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Xiaomi made only $56M last year, filing shows

The upstart Chinese phone maker is operating on a profit margin of just 1.8 percent, which pales in comparison to competitors like Samsung and Apple.

Carrie Mihalcik Senior Editor / News
Carrie is a Senior Editor at CNET focused on breaking and trending news. She's been reporting and editing for more than a decade, including at the National Journal and CurrentTV.
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Xiaomi is know for low-cost phones that pack high-end specs. CNET

Xiaomi, the world's third-largest smartphone maker, is serious about selling devices at or near cost to get ahead in the market.

Xiaomi earned 347.5 million renminbi ($56 million) in net profit on 26.6 billion renminbi in revenue ($4.3 billion) last year, according to a disclosure made to the Shenzhen Stock Exchange.

That gives the 4-year-old Chinese company an operating margin of just 1.8 percent, according to Reuters. For comparison, Samsung's mobile division reported an operating margin of 18.7 percent last year, whereas Apple reported and operating margin of 28.7 percent for the year ended September 2013, according to Reuters.

Xiaomi's slim profit underscores the company's willingness to grow at any cost. The Chinese manufacturer's stunning expansion has put many of its larger, more established rivals on notice.

The disclosure was submitted as part of Xiaomi's $200 million investment in home-appliance maker Midea Group. The company pointed out that the filing does not cover all of its financial information.

"The figures are for Xiaomi Inc., which is the company that invested in Midea Group. Xiaomi Inc. is one of the companies under Xiaomi," said a Xiaomi spokeswoman in an email. "Therefore, the filing only covers Xiaomi Inc. but not the whole of Xiaomi."

Xiaomi, which sells low-cost smartphones and tablets aimed at budget-conscious customers, has so far largely avoided western countries -- like the US, UK and Australia -- and has instead focused on emerging markets like China, Indonesia and India. It has drummed up a huge amount of buzz for devices like its Redmi 1S by holding online flash sales -- in which a limited number of phones go on sale at any one time.

In just four years, the company managed to become the third-largest smartphone provider in the world, following only Samsung and Apple, according to IDC. In August, Xiaomi topped Samsung as China's leading smartphone maker, according to research firm Canalys.

Xiaomi latest efforts have focused on growth in Indonesia and India. Last week, however, Xiaomi confirmed it will suspend sales of its handsets in India after being served with an injunction by the Delhi High Court for infringing on Swedish telecommunications firm Ericsson's patents.

Update, December 16 at 6:50 a.m. PT: Adds comment from Xiaomi.