Xiaomi's smartphone business hit with worst quarter ever in China, could India be next?

In what could be b news for Chinese smartphone maker Xiaomi, company has posted its quarterly results, indicating slowest-ever growth in terms of sales. se results were confined to Xiaomi's performance in Chinese market for Q3 2019. Xiaomi's sales are declining in China but at same time, rival Huawei's market share is on rise.

Xiaomi's quarterly smartphone business declined 8 per cent to 32.3 billion yuan. Between July - September 2019, Xiaomi mand to sell about 32.1 million phones during, roughly one million units fewer than same period last year.

However, Xiaomi's total revenue rose 5.5 per cent to 53.66 billion yuan from same period last year. Xiaomi is focusing on foreign smartphone markets, amid sales drop at home. But while achieving that, Xiaomi's selling and marketing expenses rose 16 per cent in Q3 2019.

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What could be reason for this decline?

In China, demand for smartphones has declined since most consumers tend to hold on to ir devices for longer. But for some reason, this situation doesn't seem to be affecting Huawei's market share. In fact, Huawei's market share continues to boost sales revenue for world's second-largest smartphone maker.

Despite expanding its business into or areas, most of Xiaomi's revenue still comes from mobile phones. So it will be interesting to see how Xiaomi copes with this 'decrease' in demand for smartphones at such a crucial time.

Meanwhile, Xiaomi has also been promoting its internet services division, which primarily consists of online sales. But it accounts for only 10 per cent of Xiaomi's total revenue.

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"If you look at Chinese smartphone market in past two years, it is true that re has been some decline, and recently we have also seen some pressure in market," Xiaomi’s Chief Financial Officer Chew Shou Zi said on an earnings call. "Once 5G era is with us, n I believe we will start to see improvement in smartphone market quite significantly."

Last month, Xiaomi CEO Lei Jun said company would release more than 10 5G phones across different price segments in 2020.