Evening, ladies and gentlemen. Welcome to the investor conference call hosted by Xiaomi Corporation regarding the company's 2023rd quarter results. I'm Steve Lin, 3rd Q3 Finance and Company Secretary. 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 is coming from a variety of sources outside of Xiaomi.
This presentation also contains some unaudited non IFRS financial measures that should be considered in addition to, but not as a substitute for, company's financial prepared in accordance with IFRS. Joining us on the call today are Mr. Wang Zhang, Partner and President of Xiaomi Corporation Mr. Allen Lam, Chief Financial Officer and Vice President of Xiaomi Corporation. To start with, Mr.
Wang will provide an overview of company performance and share strategic initiatives of the company. Mr. Lam will then review the ecosystem and financial updates that I quoted earlier. Following that, we'll move on to the Q and A session. I will now turn the call over to Mr.
Wang.
Yes. Thank you. Thank you, Steve. Hello, everyone. Thank you for joining our Q3 2020 earnings call.
Before my presentation, actually, I want to take this opportunity to introduce our new member, Alan Lam, who is joining us about 1.5 months ago. So I'm very happy to introduce him as a new friend or old friend to you all. I think many of you may know him well, but yes, see a few words.
Hey, everyone. Good to meet you all over the phone. I joined Xiaomi on October 9. It's been a very interesting 7 weeks since I joined, and I look forward to sharing more with you guys both online and offline. Thank you.
Yes. Thank you. Thank you, Alan. So actually this quarter, we delivered another very solid result across all our business segments as we relentlessly focus on the execution of our core strategies. In this quarter, we posted a historical highs in both revenue of RMB72.2 1,000,000,000 and adjusted net profit of RMB 4,100,000,000, up 34.5 percent and 18.9 percent year over year, respectively.
Our commitment to our core strategy of smartphone times AIoT continued to underpin our robust performance. I'm very pleased to share that our global smartphone shipment rose to number 3 in the Q3 of 2020, the first time since 2014. Actually, it's a record high market share. It's about 13.5%. That's a record high in Xiaomi history.
We continue to execute our dual brand strategy, driving our success in the premium smartphone market, Supported by our well received premium smartphone models, including Mi 10 series, we sold more than 8,000,000 premium smartphones as of October 31, 2020, driven by a higher percentage of sales from our premium smartphone models, our smartphone ASP maintained an upward trend year over year, especially in Mainland China. Our relentless effort to pursue technological innovation, boosters our remarkable achievements in the smartphone market. For example, one of our primary R and D achievements is the camera performance. We achieved the number one position in DxOMark 2x this year. These achievements were made possible as a result of our dedicated team of close to 1,000 talent camera focus engineers in 9 global R and D centers across the world from Beijing to Paris to Tokyo to San Diego.
Another example of our efforts in technological innovation is Xiaomi's smart factory, which demonstrates major progress in our smart manufacturing. Xiaomi Smart Factory is equipped with an annual production capacity of 1,000,000 premium smartphones, not only serving as a mega lab that engages in the R and D of new materials, cutting edge technologies, but also as an experimental base for next generation manufacturing equipment and automated production lines. This marks another step towards the elevating China's smart manufacturing capabilities as well as increasing manufacturing efficiency for all Xiaomi partners. Looking forward, we'll continue to invest in R and D, the more front of the rapid changing technology in smartphones from 5 gs era and key technological features that advance the smartphone industry as a whole. Lastly, we have significantly strengthened our management team this year.
Today, I'm very proud to introduce Mr. Alan Lam and also we also have other executive members joining us, including Adam Zeng, including other members and also Peng Jie Bin joined us as our Chief HR Officer in the company. Actually, I may spend a few words to introduce Alan. Alan actually is a seasoned capital markets professional with an in-depth understanding of the industry. With Alan joining the team, I'm sure he will bring his experience and expertise to his work with Xiaomi.
Now, I think it's time for Alan to discuss more details of our 3rd quarter earnings results and the business updates. Alan, please.
Yes. Thank you, Wangzhi. Hello, everyone. As I said before, I'm very honored to join this big family of Xiaomi and to share with you our latest business. As you may have read from our press release, in the Q3 2020, we achieved a record revenue of RMB72.2 billion, which is up 34.5% year over year.
