Good evening, everyone. Welcome to Xiaomi 2023 third quarter results announcement, investor conference call, and audio webcast. Today's conference is being recorded. If you have any objection, you may disconnect at this time. If you have any questions and would like to raise during the Q&A session, please press star one on your telephone keypad to register your question. Should you wish to cancel your question, please press star followed by two. I now hand over the conference to Ms. Anita Chen, Head of Investor Relations and Corporate Finance. Please go ahead, Ms. Anita Chen.
Good evening, ladies and gentlemen. Welcome to the investor conference call and audio webcast hosted by Xiaomi Corporation regarding the company's 2023 third quarter results.
Before we start the call, we would like to remind you that this call may include forward-looking statements, which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions are coming from a variety of sources outside of Xiaomi. This presentation also contains certain non-GAAP 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 online today, we have Mr. Lu Weibing, Partner and President of Xiaomi Corporation, and Mr. Alain Lam, Vice President and CFO of the company. To start, Mr. Lu will share recent strategic and business updates of the company. Thereafter, Mr. Lam will review the financial performance of the third quarter of 2023. Further on, we will move on to the Q&A session.
I now turn the call over to Mr. Lu.
Good evening, everyone. Thank you for joining us on our third quarter 2023 earnings conference call. As you can see from our Q3 financial results, we have achieved robust performance across all our key operational metrics, and I would like to mainly focus on three points. This is the first time that we have achieved a year-over-year revenue growth for the first time after six quarters. The second highlight is that in Q3, in the mainland Chinese market, after substantial changes, everybody is paying attention to Xiaomi's high-end strategy. In our Xiaomi 14 product that has just been launched, and we have achieved great results. You can see that our capability has improved greatly. The external environment impact on us has actually reduced substantially.
Number 3, for this year, especially for 3 quarters, we have done very well, and you are very interested in our future development. We are also very capable that we have received quite great results for the past 3 quarters, and we believe that we can continue this sustainable growth. And we're very confident about ourselves. So tonight, what we would... I'd like to talk with you, there are three parts of the above areas. One is, what changes has happened? And second, what have we done? In terms of Xiaomi's business, is this sustainable? And, finally, how do we look at 2024 in terms of the industry, the operation, as well as the consumption? First of all, let's take a look at global macro. The global economy has been slowly recovering throughout 2023.
However, the trend continues to be sluggish, and there is also very uneven development or growth. According to the latest report issued by the IMF, they are forecasting 2024, the economic growth was revised down by 0.1 percentage point to 2.9%. Weakness stays, especially in the developed economies, and relatively resilient in the emerging countries that demonstrate a fair degree of resilience. In the third quarter of this year, according to Canalys, the global smartphone market remained weak, though shipments continued to decline by 1% year-on-year. However, the decline has noticeably narrowed down compared to the previous years, and we're very bullish about 2024. Looking at competition in Q3 for China market, we have seen certain changes, and this will also affect our industry. Overall speaking, the macro environment remains challenging.
However, for Xiaomi, for our all business segments achieved very high balanced growth and operate efficiently. For the group, we have demonstrated robust execution. In the meantime, we have also seen very good results, and in our third quarter, our business has demonstrated resilience and navigated throughout the economic cycles. Total revenue for Q3 reached CNY 70.9 billion. Year-on-year growth has been realized. We continue to deliver solid performance in profitability and net margin reaching 6 billion, remarkable 183 year-on-year growth in the Q3 of 2023, excluding CNY 1.7 billion expenditures related to our smart EV business and other new initiatives. Our core business adjusted profit reached CNY 7.7 billion.
So I would also like to say that, this is the reason why I'm very bullish about our core business and for our new business, EV business, this will lend a very strong support. I would also like to share with you some of my points on the few important areas, and the first one is on the high-end market. In Q3, Chinese economy has seen some changes. Within our industry, we have seen a lot of attention given to Xiaomi, especially for Xiaomi's high-end development, especially with the Xiaomi 14 smartphone being launched, and we can see that, for Xiaomi 14, very quickly, within one week, we have been able to realize 1 million units of sales and during Double Eleven for Xiaomi 14.
We have been nominated as the champion across the four platforms, and this also help us with our across the four platforms and the revenue achieved over CNY 2.4 billion. In the meantime, we also have the whole complete Leica camera system. In the meantime, for our product selling above CNY 5,000 has been significantly solidified, and this has exceeded our expectations. The reason why Xiaomi we can receive this progress, there are following reasons. The first one is that Xiaomi, we adhere to benchmark ourselves to iPhone and starting from Xiaomi 12, and in terms of energy saving to capabilities, and to today, overtaking Apple this time with the Xiaomi 14 Series. For Xiaomi 14, we benchmarked to iPhone 15 Pro.
