Interview with Xiaomi Liu De： The Logic and Value Behind 89 Xiaomi Ecological Chains in Three Years
Xinlang Technology Zhang Jun
At the end of 2013, Xiaomi started the eco-chain plan and set the goal of investing in 100 eco-chain enterprises within five years. As of June 30, the number of Xiaomi eco-chain enterprises has reached 89, which is getting closer and closer to Lei Jun’s goal.
In addition to the changes in numbers, Liu De, co-founder and vice president of Xiaomi Company and head of Xiaomi Eco-chain, told Sina Technology that the play of Xiaomi Eco-chain is also changing.
Take category as an example, from the initial category and field as the standard, to the current user group as the center. Therefore, the Xiaomi ecological chain has also expanded from the original mobile power supply, bracelets and other hardware products to consumer goods such as towels and electric toothbrushes. In the selection of enterprises, Xiaomi Eco-chain has invested in most startup companies before, and will also invest in medium-sized companies in the future. In addition, in the management of eco-chain enterprises, Xiaomi gradually gave up the practice of signing exclusive agreements, maintained moderate competition, and even let some enterprises that did not do well quit.
With the maturity of the style of play and system, the Xiaomi ecological chain, which originally grew up by relying on the Xiaomi brand dividend, has begun to bring irreplaceable value to Xiaomi in turn.
Taking Xiaomi’s offline channel Xiaomi Home as an example, Xiaomi Eco-chain provides it with a variety of products, which are combined into a single high-frequency shop through multiple low-frequency products, which is also the secret of Xiaomi Home’s high ping efficiency.
Recently, Lei Jun, chairman and CEO of Xiaomi, announced at the swearing-in meeting of mobile phone business that the shipment of Xiaomi mobile phones reached 23.16 million units in the second quarter of this year, and resumed rapid growth. Lei Jun also regards the competition for the international market as the third wave of China’s mobile phone industry after the rise of smart phones and the change of machines in the third-and fourth-tier markets.
In Liu De’s view, with the reappearance of the incremental effect of Xiaomi’s mobile phone, the Xiaomi ecological chain will usher in a new wave of dividends.
The secret of rise
Since the Xiaomi Eco-chain Plan was launched at the end of 2013, the companies under Xiaomi Eco-chain have expanded rapidly. In March 2016, this number was 55; In March of this year, the number increased to 77; As of June 30, Liu De revealed that the number of Xiaomi eco-chain enterprises has reached 89.
Although only more than 30 out of 89 companies have released their products, explosive products such as Xiaomi Mobile Power Supply and mi band have been born, with sales exceeding 10 million. As of March this year, among the 77 companies, there are 16 unicorn companies with annual sales exceeding 100 million yuan and 4 unicorn companies with a valuation exceeding 1 billion US dollars. In 2016, the revenue of Xiaomi Ecological Chain Company has exceeded 15 billion yuan.
Why can Xiaomi ecological chain rise? In Liu De’s view, the first is the strict standard of investment in Xiaomi ecological chain itself; The second is to enjoy the dividend of Xiaomi; The third is a good time.
Regarding whether a company deserves to be included in the ecological chain by Xiaomi, Liu De summed up the following principles:
1. Is it a big field or a big market, because the Xiaomi ecological chain model is bound to make some big markets;
2. Is there any shortage of products in this market? Only when there are pain points and shortages can you get a knife;
3. See if the products in this field can be iterated. If they can’t be iterated, the company can’t last;
4. Is it in line with Xiaomi’s user base? The closer it is to the user base, the better it will be;
5. Is the team strong in technology and a great knife?
6. Does the boss have the same values as Xiaomi, not making quick money and being a national enterprise?
It is on the premise of sharing common values that dozens of companies in the ecological chain can form an alliance and it is possible to jointly launch explosive products.
In addition to the explosive attributes of eco-chain enterprises and products themselves, Xiaomi bonus is the biggest external factor for the rise of Xiaomi eco-chain. Liu De regards millet as a hot stove, while the ecological chain uses the waste heat around it. Specifically, it is mainly the eco-chain companies that enjoy the dividends of Xiaomi in four aspects.
