Lei Jun: Thank you for joining our third quarter 2020 earnings conference call. Actually, before I give my speech, I would like to take this opportunity to introduce our new member Alain Lam, who joined us about a month and a half ago. I think many of you may know him well. Lin Shiwei: I joined Xiaomi on October 9th. Seven weeks have passed since I joined. I hope to share more with you both online and offline. Lei Jun: During this quarter, we focused on executing our core strategy and achieved very impressive results in all areas of our business. In this quarter, we achieved revenue of RMB 72.2 billion and adjusted net profit of RMB 4.1 billion , up 34.5% and 18.9% year-on-year respectively, setting new historical records . Our smartphone × AIoT core strategy continues to consolidate strong momentum. Our smartphone global sales rose to third place in the third quarter of 2020 for the first time since 2014, and actually achieved a record high market share of about 13.5% . This is the highest record in Xiaomi's history. We continued to execute our dual-brand strategy to drive our success in the premium smartphone market, with sales of over 8 million premium smartphones as of October 31, 2020, supported by our two well-received premium smartphone models (Mi 10 series). Our smartphone average selling price maintained an upward trend year-over-year, especially in Mainland China. Our relentless pursuit of technological innovation has supported our extraordinary achievements in the smartphone market. For example, one of our major R&D achievements is camera performance. We received the first place in DXOMARK twice this year. These achievements were made possible by our team of nearly 1,000 camera-focused engineers in nine R&D centers around the world, including Beijing, Paris, Tokyo, and San Diego. Another example of our efforts in technological innovation is Xiaomi's smart factory, which demonstrates our significant progress in smart manufacturing. With an annual production capacity equivalent to 1 million premium smartphones, Xiaomi's smart factory is not only a large laboratory engaged in the research and development of new materials and cutting-edge technologies, but also an experimental base for the next generation of manufacturing equipment and automated production lines. This marks another step towards enhancing China's smart manufacturing capabilities and improving manufacturing efficiency for all Xiaomi partners. Looking ahead, we will continue to invest in R&D and will be at the forefront of key technologies that will drive the entire smartphone industry in the 5G era. Finally, we have significantly strengthened our management team this year . Today, I am very proud to introduce to you Mr. Lin Shiwei, and we have also had other executive members join us, and Peng Zhibin has also joined us as the company's Chief Human Resources Officer. Alain is actually an experienced capital markets professional with a deep understanding of the industry. With Alain joining the team, I believe he will bring his experience and expertise to the cooperation with Xiaomi. Lin Shiwei: I am honored to join the Xiaomi family and share our latest achievements with you. As you read in our press release for the third quarter of 2020, we achieved record revenue of RMB72.2 billion, up 34.5% year-on-year. Adjusted net profit for the period also hit a record high of RMB4.1 billion, up 18.9% year-on-year. All of our business units achieved strong growth, which demonstrates the strength of our business. I'd like to share some important updates with you and then walk through our performance in each of our segments in the third quarter. The first point I want to highlight is our record performance in global smartphone shipments. In the third quarter, we regained our top three position in the world with an all-time high market share of 13.5%, up 44.6% year-over-year. During the quarter, we continued to execute our dual-brand strategy for our smartphone business, which will drive our successful entry into the premium smartphone segment. While we performed well after the debut of Mi 10 Pro, in August this year, we launched Mi 10 Ultra, which was a hot seller at the time of its launch with its advanced technology. As an example of how popular our premium models have been this year, in the first 10 months of this year, we sold more than 10 million premium smartphones globally, which we define as those with a retail price of RMB 3,000 or more in mainland China and EUR 300 in overseas markets. The third point I want to talk about is our relentless pursuit of innovation, which is one of Xiaomi’s core values and we believe has become the most important factor in our development. Camera development is one of the demonstrations of our advanced technology. We are ranked first in the world in DXOMARK camera score with three of our flagship products; CC9 Pro, Mi 10 Pro, Mi 10 Ultra. Another area of our technological leadership is our fast charging technology. In October, we debuted new 80W wireless charging technology that can fully wirelessly charge a 4000 mAh battery in 19 minutes. We are also trying to make breakthroughs in advanced manufacturing technology. As Mr. Lei mentioned earlier, we launched a smart factory in Beijing in August this year. The factory plays three main roles. First, we have an annual production capacity