Xiaomi, a well-known tech company recognized for its smartphones and smart devices, is making notable progress in the home appliance sector. The latest financial report from the company shows remarkable growth in shipments of air conditioners, refrigerators, and washing machines.
Xiaomi's Winning Formula
Lu Weibing, the Group partner and president of Xiaomi, credited this achievement to the company's creative strategies and dedication to offering value to customers. He pointed out that Xiaomi’s air conditioners have been particularly influential in this growth, with shipments surpassing 1.7 million units in Q3 2024, representing a year-over-year rise of more than 55%.
Focus on Transparency and Cost
A major reason for Xiaomi’s success in the air conditioner market lies in its emphasis on cost-efficiency and transparency. Lu noted that the profit margins on Xiaomi’s air conditioners are just above 10%, which is much lower than the industry standard of 30-40%. This bold pricing strategy is feasible due to Xiaomi’s streamlined operations and its direct-to-consumer sales model.
Lu also took aim at traditional home appliance makers, criticizing them for charging excessive prices for their products. He mentioned that certain air conditioners, which have a production cost of only 3,000 yuan ($413), are sold for outrageous prices reaching up to 20,000 yuan ($2,759). Xiaomi, he asserted, seeks to eliminate information gaps and offer real value to consumers.
Enhanced Customer Experience
In an effort to improve its customer service, Xiaomi has simplified its air conditioner service processes. The company has combined disassembly, delivery, and installation into one seamless operation, making life easier for customers. This unique method differentiates Xiaomi from its rivals and boosts overall customer satisfaction.
Lu also voiced his frustration over the stagnation in the traditional home appliance sector. He condemned the practice of marketing the same product under different brand names at varying prices, which he considers unjust to consumers.
According to a previous report, Xiaomi now holds the third-largest market share at 11.82%, marking a 4.31% increase from the previous year. This positions Xiaomi closer to the industry leaders, Gree (24.04% share, down 3.01%) and Midea (25.01%), as it leverages affordability with an average price of 2,281 yuan ($318). Meanwhile, Gree is encountering difficulties, including a 15.84% revenue decline in Q3. Xiaomi’s momentum, fueled by strong IoT integration and features like AI upgrades, could see its air conditioner sales surpass its TV sales by 2026.
