Xiaomi is being abandoned?
Li Weixing, a founding employee of Xiaomi 12 and vice chairman of the Xiaomi Technical Committee, was exposed by the media to leave the news. Prior to this, Xiaomi's two co-founders Huang Jiangji (Employee No. 4) and Li Wanqiang (Employee No. 3) also left Xiaomi. The departure of Li Weixing has opened a new opening for Xiaomi's original 13-person founding team.
The 13 people who once drank millet porridge with Lei Jun are still 10 people left. The team that started the business with Lei Jun is losing.
In addition to the founding team, those who are gradually "abandoning" Xiaomi are also the ecological chain enterprises behind Xiaomi. The launch of its own brand, opening up marketing channels and suppliers, and the drama of "escaping millet" are being staged in xiaomi to varying degrees, as well as in the xiaomi ecological chain.
On the one hand, the "escape" of some ecological chain enterprises, on the other hand, the Xiaomi ecological chain platform period has arrived, coupled with the investment environment of large factories under the pressure of anti-monopoly supervision, Xiaomi's unique ecological chain gameplay has become more and more "subtle" and "mysterious". How to revitalize the Xiaomi mobile phone ecological chain, whether the Xiaomi car business can reproduce the success of the mobile phone ecological chain, Xiaomi's new answer sheet has just begun.
Ecological chain enterprises "quietly self-reliant"
The early ecological chain enterprises are more in the form of Xiaomi foundries.
Xiaomi bracelet is the product of the cooperation between Xiaomi and Huami, behind the Xiaomi headphones is magic acoustics, and behind the smart home are green rice, zhimi and other enterprises. It has to be admitted that the early ecological chain enterprises, after the halo of the "xiaomi" brand on their heads, with the resources, channels and order advantages given by xiaomi, the scale of development is growing day by day.
However, after the development to a certain scale, they have launched their own brands, as the "Foxconn" behind Xiaomi, while their own brands have developed hand in hand, and even once surpassed the trend.
The performance is more obvious to a few companies that have already gone public, or companies that have run early on. Xiaomi's early headphone foundry Jiayi Lianchuang (now Magic Acoustics) produced headphones for Xiaomi OEM at the same time, launched its own brand 1More; Huami Technology released its own brand Amazfit in the second year of the launch of the original Millet bracelet; Stone Robot also launched its first private brand product in 2017 - Stone Sweeping Robot.
Xiaomi balance car manufacturer No. 9 Company will even directly emphasize the relationship with Xiaomi in the prospectus, "The company does not belong to the typical ecological chain enterprise defined by Xiaomi." ”
Huami is a typical ecological chain enterprise in the early stage of Xiaomi's ecological chain, which was born along with the Xiaomi ecological chain strategy. In 2018, when the Xiaomi ecological chain developed most rapidly, it was successfully listed.
Huami's financial report shows that in 2016, Xiaomi wearable products accounted for 92.1% of Huami's total revenue, at that time, it was only two years since Huami launched its own brand. In 2018, Huami acquired the core assets of smart wearable brand Zepp, and it was also this year that Xiaomi wearable products fell to 66.9% of Huami's revenue.
But since then, despite Huami's repeated launch of the Amazfit series of new products, Xiaomi wearable products still account for more than 60% of total revenue.
In the quarterly financial reports of 2021, although the proportion of Xiaomi wearable products and private brand revenue was not specifically disclosed, in the quarterly report, Huami has also emphasized that the shipments of Xiaomi wearable products have been declining, while the shipments of private brands are growing at a high speed. The third quarter of 2021 financial report shows that unit shipments of Xiaomi wearable products fell by 45.3%, while private label shipments increased by 88.9%.
From Huami's financial report data, it is not difficult to see that Huami's "de-milletization" road is not very smooth, but it has been firm confidence, while launching a basic smart watch, it even enters the high-end GT series like a high-end smart watch.
