Although the overseas epidemic continues, many markets are becoming the main growth driver for Xiaomi. In this quarter, Xiaomi’s overseas market revenue reached 39.8 billion yuan ($6.05 billion), a year-on-year increase of 52.1%. For the first time, Xiaomi’s overseas market revenue accounted for more than half, reaching 55%.
However, along with the increase in smartphone shipments, in the third quarter of this year, the ASP (average selling price) of Xiaomi smartphones decreased from the previous quarter. In the high-end market where Xiaomi wants to stay firm, it needs to continue to consolidate its capabilities.
Smartphone shipments hit a record high, ASP fluctuates slightly
The smartphone business is Xiaomi’s basic business and the biggest bright spot this quarter.
In the third quarter of this year, Xiaomi’s smartphone revenue reached 47.6 billion yuan ($7.24 billion). That’s a year-on-year increase of 47.5%; smartphone shipments were 46.6 million units, a year-on-year increase of 45.3%. Both revenue and shipment volume hit record highs.
According to data from the third-party agency Canalys, in the third quarter of this year, Xiaomi’s smartphone shipments ranked third in the world, with a market share of 13.5%. This is also Xiaomi’s return to the top camp after entering the world’s top three. It happened in 2014 for the first time.
Xiaomi President Wang Xiang said in the conference call that the dual-brand strategy and technology investment are very important contributions. After the split of Redmi, it will consolidate the original stock market. A few days ago, Xiaomi officially announced that the cumulative sales of the Redmi Note series exceeded 140 million units; the Xiaomi brand hit the high-end and strengthened its core technology investment.
In fact, in addition to Xiaomi’s own strategic layout, changes in the industry structure are also important external reasons. Since 2019, Huawei has been banned by the United States and has encountered difficulties in the application ecology and chips. This has greatly affected global sales. A few days ago, Huawei announced the sale of Honor to save itself.
Min Hailan, consultant of Nomura Research Institute, believes that after Huawei sells Honor, the global market ranking may be reshuffled in the future. Honor is separated from Huawei. On the one hand, Honor will compete more directly with Xiaomi. On the other hand, Huawei’s global ranking may be affected. She predicts that Xiaomi is expected to surpass Huawei to rank second in the smartphone category in the future.
Average Selling Price
In the third quarter of this year, the ASP of Xiaomi smartphones was 1022.3 yuan per unit. Say, a year ago it was 1006.5 yuan per unit. However, compared with 1116.6 yuan in the second quarter of this year, it was a decrease.
Xiaomi said that the year-on-year increase in ASP was mainly due to the increase in sales of mid-to-high-end smartphones in the third quarter of this year. In the first 10 months of this year, the global sales of Xiaomi’s smartphones priced at 3,000 yuan or more in China and 300 euros or more outside the world exceeded 8 million units. In addition, the ASP in Mainland China increased by 14.7% year-on-year in this quarter. But the ASP in the overseas market dropped slightly by 1.5%.
Wang Xiang explained that Xiaomi has strengthened its layout in the mid-to-high-end field, and the premium brought by the popularization of 5G. This is the main reason for the significant increase in China’s ASP. In overseas markets, due to the phased product portfolio, such as the launch of Xiaomi 9A, the sales volume is very large. This has a certain impact on overseas ASP.
Overseas markets become growth engines, accounting for 55% of revenue
In the third quarter of this year, Xiaomi’s overseas market revenue reached 39.8 billion yuan. This is a year-on-year increase of 52.1%, a record high in a single quarter. At the same time, Xiaomi’s overseas market revenue accounted for more than half for the first time this quarter, reaching 55%.
The European market became a bright spot. According to Canalys data, in the third quarter of this year, Xiaomi’s smartphone shipments in the European market increased by 90.7% year-on-year, with a market share of 18.7%, making it the top three for the second consecutive quarter. Among them, the growth rate of the smartphone market in Western Europe reached 107.3%, the market share reached 13.3%, and the ranking rose to the top three for the first time.
At the recent Xiaomi Developer Conference, Xiaomi Chairman and CEO Lei Jun stated that Xiaomi’s goal is to rank first in Europe in the next few years.
In addition to the European market, Xiaomi is also accelerating its deployment in other overseas markets. According to Canalys data, in Latin America, Xiaomi’s smartphone shipments increased by 471.4% year-on-year, with a market share of 9%, ranking fourth; smartphone shipments in the Middle East market increased by 156.7% year-on-year, with a market share of 17.4 %, ranking third; in the African market, smartphone shipments increased by 197.5% year-on-year, with a market share of 10.7%, ranking third.
Lin Meibing, chief analyst of WitDisplay, believes that the growth of Xiaomi in overseas markets is firstly due to the acceleration of the layout and the support of localized operations; the second is that the epidemic has a great impact on offline channels, and online channels are Xiaomi’s traditional advantages. At the right time, Xiaomi took its advantage to the extreme. The financial report shows that in the first nine months of this year, in overseas markets outside of India, Xiaomi’s online smartphone shipments have exceeded 10 million; the third is that while Xiaomi caters to online consumption habits, it also meets the user’s preference for cost-effective products during the epidemic.
In addition to the smartphone business, Xiaomi is also promoting IoT and Internet services to accelerate its entry into overseas markets.
Xiaomi’s IoT Business
In the third quarter of this year, Xiaomi’s income from overseas IoT and consumer products increased by 56.2% year-on-year, which also hit a record high in a single quarter. And the scale of overseas income of some major categories, such as bracelets, scooters, and sweeping robots, has exceeded that of mainland China. Xiaomi said that it will use its channel advantages and user base to introduce more explosive products into overseas markets.
In the third quarter of this year, Xiaomi’s overseas Internet service revenue increased by 75.6% year-on-year to 700 million yuan, and its contribution to the overall Internet service revenue reached 12.%. Xiaomi said that with the rapid growth of overseas mobile phone sales, the scale of overseas users continues to expand, especially in developed regions such as Europe, which has driven the growth of overseas Internet per capita income.
In general, although the global epidemic is still ongoing, Xiaomi has given full play to its advantages in online channels. In addition, Xiaomi is also further supplementing its capabilities in technology research and development, overseas operator channels and other shortcomings.
Regarding the expectations for the fourth quarter of this year, Wang Xiang said that Xiaomi still has confidence, but it also faces challenges. Since the second quarter of this year, Xiaomi has been facing a shortage of global parts supply. He said Xiaomi will work hard to cooperate with suppliers to maximize production capacity to meet the demand in the fourth quarter.
In addition, Lin Meibing believes that Xiaomi’s challenge lies in its high-end product line layout. Future competition with BBK, Apple and Samsung is worthy of attention.