Ladies and gentlemen, welcome to Xiaomi 2023 Annual 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 would like to raise during the Q&A session, please press Star one on your telephone keypad. Should you wish to cancel, please press Star two. Now we'll hand it over to Ms. Anita Chen, Head of IR and Corporate Finance.
Good evening, welcome to the Investor Conference Call and the Audio Webcast hosted by Xiaomi. Before we start the call, we would like to remind you that this call may include forward-looking statements which may be underlined by a number of risks and uncertainties and would not be realized in the future for various reasons. Information about global market conditions are coming from a variety of sources outside Xiaomi.
This presentation also contains some audited, non-audited, non-IFRS financial measures that should be considered in addition to, but not as a substitute for, the company's financials prepared in accordance with IFRS. Joining us on the conference call today are Lu Weibing, Partner and President of Xiaomi Corporation, and Alain Lam, Vice President and Chief Financial Officer of Xiaomi Corporation, Chairman of Airstar Digital Technology. To start, Mr. Lu Weibing will share a recent view of the financial performance of 2023. Following that, we will move on to the Q&A session. Now I will hand it over to Mr. Lu Weibing.
Thank you. Lu Weibing, thank you for joining us in this conference hall for Q4 and the full-year results. Under the guidance of the stable operations strategy and benefiting from a long-term focus on underlying technologies, Xiaomi achieved a breakthrough and delivered remarkable performance growth in 2023.
I'm sure you've all read our financial results. There is remarkable growth in our business. In Q4, our growth has returned to double-digit growth. In Q3, there was a turnaround, and this quarter we returned to double-digit growth, and we have continued the good momentum with profits. This is your particular concern in this conference hall. So tonight I share two main points. First, I'd like to share with you some business highlights for the full year 2023 and Q4. Second, I'll share Xiaomi Group's overall business direction for 2024. First of all, let us look at the global market. In Q4 2023, according to Canalys, as you can see, after seven consecutive quarters of decline, the market returned to growth, with shipments increasing 7.5% year-on-year.
As we said, the overall shipments in the H2 were better than the H1, and the global consumer market continued to show a weak recovery trend. Looking at 2024, we believe 2024 will see a slight year-on-year increase, but in terms of market structure, we will see that there will be a strong consumer upgrade trend in the global market. Despite the slight growth in sales, revenue growth will be significant. So overall, we remain cautiously optimistic about 2024. Now I'm going to talk about the performance in Q4 2023. In 2023, the macroeconomy was challenging, but Xiaomi's various business lines developed steadily with high efficiency. For the full year 2023, we've achieved steady growth, total revenue being RMB 271 billion, adjusted net profit RMB 19.3 billion, a year-on-year increase of 126%. Our GP margin hit a record high of 21%.
In innovative business such as auto, the expense was RMB 6.7 billion. Excluding that, our core business profits were RMB 26 billion, a year-on-year increase of 124%. So there was a strong contribution from the existing and new business. In Q4, we achieved very good results. Our total revenue was RMB 73.2 billion, growing year-on-year for two consecutive quarters, with Q4 revenue being two-digit. Our adjusted net profit in Q4, RMB 4.9 billion, increasing by 236%, and a core business, RMB 7.3 billion, a year-on-year increase of 171%. This is why we emphasized on our profitability. Now I'm going to share with you our high-end breakthroughs. We have been implementing the high-end strategy for four years. According to third-party data, in Q4, in the 4K-6K price segment in China, in Q4, Xiaomi's market share was 28%, increasing by 20.6 percentage points.
This shows that we have made a strong hold in the high-end market, especially with the HyperOS and the new imaging system. Xiaomi 14 Series set new records, becoming a phenomenon in the domestic high-end markets, achieving a historical leap for Xiaomi's digital flagship. The 14 Pro far exceeded expectations, being a RMB 5K-RMB 6K price range phone. It laid a very good foundation for Xiaomi smartphones to break into the RMB 5K+ price segment. Following the strategic upgrade last October, in February, in Barcelona, we announced our new Human x Car x Home ecosystem strategy, and we launched Xiaomi HyperOS. The Xiaomi 14 Ultra released globally, marked an important milestone in our global high-end market. In terms of imaging and technology, we have jumped to a new level, receiving wide acclaim from users with sales rising steadily.
