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Xiaomi sees dollar signs in consumer finance


May.12.2015 0 Comments

Like Baidu and Alibaba, Xiaomi is eyeing China’s finance industry and seeing dollar signs. Today the company is officially launching a money-market fund called Huoqibao inside a new standalone app called “Xiaomi Finance.”

Like the Alibaba-affiliated Yu’ebao, Xiaomi’s Huoqibao lets consumers save excess cash and earn interest from it. After registering for a Xiaomi Finance account with one’s national ID, users can bind a bank card to the app can store as little as RMB 1 (about US$0.15). The fund is managed by China’s E Fund Management and currently offers an annual return rate of 4.26 percent.

This marks Xiaomi’s first foray into serious finance, but it has dabbled in money in the past. Huoqibao was once available in beta for select users of Xiaomi Wallet, another standalone app that was primarily used to manage virtual currency known as Mi coins. Users from inside China could purchase Mi coins through bound bank cards or Alipay accounts, and redeem them for customized launcher themes, or media like e-books.

Below are some screenshots we’ve carefully lifted from our friends at Chinese tech blogHuxiu. The left and middle pictures are shots of the Xiaomi Finance app, while the right shot is a picture of Huoqibao from Xiaomi Wallet. Huxiu states that Huoqibao does not appear to support Alipay at present.

“活期宝”只是前奏,小米还准备和阿里、腾讯抢食个人征信蛋糕-看点-虎嗅网

Compared to China’s other internet giants, Xiaomi is slightly late to the money market game. As of late 2014, Yu’ebao had over 185 million users] and and a fund size of RMB 578.93 billion (about US$93 billion). Yu’ebao’s deep integration with Alipay Wallet, which is also tied to Alibaba’s mobile ecommerce properties like Tmall and Taobao, make it tough for new customers to miss. Tencent and Baidu also have mobile money-market funds of their own.

Of these three companies, Xiaomi is arguably in the weakest position when it comes to promoting consumer finance products. Alibaba already owns the biggest pool of money online in China thanks to Alipay, and Tencent owns the best mobile real estate thanks to WeChat, China’s most popular messaging app. Messaging apps and ecommerce marketplaces both contain powerful network effects that help ensure longevity.

Unlike these companies (and arguably any other company in the world), Xiaomi is extremely well positioned to benefit from the emergence of smart home devices. Since thousands of customers log onto Xiaomi’s website to buy a smartphones every week, it can leverage that focused attention by selling smart lightbulbs and smart cameras and taking a cut in the process. Many of the hardware startups it invests in go on to list their items on the company’s ecommerce platform.

Documents discovered last year by the Wall Street Journal indicated that Xiaomi makes themajority of its revenue and profits from hardware sales. But the company continues to invest in “services” – broadly defined as all of the semi-tangibles one buys on the internet. The company claimed to earn more than US$1 billlion in revenues from services in 2014, marking 6 percent of its total revenues.