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Lei Jun's open letter to Mi Fans: what is Xiaomi and what does it aspire to!

What is Xiaomi? And what is its purpose? We saw it born eight years ago as a company that produced software, MIUI, after two years then began to produce smartphones. Over time it has evolved and today produces a myriad of products, intelligent and not, which embrace almost all aspects of everyday life of each of us.

So I repeat: what is Xiaomi? And where do you want to get there?

Difficult to answer these questions, at least it is for us, so here we propose an open letter from Lei Jun, founder of Xiaomi, in which the company's CEO enlightens us on our questions. Enjoy the reading!

Hello Fan me,

Thank you for your interest and support for Xiaomi. As you read this letter, I hope that you not only see a thriving and fast-growing company, I would especially like you to understand how we have been pioneers of an innovative and surprising business model, reinforced by courage and trust.

In this letter, I would like to share my personal thoughts about Xiaomi and what we are fighting for.

Xiaomi is more than a hardware company. It is an internet company oriented towards innovation.

Xiaomi is an internet company that makes smartphones and smart hardware connected by an IoT platform. Our mission is to build amazing products with honest prices, to allow everyone in the world to enjoy a better life through innovative technologies.

Every day, over the past eight years, our vision of being friends of our users and being the "coolest company" has motivated us to pursue innovation and maintain a constant focus on quality and efficiency.

We founded Xiaomi in April 2010. At the time, my co-founders and I had a simple idea: to create a very cool smartphone that we would personally use and love. Among the eight co-founders of Xiaomi, six of us are engineers and two are designers, we are all technology enthusiasts.

"Surprising products"and "honest prices"Come hand in hand, for us they are inseparable must-haves. Only by creating extraordinary products that exceed people's expectations and offering them at fair prices, we can win the hearts of our users. Pursuing innovative technology and exceptional design is in our DNA. Our engineers are obsessed with extending the boundaries of technology and repeatedly designing every last detail to ensure that our products far exceed our users' expectations. We have the courage to break with the conventions and constantly improve ourselves, and these are the main reasons why we have been able to gain the trust and appreciation of our users.

We promote an innovative culture, not limited to technology. We are innovative not only in smartphone technology, including materials, displays and SoCs, but also in design, for which we have received over 200 awards globally. We have a unique business model and have built a unique ecosystem of companies. We have a unique model of engagement for our users, as well as a new retail strategy, both online and offline, which is highly efficient. The spirit of innovation is deeply rooted in everything we do and motivates us to accelerate our exploration into still unknown waters.

Currently, we are the fourth smartphone company in the world. We have created many intelligent hardware products, including many leaders in their respective categories. We have also built the world's largest IoT platform with over 100 million connected devices. Furthermore, we have 190 millions of MIUI users on a monthly basis that regularly use our innovative Internet services.

What makes us even more proud is that we have completely transformed the industries we participate in. We have led the rapid adoption and improvement of smartphone quality in China, laying a solid foundation for the rise of the mobile Internet in the country. The rapid development of mobile payments, e-commerce, social networking and short-form video in China can be largely attributed to the penetration of mobile Internet into the lives of hundreds of millions of people. China is now the world's largest smartphone market with a strong and vibrant mobile Internet industry. We believe that our contributions in all this have been widely recognized.

Good companies make profits, large companies also win the hearts of people. We are proud to be a technology company with a rare "fan culture". We have a large global community of "Mi Fans", Passionate users who are deeply loyal to our brand, strongly committed to our platform and actively contributing to providing feedback and presenting ideas for the development of our products.

letter she jun mi fans xiaomi

After shooting, Xiaomi keeps growing!

Although a young internet company, Xiaomi has succeeded in many challenges. In the 2016, our smartphone sales have declined. It was clear to us that since we have grown so rapidly in our early years, we did not have a sufficiently solid foundation to face all the challenges we faced at that time. We deliberately slowed our growth by focusing on strengthening three key aspects of our business: innovation, quality and supply management. In 2017, Xiaomi has successfully achieved these key objectives and has returned to the rapid growth that distinguished it.

As far as we know, apart from Xiaomi, there has never existed another smartphone company that has recovered with such success after a drop in sales like ours.

This was a turning point for Xiaomi. This experience was invaluable to us. We have strengthened our management capacity, increased our talent pool, expanded our technology bases and improved our supply chain and production capabilities.

Xiaomi is more than a hardware company. We are an internet company based on innovation. Although business hardware is essential to creating our user base, we do not expect it to be the main source of our profits. We maintain excellent design and exceptional quality in our products, but we sell them at a price that is very close to their manufacturing cost. We then provide our users with complete Internet services. This is our unique business model, which includes hardware, new retail and internet services.

The results of Xiaomi obtained so far illustrate the strength and resilience of our model. After 7 years since our foundation, our annual revenue has exceeded the 100 billion RMB, achieving a growth rate that many traditional companies are unable to match. The increase in efficiency derives from the reduction in operating costs, in particular sales and marketing costs. Xiaomi's unique business model ensures that our products are of high quality and with an honest price, which is the basis for gaining trust from our users.

