Xiaomi ventures into the medical device industry, entering the market with medical equipment

Lei Jun's ambition is not limited to just the mobile phone field.

Cooperating with medical equipment companies to sell medical devices.

Recently, according to Sina Finance, an investor asked Jiuan Medical, "Does your company's iHealth cooperate with Xiaomi on smartwatches and other wearable devices? "

Jiuan Medical responded that the iHealth Brand introduced Xiaomi as a strategic investor, receiving a US$25 million investment (approximately RMB 175 million) and becoming Xiaomi's partner in the health field.

Meanwhile,Jiuan Medical stated that, in terms of products, it will gradually launch blood pressure monitors, blood glucose meters, thermometers, and other products through the Xiaomi platform.The company also specifically established a "爆款" (best-selling product) team, operating independently, with separate accounting, designing and developing products, and launching them through Xiaomi channels.

The cooperation between Xiaomi and Jiuan Medical is not just about sales.It is reported that Jiuan Medical has established a department specifically for the research and development of smart hardware products. In addition, it has opened Xiaomi authorized stores in China and France, cooperating with the Xiaomi platform in new retail.

Jiuan Medical's main hardware products include electronic sphygmomanometers, blood glucose meters, and wearable devices for personal health management in the fields of blood oxygen, electrocardiogram, heart rate, weight, and body fat. Among them, the "iHealth" Brand, equipped with an APP and cloud platform, specializes in the mobile medical field.

Xiaomi's diversified ecosystem, with healthcare as one of the key focuses.

Previously, according to Xiaomi's disclosed prospectus, its ecological chain and strategic investment have become increasingly clear.

It is reported that, since 2014,Xiaomiinternally established a Xiaomi ecological chain department, planning to invest in 100 companies to join Xiaomi's ecological chain. Currently, Xiaomi's supply chain has invested in more than 100 companies. InLei Jun'sview, the Xiaomi ecological chain is the foundation for Xiaomi to become a great diversified company.

Unlike the investment layout methods of other domestic star companies,Xiaomi's strategic investment is aimed at establishing close cooperative relationships with ecological chain enterprises and forming synergistic effects.Even if they are not Xiaomi, or do not belong to Xiaomi, one thing is the same: they are all like Xiaomi.

Therefore, Xiaomi smart bracelets, Xiaomi body fat scales, weight scales, Xiaomi blood pressure monitors, thermometers, etc., although not all are produced by the same company in Xiaomi's ecological chain, give people the feeling that "this is very Xiaomi."

If products like weight scales are considered to be on the edge of smart home and household medical devices, then thermometers and blood pressure monitors are Xiaomi's direct investment layout in the medical device product field.

In 2016, "Miaomiaoceshi Technology," a medical device company specializing in infant thermometers, received a multi-million Pre-A roundfinancing，from Xiaomi and Shunwei Capital. "Miaomiaoceshi" also became the second medical device company in Xiaomi's supply chain, shouldering the mission of opening up measurement and maternal and infant markets for Xiaomi.

Yiou Healthcare reported on December 25 that the business scope of Beijing Shi Le Technology Co., Ltd., a wholly-owned subsidiary of Xiaomi, has been changed, adding the "medical internal medicine medical services" project to its original business.

It is understood that the company was established in June 2019 with a registered capital of 2 million yuan. The legal representative is Lin Bin, co-founder and president of Xiaomi, and it is wholly owned by Xiaomi Communication Technology Co., Ltd.

Data from Qichacha shows that the company's latest business scope includes technology development, technology consulting, technology services; basic software services; application software services; computer system services; engaging in internal medicine medical services; food sales; catering services.

New industry sectors poised for explosive growth.

Not only Xiaomi, but Huawei, Apple, Baidu, and Tencent also laid out the medical and health industry in 2019. From the trends of large Internet companies and the extension of 5G to the medical field, it can be seen that the market in this field will experience explosive growth.

According to data from the "China Internet + Medical Industry Market Prospect and Business Model Innovation Analysis Report" released by the Foresight Industry Research Institute, in 2009, the scale of China's Internet medical market was only 200 million yuan, mainly remaining in the PC Internet stage, with medical informatization just starting, mainly focusing on medical advertising, online diagnosis, and medical information search.

After that, with the popularization of mobile Internet, the expansion of user scale, and the continuous improvement of software and hardware infrastructure, various entrepreneurial enterprises have poured in,and the awareness of Internet medical care began to widely form. By 2012, the market size of China's Internet medical industry rose to 6.71 billion yuan.

Thereafter, under the continuous growth of market demand and the support of national policies, the Internet medical industry grew rapidly, data and services were further improved, and the market growth rate also steadily increased year by year. By 2017, the market size of China's Internet medical industry reached 32.5 billion yuan, a year-on-year increase of 45.74%.

The high growth reflects the fact that traditional medical services cannot effectively meet the needs of patients and effective connections between doctors and patients. Currently, the Internet medical industry chain has gradually taken shape. According to Foresight Industry Research Institute's calculation, in 2018, the market size of China's Internet medical industry reached 49.1 billion yuan, a year-on-year increase of 51.08%.

At this growth rate, by 2020, the market size of China's Internet medical industry will exceed 90 billion yuan.Previously, how to price Internet medical services and include them in medical insurance reimbursement has always been the biggest obstacle to industry development. Now, under the situation of clear and favorable policies, it is expected that this Internet medical industry cake will further expand.

Investment layout: both opportunity and risk.

There are still many risks in Internet medical services. Taking Jiuan Medical as an example, it has formulated and implemented a strategy of "using wearable devices and smart hardware as an entry point to enter the Internet + medical and health big data field, and then establishing a health ecosystem around users."

However, worldwide,the Internet + medical industry is still in its infancy. Issues such as the product forms and business models of personal chronic disease management, the definition of personal health management platforms, the provision of medical services, and the acceptance of hospitals and users have not been resolved.

Worldwide, other companies are also exploring this field, including Google, Amazon, Apple, and BAT. The research and development and competition for market share are in a race against time, intensifying competition.

This means that if other companies' new models or technologies replace the existing exploration directions, the previous investments will become sunk costs.

Furthermore, for smart product businesses, competing in new retail e-commerce platforms will involve a large number of industry competitors. If the products cannot stand out in terms of performance, Price, and user experience, or if they fail to meet market demand, there is a risk that the upfront investment in smart hardware product R&D will not be recovered.