FP StaffAug 22, 2022 15:05:14 IST
Xiaomi, in a recent statement to its stakeholders, in Beijing said that its net profit for the quarter ending in June 2022 fell by 83 per cent from last year’s $200 million or 1.36 billion yuan.
Xiaomi is the third largest smartphone brand in the world in terms of shipment of smartphones. According to the statement that they issued in Beijing, revenue declined by 20 per cent to 70.1 billion yuan, on shrinking business both overseas and at home.
The drop in earnings has led Hong Kong-traded shares in Xiaomi, led by Chinese billionaire entrepreneur Lei Jun, to lose 52 per cent of their value in the past year.
Overall global shipments of smartphones in the first half declined 9% from a year earlier due to weak demand, consultancy Canalys said last month. Samsung and Apple were No. 1 and No. 2 ahead of Xiaomi.
Lei, who in 2021 topped Forbes China’s annual ranking of the mainland’s top 50 CEOs, fell off a new 2022 list published on 18 August.
Xiaomi, which ranked No. 292 on the Forbes Global 2000 list of the world’s top listed companies published in May, on Friday reaffirmed earlier plans to enter the electric vehicle market. The electronics brand will face tough competition with Tesla, BYD and others.
Lei has a fortune worth an estimated $9.8 billion on the Forbes Real-Time Billionaires Index today. He’s also an investor in software firm Kingsoft and JOYY Inc., a Nasdaq-listed social media platform that was known until December 2019 as YY.com
This comes at a time when a number of Chinese smartphone brands have been facing difficulties, both in their home market, as well as in international markets. The shipment of Chinese smartphones decreased by almost 15 per cent in the second quarter of this financial year. As per Financial Post, a Canadian financial news website, this marks the fifth consecutive quarterly loss for the industry.
Several analysts have opined that the Chinese market is in deep trouble and that things are only going to become worse as a result of a variety of causes.
These include the strict “Zero COVID Policy” that China has adopted. China’s severe COVID-19 restrictions are not good for businesses. There’s also the fact that the Chinese smartphone market is severely saturated, both domestically, as well as globally. As of the end of last financial year, there were more than 1.6 billion active mobile phone accounts in China, surpassing the population of 1.4 billion.
Internationally, however, the biggest reason why Xiaomi and other Chinese smartphone brands have taken a beating off late are the security concerns that several governments and internet activists have had for years now.
Several government agencies from all over the world fear that not just apps, but the devices themselves originating from China can potentially spy on their citizenry, and are a major concern for domestic security and sovereignty.
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