China’s Steve Jobs Plans to Make a US$100 Billion IPO

China economy debt, lei jun

It’s no secret people hated working for Steve Jobs.

Under Steve was not only impossible deadlines, but constant abuse.

This is crap’ he would constantly tell engineers who pulled all-nighters to make his recommended changes.

He wasn’t all that emotionally intelligent. But everyone agrees working with Jobs was one of the best things they ever did. They were a part of history, creating something that would change the world.

He was a maverick. He didn’t care about making money. He just wanted to make revolutionary products.

And he did exactly that. The Mac, iPod and iPhone all introduced features that are now industry standard.

You could say Apple continues to benefit from Jobs’ perfectionism and strive for simplicity.

And it’s these same characteristics, which could soon help Lei Jun launch a US$100 billion company.

Just one of many in China

Hundreds of people flock to Beijing’s Rainbow City mall on a Saturday night. Some are looking for sales. Others want to see the latest movie. All want to have a good night out with their friends and family.

But Lei Jun isn’t soaking up the Saturday night vibes. He’s in his office, overlooking shoppers, for his 12th meeting of the day.

It’s the first time in the month of March that Lei Jun is actually in the office. On any other day he’d be making his regular trip to India.

You see, Lei Jun is the CEO and founder of Xiaomi, the Apple of China.

And like Apple’s co-founder, Lei Jun has a similar obsessive behaviour. Business Week writes:

Lei founded Xiaomi after running software maker Kingsoft Corp. and selling e-commerce start-up Joyo.com to Amazon.com, Inc. He says the money Xiaomi stands to make doesn’t interest him in and of itself; those in his orbit say it’s more what the money represents — the company joining the ranks of China’s so-called national champions, the likes of Jack Ma’s Alibaba, Pony Ma’s Tencent Holdings Ltd., and Robin Li’s Baidu Inc. “I wanted to lead a Chinese company,” the 48-year-old says, “to become No. 1 in the world.”

The finicky CEO has turned things around by micromanaging operation at a level Jeff Bezos might ency. Lei obsesses over pixel sizes on his phones’ screens and the rainbow colours of Xiaomi’s AA batteries.

He hates seeing empty water bottles cluttering office desks, and his co-founders are used to him tweaking font sizes on their PowerPoint presentations. “Eight of us may be called co-founders, but the structure is really one plus seven,” says design chief Lie De. With Liu, Lei also contributed to the planning for Xiaomi’s new headquarters, down to choosing the urinals in the men’s bathroom.

Before coming into the office Lei Jun was on a trip around Hong Kong meeting with bankers and lawyers prepping to take his company public. The number he’s eyeing?

US$100 billion.

It will make Xiaomi the largest IPO since Alibaba.

And this is just one of many stories happening on China’s tech frontier. For years, China has been fast developing their tech industry. The government has been subsiding research and development heavily. They’ve even funded various innovation hubs all over China.

If you read yesterday’s Money Morning, you’ll know this is because of China’s ‘Made in China 2025’ plan. 

The plan is to elevate the wealth and living standards of all Chinese. To do that, China plans to compete in advanced manufacturing. This means producing things like 3D printing, advanced materials, nanotechnologies and robotics.

But to achieve this plan, China has to make a real push in all things tech, which is what they’re doing today.

While they’re quickly catching up to the US in many tech aspects, there is one industry China has already won decisively — fintech (financial technology).

Maybe your best shot at a 10-bagger

How often do you use your credit card?

Like most people I use mine every day. It’s not a necessity. But it’s extremely useful. For example, my wife and I use a credit card to track spending and utilise our offset account. The more money we have in our offset the less interest we pay on our mortgage.

But in China credit cards aren’t all that common. And the simplest answer is because they never really caught on. Today it’s almost a blessing credit cards never took off in the Middle Kingdom. Without the infrastructure China has been able to develop a different payment system that dwarfs all others.

In 2017, China’s mobile payments market totalled more than US$16 trillion. And it’s expected to grow far larger in the next two years ahead.

As comparison, North America’s market is only US$49.3 billion. It’s definitely not a number to sneeze at. But compared to China it leaves a lot to be desired.

Right now you should be thinking about getting exposure to China’s tech industry. Even the Australian Financial Review wrote an article yesterday urging investors to think about investing globally:

It is a well-known fact that the portfolios of many Australian investors are not geographically diversified. This means that Australians are missing out on 98 per cent of the world’s equity market investment opportunities.

In recent years, some investors have used passive funds to provide access to global markets. However, as the current US equity bull market recently passed its ninth anniversary, increasingly opportunities exist in identifying individual stocks with compelling business characteristics rather than riding the vagaries of entire markets.

And this is exactly what my brand new advisory service, Wealth Eruption, helps you do — gain exposure to erupting markets within Australia and overseas.

As of writing I’ve already found two ASX listed stocks with huge upside exposure to China’s multi-trillion dollar mobile payments market.

These investments could be your best chance to grab a 10-bagger this year. But you’ve got to be quick. Both are already on the move.

To find out these names and more, click here.

Your friend,

Harje Ronngard,
Editor, Money Morning

Harje Ronngard

Harje Ronngard

With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation.

Leave a Reply

Be the First to Comment!

  Subscribe  
Notify of