Lei Jun: Xiaomi Will Invest Over CNY 10 Billion in R&D in 2020
According to Lei Jun, founder and CEO of Chinese consumer electronics behemoth Xiaomi (01810:HK), the company is planning to spend more than CNY 10 billion on research and development in 2020.In 2019, Xiaomi allocated around CNY 7 billion to drive innovation internally.
Chinese Vendors Erode Apple's Lead in TWS Market – Xiaomi Ranks Second in 2020
The release of Apple's (AAPL:NASDAQ) Airpods at the end of 2016, along with the headphone jack-free iPhone, defined the new electronics category – true wireless stereos. As the Airpods were the first, and the patents around realizing a 'no time lag' in data transmission between two points of Bluetooth connection are kept secret by Apple, Apple enjoyed a complete lead in this category for the first two to three years. However, as related technology breakthroughs have been made by both Chinese and American electronics companies, TWS products with lower prices and similar functions with Airpods have been invented and taken away customers from Apple.
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Gree Joins Xiaomi's Industrial Fund
Having long held to the slogan of 'Holding Core Technologies,' the Chinese home appliance leader Gree Electric (000651:SZ) is moving further towards integrating with the upper stream component and solution providers by joining Xiaomi's (01810:HK) industrial fund. A total amount of CNY 3.55 billion will be injected into Xiaomi's industry fund and the future investment deals will be focused on integrated circuits, artificial intelligence, industrial Internet, core equipment and cutting-edge technologies.
Xiaomi's IoT strategy, which involves home appliances, is followed by more and more consumer electronic vendors, the pattern is actually casting threats for traditional home appliance manufacturers such as Gree Electric and Media (000333:SZ). The rising competitors are urging Gree to deliver more innovations within conventional products – and thus the cooperation with Xiaomi will help pick up the slack.
While Xiaomi, on the other side, should boost its power and attain a higher margin for its hardware revenue. As the CEO of the company addressed in his recent public speech, Xiaomi's next long-term strategy partly lies in the 'smart' manufacturing industry. Thus, Gree's billion-level capital injection in the industrial fund will fuel the overall development of smart manufacturing.
Apple, Huawei and Xiaomi Lead the Wearable Market in China and Globally
According to IDC's classification, wearable products are comprised of hearables, watches, wristbands and others.
In China, the total shipments in the second quarter of smart wearables reached 26.58 million units with Huawei taking 29.2% of the total. The sales volume of Huawei is driven by the Watch GT 2 and the TWS product Freebuds 3. Xiaomi (01810:HK) follows Huawei and accounts for 21.3% of the total shipments. The company did not lavishly release new wearable products, except for the Mi Band 5 – thus it presents a 9.1% shipment decline year-on-year. Apple (AAPL:NASDAQ), which is the global number one wearable shipper, ranks third in the Chinese market, taking around 19% of the market. Though new releases, AirPods and Apple Watch are still favored by the consumers. The fourth and fifth goes to BBK Electronics' Imoo and Qihu 360 (601360:SH).
Globally, during the second quarter, the wearable market grew into 86.2 million shipments, presenting a 14.1% year-on-year growth. Unlike the Chinese market, Apple took an apparent lead with over 30% of the total market, while Huawei and Xiaomi are in a close race with 12.6% and 11.8% respectively. Notably, Huawei delivered the most significant year-on-year growth at 58%, which was mostly boosted by its surging sales in China.
Chinese TWS Market Shows Potential: Fast Expansion and Vast Unclaimed Market
The following is a summary of the landscape of the Chinese TWS market in 1H 2020. For other analyses on that topic, please check parts 1 and 2 of Chinese TWS overview.
► The Chinese TWS market has higher year-over-year growth rates than the global market.
► Apple, Huawei and Xiaomi are the top three smart shippers in China, while globally Huawei's position is taken by Samsung Electronics.
► Nearly 50% of the Chinese hearable market is occupied by brandless products, which present further growth room for big electronic vendors.
According to IDC, the first half of 2020 witnessed market expansion both in China and globally.
In China, the shipments of wireless earbuds reached 42.56 million, presenting 49% year-over-year growth. Among the total, true wireless stereos (TWS) take 64%. Though the Chinese market expands rapidly, the market still presents great growth potential as the category 'others' take nearly half of the total shipment, which the sum of Apple (AAPL:NASDAQ), Huawei and Xiaomi (01810:HK) lags behind. Apple's Airpods in China take the first position except for the 'others' at 18% of the total, followed by Huawei at 10.1% and Xiaomi at 8.3%.
Globally, the shipments of hearable products grew 32.6% during the same period. Apple led the charge here as it managed to ship 23.7 million Airpods and Beats products, followed by Samsung and Xiaomi. The global hearable market is dominated by smartphone brands as the opportunity to bundle remains high.
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