Xiaomi

Xiaomi is a Chinese corporation, as of 2022, the world leader in sales smartphones (about 60% of the company's revenue). The company also makes appliances, tablets, smartwatches, electric scooters and more. In 2021, the company created a division for the development of electric vehicles Xiaomi EV and plans to begin mass production of its own electric vehicles in the first half of 2024.

Performance indicators

2024: 3rd place in the smartphone market in the first quarter

2023

Revenue decline 3.2% to RMB270.97 billion

At the end of 2023, Xiaomi's revenue amounted to approximately 270.97 billion yuan ($37.64 billion at the exchange rate as of March 21, 2024). This is 3.2% less than the result for 2022, when the figure was 280.04 billion yuan. Such figures are given in the financial report released on March 19, 2024.

The drop in revenue is partly due to lower demand for smartphones. According to Canalys estimates, in 2023, sales of Xiaomi cellular devices decreased on an annualized basis by about 4%. According to Xiaomi itself, the company sold 145.6 million smartphones, which corresponds to 12.8% of the total global market. In the ranking of leading suppliers of such devices, the company ranks third, behind only Apple and Samsung. In 2023, smartphone shipments brought Xiaomi about 157.5 billion yuan ($21.88 billion).

𝓲

Unsplash

The report notes that in 2023, sales of Xiaomi tablets showed significant growth: global shipments exceeded 5 million units, an increase of more than 50% compared to the previous year. In the direction of [[the Internet of Things (IoT) [[Internet of Things (IoT)|[[Internet of Things (IoT)|[[Internet of Things (IoT)|[[Internet of Things (IoT)|[[Internet of Things (IoT)|[[Internet of Things (IoT)||Internet of Things (IoT)]]]]]]]]]]]]]]] and products for the modern lifestyle, the company's revenue amounted to 80.1 billion yuan ($11.13 billion), rising 0.4% compared to 2022. As of December 31, 2023, the number of connected IoT devices (excluding smartphones, tablets and laptops) on the Xiaomi platform reached 739.7 million, which is 25.5% more than in 2022. The company increased sales of air conditioners in 2023 by 49% (up to 4.4 million units), refrigerators - twice (up to 2 million units), washing machines - by 24% (up to 1.3 million units).

Xiaomi's net profit in 2023 reached 17.47 billion yuan ($2.43 billion). This is approximately 7 times more than the previous year, when the company earned 2.5 billion yuan ($0.35 billion).^[1]

Share of emerging markets in the supply of smartphones - 57%

The share of emerging markets in the supply of smartphones of manufacturers.
The chart is based on data from the first quarter of 2018 through the second quarter of 2023.

2022:14% drop in revenue, 87% drop in net profit due to collapse in demand for smartphones

At the end of 2022, the revenue of the Chinese Xiaomi amounted to 280.04 billion yuan (approximately $40.69 billion at the exchange rate as of March 27, 2023). This is 14.7% less than last year's result, as stated in the financial report published on March 24, 2023.

The sharp decline in the smartphone market has had a strong impact on Xiaomi's business. Thus, in China, the demand for the company's devices in 2022, according to Canalys estimates, collapsed by 24%, and the share on an annualized basis decreased from 15% to 13%. If we consider the global market, sales of Xiaomi smartphones decreased by 20%: the company took 13% of the industry against 14% in 2021. New restrictions in China in connection with the COVID-19 pandemic, disruptions in supply channels and global macroeconomic challenges had a negative impact on product shipments.

Xiaomi's performance was negatively affected by COVID-19 restrictions, supply channel disruptions and global macroeconomic challenges

Xiaomi's net profit in 2022 collapsed by 87% to 2.5 billion yuan (about $0.36 billion). For comparison, a year earlier, the company received 19.28 billion yuan of net profit.