Our adjusted net profit for the period also hit a record high of RMB 4,100,000,000, which was up 18.9% year over year. All of our business segments achieved robust growth, which demonstrates the strength and the resilience of our business. I'd like to share with you some key updates and then walk you through each of our segments' performance for the Q3. The first point that I would like to highlight is our record breaking performance in global smartphone shipments. In the Q3, we regained our top 3 position globally with an all time high market share of 13.5% and year over year growth of 44.6%, which was the highest among the top 5 smartphone manufacturers.
In the quarter, we continued to execute our new brand strategy for our smartphone business, which propelled our successful entry into the premium smartphone segment. Inspired by our outstanding performance following the debut of E10 Ultra, in August of this year, we launched Mi 10 Ultra, supporting our most cutting edge technologies and the prices starting from RMB52.99 each, which has become highly sought after upon its launch. Just as an illustration of how popular our premium models are this year, in the 1st 10 months of this year, we have sold more than 10,000,000 premium smartphones worldwide, which we define as retail price point at or above RMB 3,000 in Mainland China or €300 in the overseas market. The first point I would like to talk about is our relentless pursuit of innovation, which is one of Xiaomi's core values, and we believe it's becoming the most important third factor in our industry. One of the testaments of our advanced technologies lies in our camera development.
We achieved the number one position globally on DxO Mark's Camera Score with 3 of our flagship products, PC 9 Pro, Mi 10 Pro and Mi 10 Ultra. Another area of our technological leadership is our fast charging technology. In October, we debuted our 18 watt e wireless charging technology, which enables full wireless charging of a 4000 mAh battery in 19 minutes. We also try to make technological breakthroughs in advanced manufacturing. As Mr.
Wang mentioned earlier, we introduced our smart factory in Beijing in August of this year. The factory has 3 major roles. Number 1, a light out annual capacity of 1,000,000 premium smartphones. The transparent addition of our flagship E10 Ultra was actually manufactured in this factory. Number 2, a medical laboratory that engage in R and D of new materials and cutting edge technology and number 3, an experimental base for our next generation manufacturing equipment and automated production lines.
Last but not least, we have strengthened our senior management team significantly by bringing in top talent with a wide breadth of seasoned experience this year. We brought in Mr. Zheng Shijong and Mr. Chang Cheng this year for our smartphone business and we brought in Mr. Tang Ji Bin, who is acting as our Chief Human Resources Officer.
I'm very pleased and honored to be among this group represented here and to work with together with them to drive the long term value for all of our stakeholders. Now let me further discuss our smartphone business segment. In the Q3, our smartphone business grew significantly, reaching number 3 position globally in terms of smartphone shipments, as I mentioned before. Our smartphone revenue reached a record high of RMB 47,600,000,000, which was up 47.5% year over year, with global shipments of 46,600,000 units. In the Q3 of 2020, our smartphone market share in Mainland China climbed to 12.6% from 9% in the Q3 of 2019, which represent an 18.9% increase year over year in terms of shipment, becoming the only one of the top five smartphone company to achieve positive growth in Mainland China according to Canisys.
Our overseas smartphone business also continued to experience robust momentum this quarter. Driven by market share expansion across all the major markets, we ranked top 3 in the overseas smartphone market with a market share of 13.8%, up 54.1% year over year. Excluding India, while we have been the number one smartphone brand for 13 consecutive quarters, our overseas smartphone shipment almost doubled on a year over year basis. We further expanded our advantages in the online channels in Mainland China. Our online smartphone market share increased to 25.7% in the last quarter from 18.5% in the Q1 of this year.
During the Single Stay Shopping Festival in 2020, we ranked number 1 in sales volume among all Android smartphone brands on tmall.com, jd.com and suny.com. If you look at our ASP, our smartphone ASP for the quarter increased by 1.6% year over year, with mainland China smartphone ASP increased 14.7% year over year, which was driven by the higher proportion of sales from our premium smartphones. Smartphone ASP in the overseas market decreased slightly due to a shift in our product mix. In particular, our entry level Redmi 9 series has been extremely popular, and we sold more than 14,000,000 units worldwide as of the end of September. We continue to expand our product portfolio at different price points.
First, our Mi 10 series, including Mi 10 Ultra, Mi 10 and Mi 10 Pro are priced at RMB 4000 and beyond, further strengthening our position in the premium smartphone market. 2nd, our Redmi K30 series and Redmi 10x5gs series priced between RMB1000 to RMB3000 support our devotion to making 5 gs technology accessible to the mass markets. And third, to fulfill the need of global consumers amid the macroeconomic uncertainties, we also introduced highly competitive entry level smartphones, including the Redmi 9A series with pricing starting from RMB499, setting a new standard for entry level smartphones worldwide. We will continue to execute our dual brand strategy to strengthen our position in the premium smartphone market, while also making 5 gs technology accessible to the mass market. Now let's move on to the IoT and lifestyle products.
