What's going on?
On Thursday, Xiaomi (pronounced “shaou-me”) – China’s largest smartphone maker – submitted its paperwork for an Initial Public Offering (IPO). It’s set to be the biggest since 2014 – and could value the company at a whopping $100 billion! (tweet this)
What does this mean?
Investors are likely champing at the bit for the as-yet unscheduled stock market listing, which is reportedly aiming to raise $10 billion from them. That’d be the most raised in a single sale since ecommerce giant Alibaba’s record-breaking debut.
Xiaomi started out in 2010, aiming to sell better (and cheaper) smartphones than its competitors in China. Today, it’s the fourth-largest smartphone player globally, behind Samsung, Apple and Huawei – and, like its American rival, has expanded into selling smart speakers and the like. In 2017, the company had sales of $18 billion and operating profit (from selling its products and services) of almost $2 billion.
Why should I care?
For you personally: There’s competition afoot for the palm of your hand.
Xiaomi’s plans include, unsurprisingly, world domination. The company wants to supercharge last year’s entry into Europe by teaming up with Chinese-controlled phone network 3. And the US is also on the horizon. Xiaomi is hoping its keen pricing and distinctly pomaceous ecosystem (including music and video streaming) will tempt customers away from more expensive smartphones. But it won’t be easy – Apple may be able to fight back with lower prices in the future if it makes more of its iPhone components in-house.
For markets: A win for Hong Kong – and potentially more to come.
Hong Kong’s stock exchange recently implemented major rule changes that allow companies to list different types of shares at once – some with more clout than others. Most investors think that this US-style approach is a good thing, since it’s partly that flexibility which led Alibaba to (somewhat controversially) list its stock in New York. Xiaomi’s decision to go long on Hong Kong may entice a stampede of Chinese unicorns to follow suit.