Eliza Wong
Xiaomi’s Impressive Growth in Home Appliances
Xiaomi Group has once again demonstrated its strength in the competitive home appliances market. The company’s latest quarterly report reveals a staggering 66.2% year-over-year growth in smart home appliance revenue, achieving both higher sales volume and increased pricing. This performance stands out in an industry where many competitors have engaged in aggressive price cutting to maintain market share.
Among Xiaomi’s standout products, air conditioners have shown particularly remarkable growth. With over 5.4 million units shipped—representing more than 60% growth compared to the same period last year—Xiaomi has reached historic highs in this category. This achievement is even more impressive considering the intense competition and price pressure in the home appliance sector throughout the first half of the year.
Resisting Industry Price Wars
According to Xiaomi Group President Lu Weibing (卢伟冰), the company faced significant competitive pressure from established industry players. Many of these competitors targeted Xiaomi specifically with aggressive pricing strategies. Despite this pressure, Xiaomi managed to not only survive but thrive during this challenging period.
Lu Weibing emphasized that Xiaomi’s success comes from a fundamentally different approach than its competitors. While others focused on short-term gains through price reductions, Xiaomi maintained its commitment to value-driven pricing backed by technological innovation and quality products.
The Strategic Vision Behind Avoiding Price Competition
Xiaomi’s leadership has made a conscious decision to avoid what Lu Weibing describes as price internal competition or price involution within the home appliance industry. This strategic choice reflects a broader philosophy about sustainable business growth and market positioning.
The concept of price involution refers to the destructive cycle of continuous price cutting that ultimately harms all market participants. Instead of joining this race to the bottom, Xiaomi has chosen to compete on different terms—focusing on technology, user experience, and long-term value creation.
Focusing on Long-Term Market Position
Lu Weibing has been clear that Xiaomi does not prioritize short-term ranking positions. Monthly or quarterly market share figures, while interesting to analysts and competitors, don’t drive Xiaomi’s strategic decisions. The company’s leadership believes that what truly matters is whether long-term market dynamics will shift in their favor.
This perspective requires considerable discipline, especially when facing quarter-to-quarter pressure from investors and analysts. However, Xiaomi’s management maintains that sustainable success comes from building fundamental strengths rather than chasing temporary advantages.
Technology Investment as Competitive Advantage
Central to Xiaomi’s strategy is what Lu Weibing describes as pressure investment in core technologies. The company allocates significant resources to research and development, believing that technological leadership will ultimately determine market winners.
This approach has several advantages over competing primarily on price:
– Technology differentiation creates products that command premium pricing
– Innovation builds barriers to entry that price competitors cannot easily overcome
– Technical advancements often lead to cost efficiencies that support competitive pricing without sacrificing margins
– Patent development creates additional revenue streams and protection against competitors
Building Sustainable Market Leadership
Xiaomi’s technology investments span multiple areas critical to home appliance performance and user experience. These include energy efficiency technologies, smart connectivity features, noise reduction engineering, and AI-powered functionality that learns user preferences over time.
The company’s approach to technology development follows several key principles:
– Focus on technologies that deliver tangible user benefits
– Prioritize innovations that competitors cannot easily replicate
– Develop platform technologies that can be leveraged across multiple product categories
– Create ecosystems where Xiaomi products work better together than with competing devices
Confidence in Achieving Annual Targets
Despite the competitive challenges, Xiaomi leadership expresses complete confidence in meeting their annual targets for the home appliance business. Lu Weibing has stated that the company has 100% confidence in successfully achieving the goals set at the beginning of the year.
This confidence stems from several factors:
– Strong quarterly performance exceeding expectations
– Successful product launches across multiple categories
– Growing consumer acceptance of Xiaomi as a serious home appliance brand
– Effective supply chain management ensuring product availability
– Increasing retail and distribution channels for home appliance products
Ambitious Market Position Goals
Xiaomi has set ambitious targets for market position improvements. During a recent live broadcast, Lu Weibing revealed that Xiaomi air conditioners aim to move from fourth to third place in market rankings by the end of the year.
Looking further ahead, the company has even more ambitious goals. Lu Weibing predicts that by 2030, Xiaomi air conditioners will rank among the top two brands in the Chinese market. This would represent a remarkable achievement given the established competition from industry leaders who have dominated the market for decades.
