Xiaomi, the Chinese smartphone manufacturer, has laid off about 900 people, affecting about three per cent of its over-32,000-strong workforce. The reason is the falling revenues. The Company’s revenues reportedly slipped 20 per cent in the second quarter.
The poor revenues can be attributed to political situations worldwide, rising fuel prices, global inflation and fluctuations in foreign exchange, which have adversely affected the market demand as well as the earnings of the Company.
While at least 30,000 of its workforce works out of Beijing, China, where the Company is headquartered, the remaining employees work from India and Indonesia.
Smartphone sales had slowed too, with revenue dropping 28.5 per cent. Considering that smartphone sales made up for over 50 per cent of the Company’s revenue, this has been a major jolt. The revenue that was about 59 billion yuan in Q2 last year, fell to about 42 billion yuan for the same quarter this year. The net profit was affected because of the pressure to sell and clear inventory, for which sales and promotions were resorted to.
Sales had picked up last year, when Huawei was facing US-imposed restrictions for obtaining components, and Xiaomi was able to capture some market share. However, this was a temporary surge in sales only. With the Chinese economy slowing down early this year, Xiaomi’s revenues began dipping again.
It is reported that the economy is slowing down so much that citizens in China have resorted to selling off their luxury watches and bags to earn money.