So you can see that we are benchmarking ourselves across different lines of products with the product that we have already realized, overall overtaking of iPhone, and our customers have proved this point by their actions. Secondly, with the technology in front, and we have many innovations, you can see that, first of all, in terms of our screen, and this is a compact full spectrum screen, and this brings great user experience. And the second, you can see that this is our Longjing Glass, and this glass is very strong and even 20% stronger compared with military glass. And in the meantime, we have also used the fiber, and number four, we have the 14 Pro titanium metal, and this is integrated into our Android flagship models.
For Xiaomi 14's sales, this has also driven our market share in China. In Double Eleven, we have reached a market share increase to 22%, and within the price range of 4,000-6,000 CNY, and further rose to 51.1%. Apart from China market, also in overseas market, we have seen very good premiumization strategies. For instance, we have launched with the co-engineered with Leica and has gained widespread user recognition. The sale volume of Xiaomi 13T Series ramped up significantly compared with its last generations. Secondly, I would like to talk about our internationalization strategy. You can see that, for today's Xiaomi, in terms of our brand, has done very well.
Globally speaking, we would like to establish a safe and a robust and a stable platform, and in this backdrop, continuously for three quarters, and for Q3, we have reached 14.1%. In addition, among Apple and Samsung realizing negative growth, and for Xiaomi, we have realized a positive growth. According to Canalys, for over 55 countries, the smartphone shipments ranked top three, and they ranked top five across the 65 countries and regions globally. In the meantime, we achieved a 2.1% increase in the Europe market. In Latin America, for smartphones, shipment increased to 18.3%, with a quarter-on-quarter growth of 1.8%. In Africa, with a quarter-on-quarter growth of 2.1% and 4.7 percentage point growth year-on-year, total shipment increased to 10.7%.
With mobile phones growth, not only that, we need to look at the increments, we also need to look at its existing market. By September, our MAU of MIUI reached 623 million, an increase over 10.5% year-on-year, marking a solid driver to our international service business. Number three, we continue to invest in future technology, and we have already seen very good market return. In the past few years, we have seen very severe market strategies, but we continue to invest in technologies and in the future. Over the past few years, in terms of our investment, we have already seen the good results.
In Q3, our R&D investment has reached CNY 5 billion, and recently we have seen a statistical report from the National Bureau of Statistics, and this is a report on statistical bulletin on national science and technology expenditures in 2022. The total is CNY 3.078 trillion, with R&D investments, including universities and institutes. Xiaomi reached CNY 16 billion. So last year, the R&D spending of Xiaomi has already exceeded 0.5% of the national R&D expenditure for the same year. So behind this is basically for Xiaomi, we are committed to the investment in foundational core technologies, and is dedicated to become a leader in the evolving realm of global cutting-edge technologies. In the meantime, we have also upgraded our strategy to the new human, car, and home strategy.
With this new strategy, and the Xiaomi HyperOS is our key platform to make sure that it happens. In early 2022, we dedicated, we decided to integrate the software architecture across the four systems: MIUI, Vela, MiHome, and In-Car OS. After two years of hard work, we have been able to integrate all these software system. We invested over 5,000 R&D engineers and seven years into this process. In the meantime, we have a few targets. First, optimizing performance for each individual device. Second, seamless and efficient cross-device connection. Thirdly, realize AI empowerment, and to make sure AI becomes our brain, and to ensure delivering proactive intelligence services to users. Fourthly, ensuring robust protection for across the device, system-wide privacy and securities. And fifthly, fostering ecosystem development in collaboration with global developers. We aim to integrate all consumers' needs.
In the meantime, in October, we unveiled a series of features aimed at improving user experience, including leveraging AI to enhance our internal management. And we are also opening up our system to other developers. Internally, we also use the AI technologies to further enhance our internal management. Number 4, behind all these results is actually thanks to the continuous improvement of management. We can see that a lot of our management benefits have realized, including the cost down, the improvement of our profit. In the meantime, for Xiaomi, we have the widest management structure. We also need to rely on a very scientific management system, and starting from the 2019, and we introduced the IPD value creation system at the product development level, aiming to address how to consistently launch top-selling products effectively.
In addition, we also have the IPMS, value realization system. We look at the ITR system and to realize a feedback loops between the user front and the research and development front, and establishing a comprehensive strategic management framework. In the meantime, we have also established DSTE system. For the past two years, for our work, we have strengthened our closed loop management mechanism of strategy, formulation, and IC, provided the efficient and high quality supply chain to deliver our proven products. With the support of the management to transform and the capability upgrade we mentioned above, we hope that we would be able to cope with the external environment uncertainty. Number five, to continue to pursue long-term, sustained, high-quality growth.
