Ladies and gentlemen, thank you for standing by and welcome to Xiaomi twenty twenty one Third Quarter Results Announcements Conference Call. Today's conference is being recorded. If you have any objection, you may now disconnect. I'd now like to hand over the conference to Ms. Your host today, Ms.
Annika Chen, Head of Investor Relations. Please go ahead, Ms. Chen.
Good evening, ladies and gentlemen. Welcome to the investor conference call hosted by Xiaomi Corporation regarding the company's twenty twenty one third quarter results. Before we start the call, we would like to remind you that the call may include forward looking statements, 20 of first sources 20 outside of Xiaomi. The This presentation also contains some unaudited non IFRS financial measures that should be considered in addition to, but not as a substitute for the company's financials prepared in accordance with IFRS. Joining us on the call today are Mr.
Wang Xiang, Partner and President of Xiaomi Corporation and Mr. Alan Lang, Vice President and CFO of Xiaomi Corporation. To start, Mr. Wang will share recent strategic initiatives of the company. Thereafter, Mr.
Lang will review the business and financial performance for the quarter. Following that, we'll move on to the Q and A session. I will now turn the call over to mister Wang.
Yeah. Thank you. Thank you, Anita. Hello, everyone. Thank you for joining our twenty twenty one third quarter earnings call.
This quarter actually ended the background of global supply shortage. All our business segments continued to grow. Total revenue reached 78,100,000,000.0 RMB, up about 8.2%. And adjusted net profit reached 5,200,000,000.0 RMB, up 25.4% year over year. And our global smartphone shipment remain strong despite the shortage of the key components.
In the third quarter, we ranked number three globally in terms of smartphone shipments. In the 2021, our global smartphone shipment reached a 146,000,000 units, equivalent to our twenty twenty full year shipments. This allow us to support our market positions as much as possible across our key market globally. At the same time, our smartphone gross margin reached 12.8% this quarter and increased by 4.4% year over year and 1% quarter over quarter. We continue to strengthen our position in the premium smartphone market.
In the 2021, we shipped around 18,000,000 premium smartphones globally. It accounted for more than 12% of total smartphone shipments compared with less than 8% in the same period of last year. The growth of premium smartphone shipment has also led to an increase in our overall ASP. Meanwhile, we are using different product lines to penetrate different target market segments and to attract new Xiaomi smartphone users. Among our new smartphone product launched this year, over half of users are new users.
Similarly, our stylish Xiaomi CV attract over 50% female users. We remain committed to technology innovation to deliver best product and user experience. In China Telecom's five g smartphone performance test in November, We ranked number one across all price categories, a result of our relentless focus on user needs and r and d investments. In the first three quarters, our r and d expenses reached 9,300,000,000.0 RMB, up more than 50% year over year. As we continue to make amazing products, actually, we are also strengthening our distribution channels.
In online channel, we were the clear leader in the year's double eleven shopping festival. We run cash the number one smartphone brand by sales volume. At the same time, we continue to expand our offline channel. By now, we have over 10,000 stores in Mainland China. Going forward, we will seize the growth opportunity in lower tier offline markets and continue to strengthen our market share.
This quarter, Internet service performance remained strong. In September, our global MIUI MAU reached 486,000,000. At the same time, our Mainland China MIUI MAU increased for the four consecutive quarters reaching 127,000,000. As we grow our user base and increase our premium smartphone shipments, Internet service revenue and advertising revenue both achieved record highs in this quarter. Furthermore, our overseas Internet services revenue contribute to nearly 20% of our total Internet service revenue.
And we are happy to share that as of yesterday, our global MIUI MAU exceeded 500,000,000 users. It took only ten months for our global MIUI MAU to increase from 400,000,000 to 500,000,000, and this marks an important milestone for our smartphone times AIoT strategy. Now I'd like to invite Alan to discuss our third quarter earnings result in greater details. Alan, please.
Thank you, Shang Zhong. Good evening, everyone. Thank you for joining us today for our third quarter two thousand and twenty one earnings call. Our total revenue and adjusted net profit continued to grow despite the global shortage of key components. In the first quarter, we ranked number three globally in terms of smartphone shipments.
Our MIUI user base in Mainland China as well as globally both reached record highs as of September, driving our Internet services revenue to set another record. The number of connected devices on our AIoT platform exceeded 400,000,000 for the first time, and the number of users with five or more connected devices also surpassed 8,000,000 for the first time. In the 2021, our total revenue reached RMB 78,100,000,000.0, up 8.2 from a year ago, as all business segments continued to grow year over year. Adjusted net profit increased 25.4% year over year to 5,200,000,000.0 RMB, and adjusted net profit margin was a robust 6.6%. By further refining our smartphone user segmentation, we have been attracting new users to Xiaomi.
