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Xiaomi looking for new CFO

Xiaomi has begun making smartphones in Vietnam for sale locally and across Southeast Asia.
Xiaomi said the first batch of its phones made in Vietnam had been sent to a local distributor, but it also wants to export its phones to Malaysia and Thailand. Photo: Reuters.

(ATF) The board of consumer electronics manufacturer Xiaomi has appointed Wang Xiang as acting chief financial officer until a selection committee gets an appropriate person to fill that role. Zhou Shengzi no longer serves as CFO, but will continue to be Xiaomi’s executive director, senior vice president and president of the international department, Phoenix TV reports.

Xiaomi released its fourth quarter and 2019 financial report on March 30. The financial report shows that for the first time, Xiaomi’s total revenue exceeded 200 billion yuan to 205.8 billion yuan last year. Its adjusted net profit for the year was 11.5 billion yuan.

The firm sells a wide range of high performance low-cost handsets, partly as a branding exercise as it rolls out an extensive line of consumer electronics, from robot vacuum cleaners, to e-bikes, laptops, electric toilets and even the Xiaoni Jia, a domestic rival to Amazon Alexa and Google home. The Xiaomi concept is the entire home – lights, curtains and other devices – can all be operated by apps.

But while doing well in the local market with dedicated stores and consumers, the company has failed to internationalize its operation.

Zhou Shengzi was formerly responsible for international relations, which explains the move to some observers. PEDaily reported that Xiaomi said the board would continue to search for a talented CFO worldwide. It calls Xiaomi an unprecedented “new species”, but it has not yet been recognized by the capital market. After being listed for 20 months, Xiaomi’s revenue exceeds 200 billion yuan a year, and its profits are tens of billions, but its market value is lagging.

According to PEDaily, there have been rumours in the market that the “underperforming” share price of Xiaomi after its listing dissatisfied investors in the secondary market, and someone will always be held responsible. Half of the overseas business has been handed over to Zhou Shouzheng, and that work is considered training experience for talented young executives, but “can also be interpreted as a big rise.”

Meituan Dianping

Also listed in Hong Kong, Xiaomi’s performance is clearly inferior to Meituan Dianping. Both of these are typical Chinese mobile internet companies, which were established almost at the same time. The day after Xiaomi was founded 10 years ago, Wang Xing founded Meituan.

Moreover, the two companies were listed on the Hong Kong Stock Exchange in 2018. It is a similar stock but has different rights, which are naturally used for superficial comparison.

On the same day, Meituan Dianping also released its 2019 full-year financial report. Last year, Meituan revenue was 97.5 billion yuan, a year-on-year increase of 49.5%. It had adjusted net profit of 4.7 billion yuan.

In contrast, Xiaomi ‘s revenue breakthrough last year was 111% higher than Meituan; not only that, but with a profit of tens of billions of dollars. So, Xiaomi was several times more successful than Meituan. But in terms of market value, Meituan is at about HK$566 billion and Xiaomi at about HK$244 billion. Meituan was has a market camp of more than double that of Xiaomi.

Xiaomi has made some moves into India with its cheap 6A model. But many of its products have not been properly internationalised, which has caused consumer confusion unless they speak fluent Mandarin. They did release an English language control interface on its popular Qibike, with an EU version, but it unexplainedly missed key features such as mudguards.

Chris Gill

With over 30 years reporting on China, Gill offers a daily digest of what is happening in the PRC.


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