Chinese Phone Manufacture Xiaomi Made Just $56 Million Last Year
Chinese Phone Manufacturer Xiaomi made $56 million dollars in profit last year, which may well sound like a lot until you hear that their revenue what a whopping $4.3 billion dollars. These figures, that were disclosed to the Shenzhen Stock Exchange reveals that the 4 year old Xiaomi has a tiny profit margin of just 1.8 percent.
Compare that to the likes of Samsung’s mobile division with an 18.7 percent profit margin or Apple who reported a 28.7% profit margin for 2013 and you see that Xiaomi really is gambling on growth at the expense of big profits.
Indeed the company’s main business strategy for grow and to increase market share is to sell its tablets and phones at as close to cost as possible in order to win over more customers.
Despite being the third largest phone maker in the world, Xiaomi has had a hard time breaking into the western markets of the UK and US and has mainly been focused on emerging markets such as China India and Indonesia where it’s been growing remarkable well. Recent setbacks in the Indian market due to infringements on a patents held by Swedish telecoms firm Ericson have led to Xiaomi suspending sales after being served with an injunction from the high court in Dheli.
None the less their persistent drive for growth is unlikely to be unabated for long and may result in Xiaomi putting more emphasis on established western markets in 2015. This could be good news for consumers as it would likely drive down prices or other handsets makers unwilling to sacrifice market share.
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