of one million premium smartphones. The transparent version of our flagship Mi 10 Ultra is actually produced in this factory. Second, it is a laboratory for the research and development of new materials and cutting-edge technologies. Third, it is a test base for our next-generation production equipment and automated production lines. We have significantly strengthened our senior management team by bringing in top talent with extensive experience, including the appointment of Mr. Zhibin Peng as Chief Human Resources Officer this year. I am delighted and honored to be a part of this meeting and to work with them to create long-term value for all our stakeholders. Now, let me further discuss our smartphone business segment. In the third quarter, our smartphone business grew significantly, ranking third globally in terms of smartphone shipments. Our smartphone revenue reached a record RMB 47.6 billion, up 47.5% year-over-year, with global shipments of 46.6 million units. In the third quarter of 2020, our smartphone market share in mainland China increased to 12.6% from 9% in the third quarter of 2019 , an increase of 18.9% year-on-year in terms of shipments. According to Canalys, the top five smartphone companies were the only ones to achieve positive growth in mainland China. Our overseas smartphone business also continued to maintain strong momentum this quarter. Driven by expanding market share in all major markets, we ranked among the top three in the overseas smartphone market with a market share of 13.8%, a year-on-year increase of 54.1%. With the exception of India, which has been one of the top smartphone brands for 13 consecutive quarters, our overseas smartphone shipments nearly doubled year-on-year. We further expanded our advantage in online channels in mainland China. Our online smartphone market share increased from 18.5% in the first quarter of this year to 25.7% last quarter. During the 2020 Singles’ Day shopping festival, we ranked number one in sales among all Android smartphone brands on Tmall.com, JD.com, and Suning.com. Regarding our average selling price, the average selling price of smartphones increased by 1.6% year-on-year this quarter, while the average selling price of smartphones in mainland China increased by 14.7% year-on-year. The average selling price of smartphones for overseas products decreased slightly due to changes in our product mix . In particular, the entry-level Redmi 9 series was very popular, and we sold 14 million units worldwide as of the end of September. We will continue to expand our product portfolio at different price points. First, the Mi 10 series includes Mi 10 Ultra, Mi 10 Pro, priced at RMB 4,000, and further consolidates our position in the high-end smartphone market. Secondly, our Redmi K30 series and Redmi 10X 5G series, priced between RMB 1,000 and RMB 3,000, support our commitment to bringing 5G technology to the mass market. Third, against the backdrop of macroeconomic uncertainty, to meet the needs of global consumers, we also launched highly competitive entry-level smartphones, including the Redmi 9A series, with prices starting from RMB 499, setting a new standard for global entry-level smartphones. We will continue to execute our dual-brand strategy to strengthen our position in the premium smartphone market while also bringing 5G technology to the mass market. Now, let's look at the IoT and lifestyle consumer products business. Backed by our Smartphone × AIoT strategy, a large user base and our leading position in the IoT market, IoT and lifestyle consumer products revenue reached RMB 18.1 billion in the first quarter of 2020, a year-on-year increase of 16.1%. As the world's leading consumer AIoT platform, we continued to expand our global IoT user base this quarter. As of the end of September, the number of connected IoT devices reached 289.5 million, a year-on-year increase of 35.8%. In addition, the number of users with five or more devices connected to the Xiaomi IoT platform reached 5.6 million this quarter, a year-on-year increase of 59%. In September, our AI assistant had 48.4 million MAUs, up 35.5% year-over-year. Our Mi Home app had 43.1 million MAUs, up 34.2% year-over-year. We also continue to maintain our leading position in the smart TV space, with global shipments of our smart TVs reaching 3.1 million units in the third quarter of this year. This quarter also marks the seventh consecutive quarter that Xiaomi TV shipments have ranked first in mainland China. As the market leader in smart TVs, we will continue to innovate and bring leading technologies to the market. In the third quarter, we launched a number of premium TVs in the Mi TV Master series, further strengthening our position in the premium TV market. We also saw the debut of the Mi TV Lux Transparent Edition, the world’s first mass-produced transparent TV. In September 2020, we launched Mi TV Lux 82-inch and Mi TV Lux 82-inch Pro. The last Mi TV 82-inch Pro was priced at RMB 49,999 and introduced cutting-edge mini LED backlight technology. Mi TV Luv 82-inch has a high cost-effectiveness among all 4K TVs, with prices starting from RMB 99,999. The overseas market was one of the main drivers of our IoT business this quarter. In the third quarter of 2020, revenue from overseas IoT and lifestyle consumer products business increased by 56.2% year-on-year, driven