This morning, Channel NewsAsia is reporting that Xiaomi has a new financial service they are working on implementing into their smartphones. Currently the app is still in testing stage, as one would expect, but should be heading to Xiaomi smartphones in another update or two. According to the site, Xiaomi is going to add a function that allows users to buy money market funds offered by mutual fund manager Efund. This is all according to a company source, which confirmed that this app is part of the latest update to MIUI. Alibaba and Tencent already have similar products, so it’s clear that Xiaomi is looking to compete with those. Analysts are also stating that this is a natural extension of Xiaomi’s business model.
Currently, the fund has a seven-day annualized yield of 6.44 percent. That’s better than the 4.52 percent offered by Alibaba’s Yu’ebao. Additionally, China’s one-year benchmark deposit rate is 2.5 percent. These numbers were as of March 17th, and could possible have changed by now.
According to research manager, Thomas Zink from IDC Asia Pacific, “Xiaomi has been selling its devices at near cost and instead pushed massive volumes and tried to monetize it’s app store in China. Wealth management and lending is simply another revenue source.” Which is going to be important to Xiaomi, if they want to keep their device prices where they are currently. Recently, Xiaomi posted a job for it’s MIUI unit looking for a credit policy specialists, credit management specialists and financial product managers. And based on those job postings, it appears that the Chinese smartphone giant is looking to provide consumer loans as well as wealth management products. Those consumer loans can be a big revenue stream for Xiaomi, and that’s not something you’d see from smartphone manufacturers elsewhere in the world, these days. Important to remember that smartphone manufacturers in China have a lot of other parts of their business, compared to those in South Korea, Japan and other parts of the world.
Xiaomi has over 100 million users, so bringing in another revenue stream like this will definitely help the Chinese manufacturer. Xiaomi has been selling their high-quality devices at pretty cheap prices. Simply because they are selling them at cost, and are able to move millions and millions of them quickly, because of that. They’ve done quite well with the Xiaomi Mi 4, Mi Note, and a slew of other devices they’ve announced recently.