Xiaomi Disclosure Shows Low Profit Margin

Xiaomi Disclosure Shows Low Profit Margin

A disclosure at the Shenzhen Stock Exchange revealed that even though the earnings of Xiaomi reached $4.3 billion last year, its net profit only amounted to $56 million.

This figure indicates that the third-largest smartphone manufacturer in the world has an operating margin of only 1.8 percent. This pales on comparison to the 18.7 percent and 28.7 percent operating margins of the mobile division of Samsung and Apple respectively.

The small profit margin highlights the readiness of the four-year old company from China in its serious effort to increase its share of the smartphone market. The dramatic growth of the Chinese manufacturer has been noted by its well-established and larger competitors.

The smartphones and tablets offered by Xiaomi are aimed mainly for budget-conscious consumers. It has also kept away from a number of western countries, such as Australia, the UK and US. The company is focusing its efforts on emerging markets such as India, Indonesia and China.

The company also enhanced its promotion of a number of devices such as the Redmi 15 through online flash sales. In these sales a small number of devices are available at a lower price.

The growth of the company has become so impressive that it was able to place third in the list of the smartphone manufacturers in the world. It is only topped by Samsung and Apple. However, it is the biggest smartphone manufacturer in the Chinese market.

The company is increasing its efforts in the Indian and Indonesian markets. But, it revealed that it is set to suspend its sale of handsets in India due to an injunction filed by the Delhi High court for patent infringements. The disclosure also was made due to the $200-million investment of Xiaomi in the Midea Group.

Posted by James Fried on Friday December 19 2014, 9:55 AM EST. Ref: cnet. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0