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Xiaomi promises to give money back to customers if its profits get too high

Xiaomi, the Chinese smartphone maker tipped for a public itemizing this 12 months, has made a novel pledge: if it makes an excessive amount of cash, it’ll give a bit of its income again to its clients.

Yes, that’s proper.

The firm mentioned at present it’s going to perpetually restrict the online revenue margins after tax for smartphones, good dwelling units and different {hardware} to simply 5 %. If it makes extra money than deliberate over a calendar 12 months, it plans to “distribute the excess amount by reasonable means to its users.”


It’s laborious to know precisely what affordable means Xiaomi is referring to, however listed below are some although.

Spoiler primary alert !! — most firms in cellular make a scant revenue, if any in any respect, on {hardware}.

Firms like LG and Samsung depend on part divisions and different client manufacturers to report the majority of the income which makes them worthwhile. More broadly, the aggressive market means there’s not a lot cash to assert in promoting telephones. Apple is estimated to account for a whopping 87 percent of all smartphone profits regardless of simply 18 % market share.

Xiaomi Mi Mix 2 was widely-lauded when it launched final 12 months

Spoiler quantity two alert !! — promoting {hardware} with a low internet revenue has at all times been a part of Xiaomi’s technique.

Indeed, former head of international Hugo Barra previously said it didn’t make money on hardware sales. That strategy could have modified, however Xiaomi had by no means put a determine on its take-home margin earlier than.

This pledge aligns itself neatly with the corporate’s core concentrate on offering cutting-edge tech, or as near, at reasonably priced costs. Much has been mentioned over time of the bang-for-buck of its $150 Redmi vary, whereas numerous comparisons of its higher-end Mi telephones — which usually promote for $150-$300 — and flagship merchandise from Apple and Samsung have graced the web.

Xiaomi has mentioned from the get-go that smartphones are only one a part of its wider ecosystem — which incorporates Xiaomi-branded good dwelling and “lifestyle” units from third-parties, and, crucially, providers that hyperlink all of the {hardware} collectively. Those embrace providers akin to on-line video, e-commerce, monetary merchandise and different digital providers.

“From the beginning, we embarked on a relentless pursuit of innovation, quality, design, user experience and efficiency advances, to provide the best technology products and services at accessible prices. We hope that our products and services will help our users to achieve a better life,” CEO and co-founder Lei Jun mentioned within the cash assertion that accompanies at present’s announcement.

Xiaomi is broadly tipped to go public this 12 months in an IPO that might worth its enterprise as excessive as $100 billion, according to Bloomberg. Chinese media not too long ago claimed that the corporate is planning a dual-IPO that might see it checklist each in Hong Kong and on Mainland China, as our sister site Technode explained.

Such a double-headed IPO can be distinctive however, as Xiaomi confirmed at present, it has no intention of sticking to so-called conference.

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