Xiaomi, the $US45 billion Chinese tech juggernaut sometimes referred to as the “Apple of China,” is releasing an unusual new product: A water purifier.
It’s a far cry from the low-cost smartphones and fitness bands the company is best known for, which have propelled it from nothing to becoming one of the world’s most valuable startups in just five years. But, when you think about it, it makes perfect sense.
Xiaomi has previously been criticised for allegedly appropriating Apple’s designs: Apple’s head of design Jony Ive once went so far as call such copycats “theft.” But the real reason Xiaomi is often referred to as the Chinese equivalent of Apple is the astonishing loyalty of its fans.
Xiaomi’s fans, whose devotion is unprecedented for any Android manufacturer, are the key to the startup’s rapid growth. It spends almost nothing on marketing, but has still enjoyed a meteoric rise through careful cultivation of its following. The company holds flash sales for “Mi-fans,” holds “festivals,” and even throws parties in expensive nightclubs and holds giveaways for its most devoted fans. Immediate sell-outs of new products only add to the excitement.
In addition to devotion, there is another characteristic that defines Xiaomi customers: youth. Research from Flurry in 2014 found that Xiaomi is far more popular among the younger generation in its native China, “especially college students and young adults who just entered the workforce.”
So where does a water cooler fit into all of this? It’s all about Xiaomi’s long-term goals. Its young, passionate customer base will soon get older, and begin buying homeware and the other essentials of adult life. If Xiaomi can be there to provide them, then why would these customers look anywhere else?
Ben Thompson outlined this in a post on Stratechery in January 2015:
What is more interesting, though, is what will happen when [Xiaomi customer] Han and his peers finally do get places of their own. They will need to buy TVs, and air purifiers, and all kinds of (relatively) high [cost] goods. And which brand do you think they will choose? If Apple can sell a battery charger to my coworker, I’m pretty certain Xiaomi can sell an air purifier to Mr. Han, and, sooner rather than later, just about everything he needs for his new house.
“This, then, is the key to understanding Xiaomi,” Thompson writes. “They’re not so much selling smartphones as they are selling a lifestyle, and the key to that lifestyle is MiUI, Xiaomi’s software layer that ties all of these things together.”
The Mi Water Purifier isn’t Xiaomi’s first foray into the home appliances market. It also sells air purifiers and televisions. And in December 2014, it invested more than $US200 million in home appliances maker Midea Group.
Xiaomi’s smartphones have already propelled the company to incredible heights, without ever dipping a toe into Western markets. But if the company gets its way, this will only be the beginning.