Built on our smartphone times AIoT strategy, our large user base and our leading position in the IoT markets, our IoT and Lifestyle product revenue reached RMB18.1 billion in the Q3 of 2020, up 16.1% year over year, showing significant recovery from the pandemic. At the global leading consumer AIoT platforms, we continued to expand our global IoT user base this quarter. The number of connected IoT devices as of the end of September reached 289,500,000, up 38.8 percent year over year. Moreover, the number of users who have 5 or more devices connected to Xiaomi's IoT platform reached 5,600,000 this quarter, up 59% year over year. Our AI assistant had 48,400,000 MAUs in September, an increase of 35.5 percent year over year.
Finally, our Mi Home ATP MAU reached 43,100,000, increasing 34.2% year over year. We also continue to lead in the smartphone sorry, in the smart TV industry as our global shipment of our Smart Series reached 3,100,000 units in the Q3 of this year. This quarter also marked the 7th consecutive quarter that Xiaomi TV shipments ranked number 1 in mainland China, according to ABC. As the market leader in smart TVs, we continue to innovate and make leading technologies accessible to the market. In the Q3, we introduced a number of premium TVs within the Mi TV Master Series, further solidifying our position in the premium TV market.
These products include the August debut of the Mi TV Luxe Transparent Edition, which was the world's 1st mass produced transparent TV. In September of 2020, we launched the Mi TV Lux 82 inches and the Mi TV LUX 82 inches Pro. The Mi TV LUX 82 inches Pro was priced at 49,999 dollars and introduced a cutting edge mini LED backlight technology that enriches images with incredible details. The Mi TV Lux 82 inches has a great price to performance ratio among all 4 ks TVs with prices starting from RMB999. One of the major drivers of our IoT business this quarter is the overseas market.
In the Q3 of 2020, revenue from overseas IoT and lifestyle products increased by 56.2% year over year, driven by our leading position across major overseas IoT products. Notably, overseas revenue from certain key IoT categories already surpassed that in Mainland China in this quarter, such as wearable bands, electric scooters and robot vacuum cleaners. Given these products' huge growth potential, we intend to leverage our highly efficient new retail channels and large user base to introduce more popular IoT products in the overseas markets. Let's move on to the Internet Services segment. In the Q3, our Internet Services revenue reached RMB5.8 billion, up 8.7% year over year.
Revenue from advertising hit a quarterly record high of RMB3.3 billion, which was up 13.7% year over year. Due to the enhancement of our monetization efficiency and the strong growth in overseas advertising revenue. Our overseas Internet services revenue also reached a historical high, which was another driver for our Internet services revenue growth. Our user base also grew significantly in the Q1. Our global eui MAU increased 26.3 percent year over year to a record high of 368,200,000 dollars with $109,400,000 in UI MAU in Mainland China.
Meanwhile, the MAU of our smart TV and e box increased by 49.9 percent year over year to 35,800,000 with paid subscribers reaching 4,200,000.
I'd like to add a
bit more color on our rapid growth in overseas Internet services. In the Q3, overseas Internet revenue increased by 75.6% year over year and accounted for 12% of the total Internet services revenue. This growth was boosted by increasing overseas smartphone sales volume and the expansion of our overseas user base, especially in Europe and in other developed markets. We also continue to enrich our overseas service offerings. For example, our Mi Music app ranked number 1 on Xiaomi smartphones by DAU among all music apps in India, in Indonesia and in Russia.
Next, let's talk about our overseas business. In the 3rd quarter, revenue from the overseas market reached RMB 39,800,000,000, up 32.1% year over year, again marking a quarterly record high in overseas revenue. We continue to hold our solid market position in major markets worldwide. According to Premises, in the Q3, our market share ranked number 1 in 10 markets globally, top 3 in 36 markets and top 5 in 54 markets. We are very proud to report for the first time our smartphone shipment ranked top 3 in Western Europe with a 13.3% market share and year over year growth of 107.3%.
