Emir BardakçıOn November 18, 2024, Xiaomi Group released its third-quarter financial report, representing strong growth in several business sectors: In the report, Xiaomi reported total revenue of 92.5 billion yuan, up by 30.5% compared with a year earlier, with a net profit of 5.3 billion yuan versus 4.9 billion yuan in the same period last year. Meanwhile, the adjusted net profit is 6.3 billion yuan – up 4.4%.
Another big positive from the earnings report was the stellar performance of Xiaomi’s white goods division, including air conditioners, refrigerators, and washing machines. Lu Weibing, Xiaomi Group Partner and President, gave a little more color on the fast-growing business during the earnings call with analysts.
Key Performance Highlights of Xiaomi’s White Goods Business
Sales Growth
- Air Conditioners: More than 1.7 million units shipped, Year-on-Year growth for more than 55%.
- Refrigerators: Reached more than 810,000 units, increasing by 20% year on year, a historical height.
- Washing Machines: More than 480,000 units shipped; an increase of 50% year-on-year and ever-highest.
Business Model Shift
- While goods is transitioning for Xiaomi from the ODM Model (Original Design Manufacturer) to a Self-Developed Model.
- Key products include the development of air conditioners and dual-zone washing machines by Xiaomi in-house.
- More upstream core components will continue the innovation to enhance competitiveness.
Profitability & Transparency
Xiaomi air conditioners run on a profit margin of over 10%: this is much less than the competitive set, which sell similar devices with much higher markups. The executive brought up: “Some products which cost 3,000 yuan are being sold for 20,000 yuan,” he said, highlighting the pricing inefficiencies in traditional home appliance markets. Xiaomi’s model is meant to cut the profit margins and benefit consumers.
Unique Customer Service
In fact, Xiaomi is also the only company in China able to offer an integrated service comprising disassembly, delivery, and installation for such large appliances.
This is further evidenced by Xiaomi’s Q3 2024 financial report, reflecting strong performance amidst its quest to transform the home appliance business. Driving growth for the business is becoming the white goods business, where it is adopting a consumer-first approach through the introduction of innovative products at competitive prices. Continuing to develop independently innovated technologies with an optimized business model, Xiaomi has been well-structured to compete against established leaders in the home appliance market. With a customer-centric approach, Xiaomi is set to disrupt existing conceptions of pricing while setting a platform again for long-term growth and innovation in the sector.