For the past few years, we know very clearly that, from a technology leader, and, we need to continue to invest in our technology, and this needs a very strong and stable finance as a core, supporting point. And, therefore, we have been able to continue to solidify our capabilities. And based on this area, you can also see that, we have seen very good results. Going forward, in the industry, we continue to see very strong challenges. For instance, some of the parts, actually, we have seen the cost going up and bill of material costs are going up. But for our management team, we are very confident that we would be able to overcome the uncertainties of the external environment and to ensure very strong growth.
Looking into 2024, not only in mobile phones, but home appliance, tablets, wearables, will continue to grow. For Xiaomi, EV cars will also be launched to the market, not only in domestic Chinese market, but also in the overseas market. We will maintain our strong growth momentum. So far, we already have a complete and extensive product lineup. Coupled with the new strategy of human, car, home, smart system, we will provide our users with superior products, fostering sustainable and high quality growth. I would like to say, Xiaomi today is the best of Xiaomi, is the Xiaomi that is ready, and is the Xiaomi that is looking forward to embrace the future. I now pass the floor to our CFO, Alain.
Thank you, Mr. Lu. Dear investors, good evening. Just now, we have heard from Mr.
That, in the macro economy, there are still uncertainties. However, in this industry, with the pressure, we continue to carry out stable operations and consolidate our capabilities. For this quarter, Xiaomi, we have delivered a very excellent answers with our revenue growth resumed and the profit continued to increase. In the third quarter of 2023, our total revenue was RMB 70.9 billion, which China accounted for 51%, overseas revenue accounted for 49%. Our comprehensive growth profit margin was 22.7%, year-on-year increase of 6.1 percentage points. Looking at by different business segments, in 2023 third quarter, our smartphone business revenue was RMB 41.6 billion, accounting for 59% of our total revenue for this quarter.
Even as the performance of the global mobile phone market is still under pressure, our global smartphone shipment improved by 27% quarter-on-quarter to 41.8 million units, exceeding 40 million units for the first time in a single quarter this year. And our market share increased by 1.2 percentage points of Q on Q to 14.1%. It has improved Q on Q for the third consecutive quarter, has also ranked among the top three in the world for 13 consecutive quarters. Thanks to the product mix, the reduction in inventory impairment, the provisions in overseas markets, and the impact of falling core component prices, the gross profit margin of mobile phones was 16.6%, a record high. An increase of 7.7 percentage points year-on-year.
In the IoT business, we have achieved a year-on-year growth in both revenue and the gross margin. Revenue was CNY 20.7 billion, year-on-year increase of 8.5%. This is mainly thanks to our tablet business and several consumer products with a high gross profit margin in mainland China. Our gross profit margin reached 17.8%. This is a year-on-year increase of 4.3 percentage points, setting another record. Our quarter, we have multiple IoT categories performing very well. For instance, Xiaomi TV maintained its first place in TV shipment rankings. For our smart home appliance business, continue to maintain year-on-year revenue growth, including refrigerator shipments. The sales volume surged by more than 95% year-on-year.
Our global tablet product shipment increased by more than 120% year-on-year, and our shipment ranking ranked among top five for the first time in the world. According to Canalys data, we ranked second in TWS headsets shipment in mainland China this quarter. In terms of internet business, our user has further expanded. In September 2023, our global MIUI monthly active users have reached a record high, with a number of users reaching 623 million, a year-on-year increase of 10.5%. Among them, the number of monthly active users of MIUI in mainland China reached 152 million, a year-on-year increase of 7.4%. Our revenue this quarter was CNY 7.8 billion, a year-on-year increase of 9.7%, a record high in a single quarter.
The gross profit margin also performed very well. Internet gross margin in this quarter was 74.4%. Advertising business, we have seen revenue quarter, so revenue for this quarter for RMB 5.4 billion, year-on-year increase of 15.7%, thanks to the outstanding performance of domestic and foreign effects and brand advertising. In terms of, gaming business, revenue increased by 5.6% year-on-year to RMB 1.1 billion, marking the ninth consecutive quarter of year-on-year revenue growth. In addition, for overseas internet, service revenues increased by 35.8% year-on-year to RMB 2.3 billion, a record high. Overseas internet service revenue accounted for 30% of the overall internet service revenue, a year-on-year increase of 5.8 percentage points.
