The Chinese company Xiaomi is preparing this year to place its securities on the stock exchange. The head of the company Lei Jun today gave a unique promise: if Xiaomi earns too much, then part of the profits will be returned to customers. What?
Today our CEO Lei Jun announced a promise to all our fans…#Xiaomi will forever limit the net profit margin after tax for our entire hardware sales (including smartphones, IoT and lifestyle products) to a maximum of 5%.
Do you like the sound of that? pic.twitter.com/ZbEjaVeBLf
— Mi (@xiaomi) April 25, 2018
Lei Jin promised that the company will forever limit the net margin (net profit after tax deductions divided by revenue) for smartphones, smart home and other devices by five percent. If the company turns out to be more profitable in a calendar year, it will earn more money, then it will try to distribute the surplus by reasonable means among its users. Most likely, this is not about a direct transfer of money, but about any bonuses for Xiaomi device owners.
It is worth noting that most companies that manufacture smartphones, and so works with a small profit or loss. In addition, in the competitive market, the struggle goes for a few percent of the additional profit.
It is worth remembering that the former manager of Xiaomi Hugo Barra in 2016 said that the company does not earn on sales of “iron” at all. Of course, since that time something could have changed, but it is unlikely that the company has a margin of more than the promised five percent. Yes, and this promise emphasizes that in the modern world, the main money is earned by services, and not by “hardware”. But even here there are exceptions.