The Broader Impact on the Home Appliance Industry
Xiaomi’s approach to competition is having a significant impact on the entire home appliance industry. Traditional players are being forced to reconsider their strategies as Xiaomi demonstrates that consumers will pay for innovation and quality rather than just seeking the lowest price.
The company’s success challenges several industry assumptions:
– That Chinese consumers prioritize price above all other factors
– That new entrants cannot compete effectively with established brands
– That technology differentiation matters less than brand heritage in home appliances
– That distribution channels cannot be developed quickly enough to support rapid market share growth
Changing Consumer Expectations
Perhaps most significantly, Xiaomi is helping to raise consumer expectations regarding what home appliances should deliver. The company’s products typically offer:
– Smart connectivity features that integrate with other devices
– Modern design aesthetics that appeal to younger consumers
– Environmental considerations including energy efficiency
– User interfaces designed for simplicity and intuitiveness
– Regular software updates that add new features over time
The Path Forward for Xiaomi and Competitors
Xiaomi’s strategy of avoiding price wars while focusing on technology and long-term positioning presents both challenges and opportunities for the broader industry. Competitors must decide whether to continue competing primarily on price or to shift resources toward innovation and quality improvements.
For consumers, Xiaomi’s approach likely means continued improvement in product quality and features across the market. Even competitors who don’t directly emulate Xiaomi’s strategy will need to respond to the raised expectations that the company is creating among consumers.
For the industry overall, Xiaomi’s success may help move competition away from destructive price cutting and toward more sustainable competition based on product excellence and innovation. This shift could benefit manufacturers, retailers, and consumers alike by creating a healthier industry ecosystem.
Lessons for Other Industries
Xiaomi’s approach offers valuable lessons for companies in other competitive industries:
– Short-term market position matters less than long-term strategic positioning
– Technology investment can create sustainable competitive advantages
– Consumers will pay for genuine innovation and quality improvements
– Avoiding destructive competition can benefit entire industries
– Building brand value through innovation creates pricing power
Embracing Long-Term Thinking in a Short-Term World
Xiaomi’s resistance to participating in home appliance price wars reflects a broader philosophy of long-term thinking in business strategy. In an era where many companies focus excessively on quarterly results, Xiaomi’s approach stands as a reminder that sustainable success requires patience and strategic discipline.
The company’s leadership understands that market leadership built on price cutting is often temporary and fragile. By contrast, leadership built on technological advantage, product quality, and brand value tends to be more durable and profitable over time.
This long-term perspective extends beyond just avoiding price competition. It influences everything from product development cycles to talent acquisition to supply chain partnerships. Xiaomi makes decisions based on where they believe the market will be in five or ten years, not just where it is today.
The Importance of Strategic Patience
Lu Weibing’s comments highlight the importance of strategic patience in building successful businesses. While competitors might celebrate short-term market share gains achieved through aggressive pricing, Xiaomi remains focused on building the foundations for lasting market leadership.
This approach requires confidence in several areas:
– Confidence in the company’s ability to develop superior technologies
– Confidence that consumers will recognize and reward quality and innovation
– Confidence that the market will eventually reward sustainable business practices
– Confidence in the team’s ability to execute long-term strategies
Final Thoughts on Sustainable Competition
Xiaomi’s experience in the home appliance market offers valuable insights into how companies can compete effectively without engaging in destructive price wars. By focusing on technology, quality, and long-term positioning, the company has achieved impressive growth while maintaining healthy margins.
The success of this approach suggests that consumers are increasingly sophisticated in their purchasing decisions, looking beyond just price to consider factors like technology, design, and overall value proposition. Companies that recognize and respond to this shift stand to benefit in the evolving marketplace.
As Xiaomi continues its journey toward market leadership in home appliances, other companies would do well to study their approach. The lessons about avoiding price internal competition, investing in core technologies, and maintaining strategic patience apply across industries and market conditions.
For businesses looking to build lasting success, the message is clear: focus on creating genuine value for customers rather than competing primarily on price. This approach may require more patience and investment upfront, but it builds foundations for sustainable growth and market leadership that short-term tactics cannot match.
