What is your perception or attitude towards ‘Made in China’ products? Cheeky Copycat? Think of Huawei, Alibaba, WeChat, Lenovo, Baidu. What do you say?

Yes, China is known for its manufacturing capability at the cheapest cost possible, and customers have always been crossing their fingers when they buy Chinese products, but there is one company that has changed the perception of Chinese smartphones in the shortest period of time – Xiaomi, as it exceeded the revenue of RMB 100 bn (~USD15bn) in just 7 years. To achieve this milestone – Apple took 20 years, Facebook took 12yrs, Google 9yrs, Alibaba 17yrs, & Huawei 21yrs. Jayadevan PK, a technology journalist, has written down the company’s trajectory to the top in his book “Xiaomi: How a startup disrupted the market and created a cult” when he replaced his own troublesome smartphone with a Xiaomi phone and found to his surprise that it was truly every bit value for money, just as advertised. Jayadeven has mentioned the brief history of China since 1985 when Motorola and Nokia were only two players in China who set up the cellular system infrastructure in China and transformed the lives of hundreds of millions of people living in poverty. In the early twenties, Samsung toppled Nokia as a market leader in terms of volume of smartphones sold.

Xiaomi Rising in China

In the late nineties and early twenties, while Motorola, Nokia, and Samsung were relentlessly tried to outsmart each other by launching the great hardware in the market, it was China who was the clear winner. It was just a matter of time before local Chinese companies would start using that knowledge to produce their mobile phone models and meet the rising demands of a booming Chinese populace.

There was a huge shift in the Chinese economy during 2000-2010, it grew from $1.2 trillion to $6 trillion (5x) – China moved from being a producer to becoming both producer and consumer. The timing was very good for Xiaomi (or any tech company) to launch its products for the Chinese populace.

In 2008, it was Google’s Android launch that changed the game irrevocably. It enabled the Chinese companies to seriously start contemplating their own brand image.

In 2010, Lei Jun (earlier CEO of Kingsoft, the so-called Chinese Microsoft), founded Xiaomi – as a Mobile internet company (not as a smartphone manufacturer). He learned from the Chinese users that it’s not the hardware, but software where the opportunity is.

Chinese Smartphone Usage Culture – Insights & Behavior

The smartphone is a different thing in China. It was built on a mental model (read more about mental models here) different from the western world. Apps aren’t too popular and neither are the app stores. In China, the operating system is as important as one single app. Chinese users wanted operating systems as an interface, rather than an app or some apps – as they want to avoid the annoyance of switching between apps. One of the reasons for this was that Chinese people didn’t grow up using Desktop computers. Smartphones were the 1st gateway to the internet for the majority of the Chinese populace. That’s why there are only 2-3 apps that are super-popular and have almost all the users in them, rather than users’ distribution into various different apps. For example, Baidu, WeChat, etc.

Lei Jun observed this behavior of Chinese users and launched Xiaomi as a ‘mobile internet company’. Let’s understand the Xiaomi product launches by understanding Chinese users’ behavior with the JTBD lens.

JTBD analysis:

Let’s see what jobs were Chinese users trying to perform here. As I’ve mentioned in this story, the following is the statement structure for a Job-to-be-Done:

When (situation) —– I want to (motivation)—— so that (benefit)——

1) When I’m going to use a smartphone, I want to be able to find all my information in one place, so that I can get my information fast and smoothly.

• Chinese love fast and smooth

2) When I’m going to use a smartphone, I want to be able to connect my personal data with all the apps once with no restrictions, so that I can save time for re-entering the data on different apps/ browsers.

• Chinese hate switching and re-entering data

3) When I’m going to use a smartphone, I want to be able to personalize it with as many features as I want, so that I can make it more beautiful and personal.

• Chinese love features

4) When I’m going to use a smartphone, I want to be able to get in touch with the right community, so that I can have personalized interactions with like-minded people.

• Chinese love social life

 5)When I’m going to use a smartphone, I want to get quick feedback from the customer care team on my queries, so that I am assured of quality service and can feel like a valued customer.

