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

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

period. These figures were commented on by the founder and executive director of Xiaomi, Lei Jun, who mentioned how much the manufacturer earns on its smartphones.

How many?

So, the company's total revenue in the third quarter was 53.7 billion yuan. This is 5.5% more than in the previous year and the highest quarterly figure 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 figures, Lei Jun noted that the company's success is its low gross sales margin, which is 8-9%.

“I think the gross margin of 8-9% is verylow, and since our sales model is based on e-commerce, the price that the end customer will ultimately pay for the purchase is 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 buyers."

Let us remember 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 away everything that exceeds this limit to his users.

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