Let's prepare to pay tribute to the Xiaomi Empire

"Introduction": This is a long article. The story started with a phone call I received yesterday. The person on the other end of the phone was the CEO of another brand who has been deeply involved in the mobile phone industry for more than ten years. If he had just said that Xiaomi was having a hard time this year, it would not be enough for me to write such a title. Until this afternoon, the bosses of the three Shenzhen hardware suppliers I visited also expressed the same sentiment, as well as the response from a mobile phone scalper group I was lurking in (this group has more than 750 scalpers of all sizes, and has 3 sets of various rush-buying software that can rush to buy corresponding products from official websites and e-commerce platforms such as Xiaomi, Huawei, Meizu, Coolpad, JD.com, and Suning.com).

Combined with the real feedback from supplier channels and distribution terminals, the title has been verified again and again - we should prepare to pay tribute to the Xiaomi Empire!

“ Thanks” Xiaomi

I believe that even the most authentic Xiaomi hater would appreciate Xiaomi's great contribution to the popularization of smartphones, and also appreciate the case contributions Xiaomi has made to China's marketing, Internet and other training industries.

Let's turn the clock back to 2010, when Xiaomi was officially established. Lei Jun and several other founders sat together to determine the Xiaomi triathlon that was later mentioned everywhere: software + hardware + Internet services.

This model started with MIUI at the software level. The opportunity was the ugly UI and various uncomfortable experiences of the Android system. Therefore, MIUI, which is positioned to serve enthusiasts, easily attracted a large number of aspiring enthusiasts who were tired of the ugly UI and difficult-to-use experience of native Android with its crazy iteration speed of every Monday and beautiful and unified UI design standards. It also brought in a large number of fans. These were Xiaomi's initial basic fans, and they were the ones who discussed, experienced, and gave feedback on MIUI in the Xiaomi forum without expecting anything in return.

With the fan base established by MIUI, Xiaomi naturally made the Xiaomi mobile phone for enthusiasts in the context of the low efficiency of the iteration and optimization of the native Android system. Different from the method of placing all brands of mobile phones on the counter with a price mark waiting for customers, Xiaomi was the first to disassemble the mobile phone and sell it by components - for example, Xiaomi mobile phones use the world's best and latest Qualcomm processors, the best Samsung memory sticks, the best LCD screens... We integrated these best hardware together and chose Foxconn with the best OEM level (in fact, a large number of Xiaomi orders were assembled by Inventec at the beginning) for assembly, and combined with our already very beautiful and smooth MIUI with the fastest iteration speed, such a nearly perfect mobile phone is sold at only 1/3 of the price of Samsung and other brands. Not only that, Xiaomi was the first to quantify the original vague feeling of "this phone is better than that phone" in the form of Antutu running points, and popularized the knowledge of "how to distinguish the performance of mobile phones" to the general consumers - this move was very popular and convincing in the eyes of enthusiasts and quasi-enthusiasts who like to "show off" their knowledge, so the initial Xiaomi's own dry food army was formed.

In addition to the above firsts, Xiaomi in 2011 was also the first mobile phone brand to sell non-spot goods. Note that Xiaomi did not deliberately adopt the futures sales model and hunger marketing, but it was forced to do so due to the huge pressure of picking up the payment. At that time, the Xiaomi mobile phone, which was priced at 1,999 yuan, cost about 1,450 yuan, and an order of 100,000 units was placed at a time (the minimum order quantity of Foxconn and Inventec was 100,000/10,000 units respectively). According to the deposit of 30%, the initial investment reached 43.5 million yuan, and the remaining 70% of 101.5 million yuan needed to be paid when picking up the goods. Xiaomi did not have such a huge amount of funds to pick up the goods and sell them again, even with Qualcomm's investment and support of millions of dollars. What do you do when you have paid a 30% deposit, but it is not enough to pay the remaining 70% of the payment?

At that time, Xiaomi did two things: 1. Borrow money to pick up the goods. Who did it borrow from? Of course, it was the big channel dealers. Only these big channel dealers could help Xiaomi distribute the goods quickly (please ignore the argument that Xiaomi has no channel burden here) and have sufficient cash reserves. 2. The so-called pre-sale, which is the futures\hunger marketing that everyone is increasingly disgusted with, overdraws the user and trust foundation established by MIUI. Although a sum of money was borrowed and a batch of consumers' purchase money was collected, it was still far from paying 70% of the payment, so - pick up the goods in batches and ship them in the order of payment. Just like this, after sending out a batch, borrow money to pick up another batch, stumbling all the way and being scolded all the way. In the past, consumers paid and got the mobile phone. In Xiaomi, they paid and waited for ten days, half a month or even longer but still didn't get the mobile phone. Emotions will inevitably begin to get excited, and antipathy will begin to spread.

