The layoffs affected nearly 3 percent of Xiaomi’s workforce. As of June 30, 2022, Xiaomi had 32,869 full-time employees, 30,110 of whom were based primarily at its headquarters in Beijing in Mainland China, and the rest in India and Indonesia. The company had 14,700 employees in its research and development vertical in the same time frame. It is not clear if the job cuts will also affect the company’s India operations.
“In this quarter, our industry faced many challenges, including rising global inflation, foreign exchange fluctuations (and) complex political environment,” said Xiaomi president Wang Xiang during a call with analysts after reporting the quarterly earnings. “These challenges significantly impacted overall market demand and our financial results for the period,” Xiang added.
‘Problems’ in India and China
Smartphone sales for Xiaomi in China, which generate more than half of the company’s total revenue, fell 29%. Smartphone sales fell 20% year on year to 70.17 billion yuan ($10.31 billion), missing estimates and marking a steeper decline from the previous quarter, when the company posted its first-ever revenue drop since listing. Net income fell 67% to 2.08 billion yuan, missing analysts’ estimates.
In its quarterly financial statement, Xiaomi said that the ongoing investigations and allegations in India could take a long period of time to settle, and the company could receive judgments or enter into “settlements that may adversely affect its operating results or cash flows”. “…it is not practical to quantify” related financial effects (of India probes) “at this stage,” the statement added.
In April, the Enforcement Directorate (ED) had said that they seized Rs 5,551.27 crore of Xiaomi India, lying in the bank accounts under the provisions of Foreign Exchange Management Act, in connection with the illegal outward remittances made by the company.
Xiaomi India further received an order on August 11, “whereby certain of its bank deposits were continued to be restricted, alleging Xiaomi India has inappropriately deducted certain costs and expenses, including purchase costs of mobile phones and royalty fees paid to third parties as well as companies within the Group”.