The revenue of the Xiaomi smartphone segment in 2022 was at the level of 167.2 billion yuan ($24.29 billion). During the year, the company sold approximately 150.5 million cellular devices, and their average price was $161.4. The Internet of Things and consumer electronics business brought in 79.8 billion yuan ($11.59 billion), down 6.1% year-on-year. Xiaomi smart TV sales rose 0.6% to 12.4 million units, while the industry as a whole recorded a 5.6% drop in shipments. As of December 31, 2022, the number of connected devices on the AIoT platform reached 589.4 million (excluding smartphones, tablets and laptops), which is 35.8% more than in the previous year. Total revenue from Xiaomi Internet services in 2022 rose 0.4% to 28.3 billion yuan (approximately $4.11 billion).^[2]

Business in Russia

Main article: Xiaomi in Russia

History

2024

Launch of the world's first smartphone factory without humans. Video

On June 9, 2024, the Chinese company Xiaomi announced the launch of the world's first fully automated manufacturing factory. smartphones The new facility, located in Changping Industrial Park in, Beijing operates without human input, using advanced robotics and artificial intelligence technologies.

The automated factory is capable of producing up to 10 million smartphones per year. The entire assembly process, from the installation of components on the printed circuit board to the packaging of finished devices, is carried out by robots. The company claims that this approach significantly improves production efficiency and minimizes the number of defects.

𝓲

Xiaomi

The factory employs more than 300 robotic systems, including manipulators, conveyor belts and quality control systems. Artificial intelligence controls all processes, optimizing production cycles and ensuring high accuracy of operations. Xiaomi notes that automation has reduced the production time of one smartphone by 20% compared to traditional methods.

Particular attention is paid to quality control: each device undergoes more than 100 automatic checks at various stages of production. This includes testing electronic components, checking assembly, calibrating cameras and sensors, and final testing of finished smartphones.

The company presented a video showing the work of the new factory. The personnel shows how robots perform complex manipulations with components, assemble smartphone cases and test ready-made devices. Xiaomi emphasizes that the use of robots allows you to achieve the highest accuracy when performing operations that are not available to humans.

The launch of the fully automated factory is part of Xiaomi's strategy to digitalize and optimize production processes. The company plans to use the experience gained to modernize its other enterprises. In the long term, this could lead to lower product costs and strengthen Xiaomi's position in the global smartphone market.^[3]

Xiaomi top managers caught taking bribes

In mid-June 2024, Xiaomi fired two regional top managers from the international relations department who were convicted of taking bribes.

According to Sina Technology, Chen Bingxu, the former general manager of the Latin American region, was convicted of extortion. In addition, he accepted expensive gifts and participated in luxury entertainment funded by the company's business partners. Another Xiaomi employee, Owen, a former general manager in Western Europe, is understood to have fabricated outsourcing deals that earned him meaningful profits. Both executives held key positions involved in expanding the company's international market.

𝓲

Unsplash

In response, Xiaomi took decisive action. Chen Bingxu was fired, stripped of his stock options and reportedly obliged to compensate the companies for financial losses. In Owen's case, the company did not confine itself to dismissal and brought legal proceedings, bringing both criminal and civil charges to pay damages.

These cases have become revealing enough for Xiaomi to show employees its dedication to ethical standards and rejection of corruption and abuse in any manifestation. The loss of key regional managers due to misconduct could significantly complicate Xiaomi's progress, however, contrary to incidents, the company continues to strengthen its position in the global market. It successfully competes with Samsung and Apple to dominate the market in Europe, and also conquers new heights in Latin America, where, according to a Canalys report, it sold 5.3 million devices in the first quarter of 2024, taking 15.3% of the market. Thus, the company's sales in this region increased by 45% on an annualized basis.^[4]

2022

15% staff cut after earnings drop

On December 20, 2022, Xiaomi confirmed information about mass layoffs in the company that had previously appeared in the media. According to the South China Morning Post, about 15% fall under the reduction. The company itself named another figure - "less than 10%."

According to the Gadget Tendency portal, the layoffs will affect almost all Xiaomi departments, including the department of mobile devices and Internet services. In some departments, up to 40% of employees will be reduced, in others - up to 75%. In general, about 15-20% of the state will leave the company, which is about 6 thousand people, the publication says.

