Is Xiaomi’s IPO worth its rumoured USD 200 B valuation?

Word has spread that Xiaomi is preparing for its IPO, expected to be valued at USD 200 billion, in Hong Kong. This massive figure is close to Intel’s market cap (USD 202 billion) and far beyond Baidu’s USD 88 billion. Calculating from the company’s 2017 earnings of USD 1 billion, Xiaomi’s P/E (Price-to-Earning) ratio is 200, a figure smaller than Amazon’s 329 but far beyond most USD 200 billion club members. Apple’s market cap is now USD 887 billion, and it has a P/E of 19.23, whereas Samsung boasts a market cap of USD 304 billion and a P/E of 9.29.   

Xiaomi hasn’t commented on the valuation, but can the company live up to it?

In fact, whether or not the valuation is correct may not be that important. The company is acting aggressively to boost its value and establish core technology advantages.


Xiaomi’s core smartphone business centers on the tech-control and data management platform supporting Xiaomi’s IoT ecosystem. This ecosystem connects the company’s goods, ranging from its smart home appliances to smart watches. The company’s 2017 smartphone shipments are likely to exceed 90 million, though the final figures have not yet been released. In India alone, Xiaomi sold 9.2 million smartphones in 2017 Q3, which, along with Samsung’s sales, topped the market. Both companies secured market shares of 23.5%. However, according to Counterpoint’s research on phone-makers’ profits in 2017 Q3, Xiaomi’s net profit per phone was USD 2, leaving the company with little space or ability to tackle core component price increases and other cost problems.  

Besides, Chinese phone manufacturers Oppo and Vivo are also aggressively grabbing shares in developing markets such as India. It’s hard to say whether Xiaomi will remain ahead.

Triathlon Strategy

Xiaomi has championed its Triathlon Strategy of “hardware + internet + new-retail” to diversify its services and expand its revenue channels.

Xiaomi’s Mi 5C phone is equipped with a Surge S1 chip, which the company designed to increase its reach in the hardware market.

As for Xiaomi’s internet strategy, the company operates an IoT ecosystem connecting 85 million devices and 10 million daily active devices, establishing extensive product and business development chains with potential for hardware innovation, big data operation, deep learning and AI development. The company is also seeking strategic cooperation with industry leaders. For instance, cooperating on IoT + AI with Baidu will not only grant Xiaomi access to the latest technology, but will also reduce Xiaomi’s R&D costs, thereby helping Xiaomi to expand into other tech fields.  

Xiaomi’s offline new retail store Mi Home. Photo from

Xiaomi is also consolidating and expanding their new retail business. Xiaomi has aggressively opened 300 offline Mi Home stores nationwide to provide real-time product experiences to potential customers, from Beijing’s CBD to small cities in other parts of China, allowing Xiaomi to cover an extremely wide range of user samples and significantly increase its market penetration.

These moves in the new retail field will maintain Xiaomi’s advantages in user data and ecosystem building. The data and ecosystem will bring Xiaomi access to more high-tech research and commercial opportunities. It was reported that Xiaomi’s tech ecosystem generated a revenue of RMB 20 billion in 2016.

These three areas will be Xiaomi’s priorities for future development. The company will try to establish a business model, as well as technical advantages, that will not be easily copied or surpassed.


Whatever impressive stories Xiaomi is telling, the USD 200 billion is just a number for now and the near future. What investors care more about is Xiaomi’s true long-term profitability and development potential.

Perhaps the rumoured USD 200 billion valuation is just another marketing method to stimulate new market curiosity and demand.

Xiaomi is breaking away from its budget tech business and “money for value” strategy in favor of investing in better technologies to further its development.

Maybe Uniqlo’s business model, a “money for value” giant in fashion retailing that is acknowledged by customers from diverse backgrounds, will shed light on Xiaomi’s future plans to innovate its way beyond its current market reach and maintain a loyal following.

(Top photo from

Fiona Zhao
Fiona Zhao

Fiona writes for AllTechAsia. She has rich business experience across several industries in China. She holds a master's degree in Anthropology from the London School of Economics and Political Science and a bachelor’s degree in Economics and Politics from The University of Manchester. Fiona is particularly interested in how technology and business combine to shape societies across the world.

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