Notably, for many of our new smartphones launched this year, over half of the users are new Xiaomi users. For example, over 70% of Xiaomi Mix Fold users and over 60% of Xiaomi 11 series and Xiaomi CD users are new users of Xiaomi. These new users help us increase our Internet MAUs in China from a 111,000,000 in December 2020 to 127,000,000 in September 2021. We continue to improve our competitive position in the premium smartphones market. In the 2021, our premium smartphone shipments reached approximately 18,000,000 units globally, significantly higher than the 10,000,000 units in all of 02/2020.
In the 2021, we've expanded our premium smartphone market share in Mainland China across all price categories. For example, in the 3,000 to 4,000 RMB category, our market share grew 6.4% year over year. In the 4,000 to 5,000 RMB category, our market share grew by 7.7 year over year. At the same time, models such as Xiaomi 11 Pro, 11 Ultra and Mix four continue to attract new premium users and improve our market share in the 5,000 or above RMB price category. The outstanding performance of our five g smartphones has also been well recognized by the industry.
In the most recent China Telecom five g smartphone performance test in November, which included tests on speed and stability, Xiaomi and Redmi smartphones ranked number one across all price category against all of our peers. The result shows the competitiveness competitiveness of our five g smartphone products. As Shang Zhong mentioned, we have achieved remarkable results during the Double Eleven shopping festival. We set new records as our cumulative GMV exceeded 19,000,000,000 RMB, an increase of 35% year over year. We ranked as the number one smartphone brand by sales volume across the major ecommerce platforms.
In the Android 4,000 RMB and above category, our premium smartphones ranked number one on jd.com and TiVo. Furthermore, our AIoT product achieved 208 number one rankings across different categories. Although, as Shang Zhu mentioned earlier, we're very happy to share that as of yesterday, our global MIUI MAU exceeded 500,000,000 users. This marks another milestone of our history and demonstrating the strong growth momentum of our user base. We continued to step up our investments in r and d.
In the 2021, our r and d expenses increased by 39.5% year over year to reach 3,200,000,000.0 RMB. For the first nine months of 02/2021, total r and d expenses reached 9,300,000,000.0 RMB, up 51.4 year over year. At the end of the third quarter, we had approximately 14,000 r and d personnel, accounting for more than 44% of our total employees. In addition, our total patent applications exceeded 48,000 globally. Our smart EV business has been progressing ahead of schedule since we officially announced our entry in March.
So far, we have a team of over 500 people. We expect to continue to execute on our strategies and begin mass production in the 2024. Now let us dive deeper into each of our segments, start starting with smartphones. In the 2021, despite the global shortage of key components, we managed to increase our smartphone revenue by 0.5% year over year to reach 48,000,000,000 RMB, while our ASP increased 6.7% year over year. Our smartphone market share has maintained an upward trend.
In the 2021, our smartphone market share was 13.5% globally and 13.8% in Mainland China, over above our historical averages. In this past quarter, we launched our Xiaomi CD for fashion conscious users. With a lightweight and attractive design, Xiaomi CD has been well received. Since launch, based on our data, over 60% of CD users are new Xiaomi users, and over half are female, demonstrating our ability to penetrate new user segments. The Redmi Note 11 series is another exciting new product that offers cutting edge technology to a wide user base.
The Redmi Note 11 Pro Plus comes equipped with a high refresh rate display, ultra clear camera, and 120 watt fast charging. Since launch at the October, sales of the Redmi Note 11 series in Mainland China have already exceeded 1,000,000 units. We continue to expand our offline network in Mainland China. We currently have over 10,000 offline retail stores, covering over 95% of cities and over 80% of counties in Mainland China. We'll focus on expanding in lower tier market as well as improving the efficiency of our offline stores in the future.
In the overseas markets, our premium smartphones have gained wide popularity. In the third quarter, our overseas premium smartphone shipments grew more than a 180% year over year, mainly driven by growth in Latin America, Western Europe, and The Middle East. As a result, our overseas smartphone ASP also saw an year over year increase. We maintained the number one position in 11 markets globally and was among the top five in 59 markets in the third quarter according to candidates. Now let's move on to the IoT and lifestyle products.