Xiaomi store in China

It is assumed that workers who fall under the reduction will receive compensation in the amount of three monthly salaries, as well as double payments for unused vacation days. Xiaomi itself confirmed that the dismissed employees will be paid severance pay in accordance with the law.

According to the South China Morning Post, as of September 30, 2022, Xiaomi had 35,314 employees, of which more than 32,000 were in mainland China. The publication notes that many of the thousands of dismissed employees joined the company relatively recently - during a large-scale recruitment campaign that launched in December 2021.

Mass layoffs at Xiaomi became known after a short period of time after the company reported falling revenues in the third quarter of 2022. During this period of time, the Chinese manufacturer of smartphones and other consumer electronics registered revenue of $10.1 billion, which is almost 10% less than sales a year ago. Xiaomi's net profit has dropped even more during this time - by almost 60%.

Reuters notes that Xiaomi has become another technology company that is forced to downsize amid outbreaks of the COVID-19 coronavirus in China.^[5]

Indian authorities seize $725 million from the company for illegal transfers abroad

The authorities India in April 2022 seized Xiaomi $725 million from a Chinese phone manufacturer for illegal transfers abroad.

Xiaomi's local unit, at the direction of its parent company, transferred money to three foreign businesses under the guise of royalties, according to Indian financial crime authorities. Xiaomi called the payments legal.

2021

Share of global smartwatch sales - 3.6%

Data for 2021

Revenue growth of 33.5% and net profit - 69.5%

Xiaomi Corporation on March 22, 2022 shared with TAdviser the financial results for 2021. Despite the difficulties associated with the global economy, Xiaomi's sustainable business model has provided stable annual growth. In 2021, total revenue reached 328.3 billion yuan, an increase of 33.5% compared to 2020. Adjusted net income for the year was RMB22.0 billion, up 69.5% from the same rate last year. Both annual indicators exceeded expectations, the company noted.

Xiaomi revenue grew by a third, profit - by 70%
Photo: fossbytes.com

Global shipments of Xiaomi smartphones grew by 30.0% over the years and reached a record level of 190.3 million units. According to Canalys, in 2021 Xiaomi ranked 3rd in the world in terms of smartphone shipments with an indicator of 14.1%.

In 2021, the company's revenue in foreign markets reached 163.6 billion yuan, an increase of 33.7% compared to last year, and accounted for 49.8% of total revenue. In addition to smartphones, steady growth is demonstrated by revenue in the Internet of Things (IoT) segment, which reached 5.0 billion yuan in 2021, an increase of 84.3% compared to last year, amounting to 17.8%.

The company noted an increase in competitiveness in the premium segment and growth promotion thanks to the dual brand strategy.

In 2021, the total supply of smartphones worth over or equal to 3,000 yuan in mainland China and over or equal to 300 euros in foreign markets exceeded 24 million units, which is much higher than the figure of 10 million units shipped in 2020. The percentage of total Xiaomi smartphone shipments increased from 7% in 2020 to 13% in 2021.

In foreign markets, the total supply of smartphones worth over or equal to 300 euros increased by more than 160% compared to 2020. According to Canalys, Xiaomi ranked 3rd in terms of foreign shipments of premium segment smartphones worth at least $350 in 2021, which indicates the successful development of the premium segment in foreign markets.

Xiaomi remains focused on implementing the Smartphone × Internet of Things (IoT) strategy worldwide. As of December 31, 2021, the number of smart devices connected to the consumer Internet of Things platform, excluding smartphones and laptops, reached 434 million, an increase of 33.6% over the year.

The number of users with five or more devices connected to the consumer Internet of Things platform (not including smartphones and laptops) reached 8.8 million, showing an increase of 40.4% compared to last year.