The same is true of Stone Technology. In stone technology's prospectus, from 2016 to 2017, and in the first half of 2019, revenue from millet accounted for 100%, 90.36%, 50.17% and 43.01% of stone technology's total revenue. Since the launch of the private brand stone sweeping robot of Stone Technology in 2017, the income of private brand has gradually increased.
In the prospectus, Stone Technology also constantly hints at the risks of relying on Xiaomi's marketing channels and suppliers. At the same time, it is worth noting that the low gross profit margin of Mijia products mentioned in the prospectus of Stone Technology, as well as the competitive relationship between the company's products and Mijia products, also repeatedly indicates the delicate relationship between Stone Technology and Xiaomi.
Launching its own brand, even at the expense of competing with the Mijia business, is not only these head ecological chain companies. While producing Xiaomi smart door locks and cameras, Chuangmi Technology, an intelligent security hardware provider, also continuously emphasized its own "Chuangmi Xiaobai" brand at the press conference and launched products such as Xiaobai smart doors.
The "independent" road of ecological chain enterprises has also been interpreted by the outside world as the "de-milletization" movement of ecological chain enterprises. In fact, in the interview process of Phoenix WEEKLY Finance, the statement of "de-milletization" is not a concept recognized by all xiaomi ecological chain enterprises, and even more companies will avoid talking about it. "De-milletization" is more like a summary of the phenomenon of data "escape" found by the media from the financial reports of the ecological chain enterprises that have been listed.
Tong Shihao, managing partner of GGV Jiyuan Capital, a B-round investor in Magic Acoustics, once admitted that Xiaomi let these companies do the amount, but the gross profit is low, and in order to make high profits, it is definitely necessary to do its own brand.
A delicate game
The delicate and indescribable relationship with Xiaomi has become clearer in the growth of Xiaomi's ecological chain enterprises.
In the past few years, because of Millet, ecological chain enterprises have taken many detours and developed rapidly. But once you lose this big tree backed by a cool tree, whether these ecological chain enterprises can survive is an unanswerable hidden pain for all ecological chain enterprises.
Xiaomi has given enterprise suppliers, channels and brand traffic resources, but the core lifeblood of these enterprises has been limited by Xiaomi, and it has also become a knife in the lifeline of ecological chain enterprises.
In 2021, a very dramatic scene occurred in xiaomi ecological chain enterprises. In the same time period, two of the same Xiaomi ecological chain enterprises: Fun Sleep Technology will safely pass the door to the listing, but Yilai Intelligent was stuck at the listing door and terminated the IPO.
The revenue is far less than the success of Easy-to-Come Intelligent Sleep Technology. Through its prospectus, it is not difficult to find that the binding degree between Yilai Intelligent and Fun Sleep Technology and Xiaomi's business exceeds more than 50% of its total revenue. Although the dependence on Millet was once denied, the data has never been able to decline.
But the most crucial thing is that Fun Sleep Technology opened the road to the development of its own brand early and focused on the development and operation of its own brand. However, the design, research and development, production and sales of intelligent lighting products and control systems in the main business of Yilai Intelligent are difficult to get rid of the millet system in its research and development, sales, branding, procurement and other series of production links.
Especially in the sales process, more than half of the revenue of Yilai Intelligent comes from the sales share of Xiaomi's Mijia brand products, and the proportion of total revenue continues to rise, while the proportion of product sales of the company's own brand Yeelight continues to decline.
The results are obvious. Yilai Intelligence was "born in Xiaomi", but it was also "trapped in Xiaomi". The problem of easy-to-come intelligence can be amplified to the problem of the entire ecological chain enterprise.
Around 2019, Xiaomi accelerated its investment in the ecological chain, and even a number of ecological chain companies will appear in a category of products. But at the same time, Xiaomi is also gradually tightening the threshold of Mijia's "foundry", which is tantamount to a stage of life and death but helpless for Xiaomi ecological chain enterprises.
