During Xiaomi's meteoric rise in 2013 and 2014, the company was quick to point out sales figures — which catapulted from 7.2 million in 2012 to 18.7 million in 2013 and 61 million in 2014. That stopped in 2015 when Xiaomi failed to meet its target of 100 million sales. In the end, the company managed to sell over 70 million phones, falling short of its revised goal of 80 million. 2016 was a better year for Xiaomi as it solidified its position in India and held steady in its home market of China, but the company isn't ready to divulge sales figures.
In a letter addressed to Xiaomi employees, CEO and co-founder Lei Jun admitted that the company grew too fast, and that the brand will now focus on creating sustainable long-term growth:
Our accomplishments are impressive, but the challenges we faced were unforgettable. In the first few years, we pushed ahead too fast. We created a miracle, but also drew on some long-term growth. So we have to slow down, further improve in some areas, and ensure sustainable growth for a long-term future.
Lei Jun also mentioned that Xiaomi needs to "upgrade" its retail model, citing that online sales make up 20% of the overall smartphone segment:
E-commerce now makes up just over 10% of overall retail in China, and the online smartphone market only makes up 20% of the overall smartphone market. Xiaomi has great ambitions, and we are not satisfied with just being an e-commerce smartphone brand, so we have to upgrade our retail model, and incorporate offline retail for a new retail strategy.
Although Xiaomi was the first to start selling exclusively online, its rivals Lenovo and Huawei have caught up. Meanwhile, the likes of OPPO and Vivo have heavily invested in retail stores in tier 2 and tier 3 cities in China and India, scooping up millions of customers in the process. Xiaomi is now looking to expand its retail presence, with Jun stating that the company will open 200 new stores this year, and over 1,000 stores in the next three years.
Xiaomi will increase its retail presence as it sets a revenue goal of $14.5 billion.
Jun also shared details on how various business units performed last year. Xiaomi's Indian unit crossed the $1 billion revenue mark, and is now the third-largest smartphone vendor in the country. The company also saw revenues of $2.17 billion from its Mi Ecosystem products, which include smart TVs, air purifiers, routers, a robot vacuum cleaner, and even a smart rice cooker. Revenues from internet services also doubled during the year.
For 2017, Xiaomi is setting a revenue target of $14.5 billion. To get there, the brand is going to turn its attention to five "core" areas: technological breakthroughs, new retail strategy, globalization, artificial intelligence, and internet finance. Jun is content on how the company performed in the first three sectors, and as such the focus is on artificial intelligence — which will be used for facial recognition — and finance:
In December 2016, we launched Sichuan XW Bank in a joint venture with partners including New Hope Group and the Hongqi Chain. We have a team of over three hundred people working on laying the foundation in the financial sector for loans, insurance, securities, finance, and payments, as well as securing the necessary licenses. This is extremely important for our future. Commercial giants of the future will not only be Internet companies, but also finance companies, because the future of finance lies in AI and big data. We are still a startup company, but we have great ambitions and capabilities too.