Global shipments of Xiaomi Smart TV reached 12.3 million units amid a general decline in TV shipments in the global market in 2021. According to AllViewCloud ("AVC"), Xiaomi ranks 1st in mainland China in terms of Smart TV shipments.

In August 2021, Xiaomi introduced the Xiaomi Pad 5 series of tablets. According to Canalys, in the mainland Chinese supply ranking, the product reached 4th place in the fourth quarter of 2021.

In 2021, Xiaomi's revenue in the Internet of Things and ecosystem products segment amounted to 85.0 billion yuan, an increase of 26.1% compared to the same period last year.

The direction of Internet services is showing steady growth, continuing to expand in foreign markets. Over the year, revenues from Internet services reached 28.2 billion yuan, an increase of 18.8%.

As of December 2021, the number of MIUI active users increased by 28.4% year-on-year to reach 508.9 million. In 2021, 112.5 million active users joined MIUI worldwide, including 18.9 million new users in mainland China.

Meanwhile, Smart TV's user base also continued to grow steadily. In December 2021, the number of active Smart TV users increased by more than 29% compared to last year, and the number of paid TV subscribers reached 4.9 million, an increase of 14.5% over the year.

In 2021, total R&D spending reached RMB13.2 billion, an increase of 42.3% year-on-year. Since technological progress is one of the company's core values, Xiaomi plans to invest more than 100 billion yuan in R&D over the next five years.

Xiaomi attaches great importance to the development and preservation of talent in the field of technology. The company announced new incentive benefits for young engineers, technicians, middle and senior managers, as well as participants in the new 10-year Entrepreneurship Program.

Mass blocking of smartphones illegally imported into various countries of the world

On September 10, 2021, information appeared that Xiaomi, without warning, began blocking smartphones illegally imported into various countries. According to the XDA Developers portal, the first to encounter such a problem were the inhabitants of the Crimean peninsula.

Then complaints about the blocked smartphones began to come from,,, and Iran Cubes. Syria Sudan There is even a list, and in North Korea this case it is completely incomprehensible how its residents were able to break into a full-fledged Internet one and report on Xiaomi's actions.

It is possible that in the future Xiaomi may begin blocking "gray" smartphones in other regions of the world, including throughout Russia.

Xiami's export policy prohibits the sale of its smartphones in the regions listed. Despite this, for all 10 years that it has produced smartphones, the company has never arranged a massive blocking in them. There were certainly isolated cases, but this time we can talk about thousands of victims.

In their messages, all users write that the blocking comes a few days after the first turn on and activate the smartphone. All functions of the device, as well as personal data of the user, become unavailable. Instead, an inscription appears on the screen stating: "Xiaomi policy does not allow the sale or provision of a product in the territory in which you tried to activate it. For more information, contact your sellers directly. "

In the user agreement posted on the official Xiaomi website, there is indeed a clause that clearly states that customers are prohibited from exporting phones to certain regions. In this paragraph, number 14.2 mentions Crimea, Syria, and North Korea, as well as Cuba, Iran and Sudan. However, neither this nor any other paragraph of the document says that the punishment for violation will be a complete blocking of the smartphone. Thus, residents of the listed regions affected by the actions of the company had the opportunity to challenge them.

According to a number of users of the XDA Developers forum, there is a possibility that Xiaomi will not block all of its "gray" smartphones located in Crimea, Iran, Cuba and other listed countries. So, under the "amnesty," according to them, the devices that were activated in the territory of the country where they were supposed to be sold will fall.

Save from blocking, as one of the users of the XDA Developrs forum writes, can also install customized firmware. There are a great many options for such firmware for Xiaomi devices, but an unlocked bootloader is needed to install them. To receive it, you need to contact Xiaomi directly, which will attract additional attention from the company and increase the risk of a complete lock of the device.^[6]

Creating a company to develop electric vehicles with a capital of $1.55 billion

In early September 2021, Xiaomi officially registered its electric vehicle business. The subsidiary is called Xiaomi EV, its authorized capital amounted to $1.55 billion. Read more here.