In addition, even if it is "entrusted with a heavy responsibility" by Xiaomi, the ultimate cost-effective price-performance price of Mijia products is low gross profit margin. The ambivalence of ecological chain enterprises has also arisen, relying on Xiaomi's orders to increase revenue, but also trapped by Xiaomi's low order gross margin.
Independently doing private brands and improving product gross margins have also given these companies a chance to breathe. What is more interesting is that from the financial report data of a number of ecological chain enterprises such as No. 9 Company, Stone Technology, and Fengmi Technology, once xiaomi orders rise and related income increases, the company's gross profit margin will drop significantly. On the contrary, once the xiaomi-related revenue declines, the gross profit margin is visible to the naked eye and rises rapidly.
"If you are separated, it is difficult to give up." Internet commentator Zhang Shule commented that millet and ecological chain companies are pushing each other forward in the game, but this is bound to produce many follow-up problems, including homogeneous competition of products, difficult to produce explosive models, and even due to excessive dependence on millet, including patent research and development, technology sources, etc., it will also be criticized for the company's science and technology innovation board attributes.
Yilai Intelligence is a typical case, and before and after the IPO, it was also deeply involved in patent disputes. Although the fun sleep technology that focuses on smart mattresses has been stable, it has also been questioned about its science and technology innovation board attributes.
In the book "Xiaomi Ecological Chain Battlefield Notes" produced by Xiaomi Ecological Chain Barn Academy, the relationship between Xiaomi and ecological chain enterprises was explained: Xiaomi is an aircraft carrier for the ecological chain, providing multi-level platform support for it; ecological chain companies are gold mines in the backyard for Xiaomi, which increases the imagination space of Xiaomi. The relationship between Xiaomi and Xiaomi Ecological Chain Company is an amplifier that values each other at different stages.
But the reality is that the gold mine in the backyard is already on the road to "de-milletization" and is gone forever. For Xiaomi, the growth curve brought by the existing established ecological chain to Xiaomi has become more and more straight, and even once there was a downward trend.
In 2017 and 2018, IoT and consumer goods broke out continuously, with revenue growth rates of more than 80%, and the growth rate in 2020 fell to 8.57%, although the growth rate rebounded by 2021, but this is also related to the development of overseas markets and the emergence of explosive products.
Get out of the "nanny" incubation mode
Compared with simple financial investment or strategic investment in business deployment, Xiaomi has its own rules for investment in its ecological chain.
Some media commented on the Xiaomi ecological chain: through the control of the supply chain to make a good quality smart machine, and then use the Internet model to cut off all offline circulation costs, and sell the products to consumers at a price close to the cost.
Since then, Xiaomi has opened the road of "nanny-style" incubation ecological chain. No project millet to help find the outlet, no parts supply chain millet to share or even help to find, no sales channels millet to help you solve, the launch of the concept of millet, open up millet product sales channels, and even to the product are delineated millet consistent design style.
The ultimate cost performance, Xiaomi ecological chain products... One label after another has allowed ecological chain companies to create one "explosive product" after another, such as Xiaomi bracelet, balance car, air purifier and so on.
The early ecological chain enterprises, with the help of Xiaomi, opened the Xiaomi-style wild run. Xiaomi will gather some of the fast-growing ecological chain enterprises to form a "billion yuan club", but due to the sharp rise in the revenue of ecological chain enterprises, by 2014, in order to more accurately control the head ecological chain enterprises, Xiaomi will adjust the club threshold step by step to "billion".
So far, the Xiaomi ecological chain has run out of Huami, Stone, No. 9, Yunmi and other listed companies, Sushi Technology, Yilai Intelligent, Fun Sleep Technology also submitted prospectuses waiting for listing. Among these companies, the market value of Enterprises such as No. 9 and Stone has exceeded 50 billion, or even 100 billion.