In the third quarter, our IoT and lifestyle products revenue reached $20.20900000000.0 RMB, up 15.5% year over year. In particular, overseas IoT and lifestyle products revenue reached a historical high, even though there were challenges with respect to overseas shipping logistics costs, which has impacted some of the IoT products overseas. As the global leading consumer AIoT platform, we continue to expand our global IoT user base. By the September, the number of connected IoT devices on our AIoT platform exceeded 400,000,000 for the first time, up 33.1% year over year. Moreover, the number of users who have five or more devices on our AIoT platform exceeded 8,000,000 for the first time, up 42.8% year over year.
Our AI assistant MAU reached a 105,100,000 in September, an increase of 34.1% year over year. Also, our Mi Home app MAU reached 59,900,000, up 39% year over year. In the smart TV category, we are rapidly expanding our global footprint. In the third quarter, global shipments of our Smart TV reached 3,000,000 units, despite the impact of increased panel prices, and we ranked top five globally. In India, our smart TV ranked number one for the thirteenth consecutive quarter.
In Mainland China, we ranked number one overall for the eleventh consecutive quarter. And since launching our new OLED products in August, our OLED TV have ranked number one for two consecutive months, demonstrating our achievement in the premium segment. We have made continuous effort to penetrate the high end white goods market. We believe we can capture significant opportunities by enhancing traditional white goods with smart technologies, while making our premium products available to the mass markets. As an example of this effort, we launched our first premium smart refrigerator in October 2021, which supports connectivity with our Mi Home app as well as our AI smart assistant.
Also during the Double Eleven shopping festival, our home appliances products achieved record sales. On jd.com, as you can see, we ranked number three in the overall home appliances category by sales value, outpacing other players like Geely. Notably, in the smart AV with ventilation category, which we have talked about in the previous earnings call, Xiaomi ranked number one in terms of both sales volumes as well as sales value. We've continued to make progress in the variable areas. In the in the third quarter, according to candidates, we were the global number two vendor in variable bands.
As we execute our smartphone times AIoT strategy, we strive to use offer our users the coolest wearable products, such as our Xiaomi Buds three Pro and Redmi Watch two, while enhancing connectivity with our smartphones. Now let's talk about our Internet services. In the third quarter, our global Internet user base continued its strong growth momentum to reach another record high. Our MIUI global MAU increased by 32% year over year to 485,900,000 in September. While our MIUI MAU in Mainland China reached a 127,300,000, an increase of 3,300,000 users from June 2021.
And as Sang Young said earlier, our global MI MIUI MAU exceeded 500,000,000 a couple of days ago. Just to recap, in the first nine months of the year, the UI MAU in Mainland China increased by more than 16,000,000. Our global TV MAU also continue to grow rapidly, increasing over 33% year over year. As our global and Mainland China user base continues to grow, revenue from Internet services achieved another record high, reaching RMB 7,300,000,000.0 in the third quarter, up 27.1% year over year. Our advertising revenue reached another quarterly high of RMB 4,800,000,000.0, up 44.7% year over year.
Gaming revenue also grew 25% year over year to reach a billion RMB, our first year over year growth in the past year. Let me elaborate further on our advertising and gaming business. Our advertising revenue is mainly derived from ad preinstallation, by search, and by performance based and brand advertisements. In the third quarter, pre installation revenue per smartphone in Mainland China increased by over 50% year over year, driven by increased premium smartphone shipments. In the overseas market, search revenue increased over 200% year over year, and performance based and brand advertising revenue increased over a 100% year over year, driving our significant growth in advertising business.
For online games, contract terms are now comparable with the same period last year. Furthermore, higher ARPU contribution from our premium as well as our gaming smartphone users helped drive solid revenue growth. Our overseas Internet services revenue also continued its rapid growth and achieved a record high. In the third quarter, overseas Internet services revenue increased a 111 a 110% year over year, accounting for 19.9% of our total Internet services revenue. Going forward, we'll deepen our collaboration with global business partners and further enrich our overseas services offerings.
Now let's move on to more detailed financials. As we mentioned before, in the third quarter, total revenue reached RMB 78,100,000,000.0. By segment, smartphone revenue grew 0.5% year over year to 47.8% for 47,800,000,000.0 RMB. IoT products revenue grew to 20,900,000,000.0, and Internet services revenue grew 27% to 7,300,000,000.0. Overseas revenue increased 2.8% year over year to 40,900,000,000.0 RMB, accounting for 52.4% of our total revenue.
