If you fail to land a job in a Fortune 500 company, would you set up your own business? That's exactly what Lei Jun did 10 years ago, and last year, Xiaomi, the smartphone brand he founded, made its debut on the Fortune 500 list in the 468th place as the youngest company.

This year, Xiaomi is 422nd, following a turnover of 205.84 billion yuan ($29.92 billion) and a net profit of 34.8 billion yuan ($5.06 billion) in the fiscal year 2019, according to its financial report.

The Xiaomi phones cost less and have high performance, employ Internet-based sales and marketing, and have been a hit since 2010.

The once obscure startup has now become the world's fourth largest smartphone brand in terms of shipment sales volume, following Apple, Huawei and Samsung, according to IDC, an international market research organization.

Liu Xingguo, a researcher at the Chinese Enterprise Confederation, said Xiaomi's unique business model, hardware plus the Internet, helped it outperform many other producers and achieve high-speed growth. "Later, Xiaomi began to enhance the integration of online and offline retail channels, which propelled its growth further," he added.

Xiaomi has invested in over 200 companies, many of which are smart hardware developers. It had built a large consumer Internet of Things (IoT) platform with 252 million connected smart devices by late March, excluding smartphones and laptops, Lei said.

Xiaomi has also built a smart factory in Beijing. It was here that the company's premium smartphone model with a transparent rear cover was assembled. Lei unveiled the model on August 11 at the company's 10th anniversary celebrations.

The sprawling factory has an annual production capacity of over 1 million units, makes some of Xiaomi's flagship smartphones, and will explore smart equipment and fully automated production.

"Xiaomi hopes to help China's manufacturing industry advance with the assistance of technology, improving efficiency and quality," Lei said at the event.

The company's overseas journey started in 2014. Its overseas market earnings totaled 24.8 billion yuan ($3.6 billion) in the first quarter of 2020, accounting for half of the total revenue, and its smartphone shipment remains on the upswing.

Data from research firm Canalys shows that Xiaomi's first-quarter smartphone shipment in the European market rose 58.3 percent year on year, with its market share reaching 14.3 percent. Its share in Spain stands at 38 percent, securing the top spot for the first time.

Matteo Giovannini, an expert at the Industrial and Commercial Bank of China in Beijing, said the relevance of Chinese state-owned enterprises (SOEs) in traditional sectors is getting balanced out by the growing presence of private Internet companies such as Alibaba, Tencent, JD.com and Xiaomi.

According to him, Chinese tech companies will possibly occupy the top spots of the Fortune 500 list as a result of technological progress and the growing potential of the digital economy.

The 2019 edition of the Global Innovation Index (GII), published by the World Intellectual Property Organization, agrees on China's progress as a global innovator. "The rise in the GII of economic powerhouses like China and India has transformed the geography of innovation. This reflects deliberate policy action to promote innovation," Francis Gurry, Director General of the organization, said.

Xiaomi plans to invest 50 billion yuan ($7.26 billion) in research and development in the next five years and utilize artificial intelligence and the IoT in its products and platforms, Lei wrote in a recent article in People's Daily.

"The fostering of Chinese companies in the digital area, such as providing better financing channels, is bound to catapult them to the forefront of driving the next wave of economic growth," Zhuo Fumin, Chairman of VStar Capital, a Shanghai-based venture capital firm, told China Daily.

(Print Edition Title: Internet Prodigy)

Copyedited by Sudeshna Sarkar

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