We are committed to ensuring that our net profit margin from the hardware never exceeds 5%

During the first few years since the founding of Xiaomi, we had a great dream: to improve the efficiency of the whole business world.

For example, in China, a t-shirt for which 15 $ is needed to produce it can be retailed up to $ 150. A pair of shoes can be sold at a price equal to 5 / 10 times the cost of production, a tie also of 20 times. The list is endless.

It has always been difficult for me to understand why companies are so inefficient. Why do users have to bear the costs of inefficiency? Cost reduction efforts are usually concentrated on reducing production costs, which can only represent 10% of total costs. Companies rarely focus on eliminating inefficiencies in sales and marketing operations, which may represent 90% of total costs.

Xiaomi has the will and determination to revolutionize the industries in which it participates, constantly pursuing the goal of cost efficiency.

At the beginning of 2011, during our first annual employee meeting, I told more of 100 than they and their families that we wanted to make smartphones with the best performance and best user experience and sell them for just $ 300. At that time, similar smartphones were being sold for more than $ 600.

Then Xiaomi continued to grow and we asked ourselves: what has remained constant in the ever-changing business world? Our answer was: users always expect surprising products at fair prices.

Many of our users say that when they browse the Mi Store or visit an Mi Home, they can buy our products with full confidence because they know that they have the best value for money. When I hear this, I realize how all our strengths have been worth it. This is ultimately our goal.

The trust of our users is the foundation of our business and efficiency is its core. As long as we continue to gain the trust of our users, our business will continue to function well. A company that achieves a high degree of efficiency will have the ability to survive multiple business cycles, continuously seize new opportunities in the industry and sustain excellent long-term operational performance.

"Surprising products, honest prices" is not just a slogan, we accompany facts to words, which is why I would like to engage with our current and future users: starting from 2018, the total net profit margin of Xiaomi's hardware assets will not exceed 5% per year. If the net margin were to exceed 5%, we would return the excess to our users.

Xiaomi

It is our belief that providing a lasting quality user experience is more important than pursuing one-time hardware profits. Focusing on efficiency is more important than short-term profits. We are confident that maintaining reasonable profits will inevitably become a trend in the industry. Pushing blindly towards higher margins will not be sustainable.

Our ultimate commitment to efficiency is to maximize the hardware company's net profit margin to 5%. We know that requiring everyone to fully embrace our ideals may take some time, however our steadfast determination and actions will ultimately help us achieve our dreams.

Building an open global ecosystem, our potential has no boundaries

Today, we introduce ourselves to you as we prepare to enter a new phase of our journey. We believe that the potential of our global business is limited only by our imagination.

We are building an open global ecosystem, not a walled garden. To allow everyone on earth to enjoy a better life through innovative technology, only one "Xiaomi" is not enough. We need to create and collaborate with at least other Xemomix "Xiaomi" to successfully build a new rich and vibrant global business system.

With our unique ecosystem model, we have mobilized many like-minded entrepreneurs. We are not alone! Together, we have created a complete suite of products that revolve around our smartphones, including mobile devices, intelligent hardware and lifestyle products. Currently Xiaomi has invested in more than 90 IoT and lifestyle companies and together we have changed many industries. In the future, our ecosystem will become even bigger.

Xiaomi

We are not only changing industries in China, but also elsewhere in the world. Among the more than 70 countries and regions that we have achieved, we are the number one in India in terms of smartphone market share and we are among the first 5 smartphone companies in 15 countries. We will continue to demonstrate that Xiaomi's business model can be expanded globally at a rapid pace.

Creating a global ecosystem has provided Xiaomi with more long-term development opportunities, expanded our boundaries and further strengthened our foundations. In the age of big data and artificial intelligence, we believe that the high volume of data generated by our ecosystem will allow us to better understand the needs of our users and offer us a significant advantage in offering better products and services.

The spirit of engineering flows in our veins. This spirit drives us to explore inexorably the most advanced technologies in order to benefit as many users as possible and to be the coolest company in their hearts. We believe that everyone in the world should enjoy a better life through innovative technologies. Basically, the Internet is focused on transparency, efficiency and equality. We want to allow everyone, regardless of gender, ethnicity, religion, nationality or level of education, to enjoy the benefits of technology.

This is the goal for which all employees of Xiaomi and I work tirelessly.

Thank you for your interest in Xiaomi. Together, we can create a paradigm shift in the business world and use technology to improve the lives of many.

Give honesty to business, give warmth to technology, give happiness to everyone, our mission has no boundaries, and we have just begun. We have changed the way hundreds of millions of people live and in the future we will become part of the lives of billions of people around the world.

Good things happen to good people. Please join us on our journey. Always believe it.

Sincerely yours,

Lei Jun


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