Our overall gross margin increased year over year and quarter over quarter to 18.3%. This increase was mainly driven by higher smartphone gross margin, which reached 12.8% in q three, an increased contribution from the Internet services segment, which has which achieved 73.6% gross margin. As we mentioned before, we continue to invest in r and d in the third quarter. As you can see, our overall operating expense ratio was 12%, which was mainly driven by r and d expense ratio increased to 4.1%. In the third quarter, our cash resources remained abundant at 98,100,000,000.0 RMB.
Let me provide you with an update on our ESG initiative. Number one, we continuously strive to protect our users' data and privacy and hold ourselves to the highest standards. Our efforts have been recognized by the British Standard Institution, which has granted the Kite Mark certification to our Mi 360 degree home security camera. Furthermore, in this quarter, we screened more than 85,000 apps in our Mainland China Xiaomi App Store for data collection violations and rectified any issues immediately. We also understand our social responsibility extends far beyond our products and services.
In responses to natural disasters in the Henan and Shanxi provinces, Xiaomi foundations donated 15,000,000 RMB and 10,000,000 RMB to the respective areas. In July, we also donated €1,000,000 to those affected by the flood disasters in Germany, Netherlands, and Belgium. We also strive to give back to our community through education. In November, the Xiaomi scholarship was launched to the second batch of of universities in China to support eligible students. In the future, as we grow our business, we'll continue to give back to our community and fulfill our corporate social responsibilities.
This concludes our prepared remarks. We'd now like to open the call for questions from investors.
Thank you, Alan. We will now proceed to the q and a session. Please leave your questions to a maximum of two so that we could allow more investors to answer the question.
Operator? Thank you. The question and answer session is now open. And our first question is come from Keena Wong with Credit Suisse. Please go ahead.
Thank you. Thank you for taking my questions.
I have two questions.
The first one is about the Internet business. We see that a strong momentum in the advertising business and also gaming is, like, picking up. And we see overseas contribution also increased, like, over 100% over a year in the third quarter. Could management give us some kind of, like, outlook in the Internet business in the fourth quarter and also first half next year? Because the overall, we as we think that it's important to know the growth momentum going forward.
As the MAU has has already achieved the kind of, like, certain level that potentially contributes the Internet business in the next few quarters as well. The second question is about smartphone side. I think we we we know that the chip shortage is, like, hard to release it in the near term. But any improvement in the fourth quarter, and what should we expect on the full full year shipment? Is the one ninety million reasonable target for us?
And should we also expect what should we expect the target for 2022 if the chip tightness is actually improving in the second half next year? Thank you.
Thanks, Tina. Let me try to take the first question, and then I'll let Shang Lu take the second question. With respect to the the growth in the Internet business, number one, I think it's driven by the increase of our global Internet users. Right? As we said before, our q three MAU reached 4.86 486,000,000, which means an increase of over a 100,000,000 in in in 2021 alone.
Right? In the first three quarters, our China MAU increased by 16,000,000. Right? And so and so I you know, a huge part of the of the increase in Internet services, obviously, driven by the increased number of our user base as well as our shipment base. I think that's number one.
Number two is the increased percentage of our premium smartphones as our overall premium smartphone portfolio. As we demonstrated in the chart one of the charts, premium smartphones do drive higher gaming ARPU, also drive higher preinstallation revenue. And so and so the the the the move towards more prem more premium smartphones for Xiaomi will also increase our our our advertising or Internet services rep. Number three is also the gaming revenue as we talk about. In the past four quarters, we've been hit by some changes in the contract terms with some of our providers, suppliers.
And q three is the third quarter is the first quarter that we are able to compare apples to apples in the last in the past five quarters. And so as a result, we're very encouraged to see that our our our gaming revenue has increased year over year. Number four, you talk about overseas. I mean, obviously, overseas is a function of the user base in the overseas market. We talk about the increase in revenue from our search business in the overseas market.
And so I think that that will continue to to contribute to our revenue as well as our net income. Lastly, I think the TV, as you mentioned that, you know, we mentioned we talked about the TV MAUs. The TV Internet revenue has also contributed to the significant increase due to some of the the memberships, etcetera, that that we've seen a year over year increase. Right? In the future, we continue to be optimistic.
So, obviously, I think as you mentioned, there's a lot of regulatory headwind which are facing some of our peers as well, which were well recognized. But at the same time, I think given the strong shipments that we have, the increased number of use new users on Xiaomi's platform, the premium use yeah. Users on on Xiaomi's phones. And to the extent that we can continue to improve customer experience, customer services, we believe that we'll continue to see you know, hopefully, continue to see a healthy growth in the Internet business.
