Xiaomi profit jumps 60 percent

Xiaomi Corp posted a net profit growth of almost 60 percent in 2018, despite a strong downturn in China's smartphone market and a lukewarm domestic economy, the company said on Tuesday.

Despite the strong growth, CEO Lei Jun lost a daring 1 billion yuan (US$148.9 million) bet with Dong Mingzhu, chairwoman of Gree, China’s biggest air conditioner company. 

Five years ago, Lei wagered Xiaomi’s revenue would surpass that of Gree by 2018.

Xiaomi’s 2018 revenue was 174.9 billion yuan (US$26.1 billion), 52.6 percent growth year on year. Its net profit hit 8.5 billion yuan, a 59.5 percent increase from a year ago, Xiaomi said in a statement to the Hong Kong Stock Exchange.

Gree’s revenue in 2018 was expected to hit 200 billion to 210 billion yuan, Shenzhen-listed Gree said in a recent statement.

Lei and Dong’s wager — widely considered in jest — came from their different strategies.

Lei focused on new business models like Internet sales and eco-system strategy while Dong emphasized technology and products.

Xiaomi expanded its business scope into smart devices with artificial intelligence and the Internet of Things. Xiaomi now covers smartphones, routers, TV sand various home appliances.

Chinese smartphone sales dropped more than 10 percent year on year in 2018, due to economic pressures, longer replacement cycles and shrinking consumer budgets.

Top vendors in the domestic market were Huawei with 26.4 percent of the market, Oppo with 19.8 percent, Vivo with 19.1 percent, Xiaomi with 13.1 percent and Apple with 9.1 percent, according to the US-based International Data Corp's latest report.

In the fourth quarter of 2018, Xiaomi’s revenue was 44.4 billion yuan, lower than market expectations of 46.2 billion yuan.