Xiaomi has gained two positions to go up to the third spot in the list of most-valuable smartphone companies of the world. Xiaomi underwent an IPO (Initial Public Offering), listing itself on the Hong Kong Stock Exchange. I reported this yesterday and at that time, virtually every outlet was going on about the IPO falling short of Xiaomi’s initial projections.
They initially expected to raise a valuation of $100 million while the actual valuation come down to $54 million. Overall, the IPO was worth $4.6 billion. Now, Ars Technica has reported that this IPO has made Xiaomi the third most-valuable publicly trading smartphone firm worldwide.
Xiaomi’s product range consists of smartphones primarily. They have promised that they will be keeping a profit margin of only 5% on their phones. While this might seem impractical from a corporate point of view, it helps in keeping prices to a minimum. In easier words, Xiaomi delivers premium features in a fraction of the price of their competitors.
Their products are priced several hundred dollars less than their competitors without compromising on features. They’re quite acclaimed for creating iPhone clones and other low-range phones. Oh but, that doesn’t mean it relies on its competitors for design inspiration every time though, they also create some good-quality phones themselves.
Xiaomi’s value is extremely commendable considering the fact that their retail operation is currently limited to only a few regions. For example, 72% of the company’s total revenue comes from China alone. Another major source of revenue for the firm is India, wherein the firm is the leading smartphone company nationwide. Xiaomi has plans to expand to other countries as well. It plans to start selling its smartphones in the US by 2019. This plan in specific is hindered by the ongoing tensions between the US and China. Both countries are involved in imposing several tariffs on each other paired with complete restrictions on the trade of selected items.
The IPO has helped Xiaomi to boost its value up to $50 billion, which means that it lags behind Apple and Samsung.
One major obstacle in Xiaomi’s course to market dominance is their current monopoly in China, wherein it does not have competition from Google’s vast ecosystem. Outside China though, will they be successful? India is a separate case as a whole since they have a vast number of people who do not have access to smartphones as they’re overpriced. In the West though, that isn’t the case. So, Xiaomi, what’s your game plan?
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