Yeah. Yeah. So the second question is related to the the supply and also the forecast. Actually, everybody knows during the entire year 02/2021, we are facing the challenge of first supply shortage. Actually, the 2021, the challenge even bigger.
So but even with the the serious supply situation, actually, we we have achieved actually record high shipment. In the first three quarters, actually, the total shipment is over 146,000,000. It's equivalent to the entire last year shipment, actually. It's a it's a I think it's a it's a very, very good result. Actually, q three and and also q four, the challenge is is even bigger as I mentioned earlier.
But I think we can we are working very closely with our suppliers, try to get more supply as much as possible. I think so I think 190,000,000 is a good number, but we still work very hard to try to get more. So I think yeah. So it is getting the middle of the q q four. Right?
We are working very hard. So for the for next year, actually, we see very good, how to say, the momentum of of the improvement. But, unfortunately, in the first half, actually, we we still see some structural challenges in the first half, q one to q two. But but the entire year 2022, the supply situation will will will be very much improved. So so we are working very hard for the for the supply for q one and q two, especially for the for the four g devices.
Right? We are still right now, we are in the more than 100 different markets, actually. Many of our markets, the consumer really need lot of acute the the four g devices even in the developer market like Europe. So we are working very hard for that supply. So, yeah, overall, it's a it's a it's it's good.
But, yeah, as I mentioned, the first half will will be a challenge. We'll maintain a very high growth for the year 2022. I I think, Tina, think just to contextualize some of what Shangling just said. Right? I mean, if you
look at our shipments in the first March of the year Yeah. We've already reached a 146,000,000, which was comparable to the entire 02/2020. If you look at our revenue from smartphone in the first nine months of this year, it has already exceeded the whole of 02/2020. So despite overall shipments being flat in the global market, we have achieved very considerable growth in our smartphones this year. So that's why we are very Skeptic.
Encouraged by the results. So I think that that that's point number one. Point number two is, as as we mentioned in the last couple of conference calls already, in in in in the global supply shortage situation, we're also able to maintain a fairly healthy gross margin. So if you look at our smartphone gross margin this quarter, it's back to 12.8%, which is comparable to what we achieved in the first quarter. So so I I just want to point those numbers out to
you. Mhmm.
Got you. So 2022 sounds good to maintain good growth for 2022. Got it. I understand that.
Got it.
Thank you. Thank you. Thank you, Adam.
Thank you. And our next question comes from Andy Meng with Morgan Stanley. Please go ahead.
Thank you, Jiang Zhong. Thank you, Allen Zhong. I have two questions. The first question is related to the AIoT business. We have seen the margin see a slight decline on quarter over quarter basis.
So is it possible for Xiaomi to raise the ASP of the IoT product and try to pass through the cost pressure? And can we say this will help us to improve the margin? Or basically the margin is more likely to stay at the current level, without much improvement in the following quarters? Okay. This is my first question.
My second question is related to the smartphone. We have highlighted two product in our presentation, which is the Xiaomi CD and the Remi Note 11 series. So basically I want to check, you mentioned about a positive feedback on those new products. But compared with the models we launched early this year, what's the key improvement we have achieved on those two models? And what are the key areas we want to do better in the future?
And also if you can share a bit more regarding the offline channel, which like a product is selling better and why is that? And do we figure out how to play this offline promotion or just like setting the popular models, etcetera? That will be very helpful. Thank you.
So, yeah, the first question related to the AIoT profit margin. So during the entire 2021, actually, we we we have I just mentioned the challenge is the supply. Right? But on the AIoT side, I think there is another challenge with the logistic transportations. The transportation cost is very high, increases significantly.
So that that will gives give us some impact on the international profit margin generally from the the international market. And, also, because of the slow response of the transportation, so they also give some impact on the the revenue side for the international market. And also because of the supply shortage, so some of the the cost of our AIoT devices increased significantly. That give us a temporarily impact on on the profit margin. This is what I see.
Probably, Alan, you can add.
Yeah. I think, Andy, on the on the IoT side as as Shangjo mentioned, you know, we we do have some products that we normally sell to the overseas market that's been delayed or that's been, you know, canceled due to the shipment costs K. Into the overseas market. So that I think that's the first point. And what that means is we also shifted some of the product mix between China as well as the overseas market.
Yes. That's the second point. Right? And China, as you know, is predominantly dominated by some of the larger white goods product such as TV. Right?
Such as TV and laptops. And, obviously, TV and laptops are due to kind of a high OC prices carry lower margins. And so I think it's it's just a math function. Right? I think I think as as OC price, people already see OC price dropping a lot.