In terms of our business, and, for this quarter, our overall operating expenses were CNY 11.1 billion. If we exclude the new business investment expense of CNY 1.9 billion, our core business operating expenses were CNY 9.1 billion, a decrease of 1% compared with the same period of last year. We continue to expand our R&D spending and invest firmly in the future. This quarter, our R&D expense was CNY 5 billion, a year-on-year increase of 22%. In the third quarter of 2023, Xiaomi Group adjusted net profit margin, net profit, we reached CNY 6 billion, a year-on-year increase of 183%. Adjusted net profit margin reached 8.5, 8.4%, reaching a record high.
Our core business profit was CNY 7.7 billion, year-on-year increase of 162%. In terms of optimizing inventory management, since the beginning of last year, we continued to optimize our inventory management. We have heard from Mr. Lu about our management and our more meticulous management of the inventory. You can see that the overall inventory amount was 66.8 billion, down by 13.5%, year-on-year. This is the lowest inventory level in 11 quarters. Looking at our cash flow, in the first three quarters of 2023, our cash flow, operating cash flow was 33.5 billion, much higher than the same period last year. In terms of our cash on hand, we have 127.6 billion, a record high.
Abundant funds can better support the development of the group's core business and the new businesses. At the same time, we also actively give back to our shareholders. As of now, the total repurchase amount in 2023 has reached CNY 1.16 billion. Finally, I'd like to touch upon ESG. We have fully integrated ESG management into our business operations, and management as a part of the company's important development strategy. In third quarter of 2023, achieved in the MSCI and Sustainalytics for the ESG rating results, we have seen very significant improvement. We pay attention to talent development and talent cultivation, and always regard growing together with our employees as an important driving force for our development. Xiaomi Group has been selected as one of the world's best employers, published by Forbes for the third consecutive year.
At the same time, adhering to the mission of enabling everyone around the world to enjoy the better life brought by technology, we are committed to achieving carbon neutrality in our existing operations and using 100% renewable energy by 2040. We will release the carbon neutral action report at the end of 2023, detailing the group's carbon neutral action. Finally, we always practice socialist public welfare and actively assume corporate social responsibilities. We have established three business keywords from Beijing Xiaomi Charity Foundation, helping those in need, talent training, and technology innovation. In terms of poverty alleviation, by the end of October 2023, Beijing Xiaomi Charity Foundation has already donated more than CNY 156 million in public welfare expenditure.
In talent training, as of October 2023, Xiaomi Scholarship and Bursary has covered 60 universities, and with a cumulative spending of CNY 55 million. In technology innovation, in as of October 2023, Xiaomi Innovation Joint Fund has funded a total of CNY 108 million and funded 74 projects. Thank you very much. This is what we would like to share with you for this quarter. We can now go into the QA session. Thank you. We now go into the QA session. If for the purpose and interest of all the investors can get a chance to ask questions, please limit your questions to 2 only per time. We're now going into the QA session. Please, press star one, and if you wish to cancel, please press star two. We welcome Andy from Morgan Stanley. Please go ahead, Andy.
Thank you, management, team. My first question is our mobile phone business. We can see that Xiaomi recently, after launching the 14 Series of products, we have seen a record performance, and for HyperOS as well as the AI system, and will this actually bring a completely new competition landscape? And how come the AI adoption actually changes the users cycles?
Yes, indeed, for Xiaomi 14, we have achieved very good results. For this year, we can see that for the overall mobile phone market, and has actually decreased compared to last year. But we can see that in the high-end market, actually, it is growing in the general market. So basically for the high-end market and overall speaking, and this is why we have seen the growth.
This time, and for the Xiaomi 14, and we have actually launched earlier compared to previous years. So basically, we have launched our product with Huawei Mate, as well as iPhone. People used to worry that will this affect our sales? Actually, we have done okay, and iPhone 15 has actually decreased compared to last year. So basically, the users will pay for innovative products, and if the users are not very attracted to your features, and they will not purchase your product. So there are still opportunities for innovation. So this round, compared with iPhone 15, and we are definitely not being beaten by iPhone, and actually, in a way, we have overtaken Apple, and so this is also one of the reasons we have done well.
You have also talked about the HyperOS. We have talked about this many times. This time with HyperOS, we can see that indeed, we have seen very good results. For Xiaomi, this is a great way to help our users. A lot of our users, actually, because they have used HyperOS and come back to our product. And why so? It's because of our human, car, and the home strategy and ecosystem, and we are the only one who can achieve this. We believe that for Apple and people might say that they have done very well, but actually, they do not cover that much, and they don't cover cars, and nor do they cover a large percentage of homes.