Thanks to Weibo, Xiaomi was saved and its urgent needs were solved. Lei Jun learned how to build a community from Huang Zhang, so he personally answered questions from netizens and interacted with them in major digital forums including the Xiaomi Forum (he did the same when he was working on MIUI), creating an image of Lei Jun that was later praised by the media as being approachable, and indirectly helped Lei Jun complete the deification movement, even though Lei Jun was already a demigod before. Xiaomi began to mobilize employees to build momentum in various forums, and Lei Jun also used his personal charm and connections to start recruiting celebrities on social media such as Weibo to cheer for Xiaomi, and also began to use the Internet to create the illusion that Xiaomi phones were selling well. At this time, the phenomenon of Xiaomi phones selling well attracted the attention of the capital market, and the so-called rounds of financing arrived. Selling in batches and with limited quantities each time (there are simply not that many quantities available for sale on the official website) was the only solution Xiaomi had when it had no money to pick up the goods. However, this method made Xiaomi taste the sweetness and it has been unable to extricate itself from it ever since. It also created an illusion of false prosperity in the market, prompting other manufacturers to begin researching and learning from it, leading to the current artificial situation in the mobile phone industry where people are embarrassed to show their faces when tens of thousands or even hundreds of thousands of units are sold out in a few minutes.

Starting with Xiaomi 2, the shipments of Xiaomi phones did start to rise. Here we are talking about shipments rather than sales, and there is a difference between the two. However, with Xiaomi's practice of squeezing and trying to break away from the channels, it did bring about the rapid popularization of smartphones and the booming development of mobile Internet. Even WeChat, which we use every day now, has to thank Lei Jun and Xiaomi. Lei Jun's so-called Internet thinking and seven-character formula have also been sung one after another. Various training institutions have begun to dismantle the Xiaomi model, and the book market has also been flooded with books about Xiaomi.

The more stories are told, the more people who tell them will believe them. After the great success of Xiaomi 2, Lei Jun participated in more and more activities and gave speeches. He continued to appear in the public eye as a successful person, which further increased Xiaomi's exposure and brought more help and endorsement to the so-called valuation of the Xiaomi brand, especially after Lei Jun won the Economic Figure Award. Of course, these so-called seven-word formulas and the Internet thinking of "the wool comes from the pig" were summarized by Lei Jun after his success. It is said that if you succeed, everything you say is right, and if you fail, everything you say is wrong. This is a country that only judges heroes by success or failure, and it has been like this since ancient times. From a personal point of view, I also need to thank Lei Jun and Xiaomi. As the head of a water army team, I earned tens of thousands of water army rewards because of the subcontracting of the Xiaomi project, which allowed me to stay at home for a year and live a relaxed and chic life (sleep until I wake up naturally).

"Xiaomi's big company disease"

Xiaomi, which narrowly overcame the difficulty of capital shortage, began to succeed. The model of pre-order and sales rush has been proven to be successful, and its valuation has also been rising steadily. In just a few years, its so-called valuation is higher than Lenovo, which has been working hard for 30 years and has the largest market share in the computer market and has been constantly acquiring international companies (Lenovo's market value just exceeded 10 billion US dollars in 2015, while Xiaomi has reached an astonishing 50 billion US dollars). Xiaomi, which is shrouded in this bubble, never mentions going public. Is it because Lei Jun doesn't want to? He is the chairman of the listed company Kingsoft. How can he not savor the sweetness of cashing out stocks after going public?

Because once Xiaomi goes public, its apparent prosperity will have to face strict audits. This is not something that can be fooled by announcing shipments. Anyone with a discerning eye knows that such prosperity cannot withstand serious scrutiny, so Lei Jun has been saying that Xiaomi is not considering going public for the time being. So when will Xiaomi go public to reward those hard-working employees? The answer is - when Xiaomi's prosperity is no longer false, but a healthy prosperity that is built in a real way, and can withstand audits and questioning - unfortunately, we may not see such a time.

Starting from Xiaomi 2, Xiaomi's shipments have been climbing steadily. Such rapid development has gradually caused Xiaomi to suffer from big company diseases from top to bottom. Arrogance, dominance, calculation, conceit, inefficiency... have all begun to be infected one after another.