The surge in Western Europe was driven by continued robust performance in several key countries. In particular, we ranked number 1 in Spain for the 1st consecutive quarter with a 33.9% market share in that market. We ranked number 2 in Italy, number 3 in France and number 4 in Germany with year over year growth of over 100 percent in each of these markets. We continue to expand our overseas online sales channels. First, through our ownme.com, which is now available in 32 countries and regions and second, through various e commerce platforms such as Amazon, Lazada and Shopee.
In the 1st 9 months of this year alone, we shipped over 10,000,000 smartphones via online channels in overseas markets, excluding India. We are also making solid headway on expanding our overseas carrier channels. We partnered with 50 carriers, covering over 100 of networks in 50 countries. As a result, in the 1st 9 months of 2020, our smartphone shipments via carrier channels grew by more than 200% year over year. Our carrier channel market share in Western Europe doubled to 4.6% in the Q3 of 2020.
We obtained leading market share in multiple major areas in Europe. We believe we are very well positioned to capture the huge growth potential in the overseas market with this rapidly growing carrier channel market share. Next, I'd like to go through our financials. As I mentioned before, in the Q3, our total revenue reached a record high of RMB72.2 billion, up 34.5 percent year over year and 34.8 percent quarter over quarter. The robust top line growth was mainly driven by our strong momentum in the smartphone business as well as very encouraging performance in the IoT and Internet Services segment.
Despite a stagnant global smartphone market, largely due to the impact of COVID-nineteen, in the Q3, our revenue from smartphones was RMB 47,600,000,000, up 47.5% year over year and 50.5% quarter over quarter. Revenue from IoT and Lifestyle Products grew to RMB 18,100,000,000, up 16.1% year over year and 18.8 percent quarter over quarter. Our revenue from Internet services reached RMB5.8 billion, up 8.7% year over year and slightly decreased by 2.3% quarter over quarter. Our overall gross margin was 14.1% in the 3rd quarter, slightly lower than the previous quarter due to the stronger growth in our smartphone business. Looking at the breakdown by segments.
Gross margin for our smartphone segment remained steady at 8.4% this quarter. The gross margin of our IoT and Lifestyle product segments increased to 14.2%, mainly due to the strong growth in our IoT products with high gross margin and the improvement in our smart TV gross margin. The gross margin of our Internet Services segment was 60.4% in the 3rd quarter, largely stable compared to the last quarter. While we continue to step up investments in brand building and R and D, our stronger sales performance gave us significant operating leverage. As a result, you can see that our operating expense ratio decreased to 9.4% in the 3rd quarter compared to 11.2% in the Q2 of this year and 10.1% in the Q3 of 2019.
As a result of all this, we have seen a steady growth in adjusted net profit. In the Q3 of 2020, our adjusted net profit reached a record high of RMB4.1 billion, which was up 18.9 percent year over year. Our adjusted net profit margin was 5.7% in the quarter. At the same time, we continue to manage our working capital in a very efficient way. Our inventory turnover days decreased to 54 days this quarter from 72 days in the second quarter.
Our cash conversion cycle was very healthy at negative 22 days. We have strong cash flow in the 3rd quarter and our cash resources reached RMB75.5 billion as of September 30, 2020. The net cash generated from operating activities reached RMB 12,300,000,000 this quarter. Finally, we continue to see strong growth in our investment performance with an increasing number of our investee companies going public in both the Mainland China and overseas. Most recently was 9 Board's successful listing on the Science and Technology Innovation Board of the Shanghai Stock Exchange.
As of the end of last quarter, we invested in over 300 companies. In the Q3, we generated an after tax net gain of RMB713.5 million from the disposals of investments. In fact, you have probably seen that we have been generating realized investment gains consistently in the past few quarters. As of the end of last quarter, the total amount of our investments are reflecting mark to market for the listed companies reached RMB50.6 billion, which equals to HKD2.4
per share. We will
continue to leverage our good resources and advantages to empower our ecosystem companies and transform more manufacturing industries globally. With that, this concludes our prepared remarks. We shall now open the line for questions.
Thank you, Mr. Lam. We'll now proceed to the Q and A session. Please limit your questions at maximum too, so we have a lot more interested to ask the questions. Thank you.
Thank you. And our first question is come from Kiana Kwan with Credit Suisse. Please go ahead.
Thanks, Zhanzong, Alan and Steve, thanks for taking my question. My first question is about the in response to the Honors spin off and also sell off. You will run independently going forward. What's Xiaomi's strategy to compete with these separated brands? Do you see as an opportunity to beat your peers?
