Lei Jun, founder of five-year-old smartphone maker Xiaomi, has declared several times that his company won’t go public in the next couple of years.
However, Apple Daily, citing sources inside the company, reported that Xiaomi has decided to follow in the footsteps of Alibaba and started preparing to list in United States, rather than in Hong Kong.
The local bourse may therefore lose another major deal.
Xiaomi has attracted much interest in the capital market. Estimates of its value keep on ballooning.
The company’s valuation has now reached US$45 billion, making it the world’s most valuable startup, according to the Wall Street Journal. This may explain why Lei would want to step on the gas and list his company sooner than expected.
The Shenzhen Stock Exchange is said to have approached Lei earlier in an attempt to persuade him to prefer the A-share stock market. However, Lei turned down the invitation as China, like Hong Kong, does not allow dual-class shares.
Lei told media that Chinese technology startups usually choose the US over Hong Kong because of the latter’s “one share, one vote” policy. In addition, companies must reach a certain level of revenue and income in order to qualify for listing on the main board of the Hong Kong stock exchange, a requirement that many tech startups cannot meet.
So if Lei insists on having absolute control over the company’s board, the US appears to be the only choice for listing.
But can he win investor confidence in the US amid accusations of patent infringement levelled against his company? Also, he has to contend with the repercussions of the fight between Alibaba and China’s State Administration of Industry and Commerce over fake goods.
Xiaomi, dubbed “Apple of China”, has long been criticized for being a copycat. In fact, there are a lot of similarities between Xiaomi’s devices and Apple’s iPhone — both in appearance and interface.
One could see during Xiaomi’s product launches that Lei would even ape Apple’s late founder Steve Jobs in terms of stage setting and format of presentation as well as dressing style.
Dong Mingzhu, president of Gree Electric, once called Xiaomi a thief. Last year, a judge banned Xiaomi handsets in India in the wake of a patent row with Swedish telecom equipment maker Ericsson. The dispute has been settled temporarily after Xiaomi agreed to pay around US$1.5 to Ericsson for every device sold.
Xiaomi knows its quest for a higher valuation will depend on how fast and how convincingly it can shed its copycat image.
As part of its activities to promote the brand overseas, the group will schedule a media event in San Francisco on Thursday. Co-founder and president Lin Bin and Hugo Barra, head of the group’s global division, will attend the event and introduce the brand to US customers.
It’s hard to tell whether US customers will give a warm reception to the Chinese smartphone brand. But if Xiaomi is able to succeed in its plan to list in the US, just like Apple, will patent and intellectual property rights lawsuits be far behind?
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