1. Xiaomi’s brand bonus, because there is a brand, it is easy to expand the category.
2, Xiaomi’s user base dividend, Xiaomi has more than 200 million users, many of whom are science and engineering men. What these users need is what Xiaomi wants to do.
3. Channel dividends, especially Xiaomi’s online sales ability and the whole network sales ability, now have the offline sales ability of Xiaomi House, including the ability of Mijia to have a new platform.
4. With the growth of Xiaomi’s overseas business, overseas business should increase by 200% or even 300% this year, so opening mobile phones overseas first will open the dividend of overseas markets in the ecological chain.
With the explosion attribute and Xiaomi bonus, Liu De told Sina Technology that the explosion of products still needs an industrial node.
He took Xiaomi mobile power supply as an example. In 2013, the global sales of notebook computers declined. Xiaomi judged that there must be a lot of surplus of 18650 batteries that are most commonly used in notebook computers, so Xiaomi mobile power supply decisively adopted 18650 batteries, which not only had high performance and mature technology, but also had a relatively low price at that time, which made Xiaomi mobile power supply win the market with high quality and low price.
"Including our mi band, Americans have been promoting this for ten years, and suddenly one day it is about to break out, and we will enter the market." Liu De said.
Play reform
After Xiaomi’s ecological chain gradually grew, Liu De said that he was often asked, "Xiaomi has invested in so many categories. Where is your boundary?" The problem. In fact, when the products sold by Xiaomi cover air purifiers, rice cookers, even towels and electric toothbrushes, Xiaomi users, media and netizens can’t sit still. How did Xiaomi change from a mobile phone company to a "department store"?
Faced with all kinds of doubts, Xiaomi shouted the goal of being a "MUJI in science and technology", and officially launched the Mijia brand in March 2016 to specifically carry eco-chain products.
With the Mijia brand, Xiaomi will not generalize the Xiaomi brand when launching eco-chain products, but will have a more accurate smart home brand. At the same time, on the basis of Mijia brand, the Xiaomi ecological chain will be smoother when products such as sweeping robots and laser tv are launched, and users will feel reasonable and not so exclusive.
Liu De took Mijia Youpin launched by Mijia as an example. At first, when Mijia Youpin sold towels, users were cursing. "Everyone thinks how Xiaomi sells towels. Are you still a technology company?" Some time ago, Mijia had products and even started selling underwear. At first, I was afraid of being scolded, but as a result, the users didn’t scold again this time. "Many users have accepted it. We started selling tea two days ago, and they can accept it." Liu De said.
In addition to brand independence, Xiaomi’s investment ideas are also being adjusted.
Xiaomi ecological chain was originally laid out by fields, such as smart white electricity, personal transportation, toys and so on. Now it is divided by user groups, that is, investing around Xiaomi user groups. "When we pay attention to the user base, we will provide services and products for him around the core user base of 224 million Xiaomi. You will find that it doesn’t matter whether we consider the boundary. As long as he needs it, we will do it early, if he strongly needs it, we will do it early, close to the mobile phone, and late from the mobile phone. "Liu De told Sina Technology.
Correspondingly, in terms of specific categories, the Xiaomi ecological chain used to be more about technology, 3C and household appliances, but now it has begun to pay attention to some fast-moving consumer goods and daily necessities. "It is getting farther and farther away from mobile phones, and the layout circle is getting bigger and bigger."
Now the Xiaomi ecological chain has also changed in enterprise selection and enterprise management.
At first, Xiaomi paid more attention to the start-up team, thinking that they were flexible and easier to adjust the team, with less investment in products and less risk. Now, Liu De believes that Xiaomi has invested in 80 or 90 companies, and the basic plate is already very good. Therefore, when looking for a company, he will start to pay attention to medium-sized companies, even invisible champions in some fields, and companies with first-Mover advantage.
In the management of eco-chain enterprises, Xiaomi will sign an exclusive agreement with the invested enterprises in the first two years of investment, and one investor in each field will promise not to invest in the second one within two years. "Two years later, the exclusive agreement period ended, and then there was no exclusive agreement, because we found that the exclusive agreement had the advantages of concentrating on fighting a big battle, but it also had some disadvantages. Once there is exclusivity, it will affect the competition of this company. " Liu De reflected.