by our leading position in major overseas IoT products. Notably, overseas revenue for some key IoT categories has surpassed that of mainland China this quarter, such as wearable wristbands, electric scooters, and robot vacuum cleaners. Given the huge growth potential of these products, we intend to launch more popular IoT products in overseas markets by leveraging our efficient new retail channels and large user base. Let's move on to the Internet service segment. In the third quarter, our Internet service revenue reached RMB 5.8 billion, an increase of 8.7% year-on-year. Advertising revenue reached RMB 3.3 billion, a record high, an increase of 13.7% year-on-year, due to our improved efficiency and strong growth in overseas advertising revenue. Our overseas internet service revenue also reached an all-time high, which was another driver of internet service revenue growth. Our user base also grew significantly in the third quarter. Our global Mi UI MAU increased 26.3% year-on-year to a record 368.2 million, and UI MAU in mainland China was 109.4 million . At the same time, our smart TV and Mi Box MAU increased 49.9% year-on-year to 35.8 million, and paid users reached 4.2 million. I would like to say a little more about the rapid growth of overseas Internet services. In the first quarter, overseas Internet revenue increased by 75.6% year-on-year, accounting for 12% of total Internet service revenue. This growth was driven by the growth of overseas smartphone sales and the expansion of our overseas user base, especially in Europe and other developed markets. We will also continue to enrich our overseas service products. For example, our Mi Music app ranks first among all music apps in India, Indonesia and Russia. Next, let's talk about our overseas business. In the third quarter, overseas market revenue reached RMB 39.8 billion, a year-on-year increase of 52.1%, once again setting a new quarterly revenue record. We continue to maintain a solid market position in major markets around the world. According to Canalys data, in the third quarter, our market share ranked first in 10 markets around the world, ranked in the top three in 36 markets, and ranked in the top five in 54 markets. We are very proud to report for the first time that we are ranked top 3 in Western Europe in terms of smartphone shipments with a market share of 13.3% and a year-on-year growth of 107.3%. Growth in Western Europe was driven by continued strong performance in several key countries. In particular, we ranked first in Spain for three consecutive quarters, with a 33.9% share of that market. We ranked second in Italy, third in France and fourth in Germany, with year-over-year growth in each market exceeding 100%. We will continue to expand our overseas online sales channels first through our own mi.com, which is now available in 32 countries and regions. Secondly, through various e-commerce platforms such as Amazon, Lazada. In the first nine months of this year alone, we shipped more than 10 million smartphones in overseas markets (excluding India) through online channels. We have also made steady progress in expanding our overseas operator channels. We work with 50 operators, covering more than 100 networks in 50 countries. As a result, in the first nine months of 2020, our smartphone shipments through operator channels increased by more than 200% year-on-year. By the first quarter of 2020, our operator channel market share in Western Europe doubled to 4.6%. We have achieved leading market share in several key segments across Europe and we believe that with this rapidly growing market share in the operator channel, we are well positioned to capture the significant growth potential in overseas markets . Next, I'd like to talk about our financials. As I mentioned earlier, in the third quarter, our total revenue reached a record RMB 72.2 billion, a year-on-year increase of 34.5% and a quarter-on-quarter increase of 44.8%. The strong revenue growth was mainly driven by our strong momentum in the smartphone business and the performance in the Internet of Things and Internet services sectors. Despite the stagnation of the global smartphone market, largely due to the impact of COVID-19, in the third quarter, our smartphone revenue was RMB 47.6 billion, a year-on-year increase of 47.5% and a month-on-month increase of 50.5%. IoT and lifestyle consumer products revenue reached RMB 18.1 billion, a year-on-year increase of 16.1% and a month-on-month increase of 18.8%; Internet service revenue reached RMB 5.8 billion, a year-on-year increase of 8.7% and a month-on-month decrease of 2.3%. Overall gross margin in the third quarter was 14.1%, slightly lower than the previous quarter due to strong growth in the smartphone business. Gross margin for the smartphone business remained stable at 8.4% this quarter. Gross margin for IoT and lifestyle products increased to 14.2%, mainly due to strong growth and high gross margins for IoT products and improved gross margins for smart TVs. In the third quarter, gross margin for our Internet Services segment was 60.4%, which was basically stable compared to the previous quarter. Our strongest sales performance provides us with significant operating leverage as we continue to invest more in brand building and R&D. As a result, you can see that our operating expense ratio decreased