Tech firms seeking new business growth engines amid challenges
Faced with an industry-wide sales slump and other challenges, Chinese technology companies, including Lenovo, Xiaomi and iQiyi, are seeking new business growth engines and emerging business opportunities like artificial intelligence, according to their latest fiscal reports.
Hong Kong-listed Xiaomi Corp posted first-quarter net profit of 4.2 billion yuan (US$600 million), recovering from a loss a year ago.
But its revenue and major smartphone business continued to decrease with the Beijing-based company posting a 23.6 percent drop in mobile phone revenue in the period.
China's smartphone sales fell 11.8 percent year on year to 65.4 million units in the first quarter. OPPO, Apple, Vivo, Honor and Xiaomi were the top five vendors, respectively, according to researcher International Data Corp or IDC.
Comparatively, Xiaomi's IoT or the Internet of Things, business grew rapidly, with sales of connected smart devices (excluding phones, pads and computers) reaching a record 618 million units. The combined revenue of Xiaomi's home appliances, including air conditioners, refrigerators and washing machines, jumped 60 percent annually.
Looking at the long term, Xiaomi recently decided to add 1.1 billion yuan in expenses for its smart electric vehicle (EV) business and other new opportunities.
Lenovo, the world's biggest personal computer vendor, posted a revenue of 424 billion yuan, down 14 percent, in the recent fiscal year through March, the first annual decline since 2019.
The decline mainly came amid a sluggish market demand for PCs, but Lenovo Chief Executive Yang Yuanqing expected the industry to rebound with single-digit growth by the end of this year.
Yang also emphasized the "second growth line" as a company strategy, which means developing non-PC businesses.
Currently, Lenovo's non-PC business accounts for almost 40 percent of its total revenue, with servers, storage and software being the fastest-growing sectors. The company also generative AI, covering applications like ChatGPT, a new growth engine with explosive growth.
Streaming site iQiyi is another tech firm which has high hopes on generative AI.
In the first quarter, Nasdaq-listed iQiyi posted a record-high revenue of 8.3 billion yuan. It added 17 million paid subscribers in the quarter to boast a total paid user base of 129 million.
In 2023, iQiyi said it will adopt a large language model, a generative AI technology, in video content production and distribution. The new technology will greatly improve the company's production efficiency, especially in animation and cartoon production in the initial stage.