Are exclusive parties the key to Xiaomi’s ridiculous success?

In just five years, Xiaomi has risen to a level that most companies don’t reach for decades, and it’s all thanks to a few business secrets. While providing smartphone that can match the quality of Apple and Samsung for a much lower price is certainly important to Xiaomi’s success, creating a feeling of exclusivity is what makes the brand so popular, and one of the ways it does this is by throwing parties. No, I’m serious. 

Zhao Ruiping assembles mechanical valves at a factory in this southern Chinese city. But he spent a recent Saturday evening at one of the city’s flashiest nightclubs—as a VIP guest of Xiaomi Corp. “I’ve never been to a club before,” said Mr. Zhao, 27 years old, who arrived in his brown work jacket. “I’m just an average worker. I can’t afford to go to places like this.” The party, for about 300 fans, was an example of why Xiaomi has risen so quickly to the top of China’s smartphone market. It has spun a dream of social advancement for China’s vast numbers of young people, a dream of luxuries from the developed world now within reach. Xiaomi sells smartphones that in many aspects are similar to phones from Apple Inc. and Samsung Electronics Co., but for less than half the price. The company became the world’s fifth-largest smartphone maker last year and the world’s most valuable startup by a recent Wall Street Journal tally, with a valuation of $46 billion.