Good evening, everyone. Welcome to my speech.
Last year marked Xiaomi's tenth anniversary. We carefully reviewed and reflected on our journey, and with the resolve to start a business all over again, we officially embarked on our next decade. This year is the first year of that new decade and the tenth anniversary of the launch of Xiaomi phones. You can clearly feel how much Xiaomi has changed, growing and maturing step by step.
A few days ago, Xiaomi entered the Fortune Global 500 for the third time, rising eighty-four places to number 338. There is more good news that you may already know: according to IDC, our phone shipments surpassed Apple's in the second quarter of 2021, making us number two in the world for the first time. Our global market share reached 16.9 percent. In other words, one in every six phones sold worldwide was a Xiaomi. Shipments grew 86.6 percent year on year, and Xiaomi is growing rapidly.
This is tremendous news, and we are all extremely excited. I thank every Xiaomi colleague for their hard work, and above all, Mi Fans around the world for standing by us throughout the past ten years.
At this happy moment, I remember an unforgettable scene from seven years ago. It was November 2014, at the first World Internet Conference in Wuzhen, and the moderator asked me about Xiaomi's future strategy.
Xiaomi phones had been on the market for only three years, yet we had become number one in China and number three worldwide. It was truly a miracle. I was full of confidence and blurted out that within five to ten years, we would become number one in the world.
Apple was number one at the time. The moderator immediately asked Bruce Sewell, Apple's senior vice president, what he thought. He said, "It's easy to say; it's much more difficult to do."
I never imagined that seven years later, we would surpass Apple and become number two in the world for the first time.
There is even more good news. We rank first in twenty-two countries. In a developed market like Europe, our market share has reached an astonishing 25 percent. We have topped the European market and become number one, the first Chinese company ever to achieve this.
After reaching number two globally, everyone was delighted and felt that number one was within easy reach. But I must be honest: never underestimate the strength of world-class giants. We are still a young company. We must assess the gap calmly, continue strengthening our foundations, and advance steadily. Xiaomi's current task is to establish itself firmly as number two worldwide.
Xiaomi's dream is to "let everyone in the world enjoy a better life through technology." The road is destined to be long and difficult. Every Xiaomi colleague and I will give everything we have to prove that Xiaomi's dream can be realized.
Last year, I gave the first speech of my life. This year, I decided to give another, titled My Dream, My Choice. I mainly want to talk about the difficulties we have overcome and the hard choices we have made over the years in pursuit of our dreams.
1.1 Falling Below the IPO Price
At the beginning of 2018, after repeated discussions, we decided to go public. Capital markets were booming, and the investment banks set Xiaomi's IPO price range at HK$17 to HK$22. Almost every entrepreneur hopes to set the highest possible price, but without hesitation, we chose the lowest: HK$17.
We sincerely hoped that our shares, like our products, would be honestly priced. It was a beautiful and simple wish, but reality was not so kind.
On July 9, 2018, Xiaomi's eagerly awaited IPO finally arrived. The atmosphere was electric. It was Hong Kong's first listing of a company with weighted voting rights and the world's third-largest technology IPO. The Hong Kong Stock Exchange even spent HK$300,000 on a custom gong, and more than six hundred people attended the ceremony. Everyone expected Xiaomi's share price to soar when trading opened.
No one expected it to fall below the issue price as soon as the market opened. Everyone was stunned. It meant the share price was below the IPO price and every IPO investor had lost money. For an IPO, it was deeply embarrassing.
After the ceremony, many reporters were still waiting outside. None of us wanted to face that awkward moment, so several of us hid in a storage room at the exchange, feeling miserable. A colleague saw us and photographed the embarrassing scene.
That evening, we held an internal appreciation dinner as planned. Everyone congratulated me, but my heart remained heavy. During my remarks, I could not help saying, "The shares fell below the issue price today, and I have let you all down. We will work hard and make sure our IPO investors at least double their money."
I drank a great deal that night. All I remember is repeatedly telling my colleagues that we had to work hard and could not lose other people's money.
The next morning, I deliberately bought a pair of ripped jeans, the first pair I had ever worn. I had only one thought: I must always remember the day our shares broke below the issue price. I also posted on Weibo to remind myself constantly that although Xiaomi had gone public, the revolution had not yet succeeded and we still had much work to do.
1.2 Buying Back Shares
Good fortune came almost too easily. The very next day, our share price recovered to the issue price and then climbed to HK$24.
Just as we were full of confidence, the China-US trade war intensified, and Xiaomi's shares began a relentless decline. They fell for more than a year, reaching HK$8.28 in September 2019. Everyone's confidence nearly collapsed, and some even thought they would fall to HK$4.
