Xiaomi, Inc.: The Rise of a Chinese Indigenous Competitor

Indigenous competitor Xiaomi is changing the smartphone landscape in China and potentially the world through a cost-leadership focused strategy that relies on contract-manufacturing and savvy supply chain management. China is the world's largest smartphone market, a position attained in 2011. Since their founding 2010, Xiaomi was has become the world's third largest smartphone company based on units shipped--only global competitors Apple and Samsung ship more smartphones. Under the guidance of Lei Jun, CEO, Chairman and Founder, and a world-class executive team, Xiaomi started developing software and evolved into a mobile Internet and e-commerce company that contract-manufacturers smartphones and compatible devices designed to offer their customers--known as Mifans--a complete customer experience at a modest price. Xiaomi relies primarily on social media to sell their products and maintain an intimate, reciprocal relationship with their Mifans, a relationship that drives their continuous innovation efforts. This rich case explores Xiaomi's growth from its founding through its heralded smartphone success, to its earning the top spot--at U.S.$ 46 million--as the highest valued private company worldwide in 2015.  This case documents the dynamics of Xiaomi's cost leadership strategy implementation including supply chain dynamics; e-marketing; Mifan relationship management; an emphasis on innovation and continuous improvement; and global expansion.