Announcing financial results for the third quarter of this year, Xiaomi founder and CEO Lei Jun explained why the company's smartphones are highly competitive. According to him, what makes Xiaomi devices such is their gross sales margin of only 8–9%.
Lei Jun said, “I think the gross margin of 8-9% is very low, and since our sales model is based on e-commerce, the price that the end customer will ultimately pay for the purchase ends up being very low. Most importantly, our own gross margins are very low and our main sales channels are very short, so the final price on the retail market remains very attractive to customers.”
He believes that the cost of smartphones will become even more exorbitant. Devices will become more expensive as the industry moves towards 5G technology. However, he added that Xiaomi's price-quality ratio will remain superior to others. Maintaining the same sales strategy when switching to 5G is quite logical, because it works great.
Regarding the financial performance of Xiaomi Group for the third quarter of 2019, the company's total revenue for the said quarter was 53,7 billion yuan, an increase of 5,5% year-on-year and the highest quarterly figure since the founding of Xiaomi. The company also reported that its adjusted net profit was 3,5 billion yuan, 20,3% more than analysts had expected. The company's total cumulative net profit for the first three quarters of this year was 9,2 billion yuan, already exceeding the cumulative net profit of 2018.
Source: 3dnews.ru