A phone that is widely known as the Apple (AAPL, Financial) of China, Xiaomi, is likely to make its debut on Wall Street soon. In a cluttered electronics and communication market in China, Xiaomi has managed to create a place for itself in only a few years. The firm which is valued at $45 billion is touted to be the hottest initial public offering.
Source: By Xiaomi (www.mi.com) [Public domain], via Wikimedia Commons
Smart Marketing = Billion Dollar Company
The company which launched its first smart phone in 2011 has zoomed past many established organisations to become the third-largest smart phone vendor, only behind Samsung Electronics Co. Ltd. (SSNLF, Financial) and Apple. Xiaomi currently has a record 16% market share. The success of the company can only be labeled as stupendous and unprecedented.
The company’s astounding success is the reason why so many expect an IPO soon. In January, the company announced that their 2014 profit had doubled since last year. It went up from $5.2 billion to $11.97 billion, which is 150% higher than the 2012 profit of $2 billion.
The sale of phones, in general, has risen from 7.19 million units in 2012 to just over 61 million in 2014. Xiaomi expects to sell about 100 million phones in 2015.
Yuri Milner, Russian billionaire who has been investing in Xiaomi since 2012, thinks that the smartphone firm’s valuation could go up to $100 million. He told Bloomberg, “I was attracted by the size of the opportunity ahead of them. I don't think there's any company that has reached $1 billion in revenue as fast as Xiaomi. In every conceivable benchmark, it's almost unprecedented in terms of its speed of growth.”
According to research firm IDC, Xiaomi is likely to sell 500 million smartphones in China this year. The USP of the company is the price of the smartphone and smart online marketing. An average Xiaomi device retails at around $150.
The golden Chinese touch
The firm’s latest round of funding took place in 2014, where it closed a $1 billion deal with a syndicate of 29 banks.
Although the firm is yet to make a formal IPO announcement, it is widely expected that the firm, which is studying its options, seems to be more upbeat about Wall Street debut after the affirming success of Alibaba (BABA, Financial) in September 2014. Considering the opening of Alibaba in the stock market, it is not difficult to predict a fellow Chinese company’s success.
The firm, which began the sale of its smartphones in the Indian market recently, faced some issues from the patent complaint filed by Ericsson (ERIC, Financial), the Swedish maker of telecommunications equipment.
Although the firm currently seems to have the upper hand at marketing, other competitors in China are trying to ape and follow suit in order to succeed in the market.
Apple, which is compared with Xiaomi, made instant history after it got listed on Wall Street in 1980. The firm sold 4.6 million shares at $22 per share. Although at the time of the IPO the firm catered mainly to personal computer requirements, it slowly enlarged its scope and entered into the consumer electronics sector. After a major dip in prices in 2008, the firm bounced back in 2012. The stock is currently being traded at $127.94.
By the looks of it, Xiaomi which has spiralled to success in a short span of time is likely to have a warm welcome at the Wall Street.