from 11.2% in the second quarter of this year and 10.1% in the third quarter of 2019 to 9.4% in the third quarter. As a result of all of this, we have seen steady growth in adjusted net profit, which reached a record RMB 4.1 billion in the third quarter of 2020, up 18.9% year-on-year. At the same time, we continue to manage our working capital in a very efficient manner. Our inventory turnover days decreased from 72 days in the second quarter to 54 days this quarter. Our cash conversion cycle is 22 days, which is very healthy. We had strong cash flow in the third quarter. As of September 30, 2020, cash reserves reached RMB 75.5 billion. Net cash generated from operating activities reached RMB 4.3 billion this quarter. Finally, our investment performance will continue to grow strongly as more and more of our portfolio companies go public in mainland China and overseas. Ninebot recently successfully listed on the Shanghai Stock Exchange Science and Technology Innovation Board. As of the end of last quarter, we have invested in more than 300 companies. In the third quarter, our net after-tax gains from investments were RMB 713.5 million. In fact, we may have seen that we have been generating realized investment gains consistently over the past few quarters. As of the end of last quarter, our total investment, which reflects the market capitalization of listed companies, reached RMB 50.6 billion. We will continue to leverage the Group's resources and advantages to empower our ecosystem companies and transform more manufacturing industries around the world. Question and Answer Session Q: Now that we are moving forward with two brands, what is Xiaomi's brand competition strategy? Do you think this is an opportunity to beat your peers? The second question is about the Internet business. In the second quarter, we noticed that the decline in gross profit margin was due to the decline in gaming gross profit margin, but in this quarter, we saw that the gross profit margin of the Internet business remained relatively stable. What is the driving force behind the continuous relative stability of gross profit margin? How do you see future trends? And for fintech, what is the future strategy for fintech as a result of some of the regulatory changes like that. And we saw that you are renaming the business. So what is the strategy in that regard? Thank you. Lei Jun: Xiaomi was born out of a highly competitive environment 10 years ago. So we have a strategy to expand our business not only to China, but also to many different countries in the market. I believe we have the right strategy. In terms of strategy, we will focus on what we have now . So we got smartphone × AIoT, and the strategy is focused on these two main areas. Smartphones are not only the cornerstone for us, but also the cornerstone for AIoT and millions of consumer IoT products, and we can do more with less. In addition, we will continue to invest in technologies such as cameras, such as chargers, continue to invest in the field of technology so that we have the ability to continuously invent new products and provide quality products not only for China, but also for overseas markets. I think we will focus on these strategies. We will focus not only on the growth potential in China, but also on the growth potential in many different markets such as Europe. In fact, we have achieved significant growth in the last quarter since the beginning of this year, and we have seen continued growth in the business in many markets. The European market is a good example, Latin America, Southeast Asian countries are also a good example, and we still maintain a leading position in the Indian market. So we are very confident that we will grow market share in these markets. And we will definitely monitor any market dynamics for us, and this is a very good environment for us. I don't think there is any change in our strategy. We should focus on the product, focus on the customer, and also focus on the channel, online channel and offline channel. On the question about gross margin, like this quarter as the growth of fintech and gaming slowed down, our gross margin improved because fintech and gaming traditionally have lower gross margins . So, fintech has really had a negative impact on our gross margin over the past few quarters due to the regulatory environment as well as COVID-19. Since then, we have been actively controlling the risks. Moreover, we have completed all the following compliance work and complied with all the regulations regarding it, But I think the change in our customer composition this quarter led to a lower gross margin for our games this quarter. So I think all these factors combined, the gross margin was flat compared to last quarter. We believe that the current gross margin reflects the current business conditions of each business segment Internet services. Looking forward, it depends on how the product mix is. Fintech companies in general believe that stricter regulations are good for the development of the industry as a whole. We have been strictly complying with all regulations since the beginning of our business; we have all the necessary licenses for relevant financial aspects. So we believe that Internet finance is a very good business for us in the long term. In addition to what was discussed in the announcement, in