For us, we have realized that with a very smooth connection of mobile phones and the batteries can last for a long time, and there is a very smooth and seamless connections with all your other devices. So when we talk about AI, we also will see the features that are enabled by AI, and behind it is about AI. We look at AI, and we look at its capability, and for Xiaomi and all various OS, and it can play a very strong role. So we believe that for Xiaomi's core technology and the user experience that that Xiaomi brings, I believe that this will continue to reduce the cycles of how often the users would change their mobile phones.
So going forward and looking into the future, what I'm trying to say is that with the core technology, the investment needs a long time, and the Xiaomi that you see today, compared with the technologies that we have launched, and it's part and parcel of the old technologies, and each round, with the iteration of our new product launches, there will be new core technologies launching, and all of this will also be very beneficial to the next round of our technology.
Thank you, Mr. Lu. You have also talked to us about what are the points that Xiaomi has done right, and please also share with us, in the future, what are the areas that you will continue to focus on, and what about Q4?
So in the past, we have a few very important strategic points and lines, and I often talk about this. And number two is to continue to go through premiumization. Premiumization strategy is a very important strategy. It's hard to do, but we are adhering to this. We are adhering to mobile phones premiumization and to drive the premiumization of our other series of products. So this is a very important premiumization strategy. Thirdly, for our strategy, which is we need to push forward for new retail. We believe that premiumization's mobile phones sales, and we can see actually, offline sales is higher than online sales for Xiaomi 14, and offline sales has already overtaken online sales.
I believe that the experience of our products could only happen in our flagship stores, and this is why we are very determined to implement this strategy, and I believe that these strategies will bring back very good returns to our business.
Thank you very much, Mr. Lu.
Thank you. We welcome the next question. Jeremy Lee from Goldman Sachs.
Thank you, management team, for taking my question. I have two questions. The first one, in Q3, we can see that with the environment changing in mainland China, and we have seen you have done well in premiumization. I'd like to ask about the overseas market in Q3. In the main market, we have also seen very good recovery, and for Latin America, Africa, India, and Europe, what have you done in those areas to achieve such a good recovery?
Second question on your internet business. We can see that, year-on-year, in terms of the growth, we can see that it's speeding up, especially in our overseas business, and we have about over 30% of business growth. So can you please share with us what are the drivers behind this? Thank you.
I'll take the first question. Second question, I'll leave it for my colleague, Alain, to answer. So I have just come back from overseas. I've visited our overseas markets for 3x . In February and March, I went to the Middle East, and in May, I went to Southeast Asia, and this time I went to North America as well as Europe. So after my business trips, we would have these summary meetings, and I talked to my colleagues about Xiaomi.
For overseas market, we definitely have a huge potential. You can take a look for our overseas market and US market, we are not in there and at the moment, about 16%-17% market share, and in Q1, Q2, and Q3, our market share continued to improve, and in Q4, I believe that we can do even better. And in today, we can see that we are roughly about 16%-17% of overseas market share. And in some markets, for instance, Spanish market, we have realized over 30%. In some markets, we only have 5%. So globally speaking, and we have a lot of potentials, and those are all opportunities for Xiaomi. So this is point one. And in business, we have a lot of opportunities.
If we look at the IoT business, and, for the IoT business, we feel that, for our overseas business, we have about, 5x of growth opportunities. So far for IoT business, it's still a very small percentage. We don't have a lot of, categories, and the price is very expensive overseas again. So this shows great opportunities there. So this is on IoT. And in the past few years, in the overseas market, what have we done exactly? If we look at our overseas business, and number one is that we have a lot of, different, categories, and we cover global markets, very wide, ranging over 100 countries. In over 60 countries, we have representative offices. 30 countries, we have, companies established. In the past few years, global economy and environment is not great. We have the pandemic, et cetera.
So it's a very complicated external environment. This means we have to build a very safe and highly efficient platform, and it needs to be highly efficient to help us realize our global mission and vision. We have done a few things in the past few years, and, the first one is that, gradually, we can see that, we are seeing good results. And in the past few years, and, with the pandemic, it had, has brought some negative impacts. Some of the brands have, left the market. And, for Xiaomi, for the past few years, and in terms of our globalization, we continue to expand. So this is, one point you can see. Very quick, one example in Africa, from last year to this year, our market has, doubled.
Our Q3 versus last year Q3, our growth is 100% growth in Latin America. It's very far away from China. I flew about 50,000 kilometers, and we have realized about 40% growth. And in developed markets, such as Europe, last Q3 and in last quarter, we have also seen a very good growth. And in India, people are concerned about the pressure, but in Q3 versus Q2, we have seen very good rebound. And in Q3, Q2, we had 15%, and Q3, we had 18%, including Middle East and Southeast Asia. We have all realized a very good growth. And this is, again, thanks to our globalization strategy, and this is the good results that we have harvested.
