Not 5%: how much Xiaomi actually earns on its smartphones

Xiaomi has published financial indicators for the third quarter and talked about its profit for this

period. These figures were commented on by the founder and CEO of Xiaomi, Lei Jun, mentioning how much the manufacturer earns on their smartphones.

How many?

So, the company's total revenue in the third quarter amounted to 53.7 billion yuan. This is 5.5% more than in the previous year and the highest figure for the quarter since the founding of Xiaomi.

At the same time, net profit for the quarter amounted to 3.5 billion yuan, and for three quarters - 9.2 billion yuan, which already exceeds the total net profit of 2018.

Commenting on these indicators, Lei Jun noted that the company's success is a low gross profit margin of sales, which is 8–9%.

“I think that a gross margin of 8–9% is verylow, and since our sales model is based on e-commerce, the price that the final buyer ultimately pays for the purchase is very low. Most importantly: our own gross margin is very low, and the main sales channels are very short, so the final price in the retail market remains very attractive to buyers ”

Recall that back in April last year, the head of Xiaomi assured that the company would not earn more than 5% on smartphones. And he even promised to give everything that would be more than this limit to his users.

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