I believe our achievement in the high-end market has to do with our cognitive breakthroughs and capability growth. At the same time, we are also gradually enabling other product categories. In 2021, wearable products were incorporated in the mobile phone department, and in 2022, laptops were incorporated. In 2023, the TV business was also incorporated as part of the mobile phone. We're going to enable the TV series with our capability in mobile phones. In the future, we're going to empower other product mix with mobile phone capabilities in technologies, intelligence, process management, and supply chain to improve the overall user experience. Now I'm going to talk to you about new retail. After a year of efforts, we have made significant progress and sustained growth in our close business partnership, deepening cooperation, expanding our retail economy of scale.
In 2023, the average monthly GMV per store increased by 16% year-over-year. In Q4, the GMV reached the best since Q4 2021, an increase of 14% year-over-year. This shows that the efficiency of our offline stores significantly improved. At the same time, offline smartphone market share in China has also been increasing, reaching 8.4% in 2023, a year-over-year increase of 1.7 percentage points. Xiaomi Auto is going to be launched soon. The development of our Auto sales and service channels has also drawn the experience from our mobile phones, and we have combined our car sales with the automobile industry's best practices. With operation as the core and digital as the foundation, we strive for a better customer experience. There are three types of stores: Xiaomi's self-operated delivery centers, Xiaomi Mi Home stores, and 2S stores in collaboration with other dealers.
Starting from the March 5th, you will see our Xiaomi SU7 in 59 stores in 29 cities, and you can reserve a test drive up to the March 28th this month. I'm going to talk about international business now. In 2023, Xiaomi's global product strength and brand strength continued to increase. For 14 quarters, Xiaomi smartphone shipments remained steadily in the top three globally. According to Canalys, in Q4 2023, our smartphone shipments ranked the top three in 52 countries and regions around the world and top five in 66 countries and regions. The international market is crucial to Xiaomi because it contributed more than 75% of our smartphone shipments. In 2023, we achieved year-over-year growth in the smartphone market share in several major markets, including Middle East, Latin America, and Africa. The stable development in smartphones also drove global user numbers to new highs.
In December 2023, the number of monthly active smartphone users reached 641 million, increasing by 10.2%. In China, the number is 156 million, increasing by 8.3%, bringing strong momentum to the growth of our internet business. In the future, we will continue to build a secure and efficient global operating system and construct a set of digital control systems providing more support to our operations in the international market. As for R&D, you've seen in our financial reports that R&D was increasing by 19%, and R&D personnel accounted for about 53%. But we invested in the environment. Now we have seen that it paid off. In 2023, our technologies, including HyperOS, Dragon Bone Hinge, Ceramic Glass, Xiaomi Super Motor, Xiaomi Super Die-cast, AI is the future, and it will be a ubiquitous capability. That's why we started investing in AI in 2016.
This year, we also launched mobile phones with built-in AI functions. In the future, we will continue to increase investment to fully empower our Human x Car x Home products while improving internal operating efficiency. Vehicles are also an important part of the ecosystem. In 2023, in December, we held the technology conference to introduce five core technologies, including electric drive, battery die-casting, smart cabin, and smart driving. At the same time, we made its official debut. Next Thursday, we will officially hold the launch event to share with you our achievements over the past three years. Facing the new decade, we're determined to invest in underlying core technologies on a large scale to achieve new breakthroughs in cutting-edge technologies. We know that R&D is an important link in leading industrial capabilities. We will continue to increase R&D investment to offer better products and user experiences.
At the same time, the leading position in technology will bring us considerable commercial returns. In 2023, Xiaomi Group did three important things. We clarified the goal for the new decade for 2020 and 2030. We continue to invest in underlying core technologies and strive to become a new generation global leader in technology. We have made our overall strategy clear: Human x Car x Home ecosystem. And thirdly, we made a new interpretation of our cultural values. We believe these three things will play an important role for our future development because in the future, this will be the blueprint providing a foundation for long-term sustainable and steady development. Last, I want to talk about the 2024 outlook. The macro and industrial environment will still face huge challenges. For example, intense market competition, rising costs of core components such as memory and screens.
But as you can see, Xiaomi's comprehensive capabilities have also undergone some changes in the past few years, so we are very confident in facing the uncertainty with our capabilities. In 2024, we will achieve growth in all categories and markets, continuing to close the gap with Samsung and Apple, and be a leader in the global industry. Therefore, based on the results of 2023, in 2024, we determined to set our overall strategy as steady and aggressive. In 2024, with the launch of Xiaomi cars and with high-end products and new retail and international markets, 2024 will become a very important and memorable year in the history of Xiaomi. Thank you. I will conclude my presentation here and hand it over to CFO Alain Lam.
Thank you, Mr. Lu Weibing. Thank you, everyone. As Mr. Lu Weibing mentioned, in 2023, we steadily implemented the business strategy of prioritizing both scale and profit.
