Xiaomi
Strategic Concepts & Mechanics
Primary Evidence
"In 2020, I could have picked up face masks that were branded Foxconn (the world’s largest electronics contract manufacturer), BYD (the world’s largest electric vehicle manufacturer), or JD.com (China’s second-largest e-commerce platform). Companies retooled some of their production lines to get into the masks and money business. Chinese conglomerates rarely hesitate to go after the core business lines of others. Huawei, for example, expanded from making telecommunications infrastructure equipment to tread on companies like Xiaomi, which makes smartphones. And both have now leapt into the automotive business. This sort of expansion is driven both by the fiercely competitive market environments and by government subsidies that make it easier for companies to try their hand at making new products."
"China leads the world in deploying ultrahigh-voltage transmission lines, high-speed rail, and 5G networks. Chinese manufacturers make machine tools—die-casting machines, steel presses, robotic arms—that approach German and Japanese levels of quality. They’ve muscled out most other Asian competitors on consumer electronics. Phone makers like Huawei, Oppo, Vivo, and Xiaomi tapped into the worker and component ecosystem that Apple helped to build. In 2025, the world’s largest phone makers are Apple, Samsung, and a half dozen Chinese firms that concentrate on sales to developing countries."
"So in 2016, when iPhone margins were 33 percent, Chinese rivals Oppo, Vivo, and Xiaomi were earning 7 percent, 6 percent, and 2 percent margins, respectively. In other words, the Apple Squeeze was instrumental to how Apple attained industry-leading margins. The message was: *We won’t pay you much, but the experience will be invaluable*."