China’s Xiaomi makes only a fraction of the money that analysts thought

Xiaomi’s rise in the market has been nothing short of extraordinary and unprecedented. The Chinese brand entered a mature market and gained massive success within it in just four years, but there are some compromises to that success as it turns out Xiaomi did not make as much money in 2013 as was originally reported. The company has a very distinct model in the industry, one that favors the customer at the expense of high margins. 

Privately owned Xiaomi Technology Ltd Co booked 347.5 million yuan ($56 million) in net profit last year, according to a regulatory filing that showed the world’s No.3 smartphone maker grappling razor-thin margins. The figure casts new light on the growth of a company that reached third place in just four years thanks to handsets lauded for balancing quality and affordability. Only this month did momentum finally stall when a patent challenge in India halted sales. Valued by private investors at more than $10 billion, Xiaomi recorded revenue of 26.6 billion yuan and an operating margin of just 1.8 percent. A Xiaomi spokeswoman confirmed the accuracy of the filing, but said it did not cover the entirety of Xiaomi’s business.