Having found success in China with its smartphone sales, Xiaomi is now looking to make money in an additional way: from money itself.
Yesterday (May 11), the company launched an online money-market platform called Xiaomi Huoqibao (the rough translation of which is “Xiaomi savings account”), according to Quartz.
The move into banking is a bold one by the smartphone maker, the Quartz story observes, because it puts Xiaomi in direct competition with the two major players in the Chinese tech industry — Alibaba and Tencent — as well as with the powerful government-owned lending outlets.
Online money-market accounts, the report goes on to state, are experiencing immense popularity in China, as they — in addition to being heavily promoted by the tech industry — offer significantly higher interest rates than the country’s traditional banks. Quartz shared statistics from 2014 showing that 185 million users of Alibaba’s Yu’ebao deposited $93 billion in their accounts, with Tencent-owned Licaitong taking in $16.1 billion in deposits from 10 million of its clientele.
Out of the gate, the yearly savings rate offered by Xiaomi Huoqibao is higher than that of Yu’ebao (just under 5 percent, compared to the Alibaba platform’s offering of 4.3 percent), with the disparity between it and standard Chinese bank accounts even greater.
The Quartz story relays Xiaomi’s previously expressed plan to gain profits less from sales of the low-priced devices on which it made its name and more from newer services. Indeed, the creation of a branded online money-market platform is not Xiaomi’s first venture outside the realm of smartphones: the company opened an online store in February and, the following month, added an interest-bearing feature to its mobile wallet.
At the time that the latter service was announced, Xiaomi President Bin Lin cautioned that it wasn’t necessarily an indication the company had any plans to move into the banking business. In hindsight, it turns out that maybe it was.