Xiaomi Fails to Meet 2015 Sales Target: Investors Question Company's Valuation

Xiaomi Technology is the world’s #4 largest phone maker, nicknamed in China as the “Apple of the East,” is now facing tough times as a slower demand for the company’s products is slowly becoming evident.

The company entered the hardware market in 2011, after a year of creating a new custom ROM based on Google’s Android. With the MIUI Express Application that it introduced, about 30M mobile users have been reported to have started using the application by 2013.

As a new player in the competitive mobile phone market, Xiaomi takes on a different business model and cut the middle man to sell directly to clients online. The company created high-end product which they sell at cost price. They, then, rely on their services and content to make up most of the revenue for the company. Even as a new player in the industry, the Company keeps in confidence and believes that it will be a Fortune 500 company.  As Xiaomi CEO Lei Jun tells New York Times, "We’re not just some cheap Chinese company making a cheap phone.”

Many Chinese as well as investors believe this that by December 2014, the company was able to raise $1.1 billion (at valuation of US$45 billion) funding, as announced on Facebook by Xiaomi co-founder Bin Lin,  making the company the lead amongst start-ups, topping Uber’s funding according to the Wall Street Journal.

With the recent report of the WSJ indicating the company’s missing the sales target of 80M for 2015; investors will be taking a second look at the $46 billion valuation. Although Xiaomi has successfully sold over 60 million smartphones in 2015, which could be a great achievement, considering a set the target at 80 million, there still is a huge difference.

As 2016 will see even more competitive products to be made available by other phone manufacturers such as who will also be offering entry-level devices, including Chinese manufactures OnePlus, Oppo, and Meizu, Lenovo, Xiaomi will definitely be having a tougher fight this year. But as the company has not yet moved on major global markets, there is still much to be seen.