Xiaomi faces difficulties maintaining momentum in 2020

China’s handset vendor Xiaomi has reported strong results for 2019, but it remains to be seen if the vendor can keep its sales momentum in 2020 amid increasing competition in the global market and the impacts of the coronavirus pandemic.

In 2019, Xiaomi saw its revenues grow 17.7% to over CNY200 billion (US$28.2 billion) and its net profit surged 35% to CNY11.53 billion, bolstered by increased shipments of a number of products including handsets, TVs and IoT devices.

Its TV shipments reached 12.8 million units in 2019, owing to the high price/performance ratios of its models. Sales of IoT devices and consumer electronics products contributed CNY62.1 billion to its total revenues, the company said.

While Xiaomi is able to ramp up its handset shipments to over 100 million units a year and claims that it has shipped over 230 million devices connected with its IoT platform, the fact that its net profit of 2019 was only one sixth of that earned by rival vendor Huawei in the year indicates that how it can ramp up profitability will be a task in 2020 and beyond, according to industry observers.

The vendor has recently launched its high-end Mi 10 and Mi 10 Pro 5G phones, and its associate brand Redmi has also released a sub-CNY2,000 5G model, Redmi K30 5G. But Xiaomi has seen the growth of its handset revenues slow down recently, the sources said.

Xiaomi is facing increasing competition from Huawei, Oppo and Vivo in the domestic market in China as those rival brands have also enhanced their deployments in IoT plus 5G ecosystems, taking on Xiaomi’s IoT operations, the sources explained.

Meanwhile, Xiaomi’s handset shipments to Europe and emerging markets such as India will be affected seriously this year by the pandemic, added the sources, noting that Xiaomi’s handset shipments to Spain, France and Italy grew over 60% on year in 2019.

―Digitimes