While maintaining our industry-leading position, we focused on capability enhancement and achieved significant improvement in profitability through comprehensive optimization of operation efficiency. In 2023, the overall revenue was RMB 271 billion, with China revenue being 55% and overseas 45%. As you can see, last year, our revenue increased in each quarter throughout the year, with double-digit growth achieved in the Q4. Last year, our overall GP margin was 21.2%, a new high, and an increase of 4.2 percentage points year-over-year. Looking at different business segments, in 2023, our smartphone business revenue was RMB 157.5 billion, accounting for 58.1% of the total revenue. In Q4, the revenue from mobile phones was RMB 44.2 billion, increasing by 20.6%. It was the first time that we achieved positive growth after seven quarters.
According to Canalys, in 2023, global smartphone shipments were 145.6 million units, ranking third in the global market, with a market share of 12.8%. In general, in 2023, our smartphone gross margin was 14.6%, an increase of 5.6 percentage points year-over-year. In Q4, our smartphone gross margin was 16.4%, benefiting from product mix, declining prices of core components, and the impact of inventory impairment reversal. There was an increase of 8.2 percentage points year-over-year. Our IoT business, in 2023, achieved year-over-year growth in both revenue and gross margin, with revenue of RMB 80.1 billion and gross margin of 16.3%, increasing by 1.9 percentage points year-over-year. In 2023, many of our IoT categories performed well.
For example, our smart large home appliance business continued to maintain high-speed growth, air conditioner shipments increased by more than 49% year-over-year, refrigerator shipments increased by more than 105% year-over-year, and washing machine shipments increased by more than 24% year-over-year. Global tablet shipments in the global market increased by more than 50% year-over-year. In internet services, we have seen continuous growth of customers. In December 2023, our global monthly active users reached a record high of 641 million, increasing by 10%. Our new users were 26 million, increasing by 8% year-over-year, with 12 million new users being added. This year, our internet services revenue was RMB 30.1 billion, increasing by 6.3% year-over-year, exceeding RMB 30 billion for the first time. Gross margin also performed well. In 2023, the internet gross margin was 74.2%.
Internet services revenue increased by 24.1% year-over-year, reaching RMB 8.4 billion. Internet services revenue accounted for 28% of overall internet services revenue in 2023, increasing by 4 percentage points year-over-year. Now I will turn to expenses. In 2023, our total operating expenses were RMB 43.5 billion, but this is including the RMB 7.5 billion of new business investment expenses. If you exclude that, our core business operating expenses should be RMB 35.9 billion. This number shows a decrease of over RMB 12.8 billion, or 7.3% compared with the same period last year. While controlling expenses, we continued to expand R&D spending and firmly invested in the future. Our R&D expenses in 2023 were RMB 19.1 billion, increasing by 19.2% year-over-year.
Thanks to the increasing gross profit and decrease in operating expenses, net profit of the group, adjusted net profit of the group, reached RMB 19.3 billion in 2023, increasing by 126.3% year-over-year. Our core business profit was RMB 26 billion. The net profit margin of a core business was 9.6%, a record high. Last year, since the beginning of last year, we've been optimizing our inventory management. As of the end of last year, our total inventory amount was RMB 44.4 billion, a decrease of 11.9% year-over-year, and our inventory returned to a healthy level. Thanks to the healthy profit and declining inventory, our operating cash flow in 2023 was RMB 41.3 billion, far higher than the same period last year. That, as of last year, our cash reserve was RMB 136.3 billion, a record high.
This provided ample funds to better support the development of the group's core and new businesses. At the same time, we also actively repurchased our shares. In 2023, we repurchased over HKD 1.5 billion of shares. In the Q1 of this year, we spent nearly HKD 1.9 billion repurchasing our shares, with a total repurchase of our shares being over RMB 18 billion since our IPO. Last, I'd be talking about our ESG strategies. ESG has been fully integrated with our business operation and management as part of the company's development strategy. In 2023, our ESG business has received 12 domestic and international awards and honors. I'd like to thank all the third-party institutions for your kind support, including S&P, Fortune, Forbes, and other institutional investors.
In January this year, EcoVadis, a third-party institution from France, awarded Xiaomi a gold-level rating, making us one of the top among the top three companies in ESG performance, with our score increasing from 53 last year to 73 this year. In January 2024, Xiaomi Group formally appointed our first-ever female director to the board. This shows our effort to continue to improve our ESG management system, enhance gender diversity, and promote the professionalism of our group's corporate governance. We will continue to maintain a steady and aggressive business strategy. At the same time, with better capability, there is a lot to expect from us in 2024. Thank you, everyone. That concludes our presentation today. Now we can take some questions.
