We are in a difficult situation, there is no doubt about that. Inflation, the instability caused by the war in Ukraine and the post-COVID era are having a major impact on the global economy, and the results of the big technology companies are a clear reflection of this, so much so that not even giants of the caliber of Xiaomi have managed to come out unscathed.
In its latest quarterly results, the Chinese company has confirmed that their sales fell by 20% on a year-over-year basis, that is, against the results obtained in the second quarter of 2021. Doing numbers, this equates to total sales of 10.31 billion dollars, although his net income fell much more, since they barely reached 2,080 million yuan, 305 million dollars at the exchange rate. That number represents a drop of 67% also following a year-over-year basis.
According to the president of Xiaomi, Wang Xiang, there has been a rebound in the pandemic in the Chinese market, and as a consequence demand sank to unimaginable levels. The executive also argued that inflation, high energy costs and the current economic situation have also had a negative impact on sales, and that revenue fell so much due to the need to clean stock by resorting to very aggressive offers and promotions.
China, the world’s second largest economy, has been hit hard by the rebound of the COVID-19 pandemic, which has caused major lockouts and shutdowns. With this in mind, it is easy to understand the weakness that it has shown in recent months, and also the drops in income that the most important technology companies in the country have experienced. In this sense, there are important data to highlight that we must take into account, such as the smartphone supply drop of 10% in the second quarter of this year (on a year-over-year basis), and the drop in the value of the company’s shares in recent months, which have accumulated a 40% drop since the beginning of 2022.
In India, the second most important market for Xiaomi, the company is not going through its best moment either, since in April this year it was subjected to an investigation by the country’s authorities that ended with the confiscation of 725 million dollars in company assets because, allegedly, they had illegally transferred funds abroad by disguising them as royalty payments . With this in mind, it is not uncommon for Xiaomi to look for new projects and new horizons.
