Xiaomi reports slowest-ever quarterly revenue growth
Chinese smartphone maker struggles to keep up with Huawei
Chinese smartphone manufacturer Xiaomi has reported its slowest quarterly revenue growth on record as it struggles to adapt to changing consumer spending habits in China and to compete with its larger rival Huawei.
Analysts had expected comparatively lacklustre reports and were proved correct. Xiaomi’s total revenue rose 5.5 per cent in the three months up to September 30, on the same period last year, to ¥53.66bn ($7.63bn, £5.92bn). Excluding one-time items, Xiaomi earned ¥3.47bn ($490m, £380m), an improvement on the ¥2.89bn ($410m, £318m) it earned a year ago.
Although many Chinese technology companies would be thrilled with adding half a billion yuan to their earnings, Xiaomi cannot afford the luxury of complacency as it fights for survival with its larger rival Huawei.
Consumer spending habits have also affected the company’s performance. Chinese consumers are holding on to their mobile devices longer than in previous years and this has affected smartphone sales, which account for most of Xiaomi’s revenue. Revenues from the smartphone division actually fell in the quarter 8 per cent to ¥32.3bn ($4.6bn, £3.57bn). The company sold one million fewer phones than it had done in the same period last year, a total of 32.1 million devices.
Although Huawei has been most severely targeted by Washington in the ongoing trade war between China and the United States, Xiaomi has felt the knock-on effect. To display their patriotism Chinese consumers have purposefully bought Huawei products, after the technology and telecommunications giant was blacklisted in America, Xiaomi has felt the subsequent effect of this shift.
Reacting to this most recent earnings data, Chew Shou Zi, Xiaomi’s Chief Financial Officer, emphasised the company’s desire to expand beyond China and to spearhead the adoption of 5G technology, stating:
“If you look at the Chinese smartphone market in the past two years, it is true that there has been some decline, and recently we have also seen some pressure in the market. Once the 5G era is with us, then I believe we will start to see improvement in the smartphone market quite significantly.”