• Chinese users quickly churn-out if no timely response

Lei Jun and Xiaomi team observed the above-mentioned user behavior and launched Xiaomi with MIUI – the modified operating system layer on the top of Android. Xiaomi was the amalgamation of hardware, software, and internet services at the center. MIUI has 3 central features:

1. Fast
2. Smooth
3. Open access.

Xiaomi ‘Fans with benefits’ approach

Xiaomi’s strategy to become an internet company was putting user-centricity as core to it. Xiaomi focussed on both hardware and software both, spent no money on marketing and promotion, relying completely on WOM publicity and online commerce. How did it do it – Xiaomi takes a down-to-up one, starting with having its customers spell out what they want.

1) MIUI bulletin board:
This allowed users to post reviews, comments, and suggestions to regular software updates, which were then quickly incorporated into the MIUI and made available in the next week’s rollout. Xiaomi kept in touch with its users on the bulletin board system.

2) Participatory consumption:
Xiaomi introduced the idea of ‘play’ as it wanted its users to play with their phone, rather than just use it. Play with Xiaomi phones by making UI playful and addictive. Xiaomi did so with active participation from the users. Participatory consumption is the concept where users participate in product development while consuming the same. E.g. IKEA, Lego, Tiktok etc.

Xiaomi users were the richest sources of its extended innovation capabilities. It divided users into 4 categories based on their skills and level of expertise in the process of participatory product development.

1. 1000 Developers  – skilled user developers are invited to co-develop the system with Xiaomi engineers.
2. 100,000 Product Testers – in-charge of beta testing and had to submit the regular test reports
3. 350 Product Supporters – expected to spend an hour a day fielding questions from regular users about best ways to use the system.
4. Regular users – posting new ideas and promoting new products and drew in people to the 1st three categories as well.

As users turned into avid fans, Xiaomi started hosting gala events to generate enthusiasm about Xiaomi as a brand – Mi Pop. Mi fans come together to participate in fun games, live demos, general meet and greet. Fans get the chance to meet top Xiaomi executives.

The above approach was Xiaomi’s famous 4F model – family, friends, fans, followers. Xiaomi emerged as a leader in 2012-14. During this time, smartphone adoption was also growing rapidly in China, so Xiaomi was mostly in the right place at the right time, repeatedly. Just with the word of mouth of 4Fs, Xiaomi became the 3rd largest smartphone brand and entered more than 80 countries by Nov 2020.

Xiaomi has successfully built up a sense of ownership for customers who see it as a company that listens, responds, and even acts on suggestions. On top of that is Xiaomi’s ‘Honest Pricing’ strategy which steers them towards making their profits from services rather than taking high margins from the sale of products. (Mi 1 was $310 whereas competing models cost around $600. In 2014, Xiaomi successfully entered international markets with ‘Honest Pricing’ and ‘Participatory Consumption’ Strategy at the core. There was an unwritten rule at Xiaomi – if a Xiaomi product is kept next to an Apple product, it should not look out of place.

Xiaomi Advancing into the Future

What do consumers want from a ‘mobile internet company’ or ‘smartphone company’?
That’s a wrong question asked. Lemme rephrase it – What kind of jobs consumers would be expecting the internet technology to do for them, to make their life more convenient, playful, and innovative?

Xiaomi has been setting up itself in the direction of the “Internet of things” and moving away from just smartphone-based internet services.

Xiaomi has launched an initiative – Artificial Intelligence (AI) + Internet of things (IoT) i.e. AIoT. Xiaomi has already moved on from smartphones to your living room with smart TV, air purifiers, to the bathroom with electric toothbrushes and smart scales, to a gym with fitness bands, to a workplace with laptops. AI-based security cameras, soap dispensers, battery packs, earphones, and many other accessories. Look at this launch in India.

Xiaomi would be able to identify each user group’s behavior and predict what it should launch next. Idea is to connect all of them through its IoT platform and use the data to further launch AI-powered products. Thereby, expanding their relationship with the customers. The smartphone is just the gateway to the users.

You might come across a few stories of Xiaomi being a copycat – but we are not here discussing companies good or evil, rather looking at the company’s product launches based on the consumers’ jobs, their insights, and behavior. After all, launching products as per consumers’ future needs is one hell of a backbreaking job for people like us.