Chinese technology giant Xiaomi is preparing to aggressively expand into Australia’s lucrative home appliance market, with the real possibility emerging that if retailers refuse to stock its new products, the company is ready to bypass them entirely — selling direct online and potentially launching its own branded stores.

The move follows a multi-million-dollar investment in Xiaomi’s own appliance manufacturing facilities, signalling a decisive shift from outsourced production to in-house control as the company pushes deeper into whitegoods and climate systems.

Chief Executive Lei Jun said the new plant will allow Xiaomi to accelerate expansion beyond its traditional smartphone business and growing electric vehicle division, ramping up production to as many as seven million units annually.

Manufacturing Power Play

Until now, Xiaomi has developed major home appliances in-house but outsourced production, while sourcing other products from roughly 400 manufacturers it has invested in. That model is changing.

According to Nikkei Asia, Xiaomi plans to bring approximately 20% of its air-conditioner production in-house, alongside other key appliances — a move aimed at tightening margins, controlling quality, and boosting scale.

The company already sells appliances across more than 20 categories, including televisions and robotic vacuum cleaners. In Australia, Xiaomi and Dreame are eyeing expansion into the TV market while broadening their appliance footprint.

But it is the air-conditioning sector that appears firmly in Xiaomi’s sights.

A Growing Target

Australia’s air-conditioning market is valued at an estimated $3.76 billion in 2025 and is forecast to grow at a compound annual growth rate of 5.6% through to 2035, reaching approximately $6.48 billion.

The market is currently dominated by established players including Daikin, Mitsubishi Electric, LG Electronics, Fujitsu and Panasonic — brands regarded as trusted mid-to-premium providers with strong smart-home credentials. Other major competitors include Samsung, Carrier, and Haier/Fisher & Paykel Australia.

Xiaomi is aiming to disrupt that landscape with aggressively priced systems and integrated smart functionality.

Its new air-conditioning systems consist of a single main unit paired with up to six circulator units. The systems can selectively direct hot or cold air in different directions and use sensors to detect occupants and adjust airflow toward them — features designed to appeal to tech-focused consumers.

Retailers on Notice

Industry insiders say Xiaomi is preparing to pitch the new range to Australian retailers. However, management is reportedly prepared to escalate if resistance emerges.

One option under consideration is the rollout of Xiaomi-branded brick-and-mortar stores in Australia — a strategy executives believe would allow staff to better demonstrate complex features and ecosystem integration.

Xiaomi already operates 18,000 stores in mainland China, primarily focused on smartphones. The company has confirmed plans to significantly expand its large-format stores that also sell home appliances, and aims to grow its overseas retail footprint from roughly 300 stores today to 10,000 by around 2030.

Australian stores, if launched, would likely carry a broad range of Xiaomi products across multiple categories.

Price Disruption Strategy

Xiaomi’s home appliance business now accounts for around 30% of company revenue and gross profit, buoyed in part by Chinese government subsidies that have accelerated domestic growth.

According to Nikkei Asia, Xiaomi appliances are best known for aggressive pricing. Data from China’s Changjiang Securities shows that as of 2024, Xiaomi’s air conditioners and refrigerators were priced 14% and 34% below the market average respectively.

The company is also betting heavily on ecosystem lock-in. As of late September, 21.6 million users globally had connected five or more Xiaomi home appliances — excluding smartphones — to its app platform. Since September, selected Siemens and Bosch appliances sold in China can also be controlled via the Xiaomi app, strengthening the brand’s smart-home integration.

President Lu Weibing has publicly stated that Xiaomi aims to become a leader in China’s home appliance market by 2030. Currently, its share in refrigerators and air conditioners sits at roughly 10%, well behind giants such as Midea and Haier.

Competitive Pressure Mounts

Xiaomi’s expansion comes amid renewed speculation that Chinese appliance heavyweight Midea is once again examining Swedish manufacturer Electrolux — a move that, if realised, could further reshape global appliance competition.

For Australian retailers, Xiaomi’s message is clear: partner with us — or compete with us.

The next battleground in Australia’s appliance market may not be fought on features alone, but on distribution, pricing power and ecosystem control.