Xiaomi CEO Lei Jun
Xiaomi CEO Lei Jun Photograph by Imagine China

King of the Unicorns

Jan 22, 2015

The biggest unicorn of all lives in the Middle Kingdom. If you haven’t heard of Beijing-based smartphone maker Xiaomi, get ready—its swift rise has the potential to be the biggest thing brewing inside China since Alibaba’s IPO.

In China, Xiaomi’s cheap phones (its Redmi 2 costs $115) are hotter than Apple’s (aapl). But Lei Jun, Xiaomi’s founder and CEO, isn’t stopping there. He’s working to create a universe of Xiaomi products by expanding into categories as diverse as air purifiers and Internet TV boxes. The company just raised money at a $46 billion valuation. Yuri Milner, the Russian venture capitalist who bet on Facebook in 2009, is one of the prominent investors backing what he calls the next $100 billion company.

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China has several impressive billion-dollar-plus startups. Dianping is a Yelp-Groupon mashup with 190 million monthly active users; Mogujie is a Pinterest clone favored by the country’s fashionistas; Koudai Shopping connects online shops with users on China’s most popular social network, WeChat. With online retail in the country expected to pass $500 billion in 2015 from just $200 billion in 2012, China is a supersize incubator for growth and fertile pasture for unicorns to graze.

This story is from the February 2015 issue of Fortune.

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