My second question is about Internet business. In the Q2, we noted that the gross margin declines was not due to strong like gaming, which has a lower gross margin. But this quarter, we see like Fintech and also gaming mix likely to decrease. What's the driver behind to see this gross margin staying relatively stable sequentially. What should we expect when like the mix to improve going forward and the FinTech what is the strategy for the FinTech going forward because of the some kind of regulatory change.
And also we see that you are rebranding their business. So what's the strategy going forward in the that? Thank
you. Okay.
Thank you. Thank you for the question. So actually, we heard the news from the media. So actually, Xiaomi was born from the very competitive environment back to 10 years ago. So we are we have a strategy to expand our business, not only in China, but to many, many different countries and the markets.
I believe we have the right strategy. The strategy we will focus on the strategy we are having now, which is number 1 from the product side is we caught smartphone times AIoT strategy. We focus on 2 major areas, smartphone as a cornerstone, but also the AIoT, millions of consumer IoT products our system so that we can have a multiplier effect, we will do that. Also, we will continue to invest into technologies like a camera, like chargers, continue to invest into the technology area so that we can have the ability to keep inventing new things to offer continue to offer good product, not only for China domestic market, but for the overseas market as well. I think we will focus on those strategies.
We will focus on the growth potential, not only in China, but also in many different markets like Europe. As Alan just mentioned, we have achieved significant growth in the last quarter. Actually, since early this year, actually, you see the continued growth of our business in many, many markets. European market is one good example and also Latin America and also Southeast Asian countries, while we are keeping our position in India market. So we are very confident we will grow our market share in those market.
And also, we will definitely monitor any market dynamics. To us, it's a very, very normal environment for us. I don't see any change in our strategy. We should focus on the product, focus on the customers and also focus on the channels, online channel and offline channels. So this is our position.
And then regarding your question regarding the gross margin, right, so I think you asked about like with FinTech and gaming growing slower this quarter, why doesn't our gross margin improve? Because traditionally, fintech and gaming were lower gross margins. I think this was the question. So in the past few quarters, I think we explained that fintech did have a negative impact to our gross margin because of the regulatory environment together with COVID-nineteen. We had additional credit allowance in the past quarters.
We have been actively controlling the risk since then, and we have been closely following all the compliance comply all the regulations on them. On the sort of the credit perspective, it's on the upper trend. But I think this quarter, we also talked about for gaming because of the change in the customer mix, we call gaming gross margin was lower this quarter. So I think with all these factors together, the gross margin was flat compared to last quarter. We think the current gross margin reflects the current state of the business situation across each business segment in which Internet service.
Going forward, it will be depending on the product mix on how that fits. So I think that's the answer to your gross margin question. Overall, FinTech, we believe having a stronger regulation is beneficial for the development of the entire industry. Since the beginning of our business, we have been closely following all the regulations. We have all the necessary licensing related finance.
We have been strictly following all the no matter interest rate or on the different types of regulations. So we believe Internet Finance constantly to be a very good business for us long term. And in the additional to and we talked about in the announcement, the current focus in addition to retail finance, consumer finance, we're also actively developing supply chain finance, which we believe leveraging our large supply chain relationship and our technology capability should offer good growth prospects going forward.
Thank you.
Thank you. And our next question is come from Yiping Huang with CICC. Please go ahead.
Okay. Thank you for taking my questions. So I have two questions. 1 is about your future room of growth in the smartphone business. So you outperformed the market quite a lot in both in China and overseas.
So and achieve a very good market share in a few European countries. So looking forward, where you think your major room of growth? And what is the reasonable market share you plan to achieve in Europe and South America? This is the first question. And the second question is that we see that the Internet business is roughly Q on Q flat for at least since the beginning of this year.
So how we should look at the Internet business going forward? And what's the correlation between the growth of your MAU and growth of your smartphone user base versus the Internet. So how or the other way, how many quarters we need to wait before we can see a strong growth on Internet? Thank you.
Yes. Thank you. Thank you for the question. The first question is related to the future growth, the trend. So actually, I see very big room for us to grow, although we have achieved a very high growth rate in the quarter 3 of 2020.
Given Europe as an example, Right now, although we reached the top three position in European market, actually, if you look at the market share, we are still in the 12%, 13% range. So that means we have a big room to grow even in Europe, right? Right now, we are another example is right now, we are number 1 in Spain, right? Our market share in Spanish smartphone market, Q3 was about 34%. It's a very high percentage.
