Lei Jun: From the challenger to the challenger

'"New Chinese Goods Movement'. This is a phrase often mentioned by Lei Jun, founder of Xiaomi Technology in the past year.

Lei Jun said that when he founded Xiaomi five years ago, he had been thinking about a problem --- China has become a big manufacturing country in the world. Why do Chinese consumers make their own domestic products, and Chinese consumers often do not evaluate high? '

'Most people think that domestic goods are very low, cheap, and not good quality. 'Lei Jun analysis, this is because China was still in the stage of scarcity of goods. As long as the goods can be made, someone will buy them. There is no motivation to change this. However, with the improvement of productivity level, the development of reform and opening up for more than 30 years, from 'commodity scarcity' to 'excess commodity surplus', and the consumer demand of Chinese consumers are also changing. As consumption increases, they need more and more Good product.

' Five years ago, starting from this basic idea, we started to make Xiaomi. 'Lei Jun said, 'If you spend 20 years, Xiaomi has 20 or 30 pieces to become the world's number one. I think Xiaomi can lead China's entire industry and change the world's impression of us. '

How to make new domestic products?

Lei Jun’s understanding of 'new domestic goods' was first cut from the mobile phone.

He has repeatedly mentioned that Xiaomi really learns three companies: Tong Ren Tang, Haidilao, and Wal-Mart.

'We do products like Tong Ren Tang, which are genuine and faithful; we serve the users of the seabed and learn more than expected. We learn the efficiency of operations from companies like Wal-Mart and Costco. 'Lei Jun summary.

'For example, you are not the world's top supplier, you can't enter the door of Xiaomi,' Lei Jun told the "First Financial Daily" reporter, 'The first request I made when I was doing Xiaomi's mobile phone was to use the first-rate supplier. To use top-level components and materials, we must be doing world-class products, but the price is half of the peers. '

'Quality products are cheap, and only through a large-scale model innovation, have the opportunity to be cheap. ' Xiaomi has made structural changes in the R&D system, marketing model and even sales channels.

The subversion of Xiaomi's traditional cost chain is first reflected in the research and development system of Xiaomi products. Lei Jun believes that a good engineer is equal to 50 ordinary engineers, 'so we hired the best people in the industry, and then tried to streamline the team, only one or two products, the investment in a single product is 5 ~10 times the investment. In this case, the size of our entire team is small, but the strength is very strong. At the same time, we focus on single products and sell one or two products to a huge amount. In fact, the cost of research and development in our mobile phone is very low. '

In marketing, Xiaomi took away traditional marketing expenses, turned users into fans through word-of-mouth communication, and expanded with social media. At the same time, encourage customers to disassemble, expert reviews, and make products transparent.

'Customers want to buy good things, hope to buy cheap things, you want to make more money to increase gross profit margins, this is originally a contradictory two-faceted body. Lei Jun believes that the solution to this contradiction is to transform the relationship between business and customers into friends. In a transparent business model, products with near-cost prices provide customers with an unexpected experience, and let customers feel that you treat him as a friend.

In the channel, at first, Xiaomi basically did not go through traditional channels such as retail stores, etc., only doing e-commerce, and even doing e-commerce direct sales, which also greatly reduced the cost. Lei Jun said: 'In the entire chain, we are lower than the peers in terms of the R&D cost of a single mobile phone, but this does not mean that we have low cost of doing mobile phones. '

When the mobile phone business made some progress, Lei Jun was thinking, how can the concept of using new Chinese goods be used to enlarge this model?

More than two years ago, Xiaomi began to invest in the ecological chain. The goal at the time was to invest in 100 start-ups in 'five years.' In the past two years, Xiaomi has invested in 56 companies, and Lei Jun said that they are also required by the concept of 'new Chinese goods'.

Take Xiaomi's patch panel as an example. Lei Jun admits that this patch panel really didn't expect to do it for a year and a half, because it may be harder than everyone thought.

'If you want to do well, almost every device needs to be customized, even each line needs to be customized, because the original flexibility is not enough, the result is 10 million research and development costs for a year and a half before the patching board. After the completion, a release, quite popular, far beyond my imagination. '

In addition to the patch panels, companies in the Xiaomi ecological chain also produce air purifiers, bracelets, and mobile power. By the end of 2015, more than a dozen products have been released.

'If 20 or 30 pieces of millet become the world's number one in 10 years, I think Xiaomi can lead China's entire industry to change the world's impression of us. I hope that in this way, the whole of China will take a big step forward in manufacturing and on the product. 'Lei Jun concluded that the rise of companies like Sony in the 1970s drove the entire Japanese industry. In the 1980s, companies like Samsung drove Korean industry. Now I hope that Xiaomi can promote the whole of China's 'new Chinese goods movement', help more startup companies, on the one hand, make high-quality products appear in a large number of industries, on the other hand, hope that with the efficiency of the Internet, these products can be achieved It's cheap enough for every consumer to enjoy the fun of technology.

'I think that Xiaomi was a very small company three years ago, so it didn't attract everyone's attention, but I think that three years later, the subversion brought by Xiaomi has already begun. 'Lei Jun said.

