Head honchos at a smartphone manufacturer, which relies heavily on sales in China, could be forgiven for feeling uneasy. After all, in February alone, the country's mobile subscriber base shrank by nearly 20 million. The coronavirus outbreak has taken its toll and uncertainty no doubt still hangs in the air. (See The mysterious case of the vanishing Chinese customers and China's mobile subs base shrinks by 20M.)
But Xiaomi, China's number two smartphone manufacturer behind Huawei, appears unfazed. On the back of some solid financial results for its fourth quarter, 2019 – we'll come to that in a minute – Xiaomi reported smartphone shipments in China "rebounding quickly" at the tail end of March.
And because of its preference for online sales channels, Xiaomi apparently didn't bear the brunt of retail store closures and shortened hours on its home turf.
It hasn't been all plain sailing. Due to a shutdown of Chinese factories, Xiaomi experienced "temporary disruption in supply-chain production in February and March." Production levels now, however, have recovered to 80-90% of normal levels.
Xiaomi was less sanguine about prospects abroad, both in India – where it is the most popular smartphone brand with nearly 30% market share – and Europe. Given COVID-19 is still affecting most countries, Xiaomi said overseas demand will "undoubtedly be affected, particularly in the second quarter of 2020."
The Chinese firm nonetheless thought the overall impact was "currently manageable," partly due to the reliance of people on smartphones and some other IoT devices to connect with each other during periods of social distancing. "This is something we learned from our experience in mainland China earlier in the year," said Xiaomi.
Run those numbers by me
In the three months to December 31, 2019, before the coronavirus took hold, Xiaomi reported adjusted net income of 2.3 billion yuan ($324 million), a year-on-year increase of 26.5%. Revenue jumped 27.1%, to RMB56.5 billion ($8 billion), over the same period.
Turnover from the company's smartphones segment was RMB30.8 billion ($4.3 billion), an increase of 22.8% year-on-year.
Encouragingly for Xiaomi, overseas sales shot up 40.7% year-on-year, to RMB26.4 billion ($3.7 billion). That accounts for nearly 47% of total revenue for the fourth quarter in 2019.
— Ken Wieland, contributing editor, special to Light Reading