South Korean media: Forget about the "mistakes of the mainland," Xiaomi's "high-end rise" is shaking the world!

On July 17, the South Korean newspaper "Korea Economic Daily" published an article stating that on May 22, the attention of the global IT industry was focused on Beijing, China. This was because the launch of Xiaomi's self-developed application processor (AP) "Xuanjie O1" took place. On that day, Xiaomi Chairman Lei Jun gave a speech saying, "If you want to compete with the iPhone for the best smartphone, your chip must be comparable to Apple," which shocked the global IT industry. This is because, after Apple, Qualcomm, and MediaTek, Xiaomi became the fourth company to adopt the cutting-edge 3nm process to manufacture the highest-performance AP.

If Xuanjie O1 made an impact on the IT industry, then the electric SUV "YU7" unveiled that day announced the emergence of a new competitor in the global automotive industry. Xiaomi has set its competitors as Porsche and Tesla. This SUV is stylish, with a single charge range of up to 835 kilometers. In just 15 years since its establishment, Xiaomi has risen to become a new force in the high-end markets of cutting-edge industries such as smartphones, semiconductors, artificial intelligence, robotics, and electric vehicles.

Xiaomi was first highlighted by the media in the summer of 2014. At that time, Apple and Samsung Electronics dominated the Chinese smartphone market, but they handed over the second quarter's championship title to this four-year-old startup. The Chinese were fascinated by Xiaomi's "Mi 1," which had a design similar to the iPhone, but at one-third the price of the iPhone. Subsequently, Xiaomi launched low-cost charging and wireless vacuum cleaners, becoming synonymous with cost-effectiveness. In South Korea, Xiaomi was jokingly called "the mistake of the mainland."

However, by 2016, with the rise of other Chinese smartphone manufacturers such as Huawei, OPPO, and vivo, Xiaomi's ranking in China dropped to fourth, and its global ranking fell to fifth. Xiaomi's response to the crisis was to "change direction." Instead of engaging in price competition, it decided to enter the high-end market, which was monopolized by foreign companies. Its benchmark was Apple. It upgraded the performance of its own operating system (OS) and began opening offline stores similar to Apple's stores across China. It also developed its own AP and started large-scale language model (LLM) research and other artificial intelligence studies.

These measures were successful. Despite the slowdown in smartphone growth, demand in the high-end market continued to grow steadily. Xiaomi's sales increased more than 5.4 times over 10 years.

The biggest contribution came from smartphones. Although expensive, their sales remained hot. Last year, Xiaomi sold 170 million smartphones, a 15% increase from 2023. In the first quarter of this year, Xiaomi reclaimed the title of "China's largest smartphone company" from Huawei, becoming the third-largest in the global smartphone market (14%), behind Samsung Electronics (20%) and Apple (19%). Additionally, Xiaomi became the world's largest smartwatch company (19%).

Many IT experts interpret this as Xiaomi's "tactical victory." This includes Xiaomi's early shift to the high-end market, investing heavily in R&D, and expanding its business beyond smartphones to application processors, electric vehicles, and humanoid robots.

Building its own ecosystem is also one of the key factors for Xiaomi's strength. The core of this strategy is that once consumers enter the "Xiaomi World," where many Xiaomi products are connected through Xiaomi's artificial intelligence and Internet of Things (IoT), they become loyal users who cannot switch to other brands. Since Xiaomi produces over 200 products that can all be controlled through a single Xiaomi app, consumers using Xiaomi smartphones will choose Xiaomi when buying a vacuum cleaner.

This is due to Xiaomi's substantial R&D investment. From 2017 to 2023, Xiaomi's R&D investment grew by an average of 35% annually. This year's R&D investment reached 30 billion yuan. The company spared no expense in areas crucial to future competitiveness, such as talent and business models, for example, offering high salaries to AI talents and acquiring autonomous driving startup DeepMotion Technology.

Original article: https://www.toutiao.com/article/1837882173313225/

Statement: This article represents the views of the author.