If the success of Xiaomi 2 made Xiaomi a great success, then the process of Xiaomi Empire's decline began when Xiaomi began to gradually build the so-called Xiaomi ecosystem in 2013 and tried to predatory subvert one industry after another at incredibly low prices. We just didn't expect it to come so quickly, so fast that we thought it was really being hacked or a media report error.

The success of Xiaomi 2 made hardware suppliers grasp at straws or like long-imprisoned prisoners seeing a sexy beauty. They wanted to cling to Xiaomi's thighs and dreamed that "once they received Xiaomi's orders, they would be able to reach the peak of their lives and marry a rich and beautiful woman." They lowered prices at all costs to meet Xiaomi's requirements. As Xiaomi's big company disease became more serious, Xiaomi became as adept at delaying payments and squeezing costs as it did at pre-order purchases. Those suppliers who thought they could get rich and reach the peak of their lives by receiving Xiaomi's orders began to regret it and started to subcontract to more and smaller subcontractors in an attempt to reduce pressure.

As brands such as Huawei and Meizu are pressing Xiaomi step by step, and other brands are trying to kill Xiaomi, which was born for fever, Xiaomi's bargaining power with suppliers has begun to weaken. Coupled with the growing arrogance, suppliers have gradually begun to avoid Xiaomi. Also, because more and more brands are learning, imitating, or even catching up, Xiaomi's price system is becoming more and more difficult to maintain, and the frequency of price cuts is getting higher and higher. Those channel dealers who stock up at the original price (don't believe the nonsense that Xiaomi has no channel dealers. At that time, when they had no money to pick up the goods, they borrowed money from big channel dealers. Shouldn't they pay the price of maintaining supply?) and scalpers can only clear their stocks at a loss, and the inventory of Xiaomi mobile phones in the hands of channels and scalpers has reached millions or even tens of millions. Now no one will take Xiaomi's orders. Since then, suppliers have begun to avoid Xiaomi, and channel dealers are no longer willing to take Xiaomi's orders. Both ends of the dumbbell have gradually shrunk and weakened. What's the use of the Xiaomi brand in the middle, Xiaomi's official website, no matter how strong it is?

Xiaomi's big enterprise disease also made Xiaomi blind. It thought that it could copy the three hardware cores of mobile phones, routers, and smart TVs to other product areas at will with MIUI, Internet services and thinking. So we see that Xiaomi does everything and never lets go. Every time it enters an industry, it fights with the so-called extreme fighting style. However, although it has brought about a collective price reduction in this product category, it has made counterfeits, plagiarism, and cutting corners more and more rampant. Why are there so many counterfeit Xiaomi phones? There are several reasons: 1. Xiaomi looks very popular, and many people are rushing to buy it, which is profitable. 2. Xiaomi's gradual arrogance and delay in payment have caused suppliers to subcontract too much, resulting in those small subcontractors under financial pressure to make counterfeit Xiaomi products to "subsidize their families." Why are there fewer counterfeit Xiaomi phones now? It's not because Xiaomi has made greater efforts to check counterfeits, but because Xiaomi no longer has the appeal and advantages in the channels and the market. Merchants will not get up early without profit, and products without profit will naturally be neglected.

Why are there so many fake Xiaomi power banks? Why is Xiaomi's power bank a product that lacks social responsibility? Xiaomi tried to sell power banks at cost price, and the price of 69 yuan broke the traditional rule that power banks have good profits. However, Xiaomi's practice is almost a devastating blow to tens of thousands of power bank manufacturers in the Pearl River Delta. Many factories have gone bankrupt and closed down, and those struggling manufacturers have to copy Xiaomi or even make power banks with inferior products and cut corners. In the past, power banks at most falsely reported capacity, but now if you buy a sand core or cement core Xiaomi power bank, please be sure to get used to it, because many purchasing QQ groups have many manufacturers selling a full set of Xiaomi sets for only 11.6 yuan!

Then let's take a look at the industries that Xiaomi's products are trying to subvert. What is happening now? In the mobile phone industry, Xiaomi's position has been gradually shaken and surpassed. The amazing product Xiaomi NOTE can have 7-8 press conferences a year. This is definitely not a coincidence. Moreover, suppliers are still holding a large number of semi-finished products waiting for Xiaomi to pick up the goods and pay for them, and channel dealers are also holding millions or even tens of millions of goods and expecting consumers to buy them quickly. What about the TV industry? In addition to the strong competition from LeTV, there are also traditional TV manufacturers that are gradually becoming Internet-based. Moreover, I don't think that Xiaomi is much better than Sony in making a TV with Sony's screen (this is not logically valid at all, and it is definitely not explained by the so-called different testing methods). What about the bracelet? In addition to lowering the price of the bracelet and keeping buyers fresh for a while, it is still a cheap toy and has not changed people's lives. Routers have been criticized more than once or twice. Poor signal, false propaganda, and various bugs are the most criticized, and obviously they have not subverted anyone.