According to Xiaomi's third quarter 2021 financial report, Xiaomi has invested in more than 300 IoT ecological chain companies. But in fact, nearly half of the ecological chain enterprises are invested and incubated around 2019. According to the data, as of 2019, Xiaomi has invested in and incubated more than 210 companies, more than 90 focus on intelligent hardware, including some unicorn companies such as Mijia, Yunmi, and Huami.
At the same time, the era of Xiaomi looking for projects, investment projects, and incubating project development has long passed, and the platform period has arrived as promised.
Around 2019, the Xiaomi ecological chain has been covered with a thick circle of three layers inside and three layers outside. In the inner layer, there are even three or four companies facing "internal competition" in a track; on the outer layer, xiaomi investment track, more and more projects, more and more marginal, explosive products are also decreasing, by 2020, xiaomi IoT and consumer goods growth rate fell sharply to 8.57%.
Xiaomi itself is aware of the crisis. According to 36Kr, from the end of 2019 to the beginning of 2020, Xiaomi has reorganized the product categories internally, and finally delineated three ecological chain directions: mobile phone peripheral products, whole house intelligence and Coldplay products.
According to reports, the SKUs (commodities) of the Xiaomi ecological chain have been cut from more than 1500 to more than 600, and cutting off so many SKUs has little impact on Xiaomi's large market. In addition, Xiaomi has also begun to manage the quality of ecological chain enterprise products more strictly and orderly. At the same time, the threshold for incubation projects is higher, and the projects that Xiaomi chooses to invest in have also shifted from the early financing rounds to the later projects themselves, and the financing rounds have also shifted backwards.
All indications show that compared with the previous "crazy" expansion of the ecological chain, Xiaomi has gradually returned to "sanity" and slowed down the development of ecological chain enterprises. Since 2020, Xiaomi's investment projects have gradually shifted to the semiconductor field and the automobile manufacturing field.
This is also related to Xiaomi's car. When the Xiaomi business center sets out to build a car, whether Xiaomi can reproduce the success of the mobile phone ecological chain is a new challenge for Xiaomi and Lei Jun.
Previously, it was reported that Lei Jun had put forward a new problem for Xiaomi: how to build an ecological chain centered on car manufacturing.
Xiaomi's action has been very fast, since last year's announcement of car manufacturing, it has opened a new round of "buy, buy, buy" and "invest". Love parking, Hesai Technology, Ganfeng Battery, DeepMotion, etc., are all projects invested by Xiaomi at this stage. Shortly after the Spring Festival in 2022, Xiaomi has invested in Zhilu Technology, a supplier of electrical systems for new energy vehicles.
Nevertheless, can it really replicate the previous mobile phone ecological chain through investment and mergers and acquisitions? This remains questionable.
Zhang Shule said that the ecological chain of car manufacturing is already very different from the ecological chain of mobile phones, and Xiaomi's previous "supplier + Internet" method copied to the car-making plan is obviously not possible, and car-making is a huge challenge for Xiaomi in terms of cost and technology.
New people enter, old people compete for strength, in the delicate game relationship, whether the ecological chain around the mobile phone business can still glow with new machines, whether the ecological chain around the car can be successfully built, whether the "aircraft carrier" of Xiaomi will continue to expand, the final answer is handed over to time and the market.
In addition, the investment environment of large factories has also undergone new changes. After the strengthening of anti-monopoly supervision and the disappearance of traffic dividends, many Internet companies, including Ali, Tencent, and ByteDance, have become more "rational", and the era of "buying, buying, buying" has long passed.
According to the data, as of 2021, of China's 295 unicorn companies, 59 have Tencent investment behind them, 31 have ali figures, and the two together account for 30.5% of the total number of unicorn companies, followed by Xiaomi and Baidu, which have 20 and 19, JD.com, 14 jd.com, and 10 Meituan and 5 ByteDance.
The wind direction has changed, and the story of millet and ecological chain has to be told differently.
The author | Su Shu
Editor| Zhang Yixiao
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