In terms of internet business, and I think number one, it is based on our overseas mobile phone growth, and Mr. Lu has talked about this, and our mobile business continue to grow, and you can also see our MAU users has already reached 623 million people. Our user base is becoming broader and broader, so the existing business and the users has brought us a lot of business. In the meantime, we have also done a lot of in-depth work. So for instance, in terms of partners, and we have done a lot of work. We have introduced a lot of new partners, and you may have also read the news.
One month ago in Singapore, we have organized a partner conference, inviting our global internet partners to join us, and this would also help with more of our products can go to our global users and to find more collaborators, and they would be willing to place their advertisement with us and to carry out new services, et cetera. So this is number one on the users, number of users growth. Second, our overseas business operation is becoming more and more mature. We are finding more partners to work with us to continue to serve with our global users together.
Thank you, Mr. Lu and Mr. Lan, for your answer.
We now welcome the next question, Kyna from Citibank.
Thank you, management team. Thank you, Mr. Lu. I have two questions to ask Mr. Lu.
In the beginning, you talked about the company will continue to maintain a stable operation in the mobile phone side, and we can see that the net margin has seemed very good, record high. And if we break this down, and what are the successful factors behind it? Is it because of a structure change, or cost down, or inventory change, or is it because for 2024, I'd like to ask, looking at the company in terms of the hardware, will you have some new foundations? So for instance, in the past, it's about 10%-11% of growth margin. And we can see that right now, we have already built quite a good foundation. So in terms of stable development and what is the trajectory?
And recently, we have also seen that, MIIT, they have published about Xiaomi's EV car. Some of the information we have also seen the building and the debugging of your, EV, cars. And in terms of, EV, can you let us know about your strategy? In addition, for the company's, future, how do we work with the, the company, and can you give us some guidance? Thank you.
Let me answer, and, I will ask, Amy to respond. I do feel that, for this season, we have achieved some new heights, and, there is a, a reason behind this, comprehensive reason. Perhaps you worry about our inventory write-down. And for Q3, we can see that, currently, it has, given us about, a write-down of CNY 600 million.
This is mainly because of our portfolio changes. Of course, we also have some other management rules and tools, et cetera. This is a very comprehensive process, and it's not just one single change. In terms of operation strategies, we continue to adhere to our strategies for a very long time. Internally, we have also asked ourselves actually those two are in conflict with each other in terms of scale and margin. But actually, we can see that they're not exclusive of each other. With a good scale, you will have good profit and vice versa. The key is how to really find the best balance between those two factors.
In the past 1-2 years, we have been looking for these strategies, and these are also strategies that we will adhere to. We also see investors paying attention to our growth momentum and whether this can be kept. When the external environment changes, how do we look at our operation? For our management team, we are very confident that we would be able to cope with the pressure from the external environment and cope with the fluctuation. This is something that we are very confident about. With respect to cars, you can already see that from the MIIT's website, you can already see this EV, and this is a sedan. In terms of the details of this vehicle, I'm not in a position to tell you much more.
I can tell you that we have this home, human, and a car ecosystem, and this is very important for the vehicle in our ecosystem. Going forward, when customers purchase our product, it is not just purchasing simple one product, it is about a life solution. It is about a whole ecosystem. We are moving towards the whole ecosystem. Secondly, you will also see that for vehicles, together with our mobile phones and our three C products, there will be a lot of synergies, and I believe that the synergies will also be shown. You have heard that for EV, and this is a general integration with consumer electronics.
In the meantime, with the integration with the consumer electronics, and there will be a lot of chemical reactions, and this will see and give us a very good result in the future. So I pass on to my colleague, Alain. You can see that in Q3, in terms of our inventories, this may have affected our margin for 0.8%. If you look at last year's Q3, it's a negative 0.8% impact. So adding together, the inventory's impact and provisions impact would be 1.6%. I stated this, our growth margin has increased by 6.1%. So with this in mind, as Mr. Lu has said, our product structure optimization, as well as the raw material costs coming down, and this has helped. This is my explanation. Thank you.
Thompson from UBS, please. Hello? Yeah, Thompson, we can hear you. Apologies, I muted myself earlier.
Thank you for your time, and congratulations on the great quarter. So the two questions, one on growth margin. From another perspective, and for the company, for the growth margin you talked about, from the domestic product portfolio. So in domestic market, for the premiumization product and versus the low-end product, and what is the growth margin difference for high-end products, and how much room is there for you to further improve the margin? So that's question one. And question two, this is relation to IoT and smart EV. For the company, every year, we will see the users' usage, and in Q3, this is roughly about 13 million.
