Lei Jun "raising a son"

The "two - sons schooling theory" mentioned by Lei Jun partially borrows from Li Ka - shing's analogy 20 years ago, where he compared his businesses to his sons and piglets. However, considering the current public opinion field and the stock price performance of Xiaomi Group on the Hong Kong stock market, this theory does help to understand and examine the trend of this technology leader.

There is an obvious difference between the two "sons": The newly entered automotive industry has a special status. With self - built production lines and all - in investment, it is like the legitimate son whose academic performance directly affects the future of the family.

The chip industry is different. It is more like a tentative move. Only if it performs well enough in "school" can it live up to Lei Jun's reputation and be recognized as part of the family. If it performs poorly, Xiaomi Group can completely replace it with a new "son", such as artificial intelligence. Chen Mingyong of OPPO, who is wealthy, bet hundreds of billions on a whim and closed the business at the first sign of setback. That's a lesson.

The stock price of Xiaomi Group has entered a new plateau.

Compared with several peers, Lei Jun is the only CEO of a major mobile phone manufacturer who has made a huge change in the product category. Xiaomi entered the automotive industry very efficiently and has established a foothold.

The main battlefields of OPPO and vivo are still mobile phones. So - called new technological products like robots and XR are only to show off their technological strength, not because they really believe these new products can become new future tracks. It can now be concluded that the Vision Pro launched during Cook's tenure will neither be the next iPhone nor an iPhone killer.

Compared with the main business of mobile phone hardware and the main profit from mobile phone advertising, these new things are too insignificant.

The only person with a visible change similar to Lei Jun is Yu Chengdong. He also has a large automotive business. But there are also differences between them. Lei Jun is the major shareholder, CEO, and the boss who independently formulates strategies and takes responsibility for success or failure. Yu Chengdong is part of a system that is achieving great success in the industrial chain, and it's hard to distinguish the contributions and faults of the individual from the system.

Lei Jun's success in the automotive track also contributes to the product thinking and methodology of Xiaomi mobile phones.

From this perspective, looking back on the past year, choosing to invest in Xiaomi Group's Hong Kong - listed stocks was really a very correct and easy decision. It was a major market opportunity when the stock price rose from around HK$10 to over HK$50. There were two key points of consideration a year ago:

Firstly, the mobile phone industry has a unique, historically irreproducible, and enviable business model. Xiaomi is not the inventor, but Lei Jun and Lin Bin were among the first to see clearly this model. In the period of drastic technological, industrial, and socio - economic transformation, this is the best "coat" and a land flowing with milk and honey.

Secondly, could Lei Jun establish a foothold in the automotive market? Issues such as licenses, competition, technology, and production lines, which now seem like a well - deserved victory for Lei Jun, were not favored by everyone a year ago.

There are two groups of people around "Zhiwu" who are optimistic about Xiaomi and Lei Jun. One group consists of Lei Jun's old peers. Most of them are driven by faith. Since they have experienced the most talent - concentrated and competitive mobile phone market in the world, they believe the automotive track won't be a problem.

The other group is investors who have succeeded in the chip track in the A - share market. A year ago, they voted with their funds early on and became major institutional investors in Xiaomi Group. This was before the so - called DeepSeek moment, when global investors had not yet realized the potential and value of Chinese technology assets.

This is truly a classic successful case of value investment, and most people have received excellent returns.

Now, there is another moment of divergence. Or rather, now that Lei Jun has established a foothold in the automotive market and Xiaomi's mobile phone business has also achieved continuous success. When discussing Xiaomi Group's future performance with these two groups of people again, divergence has emerged among them once more.

Even among some people within Xiaomi Group, the most worthy topic of discussion is still the automotive business. Can this youngest "son" of Xiaomi Group, which has been recognized by the market, replace the mobile phone business in the future, or at least stand shoulder to shoulder with it?

How obvious is the success of Xiaomi cars? On major highways, the transport vehicles of Xiaomi cars are the most prominent, which is a reasonable explanation for its market success. There are also some unreasonable aspects. Xiaomi may need to solve the problem of the second factory as soon as possible to reduce transportation costs and improve logistics efficiency.

Another unreasonable thing is that there are few Tesla transport vehicles on Chinese highways.

The question is, how successful does Xiaomi's automotive business need to be to match Xiaomi Group's current valuation and provide room for the next valuation platform? The latter is where the most serious divergence lies.

The current divergence and confusion stem from the fact that Xiaomi Group and Lei Jun have always aimed at global benchmark enterprises, Apple in the mobile phone market and Tesla in the automotive market. This benchmark positioning is simple and clear, which can not only unite the internal team clearly but also convince external investors clearly.

Now, Lei Jun and Xiaomi Group, known as the "Chinese Jobs" and having achieved a foothold, have initially achieved this goal. The current valuation level reflects this achievement.

Not everyone believes in Tesla and Musk's goals. But those who believe bought Tesla stocks below US$10, chose to join Tesla, and endured Musk's tyrannical management style.

Those who believed made money, while those who didn't missed the opportunity.

Chinese entrepreneurs are not good at or willing to talk about such goals, and they don't like those who do. Cook's goal is simple: to follow the established rules and be the best successor CEO in history. The goals of OPPO and vivo are also simple: lower costs, higher market share, more profits, and higher profit returns.

Yu Chengdong's situation is a bit more complicated. On the surface, like Cook, Shen Wei, and Chen Mingyong, more market share means more money. But in essence, he also needs to drive the growth of Chinese local enterprises like SMIC, BOE, and Kyson Technology. He has to be the locomotive of this Chinese industrial chain.

What is the new benchmark for Xiaomi and Lei Jun? Is it to sell more cars, more mobile phones, and gain more market share? Or is there an idealized goal beyond market share? At least part of the current internal and external divergence and noise can be attributed to this.

Looking closely, Chinese mobile phone tycoons, including Lei Jun, have successful cases of "raising children". This statement is partly due to the initial success in the automotive market and a self - praise after good parenting.

The other half of the meaning is that Xiaomi Group has now successfully replicated a car factory with a strategy very similar to Tesla's. The future valuation of this car factory depends on Lei Jun's continuous efforts on the one hand and the contrast of peers on the other. Other enterprises that cannot replicate Tesla's model as efficiently as Xiaomi will gradually decline.

However, the car factory is not the whole valuation of Tesla and Musk. Musk's FSD, Robotaxi, robots, and the underlying xAI, Lei Jun disdains to fully replicate and cannot fully learn. How much to learn and to what extent is the "schoolwork" for Xiaomi's automotive business as the legitimate son.

This article is from the WeChat official account "Zhiwu Technology Review". Author: Zhiwu. Republished by 36Kr with permission.