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Xiaomi made just US$56 million last year

By Kenny Yeo - on 16 Dec 2014, 10:11am

Xiaomi made just US$56 million last year

How does Xiaomi offer such attractively designed devices with competitive specifications at such low prices? The answer is really as simple as it seems - razor-thin margins.

According to a regulatory filing made to the Shenzhen Stock Exchange, Xiaomi, the world's third largest smartphone maker, made just 347.5 million yuan or around US$56 million last year. To give some perspective, this is less than what Apple makes in a single day.

With revenues of 26.6 billion yuan last year, this means that Xiaomi has an operating margin of just 1.8%. For comparison, Samsung's mobile division reported an operating margin of over 18%, while Apple is way ahead with 28.7%.

Such a move is not unusual as Amazon also adopted a similar strategy in its early years as it strove to grow at all costs. However, with the mobile industry being so competitive, many have wondered if Xiaomi's approach is sustainable.

Bryan Wang, an analyst at Forrester Research, said, "They’re growing so fast and so lean, I wouldn’t be surprised even if they were losing money."

The filing was made as Xiaomi invested US$200 million in home appliance maker Midea Group. It also revealed that its CEO Lei Jun, holds a 77.8% ownership of the company.

Source: re/code

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