But compared to other regions other countries, we are still below 20% or in the 10% 10% plus. So that's a huge growth area. That's Europe. So and you're talking about the Latin American market, it's huge market, even bigger market space for us to grow. Right now, we are only in the maybe in some countries, we are 10%.
Some countries may be below 10%. We see a huge potential. We are in Latin American market only a year, only 1 year. So we just established our partnership in the offline channel, the online channels, the carrier channels as well. So we keep investing in those markets.
So we see also see a very big potential to grow. Indian market, we are right now, we have we are number 1 for, I think, 13 quarters already. So, we will we see in the Indian market, actually, there's about, I think, 130,000,000 to 150,000,000 smartphones every year. But the potential growth areas, at the same time, actually, we have in the market, you can also see another 150,000,000 feature phones. So that means we have a lot of work to do, right?
We should continue to innovate to make a very cost effective, high performance smartphones to serve the Indian consumers. We should go build the channels down to the countryside, the villages to serve the people there so that they can be equipped with the mobile Internet that we can we hope we can change their lives and help them to have a better life with the access to the Internet. This is our plan. So overall, I think we have we are very, very optimistic about the future growth for the next maybe 5 years.
And your second question regarding the flat Q on Q Internet service revenue, right. So we talked about the reason for the slower revenue growth this quarter was mainly, 1, because of we are actively controlling the risk for the Fintech basis and second is because of the gaming business. And third is, as Xiaodong mentioned, we see a very, very good momentum and a strong potential for user gain. So I think we will focus more on user acquisition than exhausting on the monetization. We'll focus more on user experience to gain more users.
But going forward, we do see a lot of growth prospects for Internet business. I think first, as you grow your shipments, you will start to accumulate more users. So with that, we see a very strong potential for that. And second, we talk about this quarter, our overseas Internet service revenue grew rapidly. Our overseas Internet revenue grew over 75% year on year this year and accounted for about 12% of our Internet service revenue already.
And third, as we increase shipments in the higher end premium smartphone market, Based on our data, we do see smartphone advertising smartphone Internet service revenue on higher end phone is much higher than normal. So that would naturally also drive up the ARPU. And 4th, we didn't talk much, but this quarter, the TV internal service revenue was also very strong. As we continue to be number 1 in China in terms of smartphone shipments, we are accumulating more and more users. On the same time, we are improving our monetizing capability.
So together, we do see a very strong potential for TV, Internet service. So we believe all of these will give us a very large growth potential for Internet Service Business. But I think at the moment, as Shaoongzuo mentioned, I think the focus for us is really on the user acquisition.
Yes. User acquisition is the most important thing. We don't even started the monetization in the overseas market yet. But you can see from our report actually, the Internet revenue from overseas market grow very, very fast. So we definitely will focus on the user acquisition in the coming years.
Okay. Yes. Thank you very much.
Thank you. And our next question is come from Piyush Borya with Goldman Sachs. Please go ahead.
Thank you for taking my question. My first question is about the China MAU progression, which has dropped slightly on a quarter by quarter basis, even though your market share has gained quite significantly. And that has also not made progress when we look at it on a year on year basis. So how do we correlate or how do we draw the correlation between your customer improvement that we're seeing and the fact that this line has not improved over the same period of time despite the significant market share gains, but it's seen with your smartphone volumes? That's my first question.
The second question concerns how you think of market share on a worldwide basis as well as back at home. If you could just take us through, so you've got a peak market share in Spain in the 30s. You've got very high market share in India. And overall, you've done very, very well in many countries. How do we go from there to looking at your market share in the countries where you don't have that market share and going back to China, overall market share as well as 5 gs market share?
So if you could just give us a qualitative assessment of how you think through those points, that would be fantastic. Thank you very much.
Yes. Thank you. Regarding to your first question, it's about the MAU, right? So actually, the this is stabilized. The MAU our MAU stabilized is around 100 and 110, 100 and 8, 9, right?
But it's a little difference is because of the time of when you do the calculation of statistics. There's a time difference cost, not the number difference. It's stabilized. We'll continue to drive the local domestic China market share. So actually, China is a very unique market.
So we are growing our market share online, but China has a huge offline market. And we need to build our stores, not only the Tier 1 cities, but we have to get into the Tier 3, Tier 4, Tier 5, Tier 6 cities. It takes time for us to build our Xiaomi stores, our authorized stores and also other stores to cover those rural areas. This takes a little time, but we will continue to drive the market share growth in the online channel. But at the same time, we will we have a plan to improve our offline coverage starting from this year.
