Chinese smartphone manufacturer Xiaomi Corp has announced an 18.9 per cent decline in quarterly revenue as consumer demand for smartphones remained weak despite the ongoing recovery from the COVID-19 pandemic. The company’s sales for the first quarter of 2023 reached CNY 59.5 billion, down from CNY 73.35 billion in the same period last year, in line with analysts’ estimates of CNY 59.43 billion.
However, net income for the period rose by 13.1 per cent to CNY 3.23 billion, compared to CNY 2.86 billion in the previous year.
Although China’s economy has rebounded since the easing of pandemic restrictions, consumer spending in the smartphone sector remained cautious. Total smartphone sales in China experienced an 11 per cent decline during the first quarter of 2023, as reported by research firm Canalys in April. Xiaomi’s sales also dropped by 20 per cent over the same period.
Furthermore, India, which was once Xiaomi’s top overseas market, has proven to be less lucrative for the company. All smartphone brands witnessed a 20% decrease in total shipments during the first quarter, with competitors like Samsung eroding Xiaomi’s market share in the shrinking Indian smartphone market. In response, Xiaomi has reduced prices on several models in both India and China, hoping to stimulate demand.
In an effort to diversify its business beyond smartphones, Xiaomi has invested in the automotive sector. The company aims to commence mass production of its first car in the first half of 2024, signaling its ambition to explore new growth avenues.
While the economic recovery continues, the weak consumer demand for smartphones poses challenges for Xiaomi and other market players. To address this, the company will need to focus on innovation, competitive pricing strategies, and explore opportunities in emerging sectors such as electric vehicles.
As Xiaomi works toward its goal of becoming a comprehensive technology company, it will be crucial for the company to adapt to evolving market conditions, leverage its strong brand presence, and deliver compelling products and services to regain momentum in the smartphone market and succeed in its diversification efforts.