I feel that these users are a very good target and for your new EV. So in terms of these users, in terms of their consumer's profile, and do they purchase a high-end or mid-end or low-end products, and for these consumers, and will they purchase all the functions and features? Okay, great. Thank you.
You asked about the growth margin difference between high-end and low-end, and how we look at the future. Let me comment on this. The way I look at this is that our high-end product, for right now, it is in the early investment. And if you look at our product and actually for high-end and low-end, there is a huge difference.
I myself feel that going forward, for high-end, we have very deep potential, and we have not yet gone through from a quantity to quality change. If we look at Apple for the whole year, and it's from, for instance, 220 million mobile phones, and they are all high-end. If we look at Samsung globally, we also compare with Samsung quite a lot. Compared with our high-end product, they have about 14 million. And for Xiaomi, we have about overall, for mobile phones, above CNY 4,000, and there is still a difference and a gap. This is a challenge for Xiaomi. This is also a huge potential for Xiaomi, globally speaking.
If our volume continues to grow and the quality change that will be brought about, and we will see this. And you know that the raw material cost reduction is actually quite high, and for our product, and the price was lowered in the very early days. So for Xiaomi, and once we have already seen the changes, and I think that we still need some time, but I believe that the potential is there. And for Xiaomi, we are very confident that we would be able to dig out this potential. You also talk about the AIoT, as well as the number of the users, and this is actually about 20% higher than our users, and this is very stable.
So we can see that, going forward, we can expect that, for our users. And of course, these are our main users, and through our observation, we can also see if a user has over five of Xiaomi's products, they are very sticky users. When they purchase the Xiaomi's product, they will not just buy one single product, they will purchase a whole solution. They will purchase a whole set of products. And, this type of customers, they are. They really appreciate and well recognize Xiaomi's products. And, utilizing this, we will continue to serve them very well. Okay? So this is what I have to say. Alain? Thank you. Thank you, Mr. Lu, for your explanation.
We welcome the next question come from, Wen Hanjing from CICC. Okay, thank you, Mr. Lu and, Mr. Alain.
I have two small questions, and one is about our strategy. You talked about offline is very important for your high-end product. We can see that the Q3, more than half of the high-end product sales came from offline. So going forward, for our premiumization, as well as for this whole complete human car, home ecosystem, and how do you look at the entire strategy? And I would also like to ask Mr. Lu and Mr. Lam, for Q3, we have seen advertisement business has reached a new high. So for your internet business going forward, how will you carry this, and what is your future direction for the internet business? I will answer your new retail question, and for the internet business, I will ask Alain to answer.
For the new retail, after these years of development for Xiaomi's business and the future ecosystem, development has played a very important role overall speaking. If we look at our single mobile phone, you can see that premiumization of our smartphone is very obvious. In addition, I don't know if you have also noticed that our tablet also grew very fast, and wearables strong support. I remember that some people say that a lot of Xiaomi, a lot of small friends or little kids would come to Xiaomi, and people joke that Xiaomi has become the new internet bars.
If the kids want to come and play, we welcome them, but we don't really disturb them, and they can enjoy our products for our refrigerators that has been sold by 100 x over growth. So this is also thanks to our new retail development. And not only that, this will support our premiumization. In the meantime, it also supports our ecosystem going forward. This is very important, especially with our EV being launched into the market. Going forward, for the EV, this will be completely incorporated in our new retail, and going forward, there will be a lot of cars in a lot of shops. Not only that, you will see our products, but also our cars. So this is something that I believe is of a very special value.
Our Human x Car x Home strategy and the new retail strategy, not only that, we need a new retail to contribute to the human car and a home strategy, and this can help us to close the loop. You can also see that, perhaps one by one, it's a silo strategy, but, overall, it can be combined together. With all these strategy, and this will be the special defensive, unique advantage of Xiaomi. So not only that, you need to give, as long as you give Xiaomi time, and you will see that, we will form a very strong defensive moat that nobody can attack us. I believe that, in the next three years, you can let your imagination fly and, dream about our future.
And, I would like to, very quickly, to comment on the two points about offline. For our high-end mobile phone, and you can see that in Q3, it's about, 55.5% for high-end, mobile phones, so this is a new high. Secondly, if you look at, the GMV of a single shop compared with the last year, it has increased, by 28% year-on-year. So this shows that, in the offline business and the single shop at GMV has, increased significantly. So this is something that, just to supplement to the first question. And your second question, you asked about, in the future, how do we further improve our advertisement business?
