Xiaomi Pledges That Its Hardware Business Net Profit Will Never Exceed 5%

Chinese manufacturing giant, Xiaomi, made a name by releasing comparatively cheap devices to the market. However, in recent times, many users believe that the company is systematically increasing the price of its products and some Mi fans are not happy. Nevertheless, at the end of Xiaomi Mi 6X release conference, Lei Jun announced an important decision of the Company. On April 23, the company’s board of directors passed a resolution that from 2018, Xiaomi promises its users that the overall net profit rate of its hardware business, including smartphones and other products, will not exceed 5%. If it exceeds, we will return more than 5% of the total to a reasonable amount.

Lei Jun stated that the choice of 5% is perfect for Xiaomi's business model. Lei Jun believes that Xiaomi is different from other hardware companies and it does not rely solely on hardware to obtain major profits. Xiaomi is essentially an Internet company with mobile phones, smart hardware and IOT platforms as the core. This announcement will probably give some fans the faith that Xiaomi's products will not require a deep financial pocket.

However, not all companies think like Xiaomi does. On April 26th, at the 2018 GMIC Conference, President Zhao Ming (Honor President) was asked how he perceives Xiaomi's decision. He said that it is quite rare for the net profit of a Chinese company Hardware business to reach 5%. "I don't know how to evaluate this issue. For us, the comprehensive hardware net profit rate can reach this level. We are also very happy," Zhao Ming said with a smile.