On May 3rd 2018: Xiaomi, the Chinese smartphone giant filed an IPO at Hong kong Stock Exchange. It was expected to be the largest listing by a Chinese tech company in almost 4 years. The listing value of the company was $100 billion. But in the initial bidding Xiaomi was getting muted response for retail investors. The grey market price was at 11% discount before the listing. On July 9th 2018 Xiaomi shares open 2.9% down in Hong Kong.
Xiaomi has become the world’s third largest smartphone maker. Xiaomi’s goal 100$ billion valuations cut down to size of 50$ billion valuations on listing. There was regulatory concern as well which led down to this valuation. Xiaomi, the maker of phones to “Qicycles” has been growing rapidly outside China as well. India is one of the fastest growing markets. It has open 6 factories in the country as well for “Make in India” project which gave them the opportunity to get tax benefits which lead to cheaper prices for smartphone. Xiaomi has taken on competition with Samsung, Apple, Huawei by offering additional features at relatively low prices. Earlier they were selling online to cut down the cost of distribution & dealers commission etc, but now they are penetrating the offline market by opening official store & exclusive partner store to counter the strong presence of Oppo & Vivo in this sector. Sources claimed that Ratan Tata was the biggest investor in the Indian arm business which Xiaomi has tripled his investment in few years.
Despite the strong business model & its presence Xiaomi has been facing issues to penetrate the global market in US & Europe. Recent tussle between U.S- China making it more difficult to capture the global markets. What will be the next move of Xiaomi…?
The Financial Book 