Xiaomi, the tech giant known for its smartphones and smart devices, is making significant strides in the white goods market. The company’s recent financial report revealed impressive growth in air conditioner, refrigerator, and washing machine shipments.
Xiaomi’s Transparent Tactics
Lu Weibing, Xiaomi’s Group partner and president, attributed this success to the company’s innovative approach and commitment to consumer value. He highlighted that Xiaomi’s air conditioners, in particular, have been a major driver of growth, with shipments exceeding 1.7 million units in Q3 2024, a year-on-year increase of over 55%.
One of the key factors behind Xiaomi’s success in the air conditioner market is its focus on cost-efficiency and transparency. Lu revealed that Xiaomi’s air conditioners operate on slim profit margins of just over 10%, significantly lower than the industry average of 30-40%. This aggressive pricing strategy is made possible by Xiaomi’s efficient operations and direct-to-consumer model.
In contrast, Lu criticized traditional home appliance manufacturers for overpricing their products. He pointed out that some air conditioners, which cost only 3,000 yuan ($413) to produce, are sold at exorbitant prices of 20,000 yuan ($2,759). Xiaomi’s approach, he argued, aims to break down information asymmetry and provide consumers with genuine value.
To further enhance its service offerings, Xiaomi has streamlined its air conditioner service processes. The company has integrated disassembly, delivery, and installation into a single operation, making it more convenient for customers. This innovative approach sets Xiaomi apart from its competitors and improves overall customer satisfaction.
Lu also expressed disappointment with the lack of innovation in the traditional home appliance industry. He criticized the practice of selling the same product under multiple brand names and at varying prices, which he believes is unfair to consumers.
As per a previous report, Xiaomi is now holding the third-largest market share at 11.82%, a 4.31% increase year-over-year. This puts Xiaomi closer to industry leaders Gree (24.04% share, down 3.01%) and Midea (25.01%), as it capitalizes on affordability with an average price of 2,281 yuan ($318). Meanwhile, Gree faces challenges, including a 15.84% revenue drop in Q3. Xiaomi’s momentum, driven by strong IoT integration and features like AI enhancements, could shift its air conditioner sales to outpace its TVs by 2026.
If you’ve made it this far, you should also check out the top Xiaomi gadgets of 2024.
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