Significant. Significantly, in fact. And so and so the you know, it it does it does help in terms of the the gross margin in future periods. Yeah. And and as as as can see, the overall shipping cost has also been normalizing.
And so it will also help the the the overall margin in the in the future periods. So I think that's the first question. I think the second question is with respect to CV and and Remi Note 10 Note 11. I think, first of all, the CV product is really made for a different demographics, a demographics that we haven't really targeted previously, which is the fashion conscious female demographics. And as I as I as I mentioned in my prepared remarks, the female users, we estimated to be around half of the buyers.
Yeah. Probably some of the other buyers give it to their girlfriends and wives. We don't know, but but but the percentage could be high. And so and so I think from our data, we already targeted a have a new demographics that we haven't touched before. Second is we targeted the the CV products a lot a lot into the offline channels.
And so this is also our first try into trying, you know, a a different types of products into a different channels. We we're very encouraged. I mean, obviously, I think it would take time for us, like like like our premium products, to get used to serving the high end premium users as well as the female demographics. So so, hopefully, the next series of the CD products will be much more competitive. I think that that's something that we we we we we would like to see.
Right? In terms of the Redmi 11 note Redmi Note 11 series, so, obviously, we've been improving the performance, but at the same time, we also increased the price. I think the the the the price range that we offered our Remi Note 11 was much higher than previous. So so I think you you can see that we're also trying to broaden the reach using this Remi Note 11 product. And so this is something that that we are we are we are trying.
Your last question is respect to the offline channel. The offline channel, I think this this year, we've added a lot of new stores. We've are we are over 10,000 now. I think the next stage for us to focus on is really to increase the efficiency of these stores or increase the productivity of these stores. I I think that a lot of these new stores, you know, are open for less than three to six months, and that it takes time to ramp up these stores.
I think I think an important focus for us is to is to improve the productivity of each of these stores in the near future.
Thank you very much.
Thank you. And our next question is come from Paish with Goldman Sachs. Please go ahead.
Thank you for taking my question. Just picking up from the store point that you talked about, Alan, could you take us through you've expanded the store number by more than a factor of three. Could you take us through what's prompted that expansion that we're observing? And give us a feel of whatever the initial feedback has been on the ability to sell through and market share gains you're seeing in the offline space. And also give us a feel for whether this is coming in at the higher end versus the overall ASP or at another price point versus the overall ASP.
Second is what have been the key learnings for you from building out this retail presence from the standpoint of how effective your sales force has been and how good the quality of the smartphone overall is versus the high end of the market. And third is more specific to how we should be thinking of the expenses related to EV, where I noticed you've fleshed out how many people have applied for and how many have been have started to work in that segment. Could you take us through what that cost point is at this stage and how that's likely to evolve and how we should think about that and baking that into our numbers? Thank you.
Thanks, Tiyush. On the offline store expansion, as we mentioned previously, we are significantly lower in terms of number of stores versus our peers. Right? If you look at Oppo and Vivo, each of them has probably 200,000 sales points in in China. At this point, we are still very, very low in terms of where we are.
I mean, obviously, we believe that we can be more efficient, and that we don't need to have that many stores to achieve their market share. Right? But I think for you know, if you compare the market share per store, I think we are we are much higher versus OPO and Vivo at this point in time. Key lessons learned, obviously. Number one is that these stores need time to ramp up.
If you think about 10,000 stores, we are hiring 10,000 employees into Xiaomi. And if we we assume one store manager per store. Right? And and that that puts significant pressure on training these people, on getting them up to speed, on getting them familiar with selling Xiaomi products, etcetera, etcetera. So we have to implement a lot of training sessions, a lot of training sessions for them to learn about our style, our culture, how to sell the product, etcetera.
So so, obviously, it takes longer it takes a while for these stores to get ramped up. I think that's that's one of the key lessons learned. And so for the next for the next few months, I think, well, we are spending considerable efforts trying to ramp up the profitability the productivity of these stores. I think what we've been encouraged to see, obviously, is our business partners because a lot of these stores are not opened by us, opened by our business partners. And we are we we and, you know, and they will only open more stores with us if they make money.
Right? And we've been talking about this ROI model for a while now, which we think is working. Because if you look at the number of average stores open per partner, that number has been increasing. So at the beginning, each partner probably open, like, stores for us. In the most numb most recent data that we collected, they're opening more than five stores with us.
