaomi’s model and Xiaomi’s values.
Despite of numerous difficulties and challenges, we still have many dazzling achievements. This victory is the concerted effort of 18,000 employees at Xiaomi. It is the victory of millions of fans who never abandoned and always supported us, and is ultimately the victory of Xiaomi’s model and values.
The great significance of its 2017 victory is that, with the miraculous reversal, the question that “how long Xiaomi can continue to win” has been thoroughly smashed. Our business model and values have withstood the tests, and demonstrated how correct and advanced they are. We have more confidence in model, path, culture and values.
We always believe that the pursuit of product experience is more promising than the pursuit of one-time sales profit. As long as we continue to provide excellent products with innovation, outstanding performance, outstanding quality, exquisite design and good price, we can win lasting recognition and trust from users.
And “user trust” is the core of our business model. Many users say they can buy every product in Xiaomi Home without second thought, because they are sure that the quality and price are always the best. This is our ultimate pursuit. Only based on the continuous accumulation of trust, will users automatically choose our products and services. Thus, Xiaomi can we truly achieve the pursuit of efficiency.
The new journey in 2018 will be to expand into the global market, and to regain our position in the domestic market!
2018 is bound to be more spectacular. On the basis of the previous seven years, we will transform the potential we have accumulated into new drivers of development and growth, and promote the continuous improvement of our development quality.
We should vigorously expand into overseas markets while continuing our focus on technological innovation and quality. In 2017, I made three trips to India, two trips to Indonesia and a trip to Vietnam, where I saw huge opportunities.
At present, we have entered more than 70 international and regional countries, and have a leading edge in several. But this is just the beginning, and there is still a huge potential for development. The vast global market is waiting for us to open up. We will put more into localization strategy, resources and product development, and will send more staff abroad to expand the market.
At the same time, we need to launch a comprehensive counter-attack in the domestic market and strive for the victory in 2019.
In 2018, China’s mobile phone market will decline for the first time in more than a decade, and the concentration of brands will intensify. Competition in the industry will be even fiercer. But we cannot retreat or stay at where we are, we can only move forward! The Chinese market is the foundation of Xiaomi. China is the world’s largest consumer electronics market and the ground for global competition. Only local wins can sustain the steady development of international business. Only a win in China can bring a win in the world.
So this year we’re setting a new goal:
Return to the top of the domestic market within 10 quarters!
In this decisive battle, we must resolutely advance the battlefield, and the headquarters is the front line. We should take the province as the unit, the city as the unit, each county town and even the community as the unit. We must maintain our courage and ingenuity, and fight to the end.
This requires us to provide strong organizational and management support on all fronts. From now on, we will cultivate and promote a large number of young managers and build a more dynamic and aggressive front-line command team. Each capable, ambitious and courageous young employee can learn and grow rapidly in battle.
Dear Xiaomi staff, thank you for your hard work! I hope you to live up to our expectations and shoulder the mission of enabling everyone to enjoy science and technology. I wait for you to write a new chapter for Xiaomi!