Lei Jun, founder of Chinese smartphone maker Xiaomi, on the evening of August 10 delivered his annual speech with the theme of “My Dream, My Choice.” During his talk, he revealed the 10 most difficult choices he has encountered in his experience. The topics of his speech involved sales volume, stock price, high-end strategy, U.S. blacklist, future goals and more.
The following is an excerpt from Lei Jun’s speech:
This year is the first year of our new decade and of Xiaomi mobile phone’s release. A few days ago, in a list of the world’s top 500 companies published by Fortune, Xiaomi was selected for the third time, ranking 338th, an improvement of 84 places.
Not long ago, data from several internationally renowned research companies showed that Xiaomi‘s mobile phone sales surpassed Apple’s for the first time, ranking second in the world. We are all very excited. At this moment, I would like to thank our soldiers from all over the world for their hard work, and of course our global fans for their unrelenting support over the past ten years.
Standing here, the most unforgettable scene seven years ago comes to my mind. At the first Wuzhen Summit of the World Internet Conference in 2014, I said that Xiaomi‘s long-term strategy is to replace Apple to become the world’s largest smartphone maker in 5 to 10 years. Apple’s Senior Vice President Bruce Seville went on to express, “it’s easy to say. It’s much more difficult to do.” The audience burst into laughter.
I really didn’t expect that only seven years later Xiaomi would beat Apple in mobile phone sales and become the second in the world. Our global market share has reached an astonishing 17%. Xiaomi‘s market share in Europe exceeds 25%, ranking first for the first time. The research company told me that this is the first time that a Chinese company has achieved such a milestone.
Nevertheless, Xiaomi is still a very young company, and our task at present is to firmly stand second in the world.
Last year, I gave my first speech, which was the first speech of my life. This year, I want to give another speech with the theme of “My Dream, My Choice.” I want to talk to you about the difficulties we have experienced and how many difficult decisions we have made in pursuing our dreams.
Let’s start with listing. In early 2018, Xiaomi planned to list in Hong Kong. At that time, many investment banks estimated that our valuation would reach HK$17 to HK $22. However, on July 9, 2018, Xiaomi‘s stock price slumped below the IPO price. After the ceremony, none of us wanted to face the reporters waiting out there. We hid in a utility room of HKEx. However, we held an internal appreciation banquet as planned that night, saying that we must make our investors at least double their profits.
The next day, I went to buy a pair of jeans with holes to remind me of that day. Luckily, Xiaomi‘s stock price rose to HK$24 per share the day after IPO. Just when we were full of ambition, the Sino-US trade war escalated, and Xiaomi‘s share price slumped again to HK$8.28 per share on September 2. At that time, everyone was about to collapse.
An investor criticized me so much about Xiaomi‘s strategy, from products to management, that my shirt became wet. (A rumor says that this investor was Zhang Ying, wife of Alibaba‘s Jack Ma. Lei Jun denied this rumor on Wednesday.)
I have always believed that the best investment is to invest in yourself. With the support of the board of directors, we bought a large number of Xiaomi‘s shares with an average price of HK$9.35 for 3.6 billion yuan. On July 10, 2020, the second day of the second anniversary of our listing, our share price finally returned to HK$17 per share. I joked with everyone that I can hold my head high and turn over a new leaf from now on.
By January 4 this year, Xiaomi‘s share price reached $HK34 per share. I told my employees seriously that I don’t have to care about stock prices anymore, and all that stock software can be deleted. From tomorrow, I want to be a happy person by feeding horses, chopping firewood and traveling around the world.
In fact, in recent years, we have made a very important decision, that is, to further increase investment in R&D and focus on making good products. We have also put forward a new goal – high end products.
Xiaomi‘s mobile phone line started by offering high end products. Later, we produced Redmi for the mass market, which was very successful. However, Xiaomi has been misunderstood by many people as only developing middle and low end products. It is extremely urgent to transform.
We restarted the high end product line three years ago by launching Xiaomi 10, which costed as much as 1 billion yuan in investment.
At that time, due to the sharp rise in the cost of raw materials necessary for 5G and the high R&D expenses, Xiaomi 10 must meet two conditions if we don’t want to lose money. The price should exceed 4,000 yuan, and at least 2 million units should be sold. Is it acceptable for our fans? We have to believe them. As long as we do a great job in producing a high end mobile phone, 2% of our fans will be willing to give us a chance.
In January 2020, a sudden epidemic disrupted our plan. At the beginning of February last year, we made up our minds to release the Xiaomi 10 on February 13 as originally planned. At that time, all seats in the conference room were empty. The next day, its sales exceeded 200 million yuan in just one minute. Up to now, we have sold 5.77 million units of the Xiaomi 10 Series. The secret here is that we need to rely on our fans to make cost-effective products that move our consumers.
After Xiaomi 10’s victory, our internal morale soared. During internal discussions, everyone said that imaging technology served as the commanding height of the whole industry. At that time, Zhu Dan, the head of our camera department, wondered if the camera sensor could be directly integrated into the mobile phone. After repeated discussions, we decided to make a mobile phone named Ultra for video enthusiasts. The video effect is amazing, but the bulge of the camera is difficult to accept. The final plan is to add a small screen beside the camera.
This product attracted much attention all over the world, and many international technology bloggers spoke highly of it at that time.
In the process of climbing the peak of science and technology, you will always encounter all kinds of difficulties, and we need to work hard to solve them together.
In January this year, Xiaomi was included on the U.S military blacklist. We finally made a difficult and important decision to directly sue the U.S. government and defend our legitimate rights and interests in an upright way.
After the prosecution, the U.S. Department of Defense had to announce the reason, which was that in 2019 I was awarded the honorary title of “Excellent Builder of Socialism with Chinese Characteristics” by the Ministry of Industry and Information Technology of China and other departments. Because the MIIT promoted military and civilian integration, they thought that Xiaomi had something to do with the military. Actually, there are 500 people that received that title, including the founders of Lao Gan Ma and Septwolves. After many rounds of confrontation, we won on May 25.
I have talked about many difficult decisions made by the company. I also want to talk about my difficult personal decisions.
Maybe many people don’t know that I have another identity, that is, the chairman of Jinshan.
In 2011, Xiaomi had been founded for just over a year. At that time, we were developing the first generation of Xiaomi mobile phones. Also at that time, Jinshan encountered a huge crisis, and its senior executives wanted me to return to to focus there.
I was very entangled. Several co-founders of Xiaomi knew my character and my feelings for Jinshan, so they gave me much support. On July 7, 2011, I officially took over as the chairman of Jinshan. This year marks the 33rd anniversary of Jinshan and the 10th anniversary of my taking over as chairman. Jinshan has undergone a thorough change, with revenue increasing by 11 times, from less than 1 billion yuan to 12.1 billion yuan.
What’s behind the irrational decision is priceless love. Over the past decade, we have treated users, employees and partners with that philosophy.
It is the trust of our fans that makes us overcome many difficulties, and gives me the courage to tell you our next goal – to become the world’s largest smartphone manufacturer in three years.
In the warm-up film of my speech, I said that I am not a genius, a model worker, or a god of war. I am just an ordinary engineer, pursuing my dreams and doing my favorite career.