What does Xiaomi and Tesla Share in Common?

What does Xiaomi and Tesla Share in Common?

My “groundless” assumption is that most people know what Tesla is,  “best car ever made”, “zero emission electric power” all sorts of buzz words that anyone can think of to describe the next-generation of motor car, which sells infectious online. Established in 2003, the company’s market cap is well above 30 billion, more than half of the General Motor’s.

What is Xiaomi? It is a Chinese locally-designed & produced cellphone with all the fancy gadgets that Apple 5s or Samsung Galaxy has, but somehow positioned at almost half of the price of its competitors. Founded only in 2010, it sold 7 million in 2012 and 20 million in 2013. In the newest round of private valuation, it is estimated to surpass 10 billion dollars, double that of Blackberry and half of Sony.

It will be rather challenging even to try making connections between these two companies by any means. Tesla started in San Carlos, California, a hotbed for innovation and entrepreneurship while Xiaomi launched its journey in the capital city of China where the power grip of the Chinese government is the most intact. Tesla is aiming at customers who are technology / environmentally savvy with upper-middle income; the typical image of Xiaomi users is the majority hardworking Chinese youth, fancying about high-quality of life but faced with with harsh realities on a daily basis.

Behind their overwhelming success stories lies their surprisingly similar marketing strategy – almost no dealership; no huge budget marketing spending in conventional channels; reliance on social media, celebrity influence (both of its CEOs are considered iconic figures beyond their industry) and mouth-to-mouth reputation; and most importantly, all sales done exclusively online.

There are two underlying principles that push two very dissimilar companies to adopt almost the same marketing approach in dramatically different cultural contexts with divergent spending habits. First, though aiming at two income levels, both companies are serving the rising young generation who are more technologically sophisticated and more ready to adopt new innovations. Second, the saving on conventional marketing by the company is directed at greater customer-centered service -- such as allowing individual choice in product design. Not surprisingly, both companies, though very young they are, are ambitious enough to prevail in both home countries’ fronts and beyond.

Therefore, the statistically odd coincidence of Tesla and Xiaomi in their marketing strategy only speaks aloud the imminent disruptive power of innovative enterprises which are ready to challenge the old schools in the business.

Sources:

http://business.time.com/2013/10/14/xiaomi-chinas-threat-to-apple-and-samsung/

https://www.youtube.com/watch?v=3jDi4Lym-Y0

http://www.theatlantic.com/china/archive/2013/10/how-xiaomis-hip-inexpensive-smart-phones-conquered-china/280803/