For example, he said that Xiaomi had given the field of driving recorder to an eco-chain company before, but this company did not come out with products for two years, which led to Xiaomi not entering the field of driving recorder for two years. "This opportunity is too great. In Xiaomi’s business system, I want to be a driving recorder, and I will get great benefits if I go public early. Therefore, this form gives various eco-chain companies the feeling of starting to delimit the site. Our management is becoming more and more mature, and the companies that invest later will not plan the site, or maintain a certain degree of competition, otherwise we will encounter great competition outside the ecological chain system. "
In addition, even if an eco-chain enterprise is invested by Xiaomi, it will not sit back and relax completely. Liu De revealed to Sina Technology that at present, two companies have been eliminated by the ecological chain system, one is a pet tracker, and the other is a maternal and child air purifier. "We told him not to do this. There is no such market segment. He firmly believes that there is such a market, but there is actually no such market." Liu De said that in the end, these two enterprises were eliminated.
Borrow from Xiaomi
While achieving rapid growth with the help of Xiaomi dividend, Xiaomi ecological chain is also of great significance to Xiaomi.
After Xiaomi reached the top of domestic smartphone shipments in 2014, Xiaomi failed to complete the shipment target of 80 million units in 2015. Lei Jun bluntly said that it was not OK, and said that 2016 would be happy. Then in 2016, IDC data said that Xiaomi only sold 41.5 million mobile phones in the whole year, plunging 36% year-on-year.
In the difficult two years of Xiaomi, Liu De believes that the value of Xiaomi’s ecological chain is crucial.
"The first is to maintain the activity. While making up lessons, we are consolidating, adjusting the team and adjusting the products, while maintaining the activity. The second is to keep the heat. We constantly have new products that can keep the heat of the market and the heat of the media. " Liu De said.
The greater value is to take the opportunity to lay out new areas, such as the Internet of Things. According to the data released by Liu De at the annual conference of Mijia in 2017, as of May 31 this year, the total number of networked devices based on Xiaomi MIOT platform has exceeded 60 million, which has gradually spread all over the world in terms of geographical distribution, and the Xiaomi ecological chain has become the largest intelligent hardware platform in the world.
Another function of Xiaomi ecological chain exceeds Liu De’s expectation, that is, the expansion of user groups.
At the end of 2015, half of the Xiaomi ecological chain was Xiaomi users.Users and non-Xiaomi Android users each account for a quarter. By 2016, the proportion of Xiaomi users has dropped to one third, and the proportion of Apple users and non-Xiaomi Android users has also risen to one third. "This year, I think that non-Xiaomi Android users and Apple users will further increase, which shows that the products of Xiaomi Eco-chain are slowly beginning to exceed Xiaomi’s original user system, and more and more Apple users and more non-Xiaomi users come to use our products." Liu De said that Xiaomi’s eco-chain products have played a role in expanding the user base and developing new users for Xiaomi.
At the same time, Liu De said that as a Xiaomi ecological chain that used to rely on Xiaomi mobile phone dividends, it is time to help Xiaomi mobile phones.
In the two years when Xiaomi’s mobile phone encountered Waterloo, it was also the two years of the rise of offline channels. Lei Jun, who led Xiaomi to make up the offline channel, shouted the goal of opening 1,000 Xiaomi homes in three years, and the support of ecological chain is indispensable to opening and maintaining 1,000 Xiaomi homes.
In Liu De’s view, Xiaomi has completed Xiaomi’s product portfolio through the layout of the ecological chain in recent years. Combining multiple low-frequency products into a shop with high-frequency purchases is also the secret of Xiaomi’s home to achieve high ping efficiency.
Recently, Lei Jun announced that the shipment of Xiaomi mobile phone reached a record high in the second quarter of this year. With the expansion of Xiaomi’s offline channels and overseas markets, the mutual borrowing effect between Xiaomi’s mobile phone and Xiaomi’s ecological chain will be further revealed.