Users are more important than the first

For Xiaomi, who wants to change the impression of Chinese people on Chinese products and promote the 'new Chinese goods movement', patents are a hurdle that Xiaomi must take.

At the same time, the rapidly changing competitive environment in China's mobile phone market is now pushing Xiaomi to a rather subtle position.

At one time, Lei Jun’s “Focus, Extreme, Reputation, Fast” seven-character and Xiaomi models became the industry benchmark. However, while Xiaomi whirlwind swept the industry, competitors Huawei glory is catching up with sales. Meizu, which accepts Alibaba's shareholding, has also made rapid progress, and LeTV, Hammer, Qihoo 360 and so on have entered, and the competition of domestic mobile phones has become highly heated. In five years, Xiaomi has become a challenged target from the challenger of the mobile phone industry.

Unlike when Xiaomi was just founded, the smartphone market is now facing a major shift, which is the arrival of the change. This puts higher demands on Xiaomi. In the past, Xiaomi’s positioning was the main price/performance ratio, but now, Xiaomi’s only relying on this point is not enough.

In such a business environment, can Lei Jun’s millet model bloom everywhere and eventually change the world?

For the patent issue, in Lei Jun's view, the patent is not equal to technology, but part of the game rules of the mobile phone industry. The patent war is almost part of the battle for the mobile phone industry. 'In the eyes of ordinary consumers, patents are technology. In fact, for experts in the industry, patents cannot simply be equated with technology. Even to some extent, it has become a hindrance to the technological innovations established by the first-time marketers using game rules for latecomers. 'Lei Jun said that there are not many truly valuable innovations. Most of them are pits. In fact, the West is now rethinking the phenomenon of patent abuse that hinders technological innovation.

He also believes that the outside world does not quite understand the technical accumulation of Xiaomi in the mobile phone industry.

'Technology accumulation is actually mainly on people. 'Lei Jun said that the eight co-founders of Xiaomi have a technical background, with an average age of 43 years and an average of 20 years of work experience.

'If you start with a salesperson, do you have the technology to be a CEO? Then there are no technology for 8 people who have been working for 20 years. I think this is a very ridiculous statement. 'Lei Jun said.

In addition to the technology-born co-founders and Xiaomi employees forming customer service, almost 80% are engineers. 'I think Xiaomi is related to its strong talent technology and technological innovation. 'Lei Jun said.

At the 2015 annual meeting, Xiaomi announced its 2015 mobile phone shipments -- more than 70 million units, although it did not reach the expected target of 80 million to 100 million units at the beginning of the year, compared with 61 million units in 2014. The results have increased by 14.75% year-on-year. As the overall shipments were overtaken by Huawei and TCL, there have been many voices in the industry that have weakened growth in the millet model.

In the face of competitors' sales catch-up, Lei Jun frankly stated at the 2015 Wuzhen Internet Conference that in the past year or so, it was a bit of a problem, especially when Xiaomi became the No. 1 brand in China’s mobile phone sales, it was very stressful. I often mention that I am the number one seller. Although the sales of the double 12 millet are still the first, I don’t allow the internals to talk about this. The user’s favorite is the most important thing, and it’s important to do things well. Don’t be evaluated externally. And the so-called numbers are defeated.

'For Xiaomi, we need to go back to the original passion now, like a startup. We need to build a strong user experience and products more firmly. 'Lei Jun said, 'It is still necessary to do a good job of product and make a real reputation. I think this is the core of the problem and the core of Internet thinking. '

For the internal management of the company, Lei Jun said that Xiaomi has just been founded for three or four years. Compared with many companies that have developed for 20 or 30 years, this piece is indeed a weakness, but in the specific operation, Xiaomi advocates It is to manage the 'guerrilla mode'. It is to grasp the essence of the problem, find the best people, strong sense of responsibility, and make these people work together, with a small number of people to enable Xiaomi's core team to command war on the front line.


'Small team is flat, response and decision-making are relatively fast, I think these are the key to the entire Internet, because the technical characteristics of the Internet make it easy to connect various businesses together, so Xiaomi is also dozens of Hundreds of small teams are fighting. So if you look closely, you will find that most emerging Internet companies have a guerrilla mode. 'Lei Jun said that this model has changed a lot from the previous time in Jinshan. Xiaomi is the co-founder of the eight co-founders to manage, and basically does not do management planning and budget, to simplify all the work, simplify It’s something that eight people can think of themselves.

He said that entrepreneurship and innovation come from the vision of entrepreneurs and organizations, the inner passion and mission, and they are willing to suffer, including pursuing more goals at every turning point. 'Of course, because Xiaomi’s founding time is short, the question I might want to think about is: What kind of enthusiasm makes me wake up and go to work with high morale. The most important thing is what you want in your heart. 'Lei Jun said.

(The project was supported by the First Finance, Fudan Management Award Foundation and the Oriental Management Research Institute of Fudan University; the main interviewer was the founder of the China Business Civilization Research Center, independent financial observer Qin Hao, and Su Yong, Dean of the Oriental Management Research Institute of Fudan University Professor; on Saturday, January 23, at 19:50, the program will be broadcast on the first financial channel.)