Of course, as we have heard from our overseas internet business, and I will not repeat this, internally in China, very important for the high-end mobile phones, and it's percentage of our overall mobile phones that we have shown some data before for the whole life cycle. And for high-end mobile phones, it's about 10 x of our low-end mobile phones. And for high-end mobile phones, if we continue to improve our market share and our sales, we believe that, of course, the margin will continue to grow, and this is our plan as well. In the meantime, we are also looking at how to explore our operation capabilities, and in the meantime, commercialization of our users, and to further solidify our sales. So those are the two parts. Okay, great. Thank you, Mr. Lu and Mr. Alain Lam.
Okay, great. Thank you.
Our next question is Jin Bo from CITIC.
Thank you, management team. A great result. Just one question. I noticed that, Mr. Lu, you often talked about human car and home, and we also want to know more about this, this for the company in terms of client, as well as your development, and how do you look at this? You talked about the design and in terms of, for instance, client base and user base. Can you let us know more about this?
Okay, the way I look at this is as follows: Actually, I feel that... Well, let's talk about smartphone first, and smartphones, the ecosystem for today. We do not yet really see a very high level of integration in the industry.
If we look at the Chinese market whole year, even for the number one player, has not exceeded 20%, and the number five is not less than 15%. So it's in the region of 15%-20%. So I believe that the market will continue to concentrate. There will be other brands that will exit from the market. So this is number one. Going forward, for any of the top brands, they will not only serve just one client base, it will be omni-channel. And if it is omni-channel, how do we meet for the omni-channel's requirements? And you will see that today for Xiaomi, for instance, we have Xiaomi and Redmi. Within Xiaomi, we have Xiaomi's digital series of products, and through the product series classification to satisfy the different users demand.
For human, car, and home, it is the same principle behind it. Based on for the users, and, we divided them into different groups, and, looking at, mobile phones and EVs can drive our customers and, to tell them more about our solutions and our user experience, and this is reliant on the whole, set of the same operating system, and this is our commercial logic. I don't know whether I have explained this clearly.
Very clear. Thank you, Mr. Lu, and thank you for your question.
Thank you. In the interest of time, we welcome the last question. Huang Leping from Huatai. Welcome.
Thank you, Mr. Lu, and one question. PC, in the past, PC and mobile phones, they are quite separate. And two weeks ago, we have seen that Qualcomm with their new chips.
Mr. Lu, you have also made a speech in that conference. How do you look at the PC market competition, and how does Xiaomi look at this sector? Well, PC, I feel that today, this is the market for the PC business. Actually, if we look at our industry and the benchmark is obviously Apple. For Apple, for instance, with iPhone and wearable tablets and the PC, they have organized a great ecosystem, and this is what we feel that this is why Apple's stickiness is very strong. And for Windows under this system, especially for Xiaomi or Huawei or Samsung and other players, if we want to connect all this, we really need to build Android and Windows.
So at the moment, there are still some divide, and in terms of user experience versus Apple system, there is a difference. This is the current situation. So in this process, we ourselves are also thinking, PC is not our main business, and, is it possible that there are some ways, and we have a few ways of looking at this. One is that, we have, for instance, a HyperOS, and in terms of connected platform, if you look at our PC with our tablet and our mobile phones, there are already some of these, connections. And I feel that we have already made some progress, and of course, there is, still a gap, lagging behind from, Apple. And secondly, and in terms of the today, Android plus the Windows going forward, is it possible that with the WoS can, build this through?
It is possible, can connect those two. So, for instance, based on ARM or based on some other products, there are some good samples and examples in terms of their performance. In the past, for ARM-based, and there is a huge difference. But right now, we can see that the performance has seen great improvement, for instance, power utilization, ecosystem, et cetera. So those are the areas that we pay great attention to. And for I myself, I also believe, and I'm very confident about this future, assuming that this direction is a good direction going forward for Xiaomi as well as for some ARM-based companies. And I think that this will be a great and a huge benefit, and this is a natural benefit to us. And for Xiaomi, again, this is why we say that we adhere to this business.
PC business is hard to do for us, but we continue to do this. It's because we believe that for PC, this terminal end in the home, car, and human ecosystem is something that cannot be ignored. This is why we can see that we have mobile phones, we have wearables, our watches and our earbuds, and we have seen some major improvement in the tablets. We have seen very good shipment results, and it's already top three in China and top five in the world. And our PC, and with our new product launch of our PC product, we have made great achievements, as well as the large screen TVs, as well as for refrigerators and washing machines.
All of these products for the whole Xiaomi ecosystem is very necessary, and we will also work our hardest to connect our ecosystem.
Okay, great. Thank you. That's very clear. Thank you very much. Thank you. This is the end of today's conference. Thanks again for joining us, and thank you for your support. Thank you, everyone. You may now disconnect. Thank you, and see you next time.