Xiaomi in America Isn't Just About Selling Smartphones

(Bloomberg Gadfly) -- Xiaomi Corp. expects to sell smartphones in the U.S. by the end of this year or early next, founder and chairman Lei Jun told reporters on the sidelines of China's National People's Congress, the Wall Street Journal reported.

Although overshadowed by a larger market in Asia, the U.S. mobile sector is a lucrative one, with consumers there spending twice as much per phone.

But Xiaomi's plan is as much about selling shares in its forthcoming IPO as it is about selling handsets to Americans.

Talk of a $100 billion valuation for the Chinese startup would make it vastly overvalued. That doesn't mean bankers won't try to help it reach such lofty heights, or that Chinese investors won't pay through the roof to bag some shares. However to get there, Xiaomi's leadership, financial boffins and marketing teams all need to keep kicking the can down the road.

The story for 2017 was about the company's turnaround, from a slump in 2015 to a rebound in 2016 and continued momentum last year. India was the main engine, and we can expect more of that noise over the coming 12 months. But Xiaomi needs another booster rocket if it's to go to the moon like everybody hopes. Hence the talk of a U.S. entry, where growth in the most recent quarter was much faster than for Asia when measured in revenue terms.

And note the timing: end of this year or early next. That would be after Xiaomi's IPO, providing a great talking point for bankers while not requiring them to demonstrate any actual success.

So yeah, maybe Xiaomi does plan to start shipping phones to the U.S. But that's not what they're really selling.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

To contact the author of this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net.

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