addition to retail finance, consumer finance, we are also actively engaged in supply chain finance, which we believe should provide good growth prospects by leveraging the leverage effect or large supply chain relationships and our technology capabilities. Q: First, regarding the growth space of your smartphone business in the future. You have performed much better than the market both in China and overseas, and have achieved good results in some European countries. So where do you think your main growth space is? What is the reasonable market share you plan to achieve in Europe and South America? This is my first question. The second question is, at least since the beginning of this year, we have seen that the Internet business is roughly flat from the previous quarter. So how should we think about the development of the Internet business? What is the correlation between the growth of your MAU and the growth of the smartphone user base and the Internet? How many quarters do we need to wait before we see strong growth in the Internet? Thank you. Lei Jun: The first question is about future growth. Actually, I think we have a lot of room for growth. Although, we achieved a very high growth rate in the third quarter of 2020. Take Europe as an example, we are currently ranked in the top three in the European market. In fact, if you look at the market share, we are still in the range of 12%, 13% . So this means that we have a lot of room for growth even in Europe. Now, we -- another example is, right now we're number one in Spain, and in the third quarter, our market share in the Spanish smartphone market was about 34%. That's a high percentage. But compared to other regions, other countries, we're still below 20%, or above 10%, above 10%. So that's a huge growth area. So you're talking about the Latin American market, which is a huge market and even bigger room for growth. Right now, in some countries, we're only 10%, and in some countries, we're less than 10%. We see huge potential . We are only one year in the Latin American market. So we are just building partnerships between offline channels, online channels and operator channels. So we continue to invest in those markets. So we also see a lot of growth potential. In the Indian market, we are number one and have been for 13 quarters. So actually we see in the Indian market - I think about 130 million to 150 million smartphones per year . But actually, at the same time in the specific growth area, there are another 150 million feature phones. So, it means we have a lot of work to do and we should continue to innovate to produce cost-effective high-performance smartphones to serve Indian consumers. We should build access to the countryside, serve the people in the villages so that they can be equipped with mobile internet so that we can - we hope that we can change their lives and help them live a better life by accessing the internet. This is our plan. So overall, I think we are very, very optimistic about the future growth that is possible in the next five years . A: Regarding the second question on Internet service revenue, we talked about the reason for the slowdown in revenue growth this quarter, mainly because we are actively controlling risks. Secondly, it is because of the game business. Thirdly, we see very, very good momentum and again, great potential for users. Therefore, I think we will focus more on user acquisition and then on monetization. We will pay more attention to user experience to attract more users. But looking forward, we do see a lot of growth prospects for the Internet business. I think first of all, as the shipment volume increases, more users will begin to accumulate. So we see a lot of potential. Second, let me talk about the rapid growth of our overseas Internet service revenue this quarter. This year, overseas Internet revenue has increased by more than 75% year-on-year, accounting for about 12% of our Internet service revenue. Third, according to our data, as our shipments in the premium and high-end smartphone market increase, we do see smartphone advertising, smartphone Internet service revenues for premium phones are much higher than normal. So this will naturally drive ARPU as well . Fourth, we don't discuss it much, but TV Internet service revenue was also very strong this quarter. As we continue to maintain our No. 1 position in China in terms of smartphone shipments, we are accumulating more and more users. At the same time, we are improving our profitability, so together we do see great potential for TV Internet services. We believe all of this will bring great growth potential to our Internet service business. However, I think at this point, I think the focus is actually on user acquisition. Lei Jun: Yes, user acquisition is the most important thing. We haven't even started to monetize traffic in overseas markets. But you can see from our reports that actually the Internet revenue from overseas markets is growing very, very fast. But we will definitely focus on user acquisition in the next few years. Yes. My first question is about China MAU, which has been declining slightly every quarter, even though you've been gaining significant market share. And when we look at it year-over-year, it's not making progress either. So how do you explain the correlation between the improvement in handset sales