And that's something that we want to we are encouraged to see because, obviously, they're making money. Otherwise, they won't be opening that many stores with us. So that's something that we'll continue to work on, increase the productivity of each store, improve the returns of each partner so that they will continue to build their network with us. In terms of EV expenses, right now, it's still relatively small compared to other parts of our business. So that's why we are not we are not breaking that out at this point.
I think this year will continue to to be low versus where where our other businesses are. But as we grow the business, we are think we're also thinking about how to better disclose the expenses related to ED so that analysts and investors will have a better view. So so stay tuned on that. We are not quite ready yet, but when we are ready, we'll let you know.
I
think I think oh, sorry. One one one last point you mentioned. So, obviously, we we do see higher percentage of premium products sold in our offline stores. Yes. I think that that's something that that that we've observed as well.
So that's why as we continue to push our effort into the premium side premium smartphone side, these stores will also be very, very helpful in in that distribution.
Thank you. And our next question is come from Gukrud with JPMorgan. My
first question is about competition in China. It seems like Honor has come in and taken a fair bit of market share in a short period of time. How do you see competition evolve now that there are four local brands who are all competing for market share? How does Xiaomi plan to kind of gain further market share in addition to the offline push in the in the next, let's say, twelve to eighteen months? I think previously, we've talked about potentially getting to high teens to 20% market share.
We were there in first half of the year. It seems like there has been a little bit of a slippage in Q3. Could you talk a little bit about how we think market share evolves in China? Second is on the overseas Internet business. Alan, think you talked a little bit more in detail about advertising growth in overseas.
Could you also get some more details on where is the revenue coming from overseas? Is it primarily coming from the higher ARPU areas like Europe, Or is it more broad based in terms of the overseas Internet revenues? Thank you.
Yeah. Yeah.
Regarding to the the competition, actually, we have a lot of competition. Actually, we respect every competitors in this market. China is the the the the most competitive market. I think we we instead of looking what competitor competitors are doing, actually, we we should focus more on ourselves to improve the the user experience, the quality of our product, improve the channel coverage. I think that's the the way we are we are we are doing it.
So, actually, focus on our key strengths. I think one of the strengths we have is we have to scale. Right? Right now, we have last year, we have almost a 150,000,000 smartphone shipped to the global market. We are we we have that scale.
Scale means we have a we have a higher efficiency. Right? We have a a better cost structure. That's the key strengths we have. And, also, we are we optimize everything in terms of the the r and d and also the the channel cost.
So that's that's the what we are doing now. I think we are we are confident that in the future, while we are building our coverage in the offline in China, we'll continue to improve the efficiency. And we will we will we will I think we are we are confident we can we can compete with anyone more efficiently. It it takes a little while for us to establish the the the the offline channels in China. But we are actually, we are still the leader in the online market.
And, also, we have a very broad global market. So I think that's all our strengths.
I think I think, Loco, a couple of other points. Obviously, in q three, our our market share was lower than q q q two. I think one of the key reasons was really the strong performance by the iPhone 12 the iPhone 13. Right? I think it actually managed to squeeze all the Android players down in terms of their market share.
So I think I think that that's the first factor. They are they are still very, very strong. I think second thing is, obviously, if you look at some of the recent market share that we have in the Chinese market, we've seen last week, we've seen 16.5%. Two weeks ago, we've seen 18.6%. So so so as the November plays out, we've been able to achieve a pretty high market share on a weekly basis in China.
Our third point is also, I mean, I think this this is a point that we made for the past couple of quarters already. As we as we as we are facing supply shortage, we are also trying to optimize our product portfolio globally because because we do have a 100, you know, markets to take care of. And so we also been strategically we I mean, allocating our resources globally to make sure that we are satisfying as much as we can all the all the channel demand, you know, under under certain under the constraint supply that we are getting. So I think that that kind of address your question on on the market share. With respect to the overseas Internet revenue, I mean, frankly speaking, we haven't been doing a lot of monetization, although some of these search revenue, pre installation revenue comes naturally.
But but, obviously, we've been focused on growing our user base. And as I said mentioned earlier, think this past nine months, we increased our user base by over, you know, a 100,000,000. And so the and the the the user base increase is actually helpful to to to our to our Internet revenue. In terms of regions, I I do think that, you know, if you look at the breakdown, the higher ARPU obviously comes from the more developed markets, right, such as Western Europe, part of Latin America, you know, than over Southeast Asia, etcetera. So so I think you do see similar trends with respect to the economic development reflected in the overseas Internet services rep.
Got it.
Thank you.
Thank you. Our next question is come from Wen Heng Jin with CICC. Thank you.
