Caixin
Dec 11, 2020 08:55 PM
BUSINESS & TECH

Q&A: Xiaomi President Wang Xiang Explains How to Build a Business Ecosystem

Wang Xiang replaced Hugo Barra as president of Xiaomi Corp. early in 2017, stepping up from senior vice president for cooperation to lead the electronics-maker’s aggressive global expansion effort.

Before he joined Xiaomi in 2015, Wang served as a senior executive at American chip giant Qualcomm Inc. in China, where he brokered deals with many of the nation’s emerging smartphone-makers that saw them utilize the company’s chipsets.

Wang, an engineer by training, has more than 20 years of experience in the semiconductor and communication industry.

In an interview with Caixin Media Vice President Li Xin conducted as part of the Web Summit this month in Lisbon, Portugal, Wang discussed Xiaomi’s strategy of using “ecosystem companies,” investing in startups by taking minority stakes, and allowing third-party developers to connect their goods to its Internet of Things (IoT) platform.

He also insisted he loses no sleep over the targeting of Xiaomi’s main rival Huawei Technologies Co. Ltd. by U.S. sanctions, saying his firm differs from Huawei in a number of key ways.

Caixin Media Vice President Li Xin: You’ve worked in multinational corporations, I think the longest one was Qualcomm. How would you compare working in those big, established corporations to working at Xiaomi?

Wang: It’s very exciting. Although I joined Xiaomi only five years ago, I knew it from when it was founded 10 years ago, because at that time Qualcomm was a major technology partner from day one. The Mi 1, Mi 2, Mi 3, all used (Qualcomm microchips).

But five years ago I was sitting on the other side of the table. I was representing many multinational companies, most of them U.S. companies, including Qualcomm, and we wanted to build a partnership between the technology companies and local Chinese players, so that has been very, very successful.

Now, actually in Xiaomi, I’m sitting on the other side of the table to help a Chinese company bring products to not only China, but to the rest of the world. Right now we are in 90 different markets, including India, Southeast Asian countries, and also in the West and European countries as well. So you see many of our products, not only smartphones, TVs, but many IoT products in the overseas market.

How many products do you actually have? What kind of ecosystems are you building with this variety of products?

Except smartphones, laptops, and smart TVs, I think right now, we have about 2,000 different kinds of products. But we could not have made those products on our own within only four or five years, so we innovated the business model — we built an ecosystem.

So the ecosystem products are designed and made by our ecosystem companies. We invest into, right now, over 120 different kind of companies doing the ecosystem products for us.

The model is: once we find a startup company, instead of hiring them or buying them to integrate them into our company, we invest in those startups, with a minority share. We don’t want to be a big majority share. So that will keep the company a startup company, keep that energy.

Then we are in charge of the product design, product definitions and ID design. We also help them on the supply chain. We are big enough to help the startup companies to build up their supply chain. So, if their product can meet our requirements, we will sell it with our brand in our channel. It’s a very successful and highly efficient model.

Right now we have many companies who are on the way to an IPO or they already went IPO. The latest one is Ninebot. A lot of people know Segway is an electric scooter company. But Ninebot acquired Segway and Ninebot helped us design electric scooters. We designed our product and Ninebot made it for us. Ninebot just went IPO weeks ago on the (Shanghai STAR Market). It was a very successful IPO, more than a 50 billion yuan ($7.5 billion) evaluation.

So instead of doing things 100% on our own, we invest into the startup companies, build ecosystem to achieve the ecosystem product together. I think that’s the uniqueness of our model.

One thing that users, especially in Europe, pay close attention to, is data. Your company produces a lot of IoT consumer products, and you collect and you are sitting on top of a lot of consumer data. How will you convince European users that this is safe?

Actually, in the privacy protection area, we are pretty conservative. When Europe executed the GDPR (General Data Protection Regulation) a couple of years back, we spent a lot of time studying the regulations and trying to make sure we complied 100% with the GDPR. We delayed many, many product launches in Europe to make sure we could protect the privacy of consumers.

We have mechanisms in our ecosystem products and smartphone products to make sure we protect the privacy of consumers, and also everything we offer to European consumers. All the data will be stored outside of China in Europe. So that’s also a very important step to make sure everything is safe.

In the past two years, many Chinese tech companies feel have felt they’ve entered a new world with the U.S. ban on Huawei, and also rising protectionism in some major markets, like India for example. How could that impact Xiaomi’s global ambitions?

Xiaomi is actually is a very young company and a very open one. We are very different. The company was founded by group of engineers 10 years ago, and entrepreneurs of course. So just like any startup company — tech startup companies in the U.S. and Europe, and the rest of the world — a group of engineers got together to share one dream and found a company.

Secondly, what we’re doing is we are trying to improve people’s lives. We want more and more people to enjoy the latest technology, or benefit from the latest technology. Traditionally, only higher income people can use this technology because the cost is high, right? But our dream is to let everyone be able to use it.

So that I think it is a great dream for a 10-year-old company.

Thirdly, actually we are a public listed company. We listed in Hong Kong in July 2018. We are very open. We have engineers across the globe. We have engineers in China. We have engineers in Japan, in the U.S. and in European countries, we have nine design centers outside of China. So I think we are a very global and open company.

So I don’t worry too much about this one. We are a technology partner for global technology giants like Qualcomm — like Google, Microsoft, Intel. Most of the tech companies, actually. So we are very open.

This interview has been edited for clarity and length.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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