Rejected profits, parity in the end: Lei Jun made a decision to make friends

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Rejected profits, parity in the end: Lei Jun made a decision to make friends

2018-04-28 20:25:58 215 ℃


[5%? 5%!

On April 25, 2018, this was a historic day for Xiaomi. For my friends, I'm afraid I'm going to suck cool. Because Lei Jun put a "satellite" - Xiaomi promised that the net profit rate of hardware should not exceed 5%. In the profit-making business world, Xiaomi's move was unprecedented. What did Lei Jun want to do?

[Gao Nerjun | Two Article Series]


Yesterday, Wuhan University, Xiaomi 6X Conference Lei Jun announced that from today, Xiaomi promises to the user that the overall after-tax net profit rate for the entire hardware business (including mobile phones and IoT and consumer products) does not exceed 5%. If it exceeds, we will use more than 5% of the total. A reasonable way to return to Xiaomi users.

When PPT opened this page, the scene was quiet and I saw shock from the eyes of my fellow travelers. Although known as the “price killer,” high cost performance is a big label for Xiaomi’s products, but this is the company’s first time to publicly restrict the net profit margin of its products. It is also rare to look at the entire business world.

"Why are we doing this? Because our name is Xiaomi." Slow background music Lei Jundao’s efforts to make such a difficult decision were discussed.

Millet eight years agoIn the video taken by the employees when they were created, Lei Jun said excitedly: “We want to make good products like Apple, and sell them on the Internet.... To do good products that people can afford, iPhone sells for 6800 for most of them. People are still too expensive. Can we make 1800 or even 800 mobile phones!......"

When you saw that high-spirited person eight years ago, Lei Jun sobbed. He reviewed the road of Xiaomi's 8 years of entrepreneurship and reiterated that Xiaomi’s mission is to promote the progress of China’s manufacturing industry. “We always adhere to the concept of “moving people's hearts and prices”, allowing consumers to enjoy the benefits of technology at affordable prices. A good life. Whether you agree or not, I just want to go the other way.” The applause sounded.

"'Touching people's hearts, price and kindness' is not an empty word, nor a frivolous self-promotion. To be truly committed, you must show enough sincerity and restrain the greediness." Lei Jun In the past month, the company’s board of directors has been discussing this resolution. This is related to whether Xiaomi can become a great company in the future. On April 23, the Xiaomi board of directors passed the resolution unanimously.

Lei Jun's remarks boiled in circles. As expected, there were four disputes. Some people like it. Someone takes it. Some people say it is a creation of a conscience company. Others think this is a marketing gimmick. In fact, Lei Jun’s mind should have been controversial.

Lee Jun responded to three questions at the press conference: First, will this affect? Future company value? Second, will millet approach cost pricing, will it disrupt business order and kill opponents? Third, how can such a low profit rate guarantee the competitiveness of Xiaomi?

"The profits are small and the profits are not small, and profits are small and profitable." Lei Jun said that small profits but quick sales, accumulate less, innovation requires huge amounts of financial support, but does not mean that the need for profits . World-class innovation is not based on money. Reasonable profits can also maintain strong enough innovation. “We keep abreast of cost pricing, and leave the benefits to users. Users will always support us.” This is the value of Xiaomi’s millet.

Of course, Xiaomi is different from traditional hardware companies and does not rely solely on hardware to gain major profits. Xiaomi is essentially an Internet company with mobile phones, smart hardware and IoT platforms as the core. And its software and services are absolutely cash cows.

Why is the "5% net profit after tax" high? This is also a focus of the current controversy. An analyst in the mobile phone industry told me that this is the relatively low level of the mobile phone industry. Of course, at present, China's mobile phone industry has shuffled heavily. For most small and medium-sized manufacturers, it is good to make money. However, for several giants, as the market concentration increases and the main models converge to the high-end, they are seeking higher profits. Millet mobile phones are being deployed to mid-to-high-end markets, and its MIX series has achieved a good market response.

Lei Jun said that whether millet is in the market's pioneering or saturated period, whether it is to do mobile phones, television or hardware products, will always adhere to the principle of close to cost pricing. "5% is our long-term commitment to our customers and it is also a constant push for ourselves."

This is For the first time, Xiaomi held a press conference at his alma mater, Wuhan University, and returned to where Lei Jun’s dream began.

Sentimental youth thirty years ago saw a book in the WuDa Library: "Fire in Silicon Valley." Afterwards, my inner heart could not be calm for a long time. I walked around the playground in a circle. My heart ignited a fire of struggle: to be a great company and to influence enough people. "To go back to my alma mater today, I looked at the fire in my heart. It was as hot and bright as it was."

On the afternoon of April 25, Xiaomi was Lei Jun's alma mater Wuhan University held a new conference

Heard this, I saw the entrepreneurial spirit in the flash. Think of a sentence Jobs once said: Please follow your inner voice, they already know what kind of person you want to be.

In the past 8 years, Xiaomi's first mobile phone model like an eel stirred the Chinese mobile phone market, defeated the copycat machine, and promoted the popularity of smart phones in China and the performance and quality of the entire industry.The promotion. Now Xiaomi’s annual revenue has reached 100 billion RMB. There are nearly 20,000 employees. There are hundreds of companies in the industry chain. In the future, perhaps it will have a bigger plate, and the pressure and challenges will certainly be even greater. Especially when Xiaomi is currently listed, it will quickly enter a new fairway. It takes more than just courage to make this commitment at this node.

Of course, whether Xiaomi can continue to promote a profound revolution in business efficiency requires time to test it. In a profit-making business society, restraining greed is not easy. Here, play CALL for Lei Jun.

The picture shows Lei Jun 30 years ago

Text from | Jiao Likun

Millet's “parity” values