Okay. Good evening, management. Thanks for taking my question. And I have two questions. The first one is about the overseas smartphone market, especially in India and Europe.
So could management share the future channel strategy of these two markets? And how will Xiaomi increase the ASP of smartphones in these two markets? And the second question is a follow-up question about EV business. We see that recently the company registered to the second car company. So could management update EV business such as the number and focus area of r and d team and the construction of the blind chain?
Thanks.
Yeah. I think, yeah, every market actually is different. Specifically, in Europe, actually, we'll continue to the the channel strategy we are we are we are we are using right now. So in Europe, actually, there are half a half market in terms of the market share. Half is the open market.
We sell the product, our smartphones, our AIoT products through the open channel. That means the big chain stores like a media market and and others. Right? We sell our product through that channels and other smaller channels. That's a that's a open market.
That's a still represent 50% of the European market. Another half will be the carrier market. Actually, we have been establishing a partnership with the the global carriers, especially European carriers. So we'll continue to grow that market. Still, up to now, our market share in the carrier channel is still have a lot of room to grow.
So so especially in the higher tier product, this high end product, we'll continue to strengthen the partnership with our partners with our carrier partner to to help them and help ourselves to increase the market share in the high tier segment. That's the a very important thing to do. In Indian market, it's a it's a different. Indian market actually online market is is close to 40%. It's had the online market is the highest market share globally among all the countries.
So we'll continue to to to strengthen our position in online market through meet.com and also our partners, including the Amazon and Flipkart. But at the same time, we'll we'll continue to grow the the offline channels in the Indian market. Indian market actually is a is a the mom and pop stores. There are thousands of those stores covering the the cities and also the rural areas. We'll continue to to improve the coverage.
We use a very high efficient methodology to cover those those areas. I will continue to to to do that. So this year, actually, our challenge in India is the the shortage and also pandemic. Give us a very big challenge in the on the manufacturing side as well as the the channel side as well. So I think next year is there's going to be improvement in supply and also the pandemic, we hope.
We see a very a big potential to grow our market share in both Europe and and India, as well as Latin America and the Southeast Asian countries.
Yeah. On the on the EV side, unfortunately, there's not much to update. I think we've been spending time and efforts on defining our product as well as the product design as well as reaching out to some of our supply chain partners or starting to reach out to our supply chain partners. But beyond that, I think there there's not much to do. I mean, obviously, there's not much to say.
I mean, obviously, you've seen that we've registered a couple of companies, you know, and, obviously, from a from a corporate structure perspective, we also need to set up the corporate structure. And so that that's been progressing, you know, on on schedule.
Okay. Thanks a lot.
Thank you. We now invite the last question, and the question is come from Xu Yingbo with Citi. And please go ahead.
Thanks for taking my question. My first question is about the oversea Internet revenue. We are very glad to find that oversea Internet revenue keep on acceleration on increase. And also when we calculate the overseas pool, it keep on increasing quarter on quarter. So my first question is that could you please give us some color on the forecast of the Internet business, especially the oversea Internet business?
And my second question is about AIoT business. We find that we have launched a new refrigerator and the washing and washing machine, has been launched for a step for for a while. So could you please give us some, forecast for the next year's AIoT revenue increase? So thank you.
On the overseas Internet question, you know, again, we've been trying what we've been trying to do is to increase our number of users in the global market at this point in time. Again, if you look at the the average ARPU in the overseas market, it remains quite small, quite low. But at the same time, because we have such a large user base, we've been able to get a a pretty significant revenue from the Internet services side. And going forward, we're optimistic that we'll continue to increase the number of users that we have in the overseas market. And as a result, I think it will continue to grow quite naturally.
So I think that answers your first question. On your second question with respect to the AIoT business, I think we've been trying to, you know, trying to improve our product mix as well as improve each category of our of our products over time. So for example, this year, we've seen a very popular product in the on the air conditioner side. We've seen very good responses on the premium refrigerator. We've seen very good responses from our from our from our path from our path.
And we've seen very positive feedback from our variable business as we improve the interconnectivity between them as well as our smartphone. So so we've been encouraged by some of these product lines that we have continued improvement and continued popularity among our users. And that's something that we'll continue to do. But, you know, as as you know, ALP is a very diversified business line. We do have a lot of SKUs.
Some of them will be doing better. Some of them will be doing worse in one year. So over time, I think it it kind of you know, we will continue to see we are quite optimistic we'll continue to see growth in this area overall.
And, also, I think the as we ship more and more high end product in the to the overseas market, actually, we'll improve the Internet service as well.
Thank you.