Thank you, Alain Lam. Now we will start the Q&A session. To allow more investors to ask questions, please, each investor ask two questions only.
Thank you. Now the Q&A session is open. To register a question, please press star one. To cancel, please press star two. Timothy Zhao from Goldman Sachs, please.
All right. Thank you, Mr. Lu Weibing. Thank you, Anita Chen, for taking my question. I have two questions. First, could you please share with us your expectation for the smartphone shipment of your company and of the market? How do you see the change in competition in different markets? Second question has to do with your high-end product. 14 Pro and 14 Ultra were great success. Could you please talk about in detail the secret for success? In 2024, some peers started aggressive promotional events, and some of them raised their shipment targets. How do you look at the high-end markets in both China and overseas in the coming year? Thank you.
Your questions have to do with smartphone business. In 2024, I believe the smartphone market will see some slight growth, probably 1 percentage points or 2 percentage points. There will not be remarkable growth. I don't see any possibility of that. As for our group, our growth target will be much higher than the industry average. Internally, we have an annual budget and also a forecast for the market growth, so our internal target should be much higher, way higher, than the average industry growth target. You're also talking about the changes in a competition landscape in different markets. Well, outside China, I think we have China, we have developed markets overseas, we have emerging markets overseas, the rest. Last year, Xiaomi has been growing, so this year we will see higher market share.
As for developed countries, in Europe especially, according to Canalys, that in Europe we had this trio of Xiaomi, Samsung, and Apple, and the fourth player only had a market share of 5%. For Xiaomi, we need to focus on product mix, especially high-end product. However, emerging markets have shown clear regional differences. You have major brands from Africa, Latin America, and Southeast Asia. In emerging markets like South Africa, Middle East, and market share from Xiaomi. Your second question has to do with our premiumization strategy. I think the secret for success is that over the past, interested if they could replicate our success story. Xiaomi has a set of methodologies. These are universal. These methods can be applied to different categories, not only smartphones, not only China's market. So we believe we have the right methodology to push forward our premiumization strategy.
I think the most important step has to do with continuous investment in technology. In products, we need to fill the gap with cutting-edge technologies. These are the factors for success. You also mentioned other initiatives by other peers, be it professional promotional events or shipments. I don't think that should be one of the factors we take into account. Before the launch of Xiaomi 14, there was very strong pessimistic emotion in the industry, but with undeniable results, we proved that we had the momentum for premium markets. We believe in 2024, be it in China or overseas markets, we will see strong progress in premiumization, especially in China, because 14 and 14 Pro had already a stronghold in RMB 4K- RMB 6K price range. I want to break into the RMB 6K- RMB 10K price range.
In overseas markets, 14 EUR 999, and 14 Ultra EUR 1,499. In overseas markets, we have already gained the market for EUR 500- EUR1,000. So these new products will bring us to new price ranges.
I'd like to add a few numbers, which we didn't talk about. If you look at our ASPs in China last year, our ASP increased by over 19% compared with 2023 and 2022. That proved that our premiumization strategy was a success in China. If you look at our market share in the price range RMB 4K- RMB 6K, in China it was 16.9% in 2023 and 7.6% in 2022. So in this price range, there was a clear increase in market share. If you look at Q4 2023, our market share in RMB 4K- RMB 6K price range, it was 28.8%. That put us on the top of Android phones in China.
That means we have clear smartphones in China. Our smartphone shipment in high-end market was over 20% in total shipment. That increased by over 2.5 percentage points. I think this figure has proved that the premiumization strategy was a success.
Thank you. Next question, please.
Next question comes from Andy Meng from Morgan Stanley. Andy Meng, please.
Thank you, management. In January 2024, your sales in Southeast Asia saw a 100% year-on-year growth. Could you please share with us why you achieved remarkable sales much better than other peers in Southeast Asia markets? Do you have any sales targets specifically for Southeast Asia in 2024? My second question has to do with AI s eries, worked with other large models, launching new functionalities, including simultaneous interpretation. In 2024, looking at your overseas business, will you work with other AI platforms like Google's Gemini?
If not working with other peers, will you rely on your own capability in R&D of AI and launching new and more competitive AI functionalities?
Your first question has to do with Southeast Asia. Well, between 2020 and 2022, we stopped all overseas visits, and in 2023, we increased overseas trips to learn about the overseas markets. I visited Southeast Asian markets in 2023, Indonesia, Thailand, and Malaysia. There were huge opportunities, we believe. Industries, and we did research into this market. Of course, the 100% growth you mentioned was for a single month, and for Southeast Asian markets, January was a busy month thanks to the Chinese New Year. But I believe there was a strong momentum for Southeast Asian markets. In 2024, we believe we will see higher market share. These countries have two very good examples.