I was deeply discouraged during that period and especially reluctant to meet investors. One investor insisted on seeing me. The moment we met, he bluntly said, "Xiaomi has cost me so much money. I honestly do not know what you people are doing." He then lectured us like schoolchildren for more than an hour, criticizing everything from strategy and products to management. My shirt was soaked through.
After the meeting, I remained alone in the conference room for a long time. At that moment, I felt utterly hopeless.
As the shares kept falling, I asked myself countless times: "We work so hard, and Xiaomi's revenue and market share are both growing. Why will the capital markets not recognize Xiaomi?" I could not understand it. "If I were an investor, would I buy Xiaomi shares myself?"
We faced a major choice: when the share price had fallen so far that everyone despaired, did we dare put real money into our own shares? It was a test of our deepest convictions. I had always believed in Xiaomi's business, and I was also a confident person. Firmly believing that "the best investment is an investment in yourself," I summoned the courage to persuade everyone to approve a buyback.
After the board agreed, we spent HK$3.6 billion in real money to buy a large amount of Xiaomi shares at an average price of HK$9.35.
Looking back today, we truly bought at the bottom. But the decision required enormous courage at the time. What if we had bought halfway down the mountain?
Heaven rewards those who persevere, and Xiaomi's share price slowly began to recover. On July 10, 2020, the day after the second anniversary of our listing, it finally returned to HK$17, the IPO price.
I breathed a sigh of relief. After two years, I could finally hold my head high again. Xiaomi's shares then surged. On January 4, 2021, they closed at HK$34. We had finally fulfilled the bold promise of doubling our IPO investors' money, and the psychological shadow of falling below the issue price finally disappeared.
That day, I told my colleagues very seriously that Futu, Tiger Brokers, Tonghuashun, Xueqiu, Dazhihui, and all the other stock apps could be uninstalled. I would never have to watch the share price again.
From tomorrow onward, I would be a happy man: feeding horses, chopping firewood, and traveling the world.
How did we emerge from the share-price slump? In recent years, the lower the share price fell, the more determined we became to invest heavily in research and development. If Xiaomi wanted to become a great company and realize its dream, it had to break into the premium market.
In fact, Xiaomi phones began at the high end. The first Xiaomi phone was one of the most advanced smartphones of its time. Later, we created Redmi products for mass-market users. They were highly successful and helped spread smartphones and develop the mobile internet worldwide.
No one expected that success to dilute the Xiaomi brand so severely. Combined with our own limited capabilities, it led many people to misunderstand Xiaomi as a maker of only low-end and midrange products.
Breaking into the premium market became urgent.
2.1 Mi 10
Xiaomi's path into the premium market officially began with Mi 10.
To succeed at the high end, we spared no expense, pursued the best possible experience, and polished every detail. When development was complete and we calculated the figures, everyone was stunned. Raw material costs had soared with the transition from 4G to 5G, and research and development expenses were enormous. To avoid losing money, two conditions had to be met: the price had to exceed RMB 4,000, and sales had to exceed two million units.
Xiaomi's numbered phone series had never been priced above RMB 3,000. Would Mi Fans accept a sudden RMB 1,000 increase to RMB 4,000? Could we sell two million phones at such a high price?
Our team was under immense pressure. We held meetings through the night to discuss complicated questions: how to reach beyond our existing audience, how to influence business users, and even whether to collaborate with a sports-car brand. I was at a loss too. After struggling for a while, I concluded there was only one path: trust the Mi Fans and rely on them.
Two million units sounded like a huge number, but more than one hundred million people in China used Xiaomi phones. Could two percent of them believe in us and give us a chance? I believed they would, as long as we made an excellent product. Our task was to give everything we had to create a premium phone that Mi Fans genuinely embraced.
Once we understood that, the burden lifted immediately. We focused on the product and continued refining every detail. When it was finished, we anxiously awaited the launch and the response from users.
No one expected a sudden COVID-19 outbreak at the beginning of 2020 to disrupt everything. The whole world seemed to stop. What should we do with the carefully prepared Mi 10? Postpone it or cancel it? We were all in anguish.
In early February, we finally made a difficult and bold decision: proceed as planned. On February 13, after overcoming many obstacles, we held the launch on schedule. It was an entirely online livestream, with no one in the venue except staff. As I put on my mask and walked toward the stage, I remained deeply worried about my own condition and how the livestream would turn out.
But the instant the lights came on, I seemed to see millions of Mi Fans before me and hear waves of cheering.
The event was an unprecedented success and received enthusiastic support from Mi Fans. Mi 10 went on sale the next day and generated more than RMB 200 million in sales within one minute. It sold at a breathtaking pace. As the first launch event after the outbreak, it opened a path for the entire industry to resume work and production.
And so, despite obstacle after obstacle, Xiaomi won a resounding victory in its first battle for the premium market.
As of today, cumulative sales of the Mi 10 series have reached 5.77 million units, and Mi 10S is still selling strongly.