Buying self-driving car technology developer Deepmotion

  At the end of August 2021, Xiaomi announced the purchase of Deepmotion, a company specializing in autonomous driving technologies, for $77.4 million. Read more here. 

Xiaomi first came out on the second place in the world in terms of delivery

In the second quarter of 2021, Xiaomi became the second largest smartphone manufacturer in the world. This is the first time Xiaomi has broken into the top two, historically dominated by Samsung Electronics and Apple.

In the second quarter, Samsung's share was 19%, Xiaomi was 17%, and Apple was 14%, the assessment of Xiaomi's deliveries in the second quarter indicates a 83% jump.

Overseas expansion was Xiaomi's biggest growth driver, with the company increasing shipments by more than 300% in Latin America, 150% in Africa and 50% in Western Europe.

Court-ordered lifting of U.S. sanctions

In March 2021 Xiaomi , it was possible to achieve the lifting of sanctions. Pentagon Thanks to this, the company's shares on March 15 rose in price by more than 7% to the close of the exchange in Hong Kong, and during trading growth reached 12%.

After the US Department of Defense blacklisted Xiaomi for companies that the US authorities believe are cooperating with intelligence, PEOPLE'S REPUBLIC OF CHINA this manufacturer smartphones and consumer electronic engineers filed an application with a Washington court demanding to annul the authorities' decision, calling it "unconstitutional actions" not supported by any evidence.

The court lifted the sanctions imposed by Trump against Xiaomi

Judge Rudolph Contreras, who considered this case, on March 12, 2021 found the accusations that the country's national security was under threat because of the Chinese company unproven. In addition, according to him, the Pentagon's decision to consider Xiaomi a "communist Chinese military company" adopted on January 15 was "deeply erroneous." 

Xiaomi said it was pleased with the court's decision, but intends to seek the cancellation of the decision not on a temporary basis, but on an ongoing basis.

So quickly and so many Chinese companies were added to these lists that US departments could not fully prepare the rationale for this.  Now the government has been asked to  produce evidence, "Steptoe & Johnson lawyer Wendy Weisong explained in a conversation with the Financial Times.

In her opinion, the decision in the Xiaomi case will inspire other Chinese companies to apply to the courts with a request to study the grounds on which they were included in the sanctions lists.

On March 15, 2021, after the growth of Xiaomi quotes in connection with the court's decision to lift the sanctions, the fortune of founder and CEO Lei Jun increased by $1.4 billion and exceeded $23 billion. This is evidenced by the data of Forbes magazine.^[7]

Getting on the US sanctions list

On January 14, 2021, the presidential administration USA Donald Trump expanded the blacklist of Chinese companies that, according to authorities, are associated with the military industry. PEOPLE'S REPUBLIC OF CHINA Among them was Xiaomi.

Americans are barred from investing in blacklisted companies because Washington suspects them of having ties to the Chinese military-industrial complex. American investors are obliged to get rid of the assets of these companies by November 11, 2021.

US imposed sanctions against Xiaomi

The Pentagon maintains a list of sanctioned companies based on the law on the protection of national interests, adopted in 1999. Trump's executive order banning securities transactions by "communist Chinese military companies" came into force on January 11, 2021. In November 2020, Donald Trump said that these companies are raising funds, including American investors, having achieved the inclusion of their shares in stock indices, and then direct them to the development of China's military-industrial complex. At first, there were 31 companies from the Celestial Empire on the list.

In mid-January 2021, nine Chinese companies were blacklisted:

• Xiaomi;
• Comac;
• Luokong Technology;
• Gowin Semiconductor;
• Grand China Air;
• Global Tone Communication Technology;
• Beijing Zhongguancun Development Investment Center;
• China National Aviation Holding;
• Advanced Micro-Fabrication Equipment.

Xiaomi said it did not agree with the decision. The company denies ties to China's military industry and assures that it will take measures to protect the interests of its shareholders in response to sanctions. Xiaomi's inclusion in the sanctions list led to a more than 10 percent drop in the company's quotes on January 15, 2021.

