Xiaomi is targeting to hit 100 billion yuan (US$14.46 billion) in revenue this year, which will see the Chinese smartphone manufacturer focusing on five key areas including internet finance and artificial intelligence.
In a note to employees, Xiaomi's founder and CEO Lei Jun said the company faced several challenges in 2016 while acknowledging it "pushed ahead too fast" during its first few years. He stressed the need for the company now to slow down and improve in "some areas", in order to ensure long-term sustainable growth.
Its e-commerce strategy, for one, needed further tweaking, Lei said, adding that Xiaomi would be looking to "upgrade" its retail model and incorporate offline retail into its new retail strategy. He noted that e-commerce accounted for just 10 percent of China's overall retail market, with online smartphone sales contributing 20 percent of the total smartphone market.
Xiaomi also suffered from supply issues for four months last year, amid a smartphone supply chain that proved "extremely complex", he said. Lei admitted that the company's efforts had been insufficient against the impact of challenges it faced.
When asked, a company spokesperson declined to elaborate on what challenges Xiaomi faced or where it fell short in its e-commerce strategy or what caused the company's supply issues.
In his note, Lei said: "The worst is over." He revealed that Xiaomi in 2017 would be focusing on five key areas, including investing further efforts to drive its globalisation plans, push for technological breakthroughs, and roll out its new retail strategy.
The new year also would see the company exploring the fields of artificial intelligence (AI) and internet finance. Pointing to Xiaomi's face detection algorithm last year, which led benchmark studies by the University of Massachusetts, Lei said AI could be tapped to help improve lives.
He also heralded the importance of online finance services, adding that Xiaomi last month launched its Sichuan XW Bank as a joint venture with several investors including New Hope Group and Hongqi Chain.
"We have a team of over 300 people working on laying the foundation in the financial sector for loans, insurance, securities, finance, and payments, as well as securing the necessary licenses," he explained. "This is extremely important for our future. Commercial giants of the future will not only be internet companies, but also finance companies, because the future of finance lies in AI and big data."
Xiaomi would be targeting to hit 100 billion yuan (US$14.46 billion) in revenue this year, but when asked, the company's spokesperson declined to reveal its 2016 revenue. He also declined to provide a breakdown of how much each region or global market contributed to Xiaomi's overall revenue.
In his note, though, Lei did reveal Xiaomi's India operations crossed US$1 billion in revenue for the first time last year, placing the smartphone maker among the country's top three in the market. In October, it sold 1.35 million smartphones in India.
He added that, worldwide revenue from its Mi Ecosystem products, smart TVs, and smart routers surpassed 15 billion yuan (US$2.17 billion) last year, with more than 50 million connected devices available on IoT platform. Mi Ecosystem comprised the company's product offerings outside of its core smartphone business, such as water and air purifiers.
Revenue from Xiaomi's internet services business, which included games and mobile payment apps, doubled in 2016, but Lei did not specify how much this totalled.
According to a Reuters report last year, the Chinese vendor's 2015 internet services revenue clocked US$564 million, Although this was more than double that of the previous year, it was significantly lower than Lei's target of US$1 billion.
In its domestic market, three of its 54 Mi Home stores had clocked more than 100 million yuan (US$14.46 million) in gross merchandise volume last year, he noted, pointing to its outlets in Shanghai, Beijing, and Zhengzhou. He added that Xiaomi was targeting to open another 200 Mi Home stores this year, before hitting a total of 1,000 stores over the next three years.