2.2 Mi 11 Ultra
Strong sales of the Mi 10 series lifted the team's morale, and we needed to press our advantage.
Imaging technology represents the commanding heights of the phone industry. Zhu Dan, head of cameras, believed that we had to make a leap in hardware. Could we put a camera-sized sensor in a phone, gain a decisive lead over competitors, and take Xiaomi to the summit of mobile imaging? Zhu Yin, head of design, immediately panicked: if we did that, the phone might become unbearably thick.
After repeated debate, everyone finally agreed to make a phone specifically for mobile photography enthusiasts and pursue the ultimate camera experience. That phone was Mi 11 Ultra. "Ultra" means taking something to the extreme.
On our path into the premium market, we chose to pursue the ultimate experience at any cost, even if the result was not perfect.
The camera department spent eighteen months and a huge sum custom-developing the GN2 sensor. It was frighteningly large, nearly one inch. Once the phone was designed, its photographs were stunning and comparable to a Sony RX100, but the camera bump and housing were also enormous. It was a truly bold design.
The designers still felt uneasy and kept improving it. Eventually, they produced a more elegant solution: adding a small screen to the camera housing made it look far more balanced. The improved prototype received good reviews from our colleagues, which put my mind somewhat at ease.
After the launch, Mi Fans responded intensely, mainly because the Ultra was so powerful. It took first place in DXOMARK's global overall ranking by an overwhelming margin and held the top spot for 122 days. Mi Fans also liked the design I had worried about, finding it distinctive and instantly recognizable.
After its release, Ultra caused a global sensation and received extremely high praise from many international technology reviewers.
Preorders also far exceeded our expectations, and everyone was delighted. But before long, we fell into another pit.
Ultra was an extremely complex product, the schedule was very tight, and users' expectations were exceptionally high. Many details failed to meet those expectations, and users criticized us severely. Over the past few months, we have assigned a dedicated team to continual optimization, and the basic experience has improved significantly. Jin Fan, head of MIUI, will give you a detailed report shortly.
Xiaomi's journey into the premium market has really only just begun. We will continue investing at any cost, and I believe Xiaomi will succeed.
Over the past year, Xiaomi grew steadily and appeared full of promise.
No one expected disaster to strike from nowhere at the beginning of this year.
On the morning of January 15, the US Department of Defense placed us on its DoD list. Xiaomi's share price plunged more than 30 percent after the market opened and continued falling, reaching a low of HK$21. Xiaomi lost HK$300 billion in market value.
The DoD list identifies "Communist Chinese military companies" that the US Department of Defense considers owned or controlled by China's military. Once a company was listed, the US government prohibited American investors from investing in it. This dealt a severe blow to the share price of an overseas-listed company and created an even greater long-term obstacle to Xiaomi's global operations.
We racked our brains but could not understand how Xiaomi had become a "military-linked company." There were many jokes online. One commenter asked whether it was because our founder's name was Lei Jun, with "jun" sounding like the word for military.
It was our first encounter with anything like this, and we were alarmed. I believed we should immediately clarify the situation. Management quickly agreed and issued a statement that we were not a military-linked company and firmly opposed the US Department of Defense's unreasonable sanctions. We also contacted the department for an explanation. The problem was that it called the matter a military secret and refused to engage with us.
We had only two choices: accept it or sue the US government. A Chinese company had little chance of winning a lawsuit against the US government, and no one had successfully challenged the DoD list at the time. An even greater concern was whether a lawsuit would anger the US government and provoke harsher action.
We consulted many lawyers and international-relations experts. Opinions varied widely and disagreements were substantial. But Xiaomi is a publicly traded company in Hong Kong, and our information is highly transparent, so we had some confidence in litigation.
In the end, we made a difficult choice: sue the US government directly and defend our lawful rights in the most open and honorable way possible.
Only after we filed suit was the US Department of Defense forced to reveal its reason. In 2019, Xiaomi founder Lei Jun had received the title of "Outstanding Builder of Socialism with Chinese Characteristics," awarded by the Ministry of Industry and Information Technology and other bodies. Because the ministry promotes civil-military integration in China, Xiaomi was supposedly linked to the military.
We did not know whether to laugh or cry when we saw this reasoning. In court, our lawyers asked: the award list contained as many as five hundred people, including the owners of Septwolves and Lao Gan Ma. Did that mean making clothes and chili sauce was also military-related?
Finally, after several rounds of confrontation, we won on May 25.
It was an unprecedented victory. Encouraged by Xiaomi's success, several other Chinese companies also brought successful cases. The victory would have an exceptionally far-reaching effect on Xiaomi's future development.
The choices I have discussed so far concerned the company. Next, I want to talk about a personal choice.
Over the past decade, people have treated Xiaomi and me as one and the same. But I have another identity: chairman of Kingsoft.
