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Xiaomi Corp (HKG: 1810), one of China’s leading technology giants has reported a 4% drop in revenue for the second quarter, reflecting the ongoing challenges faced by the Chinese mobile phone market.
The company’s revenue dipped to 67.4 billion Yuan (approximately $9.24 billion), down from 70.17 billion Yuan in the same quarter of the previous year. Despite the decline, Xiaomi managed to surpass analysts’ expectations of 65.13 billion Yuan, offering a silver lining to an otherwise dull market outlook.
This decline in revenue experienced by Xiaomi, while noteworthy, comes as no surprise given the complex dynamics that have been reshaping China’s smartphone market. The country, which was once a bustling hub for smartphone sales, has witnessed a decline in recent years due to a variety of causes.
Research firm Canalys reported a 5% drop in smartphone shipments to 64.3 million units in the second quarter. This slump in demand has put further pressure on smartphone manufacturers, including Xiaomi, as they grapple with diminishing sales both domestically and in key international markets.
Specifically, Xiaomi experienced its shipments decline by 19% to 8.6 million units. Xiaomi’s performance in India, a market that has historically been a stronghold for the brand, also took a hit. Shipments to India fell by 22%, with Xiaomi managing to deliver only 5.4 million units.
Surprisingly, while Xiaomi’s revenue faced a decline, the company’s net income told a slightly different story. Net income increased to 5.14 billion Yuan during the period, marking an impressive 147% increase from 2.08 billion Yuan recorded a year earlier.
Xiaomi’s success in increasing net income, even in the face of declining revenue, can be attributed to its broader business strategy.
“We maintained our leading market position in each of our business segments, while managing to reduce costs and enhance efficiency, resulting in strong financial performance,” Xiaomi said in a statement.
The decline in handset sales, a challenge faced not only by Xiaomi but also by other smartphone manufacturers, has pushed the company to explore new avenues for growth. Xiaomi has revealed it plans to make a dramatic foray into the Electric Vehicle (EV) market.
Reports from Reuters earlier this month confirmed that Xiaomi has secured approval from China’s state planner for its foray into the EV sector. This marks a significant step towards realizing its vision of becoming a major player in the automotive landscape.
Xiaomi’s commitment to this venture is evidenced by its substantial investment pledge of $10 billion over a span of a decade. This significant financial commitment demonstrates the company’s long-term vision for the automobile business and its determination to make a lasting impact in the EV market.
Xiaomi’s latest endeavor comes only shortly after unveiling a new prototype of its Wireless Augmented Reality (AR) Glass Discovery Edition in February. With this infusion of resources, Xiaomi aims to rapidly establish itself as a key player in the electric vehicle sector, demonstrating its agility and strategic thinking.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
The Chinese smartphone giant started to let go of some of its staff due to lower sales amid the lockdowns in China.
While many companies are gradually rebounding from the adverse effects of the coronavirus pandemic, others like China Xiaomi are still battling with the COVID impact as it plans to lay off 10% of its workforce. According to the South China Morning Post, the smartphone maker has started firing employees across multiple departments, including its smartphone and internet services units.
Speaking on the cut, a spokesperson said Xiaomi is conducting a “routine personnel optimization and organizational streamlining” due to COVID with “less than 10 percent of the total workforce” affected. The company revealed in its Q3 financial results that it had 35,314 employees, with over 32,000 in mainland China. Notably, Chinese companies often conduct layoffs in the name of “business optimization.” This is done to avoid scrutiny from labor authorities because employee dismissals that affect over 20 jobs must be referred to the government under China’s labor law. Xiaomi stated that victims of the layoff had been compensated in compliance with local regulators. A report said the laid-off workers got redundancy packages from the company.
The Chinese smartphone giant started to let go of some of its staff due to lower sales amid the lockdowns in China. Slower consumer spending also contributed to the jobs cut. Notably, most of the people that would be impacted during the layoff were just recruited in December last year. Major social media platforms in China, including Weibo, Maimai, and Xiaohongshu, have been buzzing with posts about the dismissal. Discussions on the platforms show that many are beginning to get concerned about the future of the tech industry in China. This is because other top tech companies in China, such as Alibaba Group (NYSE: BABA) and Tencent Holdings, have also been laying off workers amid the prolonged Covid-19 battle in the country.
Xiaomi made the move to reduce headcount shortly after its founder unveiled the new flagship 13-series smartphones. The company, which plans to unseat the iPhone from the global top position by 2024, revealed that the Qualcomm Snapdragon chipset powers the new smartphones. This came as the Chinese economy struggled in the consumer electronics market. As a matter of fact, global smartphone shipments dropped 9% YoY to 297.8 million units. Market research firm Canalys confirmed that smartphone shipments in China declined 11% to 70 million units. As for Xiaomi, the 5th largest smartphone seller in China with a 13% market share as of last quarter, the company’s revenue shed 9.7% YoY to 70.47 billion yuan. Its net profit also reduced by 59.1% to 2.21 billion yuan during the same period.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
China’s leading smartphone manufacturer Xiaomi has announced that the recent advertisement for Bitcoin and crypto payment made by the Portugese MI store has no connection with the company’s operation. A Facebook advertisement posted by the MI store indicated that it would accept payments in Bitcoin and a few other cryptocurrencies.
Xiaomi said that the Portuguese MI store is a third-party authorized independent entity and later the store also clarified it has no relations with the Chinese smartphone manufacturer.
“Xiaomi responded that cryptocurrency payments was published by Mi Store Portugal, a authorized partner of the Mi Store in Portugal. This partner is operating independently in the local area and is not related to the operation of Xiaomi company.”, said Colin Wu, Chinese journalist.
Xiaomi’s move to discard the Portuguese Xiaomi store has come as an indication that it doesn’t want to associate itself with crypto-related promotions, given the recent Chinese crackdown. Chinese journalist, Colin WuWu pointed out that Xiaomi founder, Lei Jun is one of the deep-pocket investors in large-scale crypto organizations like OKCoin conflux and certik,
As a Chinese company, Xiaomi is afraid of being involved in supporting cryptocurrency payments that violate Chinese laws. But on the other hand, Xiaomi founder Lei Jun has invested in many cryptocurrency companies, such as okcoin conflux and certik.
— Wu Blockchain (@WuBlockchain) August 6, 2021
The MI Store has stated they will accept crypto payments in Bitcoin ( BTC), Ether (ETH), Tether (USDT), Dash (DASH), and Utrust (UTK) tokens.
Utrust (UTK) token is part of Xiaomi Portugal’s partnership with the European blockchain technology payment platform, Utrust that facilitated the crypto payment services to buy Xiaomi phones. However, Utrust has pulled its partnership tweet, upon Xiaomi’s announcement of having no relations with the Mi store in Portugal.
“Mi Store Portugal, the official Xiaomi retailer, now accepts #crypto payments! Xiaomi is the m,2nd largest phone manufacturer in the world, and now their local branch is accepting the Money of Tomorrow.”, Utrust tweeted and later deleted.
The Chinese government has announced to maintain the crypto crackdown policies in the country during the second half of 2021. In a conference on July 31, the People’s Bank of China reached a consensus to “maintain” high pressure on digital currency trading in China, by encouraging and enabling trade and exchange platforms to adhere to regulatory requirements and rectify their operations for the same.
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