Technology Author: Tzuhsuan Tang Editor: Tao Ni Feb 09, 2022 11:54 PM (GMT+8)

Lei Jun, CEO of Xiaomi, prioritizes premiumization as key to company's long-term growth

Xiaomi technology campus

For Xiaomi, the Chinese smartphone maker, the Year of the Tiger couldn't have gotten off to a more roaring start. 

Lei Jun, the company founder and CEO, said in an internal letter dated February 8 that Xiaomi will set up a working group committed to a premiumization strategy.

To achieve this goal, Xiaomi has mapped out a plan to become the world's largest Chinese handset maker by sales in three years.

It also indicated that it will benchmark its products and user experience against iPhone.

According to its stated ambitions, the company will spend CNY 100 billion (USD 15.74 billion) on research and development over the next five years.

In addition, the internal letter revealed the shipments of Xiaomi's Mi 12 and Mi 12 Pro in the first month since their launch. 

Specifically, data from e-commerce platforms JD.com and Tmall suggest that Mi 12 Pro became the best-selling model of all Android OS handsets within the price segment of CNY 4,000 and higher in January.

However, Lei didn't disclose how many units were sold.

According to a Canalys report of the global smartphone market, Xiaomi's mobile phone shipments in the Chinese market achieved double-digit growth in 2021, ranking third in market share.

However, market observers point out that premiumization will not be easy for Xiaomi, given the domination of current market leaders Apple and Samsung.

At home, due to continuous investment of brands such as Huawei in the high-end mobile phone market, the segment has become a battlefield where homegrown brands often spar ferociously for a piece of the pie.

OPPO and Honor, formerly a budget phone brand under Huawei, were involved in a fierce competition over market share for foldable phone late last year and this battle has continued into this year.

To date, Xiaomi has been moving along a track of premiumization for two years, rolling out several products equipped with cutting-edge technology, including the Xiaomi MIX4 with under-screen camera technology and the folding screen phone MIX FOLD.

But analysts believe it will be hard for smartphone brands to gain a competitive edge over others in the core component specifications of their flagship Android phones.

Instead, Xiaomi has been trying to build a unique ecosystem featuring a strategy of "mobile phone X AIoT" at its core, so as to differentiate itself from competitors.

Lei, an entrepreneur often credited for his can-do spirit, said although the first two years of Xiaomi's premiumization are marked by successes and setbacks, this trajectory is "the only way for Xiaomi to keep growing" and it is also a "matter of life and death" for the tech giant.

"We will unswervingly execute our premiumization strategy," he wrote in the letter.