Xiaomi restructures mobile phone business as company moves away from ‘flat’ structure

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Chinese smartphone maker Xiaomi has restructured its mobile phone business group amid increased competition in the Chinese market, Tencent Tech reports (in Chinese). The move comes one month after the company spun off its budget smartphone sub-brand Redmi.

A new advisory team will be set up under the smartphone business group and led by Zhu Lei, formerly head of sales, combined with an operational team controlling product expenses within the company. Chinese media cited Xiaomi CEO Lei Jun as saying that the restructuring aims to enhance the company’s operation and strategy in its smartphone business.

At the same time, Xiaomi established a department to conduct research and development into new technologies for touch control of mobile phone displays. Lei Jun made the announcements in an internal letter to employees. A Xiaomi spokesperson confirmed the moves to TechNode.

The restructuring follows reports that Xiaomi is abandoning its flat management structure as a means to revive its flagging sales. Xiaomi is reportedly seeking a more systematic organizational structure. An anonymous employee told Caijing that the company is trying to be “more regulated,” and that it has been looking for reasons for its unsatisfactory performance. Xiaomi co-founder Wang Chuan immediately denied the claims.

Despite its overseas success, Xiaomi’s smartphone business has stumbled in 2016, witnessing a 36% decrease in shipment volume compared to the same time period last year. According to research firm the International Data Corporation, Xiaomi’s sales bounced back in 2017 with a 12.4% market share and 32.6% annual increase in shipments, before it decelerated a year later, reaching only 1.3% year-on-year growth in 2018.