Things were going so well for Xiaomi. Customers were lining up, investors were swooning and the Beijing-based startup closed funding at a $45-billion valuation. That was last year. Now the high-flying smartphone maker is stumbling. Founder Lei Jun’s latest business, one of China’s most exciting startup stories of the past few years, is likely to miss its own goal of selling 80 million smartphones this year, according to two people with knowledge of its production plans. Suppliers also cut their internal targets for Xiaomi in anticipation of the shortfall, they said. Xiaomi’s falter shows the startup’s challenge in trying to maintain momentum after a meteoric ascent past Apple and Samsung Electronics in China. Investors bought into the company’s story of youthful disruption and online sales, yet the subsequent lowering of China’s growth target and the copying of its sales strategy by rivals have neutralised Xiaomi’s firstmover advantage, putting its high price tag in doubt. “All those expectations of growth aren’t being realised, which now makes that $45-billion valuation unfeasible,” said Alberto Moel, an analyst at Sanford C Bernstein in Hong Kong. “The argument was that their business is kind of like Apple and they’re growing very fast, but they’re no longer growing so fast and they’re not as good as Apple.” SHIPMENTS DROP Xiaomi doesn’t provide exact shipment targets to its suppliers, instead working on a real-time basis with orders fulfilled as they come in on Xiaomi’s website. Yet the companies tasked with preparing the components and capacity to meet Xiaomi’s needs have started scaling back production and diverting resources elsewhere. Domestic shipments of Xiaomi smartphones, including its premium Mi 4 and more economical Redmi series, dropped 8 per cent in the third quarter from a year earlier, its first-ever decline, according to researcher Canalys. IHS, another research firm, estimates that Xiaomi shipments dropped 3.9 per cent, barely maintaining the lead over Huawei. That’s a big change from the bold growth projections used to justify Xiaomi’s tag as one of the world’s most-valuable technology startups. In March of last year, Lei predicted selling 100 million smartphones in 2015. Through the first nine months of this year, Xiaomi shipped about 53 million smartphones. With its optimistic forecast, Xiaomi secured $1.1 billion in December from investors including GIC, All-Stars Investment and DST. Xiaomi drew comparisons to Alibaba Group Holding, the Chinese ecommerce company that months earlier held the largest initial public offering ever.