Think Xiaomi is just a supplier of cheap smartphones? Think again.
Writing in the International Journal of Business and Economic Sciences Applied Research, Hsien-Chih Kuo, Pin Luarn and I-Jen Chen from Farestone Telecommunications and the National Taiwan University Science and Technology explain their study of the Xiaomi ecosystem to try and find out how the company has not only been so successful in recent years but just how the model works.
Founder Mr. Lei Jun has described Xiaomi as operating a ‘Fan-Centric business model’ and the researchers find the company’s fans not only among their customers but their suppliers as well; ‘..numerous respondents stated that the biggest difference between Xiaomi and other brand manufacturers lies in its collaborative model.’
They use a ‘service-dominant logic’ or SD Logic framework for their work and this relatively new concept seeks to explain, say, the Apple phenomenon of nurtured customers turning into tribal boosters. Or, IKEA which recruits part time workers to assemble it’s products who then become users (you and me!).
In Xiaomi’s case extensive use of their social network ‘Miliao’ (they avoided wisely Mi-Chat but that’s what it translates to) helps them engage customers; and, by sharing this data with suppliers allows their manufacturing agents to collaborate in product design and order right-sizing.
If you’re considering participating in the upcoming IPO the paper provides some useful context but before you read it you might want a quick tutorial on SD Logic and there’s a helpful Wikipedia entry here Wiki – Service Dominant Logic. You’ll find the paper itself via this link Value Co-Creation of Xiaomi in China.
So, not just a supplier of cheap smartphones, in fact not just a smartphone-munger at all. A business ecosystem conductor, curator and ringmaster; whether that’s worth U$100bn though is an entirely different question.
Happy Sunday.