The Chinese Foreign Ministry called on the US authorities not to discriminate against Chinese companies and not to create obstacles to bilateral cooperation.^[8]

2020: Revenue growth of 19.4%, to RMB245.87 billion, profit - 2 times, to RMB20.31 billion

Xiaomi, according to the results of its work in 2020, raised 245.87 billion yuan (about $37 billion at the exchange rate at the time of publication of the financial statements - March 24, 2021), which is 19.4% more than sales a year ago.

The revenue ratio in China and the rest of the countries combined is approximately 50% by 50%. In 2020, the company's turnover outside the Celestial Empire reached 122.4 billion yuan, which is 34.1% more than a year earlier. By December 31, the products of the Chinese manufacturer were presented in more than 100 countries. According to Canalys, Xiaomi smartphones were among the five most popular in terms of quantitative deliveries in 54 states.

Xiaomi's revenues from the sale of smartphones in 2020 amounted to 152.2 billion yuan, an increase of 24.6% compared to the previous year. Over the year, the company shipped a total of 146.2 million pipes, which is 17.5% more than in 2019. Sales of premium smartphones (the company includes models costing from $460) for the year exceeded 10 million units, thanks to which the average cost of Xiaomi phones sold increased by 6.1%, to 1,040 yuan.

Xiaomi's revenue for the sale of Internet of Things devices and various non-smartphone consumer electronics increased by 8.6% compared to 2019 by the end of 2020 and reached 67.4 billion yuan. Over the year, the company released about 12 million Smart TVs, which is slightly less than the previous year's volume of 12.8 million units. The Chinese manufacturer linked this decline to the consequences of the COVID-19 coronavirus pandemic and problems with the supply of key components for TVs.

The direction of Internet services in 2020 brought Xiaomi about 23.8 billion yuan in revenue, which is 19.7% higher than a year ago.

Xiaomi's net profit in 2020 compared to 2019 more than doubled to 20.31 billion yuan.^[9]

2019

Revenue growth by 17.7% to $29 billion

On March 31, 2020, it became known that the Chinese Xiaomi in the report for the fourth quarter and the entire 2019, it reported record annual revenue. Thus, the company's revenue in 2019 increased by 17.7% compared to 2018, exceeding $29 billion. Most of Xiaomi earned thanks to the sale - smartphones $17.1 billion per year.

The company shipped 124.6 million smartphones in 2019. Xiaomi's net profit reached $1.62 billion - 34.8% more than in 2018.^[10]

Transfer of 20 thousand employees of shares for $24 million after entering the rating of 500 largest companies

On July 23, 2019, it became known that Xiaomi would give each employee 1000 shares. The Chinese manufacturer smartphones decided to pay rewards after it entered the Fortune Global 500 ranking of the world's largest companies.

According to the South China Morning Post, citing a statement that Xiaomi made for the Hong Kong Stock Exchange, by July 19, a little more than 20 thousand employees of the company received the securities they were entitled to, the exchange rate of which at that time was HK $9.11.

Xiaomi first entered the top 500 global companies in terms of revenue

Xiaomi has allocated $187.5 million ($24 million) to HK for this incentive program. True, the staff will be able to take advantage of this bonus only in a year - if the employee leaves Xiaomi by July 19, 2020, then he will not be able to cash out the shares. But the award is due to both full-time employees and those who provide services under the outsourcing scheme.

HK $9.11 is 46% less than the value of shares at the time of the IPO in July 2018, the newspaper notes.

Xiaomi encourages staff to celebrate the landmark event - the company ranked 468th in the Fortune Global 500 and ranked 7th in the Internet and Retail category of this rating.^[11]

It took Xiaomi just nine years to make the Fortune Global 500 list. We must thank all our fans and Mi users for their unwavering support. We also became the youngest company in the rankings this year. We are proud of this record, which we will remember, taking to a new level the international expansion of the company, - said the founder, chairman of the board of directors and CEO of Xiaomi Lei Jun.

