Apple's (Very) Serious Chinese Competitor Xiaomi Is Now Bigger Than Uber

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Xiaomi CEO Lei Jun attends the launch of the new Xiaomi smartphone at National Convention Center on July 22, 2014 in Beijing, China. China's smartphone maker Xiaomi Corp launched its fourth-generation Android smartphone 'Mi 4' on Tuesday. And Xiaomi sold 26.11 million smartphones in the first half of 2014.

The company is now the most-valuable private startup in the world, beating out Uber at a valuation of $45 billion.

It has been a year of ascendence for China's homegrown technology firms, highlighted by the September IPO of Alibaba Group Ltd., which at $25 billion set a record as the largest IPO haul to date. Last week, the privately held hardware firm Xiaomi Corp. continued the trend by raising $1.1 billion in equity funding, valuing the company at $45 billion dollars -- a more than four-fold increase in valuation since its last round in Aug., 2013.

It's a remarkable tale of rapid growth; Xiaomi shipped its first products in 2011 and is now the world's third-largest smartphone maker by shipment volume and the most valuable privately funded tech startup in the world, edging out Uber for that honor.

In 2014 the company began expanding beyond the Chinese market, entering Singapore, India, Malaysia, the Phillipines and Indonesia, with penetration into Mexico, Brazil, Russia, Turkey and Thailand slated for 2015. It's global ambitions are helmed by former Google Android vp Hugo Barra -- the company's phones and tablets feature a sleek, customizable operating system built on Android software.

The company has taken significant flak as a Chinese Apple clone: its founder-CEO Lei Jun sports Jobsian attire during splashy product announcements, notably cribbing the Apple founder's famous "One more thing... " cliche for an announcement earlier this year. And the product line is remarkably similar to that of Apple, with smartphone's, tablets (dubbed the MiPad), a set-top TV box and a cloud storage service (the, ahem, MiCloud). Xiaomi also is a major client of Foxconn, the giant Taiwan-based electronics manufacturing contractor whose biggest client is -- can you guess? -- Apple.

Jun's protestations at being compared to Steve Jobs notwithstanding, the trajectory of the two companies promises to yield an increasingly incendiary rivalry in years to come, as Xiaomi attempts its aggressive expansion beyond the Chinese market and Apple relies increasingly on China and other developing-world markets for continued growth. 

This summer Apple reported 26% year-on-year revenue growth in China, compared to overall revenue growth of 6% for the company. A year ago Apple signed a long-awaited deal with China Mobile – the worlds largest mobile network by number of subscribers – and Apple CEO Tim Cook called the event a "watershed day" for the company. China remains a crucial and profitable market opportunity for Apple despite Xiaomi's dominance there.

Xiaomi does offer a number of other tech products outside the Apple core, including an air purifier, a smart TV, a wi-fi router and a fitness bracelet. Importantly, the company offers its products at affordable pricepoints, sell them exclusively online, and relies on content and services to shore up its bottom line while selling its electronics at very low margins. Last month, Xiaomi announced it would be investing $1 billion in developing television content.

It remains uncertain whether Xiaomi, whose logo is a cartoon bunny sporting a hat repurposed from Mao-era Communist Party propoganda, will be able to succeed as a global brand outside its home market, or differentiate itself meaningfully as something more than a cut-rate purveyor of Apple knock-offs. But after last week's funding round, it seems clear that it won't fail for lack of capital.