In 2010, Xiaomi Corp’s founders decided to create a smartphone brand selling handsets at “honest” prices. Xiaomi released its first smartphone in August 2011. It rapidly gained market share in China to become China’s largest smartphone company in 2014. Eight years after the ideation, Lei Jun and the seven other Xiaomi co-founders have created a company that wants to challenge the global industry dominance of Apple Inc and Samsung Electronics Co. Targeting an initial public offering that’s expected to be the largest since 2014, Xiaomi’s move could create three-five new billionaires.
Last week Xiaomi filed for a debut in Hong Kong that will value the company at US$50 billion to US$100 billion, according to six analysts surveyed by Bloomberg. With a 31.4% stake, Lei, the chairman and chief executive officer, is the biggest shareholder. While his fellow founders control 27% of the company, according to the prospectus. A market value of US$100 billion would see five of Lei and Lin’s co-founders reach that mark. This is an example of how rapidly the world’s second-biggest economy is forging the mega-wealthy. Among the world’s 500 richest people, there are 40 Chinese, the second most after the US, with a combined wealth of US$464 billion, according to the Bloomberg Billionaires Index.
Apple Inc. is the world’s most highly valued smartphone maker, valued at roughly 3½ times annual sales. For Xiaomi, that multiple would produce a market value of about $63 billion. However, the company earlier predicted to be a $100 bn IPO. However, reportedly the targets may have been reduced to $70-80 bn. What it actually will be, is just matter to witness and cannot be absolutely predicted.
Xiaomi doesn’t make gadgets itself, unlike most hardware firms. It invests in device manufacturers like Lumi United and Segway-Ninebot, which then carry out Xiaomi’s product requests. This is called an “ecosystem” approach. To ensure that the startups stick to its core values of quality and affordability, Xiaomi sends engineers to work alongside them. The startups accept low margins in exchange for huge sales volumes that come with joining the Xiaomi ecosystem. As of the Q4 2017, Xiaomi was the world’s third-largest wearables company by shipment, according to IDC.
A $ 100 bn IPO can make Lei China’s fourth-richest person after Alibaba Group Holding Ltd’s Jack Ma, Pony Ma of Tencent Holdings Ltd, and Hui Ka Yan, chairman of China Evergrande Group. There are many speculations about the upcoming IPO.