Xiaomi ended up in the Fortune Global 500 due to the fact that in fiscal 2018 the company's revenue amounted to $26.44 billion, and net profit - $2 billion. 

Milner owns $1.8 billion of Xiaomi shares, and invested $457 million

On January 18, 2019, it became known that the Apoletto Managers investment fund Yuri Milner owns $1.8 billion worth of Xiaomi shares. This is evidenced by the Bloomberg Billionaires Index, which is updated daily based on the assessment of assets owned by entrepreneurs. Read more here.

2018

Shares of smartphone suppliers in the Chinese market

Revenue growth 52.6% to RMB174.92 billion

In 2018, Xiaomi's revenue amounted to 174.92 billion yuan ($26 billion), which is 52.6% more than a year earlier, thanks to the company's active expansion in the Indian and European markets.

Most of Xiaomi's revenues are generated by sales smartphones - in 2018 they reached 113.8 billion yuan, surpassing the figure a year ago by 41.3%. In physical terms, the company's smartphone sales increased by 29.8% and amounted to 118.7 million units (data IDC provided in the Xiaomi report).

Xiaomi financials

On products in the field of the Internet of things and consumer electronics (TVs, laptops, electric toothbrushes, razors, scooters, vacuum cleaners, etc.), the Chinese vendor earned 43.8 billion yuan in a year. This is 86.9% more than in 2017. Shipments of Xiaomi TVs jumped 225% to 8.4 million units. In 2018, the company mastered several new markets, including air conditioners and washing machines.

By the end of December 2018, about 2.3 million users worldwide had more than 5 Xiaomi IoT devices, including smartphones and laptops, up 109.5% year-on-year

Another fast-growing Xiaomi business is services. The company's revenues from them in 2018 reached 16 billion yuan, rising by 61.2% compared to 2017. Advertising revenue rose 79.9% to 10.1 billion yuan largely due to the continued optimization of recommendation algorithms and the growing use of the company's services.

Average revenue from one user of Xiaomi services by December 31, 2018 rose to 65.9 yuan from 57.9 yuan a year earlier. The total number of such users increased from 170.8 to 242.1 million.

In 2018, Xiaomi returned to profit, recording it at 13.47 billion yuan ($2 billion). In 2017, the company's losses were measured at 43.89 billion yuan.^[12]

Going public: raising $4.7 billion and valuing $54 billion

On June 29, 2018, Xiaomi held an initial public offering of its shares. The Chinese company managed to attract $1.4 billion less funds than planned.

According to Bloomberg, Xiaomi has set the offering price range as part of the IPO  at HK $17-22, but on the exchange the company sold 2.18 billion shares at a price of HK $17 for each.

Xiaomi store in China

Thus, Xiaomi earned HK $37 billion on the listing, or approximately $4.7 billion at the exchange rate as of June 29, 2018. Shortly before the placement, Xiaomi was building a forecast to raise up to $6.1 billion, and a few months earlier, Reuters and other publications reported an amount of $10 billion.

Going to the Hong Kong Stock Exchange, Xiaomi received a market capitalization estimate of $54 billion, which is half the original goal of the vendor. At the same time, even the lower limit of the planned placement range corresponds to 22.7 times the profit expected at the end of 2019. This suggests that the additional placement option has been fully implemented, Bloomberg notes.

According to the Financial Times newspaper, Hong Kong investors were unhappy with the recent Xiaomi roadshow, saying that the shares were overstated even for the lower end of the range.

According to analysts, Xiaomi's IPO caused significant demand from institutional investors, but not too much excitement among retailers. Xiaomi's major anchor investors include American processor maker Qualcomm, Chinese mobile operator China Mobile, Chinese fund CICFH Entertainment.