that we've seen and the fact that MAU has not gotten better over the same time period, even though we've seen significant market share gains in smartphones? The second question is about how you think about your global and domestic market share. You have peaked in Spain at 34% and you have a high market share in India. Overall, you are doing very, very well in many countries. How do we think about the countries where you don't have such a high market share and then go back to China's overall market share and 5G market share. Can you talk about your views? Lei Jun: Regarding your first question about MAU . So actually, this has stabilized, MAU is stable - our MAU is about 110 million, 108 million, 109 million. But the difference is not big, because the time you do statistical calculations is different, so there is a time difference cost, but there is no quantity difference, so it can be stabilized. We will continue to drive the share of the local Chinese market. So, actually, China is a very unique market. So we are expanding our market share online. But China has a huge offline market. We need to build not only first-tier stores, but also third, fourth, fifth, and sixth-tier cities, and it takes time to build authorized stores and other stores to cover these rural areas as well. It takes some time , but we will continue to drive market share growth in online channels. But at the same time, we plan to increase offline coverage starting this year. So it takes some time. But in overseas markets it's more complicated. Every market is different. So, for example, in the European market, it's an offline market, and online only represents, I think, less than 10% . But we are still working closely with online channels. For example, Amazon in many countries, cities in France, and other online channels in Europe, use these channels to do a lot of marketing activities and communicate a lot with our fans and customers. But actually, at the same time, we have invested a lot in building partnerships with traditional offline channels, which are the main channels for smartphone sales. So we have established very, very strong partnerships with the media market in many European countries, from Germany, Spain, Italy, Italy and many other countries. We have also established Xiaomi authorized stores. In overseas markets, I think there are more than 700 stores . So, as I mentioned, Europe has offline-driven markets in different regions. But if you are talking about the Indonesian market, you have to cover hundreds of thousands of very small stores across the country. So we use another strategy to cover these markets. We think the growth of the Indonesian market in the third quarter was very good. The Indian market is similar, but the Indian market has a very strong online channel, close to 50% online. So if you want to be successful in India, you need to take a more balanced approach. So it varies a lot from country to country. I think we've been working on this for three years. We have learned a lot from different models. So I think we will continue to invest in different types of markets. At present, we have built a system covering major markets, including Europe, Latin America, Middle East and Southeast Asian countries, and India. Yes, we are very optimistic or confident about the future growth, especially the next two to three years. Q: First, if you could give a little more detail on the fintech business, how should we think about some of the credit stresses now that you're sort of reconfiguring the business? Alain mentioned that some of the credit stresses have started to bottom out on the fintech side over the next year or so. How do you think about the growth drivers? Will it still be primarily related to consumer lending? Or will it be in other areas like supply chain finance, etc.? The second question is, since this is the first time you explained the overseas revenue of the Internet, it is not a small number, accounting for 12% of the total. Considering the prevalence of Playstore around the world, can you talk a little more about how to monetize in these overseas markets? A: As we announced about a month ago, through our new fintech strategy, we are focusing on three areas, of which consumer finance is one. We are increasingly moving into supply chain finance because we see a lot of positive regulatory headwinds emerging in that market. But more importantly, we believe we have a very unique advantage in this area. The third area is obviously technology to leverage our technology to enable more financial institutions to come into the supply chain financing side of things. So in terms of consumer financing, as we've seen in our results and over the last two quarters, we've been turning around loan balances, we're seeing the light at the end of the tunnel and I think that business is improving over the last few months. Supply chain finance is obviously an area that we're going to be focusing on given that we have a fairly unique advantage in that area because a lot of these are our suppliers or suppliers to our 12 suppliers. So we've seen good data on their production in that area. And also, a lot of them rely on working capital to run their business, and we think that can help us use data and also leverage our technology advantage, our technological advantage to make the process more efficient. So