What about the scale? It didn't change anything either. I believe many people still remember the plagiarism of the air purifier. The joint release of the smart air conditioner with Midea looked more like a poor performance to grab exposure and presence on the day of the Meizu press conference (have you ever seen a press conference with only product line drawings and no renderings?). The smart socket has no smart functions except for a few more USB ports, and it can't interact with the so-called MIUI. The traditional giant Bull also reacted very quickly, so Xiaomi didn't get any advantage. Water purifier? If you are a rational person, you must know that it will never change people's habits of drinking boiled water, tea, coffee, juice, purified water, mineral water, etc.

Go to Xiaomi's official website and you will see that in addition to mobile phones, TVs, routers... Xiaomi actually sells several other things, even though it has become China's third largest e-commerce platform. Lei Jun's so-called extreme focus is no longer to be found. The word "fast" has nothing to do with Xiaomi. Just look at the complaints under Lei Jun's Weibo and you will know that Xiaomi's reputation has also disappeared. The quality of Xiaomi phones is still criticized, and there has been no improvement in the past few years. Executives are busy giving speeches everywhere and accepting worship everywhere, but they have forgotten the extreme and focus that should be improved.

"Destruction begins with oneself"

Although people are badmouthing Xiaomi every year, 2015 was the year when Xiaomi began to show its decline most obviously. The evidence from the media is that Xiaomi fell off the top of the list during the JD.com 618 promotion, and Xiaomi’s people immediately said that the official website had achieved the largest sales volume for Xiaomi. Anyway, outsiders don’t know the specific data, so you can say whatever you want. Some self-media’s point of view is that the iteration cycle of Xiaomi mobile phones is getting longer and longer, and the per capita transaction volume has dropped from 1,500 yuan to 400 or 500 yuan. And my supplement is that the supply chain is not only avoiding Xiaomi, but also using Xiaomi’s products to copy and make money, and Xiaomi’s channel dealers and profit-seeking scalpers, who rely on Xiaomi for survival, have also begun to flee Xiaomi.

Lei Jun and other senior executives cannot fail to realize this. Various investments, cooperations, and products are more like Xiaomi's desperate attempts to find a cure. Xiaomi has entered a vicious circle - trying to disrupt a product, but failing to do so; then trying to change another product, and encountering setbacks again. This cycle repeats itself.

The foundation of the Xiaomi empire is shaking. The enthusiasts who started the company either cannot feel the enthusiasm of Xiaomi or have grown more rational and cautious, and there are more market options. The addition of the low-end Redmi phones has greatly discounted the comprehensive communication power of Xiaomi's consumer groups. The arrogance and conceit of trying to take everything has wasted a lot of Xiaomi's energy and costs, but the gains are limited. The dominance and oppression forced suppliers to start to stay away and avoid, and the crude and single marketing methods, frequent changes in the price system, and the imitation and surpassing of competitors have caused distributors to lose interest. All of this proves the weakness of the Xiaomi empire. Even if it looks like an ecosystem on the surface, it is useless.

"Solvable?": Let's take it apart!

It may be possible to break up Xiaomi and divide it into several business units, which can operate independently and be responsible for their own profits and losses. Otherwise, it is difficult to guarantee that Xiaomi will not become the second Vancl.

Xiaomi's mobile phone division focuses on mobile phone products, gradually regaining the audience that belongs to Xiaomi's new brand positioning, improving product quality, and enhancing service standards.

Xiaomi TV operates independently, increases content cooperation, establishes a production and broadcasting system, improves the Xiaomi TV ecosystem, and enriches the categories of TV peripheral equipment, such as home audio and video centers, game centers, home projectors, etc.

Xiaomi routers, bracelets, sockets, weight scales, etc., we will never leave any burden that can be thrown away, and we will simplify as much as possible.

Please ask Lei Jun to lead Xiaomi to regain what he has summarized: extreme, focus, reputation and speed! Xiaomi has now lost these and is becoming a patient suffering from all the diseases of big companies.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.