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  • A company started just eight years ago has now become

  • one of the world's largest smartphone makers.

  • I'm talking about Xiaomi. It's opening stores and now rapidly expanding outside of China.

  • So what's behind the growth of this massive Chinese tech company?

  • Xiaomi is the fourth-biggest smartphone player in the world.

  • It's India's top-selling smartphone brand and one of China's top players.

  • But its breadth is much more than that.

  • It's present in 74 markets around the globe,

  • with nearly 15,000 employees

  • and more than 300 million people

  • are using its products or services.

  • While Xiaomi may be a foe for Apple, it's

  • somewhat of a friend to Google and Microsoft.

  • Xiaomi smartphones run a version

  • of Google's Android operating system

  • and the Chinese tech company is partnering

  • with Microsoft to collaborate on artificial intelligence.

  • The company makes about 72% of its revenue

  • from China, and 28% from the rest of the world.

  • Xiaomi generates most of its revenues from

  • smartphones, but it's also expanded into

  • other products like music

  • and video streaming, too.

  • The Beijing-based company wants its smartphones to be just the start

  • of an entire device ecosystem for its users.

  • Which may explain why it's sometimes referred to as theApple of China.”

  • When the company was first started, Xiaomi only sold its products online

  • in an effort to reduce overhead costs.

  • It avoided spending money on advertising

  • and relied on brand loyal customers to spread the word.

  • Xiaomi's selling point was simple.

  • Offer high-quality devices, but at lower prices than competitors.

  • And it worked.

  • Xiaomi became China's number one smartphone in 2014.

  • But the success was short-lived.

  • Sales fell in 2016, pushing Xiaomi down several spots to number five in China.

  • New low-cost players were entering the market, and the company learned that by selling its

  • phones online directly to consumers, well, it made it difficult to reach new customers,

  • like those in China's smaller cities.

  • So Xiaomi began to change up its strategy.

  • Recently it's been getting into the brick-and-mortar game,

  • opening a large number of stores like this one in Hong Kong.

  • It plans to open 2,000 stores worldwide by 2019 with just about half of them in China.

  • It's expanding its footprint outside of China, opening retail stores in Spain and Italy

  • and forming retail partnerships here in the U.K.

  • And while Xiaomi isn't in the U.S. yet,

  • Xiaomi's head of its international business says they do have plans to enter the market.

  • It's not just a smartphone business.

  • Xiaomi also makes things like smart watches, headphones, speakers, pillows,

  • VR headsets, air purifiers, rice cookers, kitchenware, luggage, hats and wallets.

  • That's on top of selling online content, entertainment and financial services.

  • In 2017, Xiaomi's sales grew more

  • than 67% from the year prior,

  • leading some to call it 'China's Phoenix.'

  • Product launch events for its new products can draw up to thousands of fans.

  • And while companies like Samsung have used

  • Kanye West and Bruno Mars to pump up fans for new products,

  • Xiaomi events are usually headlined by well, the company's CEO Lei Jun.

  • As one of Xiaomi's co-founders, he has a net worth of more than 12 billion dollars.

  • He worked in technology and as an angel investor before starting the company in 2010.

  • So what's next?

  • Smartphone shipments in China suffered their largest decline ever in the first quarter of 2018.

  • And global smartphone sales declined last year for the first time since 2009.

  • While the industry news is concerning for massive smartphone players,

  • Xiaomi actually had an 88% increase in the number of phones

  • they sold globally in the first quarter of this year.

  • That's compared to a slight decrease by Samsung and slight increase by Apple.

  • Xiaomi's growth was largely because of its previous ho-hum performance though.

  • So the question remains.

  • WillChina's Phoenix,” so dependent on its hardware business, fly to new heights?

  • Or will it return to the ashes?

  • Hey, guys, it's Uptin. Thanks for watching.

  • For more of our videos check out 'The rise of the Chinese smartphone' here

  • and my day at Huawei's campus in China here.

  • We're also taking suggestions for future CNBC Explains, so leave your comments in the section below

  • and while you're at it, subscribe to our channel.

A company started just eight years ago has now become

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