Is Xiaomi Really the Apple of China?

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June 5 (Bloomberg) -- Former Google Executive Crid Yu, Bloomberg Businessweek’s Brad Stone and Bloomberg’s Cory Johnson take an in-depth look at China’s tech giant Xiaomi on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

The apple of china.

Is it really?

I think, in a lot of ways, it is.

Xiaomi, in four years, has built a brand that consumers love.

It has grown very fast and sold 18 million smart phones.

It left a lot of customers disappointed.

The phones are hard to get.

They grew the supply chain so they could fill the demand.

Customers are hanging out outside -- you have people on trains for 15 hours to go to this event.

That's right.

They are drawn to the star power of the executives.

The founder has a long career in chinese technology.

He was the ceo of a software maker and is a prolific angel investor.

He brought together seven other tech titans in china, all who could have been ceos of their own companies, to found xiaomi together.

It is called the avengers, the dream team.

It was a symptom of his huge ambition.

Starting a mobile phone company.

Very expensive and very difficult to do.

A lot of people thought, how can you compete in the air of apple and samsung?

In partnership with a formal executive, he brought in these other founders and each of them have a piece of the company.

One guy handles the operative system.

Another handles design and another in charge of manufacturing the phones.

They have a big founding team.

When you look at the outside at the numbers, do they really show the promise of becoming a global player like an apple?

Net yet.

It's intriguing.

The growth is very intriguing.

The biggest -- the business model -- the way they have done things that other android phone makers have not able to do -- not been able to do.

Create a software that is customizable enough.

A very different business model, selling products only online.

Having support that customers can get to, but not the full retail experience.

The company had some big hiccups with inventory.

The phones sold out in a matter of seconds.

The other stuff they try to sell before phones, too.

They have been selling routers and other hardware goodman.

They have been sitting on inventory that went stale.

That is one of the secrets of running a successful technology business.

How they never really get stuck sitting on product that wasn't hot.

If they somehow managed to gauge demand accurately and get enough product to make customers happy without sitting on this stuff that is becoming an valuable -- on valuable by the second.

This is a company that should know how to do it and could not manage it.

Xiaomi is doing quite well.

Regardless of how successful this company is, people will look at how the model works and see if they can take these ideas and run with them.

I want to bring in the former executive at google in china.

He is joining us today from london.

As someone who has worked in china, what do you think of xiaomi's rise?

It is very impressive.

One thing we need to point out is that xiaomi's success is not because it is a low-cost copycat, which is very easy for us on the west to think of.

They have gotten this far because of the great products and affordable price.

As brad mentioned in his article , which is very well written, xiaomi's business model is very disruptive.

They are not a global power yet, but that business model could be disruptive to someone like apple or samsung.

Part of that business mo del is selling direct to customers.

They save a lot of money.

25% margin that the retailer is taking.

They don't advertise.

One of the first technology companies to grow up relying on social media.

It has attracted the founding team's star power.

Can import that over to other countries?

The google dna that runs through this company is very interesting to me.

I wonder, from your standpoint, what do you see about this company that has taken its notes from google?

There definitely is a flavor of commoditizing a layer and giving it away.

They are not giving away the hardware.

Most people speculate that they can't be making much margin on this.

They're ok with that.

Xiaomi is very much dependent on the android ecosystem and being able to be compatible with it.

Android is a google backed os.

Xiaomi actually, the miui is a layer on top of that.

If google was a more active participant in the chinese ecosystem, if it hadn't reorganized its operations.

If you could have your android in china, do you think the miui would be as successful as it is?

I think so.

The miui -- it is very much based on user feedback.

They push out software on a weekly basis.

That also is a very google thing, isn't it?

Launch something and continue to innovate on it.

They have not called it a beta.

It you could imagine that they would call their phone a bit of fun.

One of the cofounders was a longtime google executive.

One of the most interesting things about all the founders as they all came with their different backgrounds and brought their own superpower to help give xiaomi what it used today to get to the top.

The reason he felt free and was able to have the entrepreneurial spark and leave google was because they reorganized its operations.

A lot of those googlers in beijing felt that their work was being lost by google's reorganization in china.

He told me that was the spark that had him -- set him free to build this company.

I want to talk about the suite of products they have.

You went to the tablet launch.

Take a listen to the ceo at that lunch talking about what he thinks -- at that launch.

We want to make the best android tablet out there.

I hope that our efforts will put some pressure on apple and prove that not all android tablets are being hidden away in drawers.

We want to make a good android tablet that everybody likes to use.

This is a guy who is often compared to steve jobs.

He was not wearing a black t-shirt and jeans there.

Do you see echoes of jobs?

He is much more humble.

Some of it came from that clip.

He apologized in some ways for the low memory version of the mipad.

Maybe he is accustomed to being -- the ipad is a great product.

Steve jobs never would have done that.

We will talk much more about him and how this company is climbing to the top with brad stone and cory johnson.

This text has been automatically generated. It may not be 100% accurate.


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