I think you're going to hear more about progress in this area in the future in this space. I think it's something we're very focused on. And then the third phase is obviously as the technology develops, as the systems develop, we also want to export that technology to enable more and more of our financial institutions to be able to participate in it. That's the fintech business. In overseas Internet business, as far as the App Store is concerned, we certainly do not have the advantages of some larger players. Lei Jun: Actually, we haven't started profitable business from overseas markets yet. But we have seen very good results from some applications. For example, in some regions, the MAU of our browser is higher than that of Google's Chrome. This is a good signal for us. So now, we are still focused on user acquisition, number one. Number two, we want to improve the user experience so that we can keep customers in our ecosystem. So we continue to improve the user experience. So we continue to increase the user experience between smartphones and IoT products. That's why we launched several features, "Mi Share". With Share, you can easily use your smartphone to control your IoT devices, such as music, right, the closer you are to your smart speaker, AI speaker, your music will automatically transfer from your smartphone to the AI speaker and vice versa, right? When you are out, the music in your home can be easily transferred to your smartphone. So this capability and another technology that we are using is called UWB. So using your smartphone, you can easily point your smartphone at the TV and then you can easily convert your smartphone into a controller or stream content from your smartphone to the TV, similar capabilities. So we will continue to improve the user experience so that we can retain customers. And then we will consider monetization in the future. But even though we haven't started yet, it's still a very good trend for the Internet, the growth of overseas Internet revenue. Q: My first question is about your long-term sales momentum. Given that we did see a second wave, it also waves COVID-19 around the world. So, what do you think the last two months have had on sales, especially in Western Europe? And, the supply chain also shows that Android 10 will generally experience an automatic slowdown in the fourth quarter. So, I wonder if you have actually seen similar seasonal changes. This is the first question. The second question is the gross profit margin of your IoT business. Our profit margin in the market segment has reached a record 14%. Can we continue to improve in the future? Lei Jun: I can say this: COVID-19 will undoubtedly affect our business in 2020, especially in the first and second quarters. We have seen a recovery starting from the third quarter. But as I mentioned a few times in the past, the smartphone business is actually a resilient, and yes, people will need smartphones, especially in difficult times. So the demand is there. But that's the case, with COVID-19, we still face some challenges. For example, supplier shortages - supply shortages are one of them , and COVID-19 is certainly another. So we are closely monitoring the pandemic in Europe and India. In fact, we hope individuals are optimistic about it because the vaccine is ready. But this winter is coming and I hope it will be the last winter of the pandemic. So we are optimistic about next year. As Alain just mentioned, we saw the light, right. So we worked very hard. We tried to try to help solve the problem in the first quarter. In China, Wuhan and here we have also made some efforts for India and even European countries through technology and efforts. I think that will end, and that's what's happening in the near future. A: Regarding IoT gross margin, I think Xiaomi has a very strong position in the entire IoT industry. We have a lot of leadership positions in many different categories of the Internet of Things market in China. We are also expanding the IoT application market. So when we do this, you see a lot of products that we are growing now. For example, in the small household appliance category, these products have a higher gross margin than some of the products we traditionally have, such as laptops and TVs. So, I think in terms of product portfolio, this means benefiting from gross margin. Another figure we shared in the quarter is that our overseas IoT business is also growing rapidly, as the gross margin of IoT tends to be higher overseas than in mainland China . So that also brings benefits to gross margin, but overall, I think from the perspective of IoT, it is very similar to the smartphones we are talking about, and in terms of industry development, I think it is still in the early stages. For us, the key is still to get used to improving the experience and gaining more users, rather than really optimizing gross margins . Lei Jun: We are happy to have good results. But in fact, we are working hard for the fourth quarter and for making more important preparations for 2021. I think supply shortage is one of the problems in the near future. We are working hard for it. At the same time, we continue to hire more engineers to attract more people to different markets and regions, so a lot of work needs to be done. via Futu NiuNiu |
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