Chinese smartphone giant Xiaomi has reported a record drop in fourth-quarter revenue as the company faced a slowdown in consumption and disruptions caused by China’s COVID-19 curbs. Xiaomi is a major player in the smartphone industry, both in China and overseas, with India being its largest market outside of China and the second-largest market for smartphones in the world. However, Samsung has been dominating the Indian smartphone market, particularly in higher-end devices, posing a significant challenge for Xiaomi.

The COVID-19 pandemic has taken a significant toll on the global economy, and China, being the world’s second-largest economy, has been no exception. Despite the easing of restrictions on domestic and international travel, consumers continue to be cautious about spending money, indicating that China’s economy will only slowly recover. Xiaomi’s president, Lu Weibing, has stated during a company earnings call that “it will take time” for China’s consumer electronics market to recover.

Xiaomi’s revenue decline in the fourth quarter of 2022 can be attributed to several factors, including the pandemic-related disruptions in production and logistics, a slowdown in the Chinese economy, and increased competition in the smartphone market. Xiaomi has been investing heavily in R&D and expanding its product portfolio beyond smartphones, with a focus on smart home devices and the Internet of Things (IoT) ecosystem. However, the pandemic has affected demand for these products as well, given the overall slowdown in consumer spending.

While Xiaomi has faced challenges in its home market, it has continued to perform well in India, where it has been able to capture a significant market share. However, Samsung’s dominance in the higher-end smartphone market poses a challenge for Xiaomi, which has traditionally focused on offering affordable devices with premium features. Xiaomi will need to focus on innovation and differentiation to stay competitive in this space.

Xiaomi has been working to diversify its revenue streams beyond smartphones by expanding its offerings in the IoT space, which includes smart home devices, wearables, and other connected devices. This strategy has paid off in the past, with Xiaomi becoming the world’s leading IoT platform in terms of the number of connected devices. However, the pandemic has slowed down demand for these products as well.