So, this takes a little time. But in the overseas market, it's more complicated. Every market every market is different. So for example, in the European market, European market is mainly this is offline market. Online only represent, I think less than 10%.
So but we're still working we're still working very closely with the online channels. Amazon, in many countries, cities, in France, for example, and also other online channels in Europe, use those channels to do a lot of marketing, a lot of communications with our fans and the customers. But at the same time, actually we invest a lot in that in building the partnership with the traditional offline channels, which are the major channels for the smartphone sales. For example, media market, media market is the largest, maybe the largest smartphone retail channel. So we have built a very, very strong partnership with the media market in many, many European countries from Germany to Spain to Italy to many other countries.
There are several others like a media market. So we also build our Xiaomi authorized stores. In overseas market, we have, I think, over 700 stores so across the different regions. Europe, as I mentioned, Europe is an offline driven market. But if you talk about the Indonesia market, it's a we call it 1,000 of the mom and the top stores.
It's a IR market. You have to cover those hundreds of thousands of very small stores across the nation. So we use another strategy to cover those markets. We see very good growth from the Indonesia market in Q3. That's the result of building a model to cover the IR channel in Indonesia.
Indian market is similar, is similar, but Indian market has a very strong online channels and offline channels. Online channel close to 50%. So you need to have a more balanced approach if you want to be successful in India. So it's very, very different from country to country. I think we know through, I think, a 3 years effort, we understand, we learn a lot from different models.
So, I think we'll continue to invest into different type of market. Right now, we have established a system to cover the major market, including Europe, Latin America, Middle East and Southeast Asian countries and India. So, yes, we are very optimistic or confident for the future growth, especially for the next 2 to 3 years.
Thank you.
Thank you. And our next question is come from Gokul Hariharan with JPMorgan. Please go ahead.
Hi. Thanks for taking my question and congrats for
the good results. First of all, if you
could give a little bit more color on the FinTech business now that you are kind of reconfiguring the business, how should we think about the extent of some of the credit pressures, etcetera? I think, Len, you mentioned that some of the credit pressures are starting to kind of bottom out. As we look at the next year or so on the fintech side, how do we think about the thrust
of growth? Is it going
to be still mostly consumer lending related? Or do we see more areas on the digital bank, on the other areas like supply chain finance, etcetera, start to become more prominent? That's my first question. 2nd question, I know that it is early days, but since you call out the overseas revenues for Internet for the first time and it's not a small number either, 12% of your overall number, Could we talk a little bit more in terms of the avenues of monetization that we are using in these overseas markets given that we don't really have app store presence in many of these markets given the prevalence of mobile Play Store?
Thank you.
Yes. Why don't hey, Pogo, why don't I take the first question on the FinTech business. As we announced about a month ago with our new FinTech strategy, we are focusing on 3 areas: consumer finance being one of them. We are increasingly going into the supply chain financing as we see a lot more kind of positive regulatory headwind in that market. But more importantly, we do believe we have very unique advantages in that area.
And the 3rd area is technology transfer, obviously, to use our technology to enable more financial institutions to get into the supply chain financing side. So on the consumer finance, as you have seen in our results and in the past few quarters, we have been shrinking the loan balance, which we are seeing the light at the end of the tunnel. I think we are seeing improvements in that business in the past few months. Supply chain financing is obviously an area that we are going to focus on, again, given the fact that we have pretty unique advantages in that area, given that a lot of them are either our suppliers or the suppliers of our to our suppliers. So we've seen we're seeing good data of their production in that area.
And also that a lot of them are rely on working capital to for their businesses, which we think we can help the process become a lot more efficient using data and using our technological advantage technology advantages. So that's an area that I think you'll hear more from us in the future about the progress in that area. I think that's something that we are quite focusing on. And then the first stage is obviously as the technology become more advanced, as the system become more advanced, we also want to export that technology to enable more financial institutions to join the game there. So that's the FinTech business.
On the overseas Internet businesses, yes, of course, we don't have the advantage of some of the bigger players in terms of app stores and whatnot, but we do have delivering revenue coming from advertising as well as from preload in that area at this point in time and also search.
Yes, actually, we haven't started the monetization business from overseas marketing yet. But we have seen a very good result for some of our apps. So for example, the browser, in some of the regions, our browser has a higher MAU than Google's Chrome. So that's a good signal for us. So right now, we are focused still on the user acquisition, number 1.