Xiaomi was going to raise investor funds on exchanges in Hong Kong and mainland China almost simultaneously. However, the company shelved a plan to place so-called Chinese depositary receipts in Shanghai, reducing the overall goal of selling securities.^[13]

Xiaomi relies on services and is ready to earn 1-2% on smartphones

Xiaomi wants to make Internet services the main source of its revenue, and the Chinese vendor is ready to sell smartphones at almost cost, earning only 1-2% from them. Xiaomi founder and CEO Lei Jun is so convinced of the correctness of this approach that he wants to add it to the company's charter. The top manager announced this in an interview with The South China Morning Post in early April 2018.

We must contain the tendency to greed and strive to gain the full confidence of consumers. Therefore, we are now discussing, and I think we will be able to write down in the company's charter a rule that permanently enshrines a certain percentage of profits from equipment, which we will not exceed. Our goal is only 1-2%. We want consumers not to hesitate to choose our products, - said Lei Jun, adding that the company is going to make money on highly profitable, paid Internet services.[14]

Lei Jun

Xiaomi sets itself an ambitious goal: in the next 10 quarters, to regain leadership in the world's largest smartphone market - in China, which it missed in 2016 under the onslaught of its compatriots Oppo and Vivo, who actively expanded sales and retail chains.

The strategy chosen by Xiaomi is already bearing fruit: in October 2017, the company announced that it had fulfilled its annual revenue plan ahead of schedule and exceeded the target of 100 billion yuan ($15.9 billion). Also, the Chinese vendor promised to continue international expansion.

Meanwhile, IDC analyst Kiranjit Kaur noted that although Xiaomi seeks to become an Internet company that generates revenue from services, profit in the hardware business is extremely important, since these funds will help Xiaomi stay afloat in difficult market conditions and wait for the strengthening of its ecosystem.

In turn, analyst Gartner Xi Kei Liu (CK Lu) called Xiaomi's smartphone strategy risky and called on the company to increase its service business.

2017

Losses of $7 billion

In 2017, Xiaomi's revenue reached 114.62 billion yuan (about $18 billion at the exchange rate as of May 4, 2018), which is 67.5% more than in 2016. Net losses amounted to 43.89 billion yuan ($6.9 billion) against 491.6 million yuan in profit a year earlier.

The cash losses are due only to the revision of the fair value of convertible redeemable preferred shares, according to documents that Xiaomi sent to the Hong Kong Stock Exchange in connection with the upcoming IPO there.

Xiaomi ended 2017 with a loss of $7 billion

Approximately 70% of Xiaomi's revenue for 2017 came from smartphone sales. Various "smart" devices accounted for 20% of the turnover, and the remaining 10% - for Internet services.

The company's telephone business is still not highly profitable. In 2017, Xiaomi's gross profit margin from smartphone sales was only 8.8%, while in the service business (games, advertising, MIUI user interface, etc.) the figure was 60%. For comparison, Apple's profit margin from the sale of flagship smartphones exceeds 60%.

Xiaomi's revenue is growing thanks to its actively international expansion. In 2017, foreign markets brought the company 28% of sales against 6.1% in 2015.

Xiaomi did not disclose the volume of smartphone sales. According to IDC analysts, in 2017 Xiaomi increased shipments of smart phones by 74.5%, to 92.4 million units. As a result, the vendor's market share rose to 6.3% from 3.6% in 2016, which allowed Xiaomi to get ahead of another Chinese company - Vivo.

Strategy Analytics experts confirm Xiaomi's entry into the top 5 leaders in the global smartphone market. In 2017, the company produced 91.3 million tubes against 58.7 million units a year earlier.

In early May 2018, Xiaomi applied for an initial public offering of its shares on the stock exchange and expects to raise up to $10 billion as part of an IPO. These funds are planned to be spent on research and development, company purchases and product development in the Internet of Things market.^[15]

Baidu and Xiaomi create IoT alliance

Chinese counterparts of Google and Apple - Baidu and Xiaomi - will unite to develop systems based on the Internet of Things and artificial intelligence. IT giants will jointly develop devices using computer vision, deep learning and other AI technologies.

Notes