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Analysis

Millennials To Take Over Xiaomi

Sep 15, 2018 by A. Alfaro
Millennials To Take Over Xiaomi

On September 13th, Xiaomi chairman Lei Jun announced the overhauling of the company's structure and emphasised on the need to have more young guns in key decision-making positions.

Two new departments--Group Organisation department and Group Staff department were established and the three existing wings of the company--Smartphone, Internet of Things (IoT) and Internet Services were split into ten more specific arms. Most of these new departments will be headed by people born after 1980.

The Group Organization department will be responsible for hiring mid and high-level managers, promotions, training, and staff evaluations. It will also be in charge of the organizational structure of every department. Liu De, Xiaomi’s co-founder and vice-president, will head the department.

The Group Staff department will assist the CEO in the devising and implementing strategic development plans for the entire company. Wang Chuan, co-founder and vice-president will be the chief of staff.

Prior to these changes, Liu De was in charge of Xiaomi’s ecosystem and Wang Chuan was responsible of Xiaomi’s television business line. Now, both men have been given additional responsibilities and would report directly to Lei Jun.

The changes would strengthen the role of the Xiaomi headquarters, cultivate an organised management and allow the 'young and vigorous' to lead the way for the company to become a CNY 1 trillion enterprise in the near future, Lei Jun explained.

Among the millennials who have been promoted to key positions includes Qu Heng. He will head the vital ecosystem department.

The IOT department, which has been retained will be headed by Fan Dian--another millennial. Both have worked in the eight-year-old Xiaomi for over 5 years. Just like Qu Heng, most of the young newly appointed senior managers have had little public exposure and very little information about them is available on the public domain.

The Xiaomi appointments reminds one of Alibaba chairman Jack Ma's announcement on Monday to step aside as his company's chairman next year to make way for the low-profile Daniel Zhang.

Commenting on the development at Xiaomi, Pan Qianglong, the director of the Hangzhou-based Zhong Ke Institute of Business, told the portal Zaker: “A company’s strategy decides its structure. Xiaomi’s ambitions are global, so its ability to gather enough competent talents will be one of its most valuable resources.”

Currently, Xiaomi has almost 20,000 employees and an annual revenue of CNY 1 hundred billion (USD 14 billion). The new structure will help the ambitious Lei Jun to better supervise the company.

Huawei, one of Xiaomi’s competitors, owes much of its success to a structure in which the guidelines and strategies set by management are implemented efficiently. The company encourages competition among employees and the best performers are rewarded.

Unlike US companies such as Microsoft or Google, Chinese companies are centred around one strong man. Only recently Jack Ma has started to delegate powers in Alibaba ahead of his retirement.

Lei Jun's move, however, hints at his intention to gradually decentralize the company, giving more power to young and competent people.

Pan Qianglong explains: “This adjustment is very meaningful: any large company’s development needs a reasonable organizational structure and a team with an effective executive capability, especially after its IPO.”

Before the adjustment, Xiaomi's three main departments did not have a clear distinction and their activities would often overlap. Similar problems existed in the television, MIUI (Xiaomi’s Android version) and entertainment departments. Now they will all be integrated in the Internet services department.

There will be four sub departments under the Internet services department, four sub departments under the hardware department, one television department and one e-commerce department.

IOT is one of Xiaomi’s priorities and it will be one the most competitive fields for tech companies in the near future. According to the data provided by Xiaomi, the company already had 115 million users of its IOT ecosystem (excluding smartphones and laptops) in Q2 2018, a 15% growth since the previous quarter. Xiaomi’s AI speaker had 30 million users by July 2018.

When Xiaomi got listed in Hong Kong earlier this year, Lei Jun had the chance to explain to the world what Xiaomi is, but after its IPO he has not explained what Xiaomi’s future steps will be. This reform gives us some hints. As Lei Jun said in his announcement: “There is no future without a new army.”

A. Alfaro

A. Alfaro is a Beijing-based freelance reporter. He focuses on China's politics, culture and society. He can be reached at varofaro@gmail.com. 

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