Number 2, we want to improve the user experience so that we can keep the customer in our ecosystem. So we continue to improve the user experience. So, we continue to the user experience between smartphones and our IoT products. So that's why
we launched
several features we call the Mi Share, right. With Mi Share, you can easily use your smartphone to control your IoT devices. For example, music, right? If you're getting closer to the smart speakers, AI speakers, your music will automatically transfer from your smartphone to the AI speaker and then why should Wasser, right? Your music in your home can easily transfer into your smartphone when you go out.
So this kind of feature and also we are using another kind of technology called UWB. So with your smartphone, you can easily point your smartphone to your TV and then you can easily turn your smartphone to a controller or you can transfer your content from your smartphone to the TV, the similar feature. So we'll continue to improve the user experience so that we can keep the customer. And then we will think about the monetization in the future. But although we have not started, but still we see a very good trend for the Internet overseas Internet revenue growth.
Yes. Got
it. Thank you. Thank you very much, Vincent Wang and Alex.
Thank you. And our next question is come from Frank He with HSBC. Please go ahead.
Good evening, Wang Zhou, Alan and Steve. Thank you for taking my questions. So my first question is about your near term sales momentum. Given we do see the 2nd wave or 3rd wave of COVID-nineteen across the globe. So do you see any sales impact in the past 2 months, especially in Western Europe?
And also supply chain is indicating some order slowdown in Q4 in general from Android can. So just wondering if we do see some similar type of seasonality? That's first question. And second question is about your IoT GP margin because you reached a record high 14% GP margin in the segment. Do we see it should be a new norm to project your GP margin in IoT or there should be tend to low teens in the coming few quarters?
Thank you.
Okay.
I can say for the first question, I can say like that the COVID-nineteen definitely impact our business in 2020, especially in the Q1 and the Q2. We see we have seen the recovery from the Q3, but it's definitely impact. But as I mentioned several times in the past, actually smartphone business is kind of resilient, right? People would need a smartphone, especially in the difficult time period. So demand is there, but we are facing several challenges despite the COVID-nineteen.
For example, the supplier shortage supply shortage is the one And COVID-nineteen definitely is another one. So we are closely monitoring the status of the pandemic in Europe and India. We hope I personally hope actually as a little optimistic because the vaccine is almost ready. But this winter is going to be I hope it's going to be the last winter for the pandemic. So we remain optimistic for the next year.
So as Alan just mentioned, we see the light at the end of the tunnel, right? So we are working very hard. We try to help in the Q1, try to help to solve the problem, the pandemic issues in China in Wuhan. And also, we have done some things for India, even European countries, with our technology and our effort, I think it will be over. It's a near term The second question
Okay. IoT margin. That's for the IoT gross margin, right? So I think Xiaomi, we are having a very strong position in IoT, the whole IoT industry. We are having a lot of leadership in China IoT market across a lot of different categories.
We're also expanding over the IoT market service staff. So while we're doing this, you will see a lot of the products we are growing right now, for example, in the small home appliance category, these naturally have higher gross margin than some of the products we traditionally are, for example, like notebook and TV. So I think on the product mix life, this is pointing to benefiting on the gross margin. And the other number we share on this quarter is, well, overseas IoT business also grew rapidly. Overseas IoT tend to have higher gross margin than in Mainland China.
So with that also benefit from gross margin. But overall, I think from IoT, again, it's very similar to what we talked about smartphone. I think for it's still relatively early in terms of the industry development. For us, the key is still getting use improving user experience and to gain more user as opposed to really optimizing the gross margin. But I think despite not actively doing so because of the shipping product mix and the geography, it did help us on the gross margin.
Got it. Thank you very much.
Due to the time constraint, we'll now take the question from the last investor.
So management, we don't have questions at this point of time. So would you like any closing remarks to our investor?
Yes. I want to say thank you. So we are happy to achieve a good result, but we are actually, we are working very hard for to prepare for the Q3 and also more importantly, the year 2021. There are challenges down the road. I think the supply shortage is this one of the issue near term.
We're working very hard on that. And also, we continue to hire more engineers to send more people to different market and region. So a lot of work to do. I want to take this opportunity to thank everyone in the call for your support, your understanding and your questions to help us to improve in many, many areas. Thank you.
This concludes the conference call today. Thank you everyone again for joining us. You may now disconnect. Thank you.