How did I become Kingsoft's chairman? It began with an "irrational" decision. I have profound affection for Kingsoft. I worked there from the age of twenty-two to thirty-eight and participated in its entire entrepreneurial journey. Kingsoft was my whole youth.
In 2011, we were building Xiaomi at full speed when Kingsoft entered a severe crisis. My elder colleagues Qiu Bojun and Zhang Xuanlong repeatedly urged me to return. But I had already started another business. How could that be possible? They said I could do it part-time; I only needed to accept.
The Xiaomi phone was about to launch, and we were at the most critical moment. Reason told me that Xiaomi had only just begun and faced countless demands. I must not act emotionally or allow myself to be distracted.
But what would happen to Kingsoft? I could not bear to abandon my bond of more than twenty years with those two elder colleagues or the future of four or five thousand employees. I agonized over it for months. Xiaomi's other founders could no longer stand watching me suffer and said, "Instead of tormenting yourself, accept it. However great the burden, we will carry it together."
As Xiaomi's founders, they naturally wanted me focused on Xiaomi. But they understood my character and my feelings for Kingsoft, which was why they supported me without reservation. I was deeply moved. With the support of Xiaomi's co-founders, I formally became chairman of Kingsoft on July 7, 2011.
When I took over, I was indeed overwhelmed. Fortunately, Kingsoft's colleagues worked with one heart. The company gradually emerged from its difficulties and regained its vitality.
This year marks Kingsoft's thirty-third anniversary and my tenth as chairman. The company has been transformed. Revenue grew more than elevenfold, from less than RMB 1 billion to consolidated revenue of RMB 12 billion. After ten years, I am deeply relieved that, with everyone's help, I did not let Kingsoft down and fortunately did not impair Xiaomi either.
Looking back today, the four words quietly guiding that irrational choice were: loyalty and friendship are priceless. For ten years, we have treated users, employees, and partners according to the same principle.
Last year, Ms. Fan Haitao wrote Forward Without Hesitation, a biography of Xiaomi. This year, she has just written Everlasting Vitality, a biography of Kingsoft. It launches today and is already available through all channels. Interested friends can buy a copy through Xiaomi Youpin.
In a few days, on August 16, Xiaomi phones will celebrate their tenth birthday. Thank you to all the Mi Fans who have traveled with us and witnessed Xiaomi's growth over the decade.
From Mi 1 through Mi 11, together with MIX 1 through MIX 3, these thirteen phones form the ten-year history of Xiaomi phones.
One Mi Fan told me that he had collected all thirteen, which greatly surprised me. I believe few people inside Xiaomi have every model. I went through my own collection, found all thirteen phones, and took a photograph.
My sincere thanks go to every Mi Fan and partner who has helped us. We have traveled together all this way, believing that all of us can reach the far shore of our dreams.
The past ten years have been extraordinarily busy, and I have hardly taken a vacation. Last June, I finally took a few days off to hike in Yunnan. I wore sunglasses and a hat and assumed no one would recognize me.
In a national forest park near Shangri-La, I happened to meet a young man. We hiked together and talked as we walked. His name was Yao Cong. He was twenty-seven and worked as a wind-power engineer for China Huaneng Group. He worked in the mountains for twenty days each month and rested for ten. Although he sometimes found the mountain work monotonous, he believed wind power was deeply meaningful.
As we talked, I suddenly noticed that he was using a Mi 8 Explorer Edition. I assumed he had not recognized me and pretended not to notice. We walked about ten kilometers together. Near the end, he suddenly asked, "Mr. Lei, could we take a photograph together?" I was startled.
He said he had recognized me from the beginning but had kept quiet because he did not want to disturb me. He told me he loved Xiaomi. Whenever Xiaomi launched a flagship, he called the local distributor and insisted that they reserve the best model for him to collect when he came down from the mountain.
He said he could afford a phone from any brand and had used other brands, but in the end he still chose Xiaomi without hesitation. "Xiaomi is different. Its philosophy is not to make more money. Xiaomi has chosen a harder but more meaningful path."
Looking at me very seriously, he said, "I am also a person with aspirations, and that is why I like Xiaomi even more."
His words stirred enormous waves in my heart.
I know that tens of millions of Mi Fans like Yao Cong around the world have quietly supported and trusted us for ten years. It is that trust that enabled us to overcome every difficulty, enter the Fortune Global 500, and reach number two in the world today.
It is that trust that gives me the courage to stand here and declare our next goal: become number one in the world within three years.
In Xiaomi's eleven years as a startup, I have worried about failure, whether my abilities could keep pace with the company's development, and whether I had enough physical strength and energy. But whenever a major crisis or challenge arose, I stepped forward without hesitation. I am not a genius, a model worker, or an invincible warrior. I am simply an ordinary engineer pursuing my dreams and doing what I love.
That concludes my speech about dreams and choices.
