21 February 2020

Xiaomi to seize the mobile payment day? Pigs might fly

When Xiaomi’s Lei Jun {雷軍} wants his staff to seize the day, he offers his favourite aphorism: “When the typhoon comes, even a pig can fly”.

Lei and Xiaomi have already soared on the launches of smartphones, smart TVs and wireless routers, and now the company sees a golden opportunity in mobile payments.

Xiaomi set up a subsidiary called Beijing Xiaomi Payment Technology Ltd. in December with 50 million yuan (US$8.25 million) in registered capital, according to the Beijing Administration for Industry and Commerce. The plan is to use it to develop e-payment technology and a clearing system.

The move comes as little surprise, given that the group has already come up with its MiBi {米幣} virtual currency system that lets users buy products and added-value services through its Android-based MIUI operating platform.

But at the moment anybody who uses MiBi still has to settle their payments through Alibaba’s Alipay, Tencent’s Tenpay, a debit card or a bank-issued credit card. Xiaomi clearly wants to take this step in-house and run a closed-circuit environment.

Third-party mobile payments were a growing, 1.2 trillion yuan market last, eight times the total for the previous year. And the market is expected to grow a further 141 percent this year, according to research institute iResearch.

But Tencent (00700.HK) and Alibaba are much bigger than Xiaomi and each one has a strong presence in the mobile payment market. Xiaomi’s 30 million-string MIUI system still trails well behind and its new business is unlikely to pose any strong threat to the big boys.

Xiaomi also lacks a license to operate a third-party payment business but media reports suggest that the company might take a short cut by acquiring a firm that already has such a permit.

2013 was a prosperous year for Xiaomi and gave it the confidence and resources to expand vigorously. The company sold 18.7 million handsets during the year, with sales reaching 31.6 billion yuan.

While smartphones may not come with big margins, the apps and services that go with them do. The company said that by the end of last year, it took in US$4.9 million each month from apps, games, icons and other add-ons downloaded from its MIUI platform. 

– Contact the writer at [email protected]


EJ Insight writer