On September 14, Lei Jun, founder and CEO of Chinese consumer electronics giant Xiaomi, stepped down as chairman of Beijing Xiaomi Electronic Software Technology Co., Ltd. The news triggered a heated discussion among netizens. The company is not the main operator of Xiaomi‘s smartphone business, but one of the subsidiaries of Xiaomi, focusing on the financial business. At the same time, personnel changes have taken place in Airstar Digital Technology, which has a mutual agreement control relationship with Beijing Xiaomi Electronics Software Technology.
Airstar Digital Technology is a key company in Xiaomi‘s financial business segment, and its business mainly includes industrial financial services, financial technology services and personal financial services. Previously, the chairman of the company was Hong Feng, co-founder and senior vice president of Xiaomi. After the adjustment, Lin Shiwei, vice president and CFO of Xiaomi, became the chairman.
Airstar Digital Technology, formerly known as Xiaomi Payment, was established in 2013. Lei Jun is the chairman and legal representative, and Hong Feng holds the position of manager. The company changed its name in 2019 and in 2021 the company was officially upgraded to its existing name.
Hong Feng officially established the financial technology service section of Xiaomi in 2015, and launched a variety of financial products. Subsequently, Xiaomi continued to exert its strength in the financial business. In January 2016, it acquired 65% equity of Jiefu Ruitong (Ruifutong), a third-party payment institution, for a consideration of 600 million yuan and won a third-party payment license; In December of the same year, it established a joint venture with New Hope Group and other companies, and obtained a private banking license.
At the beginning of 2017, Lei Jun announced that Internet finance would be positioned as one of Xiaomi‘s strategic cores, and together with black technology, new retail, internationalization and artificial intelligence, will form the company’s five core strategies. However, in 2018, several peer-to-peer (P2P) lending platforms recommended by Xiaomi collapsed and the company ran into a credibility crisis. In 2020, it obtained the license of consumer finance and virtual banking, and Chongqing Xiaomi Consumer Finance Co., Ltd. and Airstar Bank Limited, a Hong Kong virtual bank under Xiaomi, opened.
Although backed by the deep pockets of Xiaomi, its financial business has not gone smoothly. According to the financial report at the end of August, in the first half of 2022, Chongqing Xiaomi Consumer Finance recorded a net loss of 93.196 million yuan, down 43.08% year-on-year.
Earlier, Xiaomi announced its second-quarter financial report, showing that the revenue of its Internet service segment decreased by 0.9% from 7 billion yuan in the second quarter of 2021 to 6.97 billion yuan in the second quarter of 2022, mainly due to the decrease in financial technology business revenue, which was partially offset by the increase in TV value-added services and game business revenue.
Analysts believe that Xiaomi needs to find more ways to generate profits at a time when smartphones are becoming more and more difficult to sell and the vehicle building business is far from complete. For Lei Jun, it is extremely urgent to optimize his company’s finance business.