In Vietnam, in a month, our sales put us on the top of the list among all the mobile phone players. Well, your second question was about AI. We've seen the AI Google. I want to make it clear that we are also one of the important partners of Google, so we will work with them on some functionalities, but we will see if their functionalities are compatible with our self-developed functionalities. So we are working with them, but we are also engaging in self-in-house development. Our team showed me the comparison in AI functionalities between Xiaomi and Samsung, and we could see different AI functions of these two phones. I didn't think that Samsung has a clear advantage. Our functionalities that we developed were not available on Samsung phones.
Of course, if there are some functions on Samsung phones which we didn't have yet, we will launch them in due course in the future.
Thank you. Next question, please.
Next question comes from Siti Pan, please.
Thank you, management. First, I'd like to follow up on the smartphone business. There was a strong increase in GP margin. In Q3, it was higher. GP margin was an 8% year-on-year growth, and how much of it could be attributable to the growth in market share? Of course, last year we've seen very good sales in 14 Series. Now, your inventory level has returned to a healthy level, especially in raw material and its cost. So can we see the continuation of your cost advantage in the next few quarters? Mr. Lu Weibing mentioned the declining cost and the rising prices.
So going forward, how does Xiaomi plan to maintain its advantages in GP margin and cost? And in 2024, how do you plan to keep it in a very reasonable and healthy level? My second question has to do with your IoT business. Last year, you said some decline in TV and laptop, but this year there will be stronger demand for IoT, especially in overseas markets. What's your expectation for the growth for?
I'd like to focus on some general ideas, and Alain Lam will talk about the financial figures. There are two reasons for better GP margin. The first, these two factors have had a positive impact on our GP margin last year. The most important reason was the declining cost of memory. Recently, the price of memory and screens have rebounded. Other components have also seen declining costs. For example, structural components s ensors.
These products have seen lower prices, all increasing, and this will also affect our GP margin. But our advantage has to do with our IoT strategy because we have other IoT categories. So overall, the GP margin of IoT as a whole. Very robust level of GP margin. You've also asked about IoT. In 2024, we'll see faster growth. Tablets will s eries, we have been among the top five tablet peers, and we're going to be one of the top three very soon. I believe you will see a very strong momentum from Xiaomi.
As for laptops, as we said, our laptop business has returned to a healthy level. As for TV business, in the end of last year, TV was incorporated as part of our smartphone department. There was recovery. The ASP and seeing some changes in ecosystems. I think this year is for us to lay a foundation.
With a solid foundation this year, we can expect robust growth of ecosystem in the future. As you can see, we have huge potential of IoT business, especially in overseas markets. Overseas IoT business still accounts for owning a small percentage in our business. There is strong room for growth. I just came back from an overseas trip. In 2024, IoT business will also see very remarkable growth.
If you only look at the GP margin in Q4, as Mr. Lu Weibing said, if you look at the product mix, especially in smartphones and the dynamics of the cost structure, and you've also seen that we did pretty well in inventory management, and our performance in inventory will also offset the same product to offset the declining profitability. That's the first reason.
In Q4 2023, we also adjusted our strategies of receivables, and there was a one-off impact on GP margin in 2024, but this was not the case in 2023. All these factors helped us improve the GP margin of smartphone business. As Mr. Lu Weibing said, thanks to our Human x Home x Car ecosystem, we can avoid focusing on the changing GP margin of smartphone business because very stable, which has been over 20% over the last few quarters. We will focus on the GP margin of different market and product categories because our focus is on Human x Home x Car ecosystem, and this is how we look at the value that our.
As for TV business, as Mr. Lu Weibing mentioned, TV and laptops are going to see some top-line decline in 2023. The reason being our business strategy adjustments because we would like to make the business healthy and more profitable.
We've seen very fast growth in Indonesia. This is a very fast investment, but our market share has some room for growth because it has not reached the ideal level yet. Thank you.
The next question comes from UBS, please.
Now, I'd like to ask a question about your automotive business. Of course, we are going to. You've mentioned that both offline and online sales channels are available, including Mi Home and 2S stores. Can you please share with us more information about your automobile business, and by the end of the year, do you have any target to achieve in terms of sales of your cars? I'd like to ask a question about Human x Car x Home ecosystem. Given this ecosystem, how do we interpret the role of your automobile products in terms of its offerings to your internet services?
We will launch SU7 on the March 28th of this month. In terms of sales channels, we drew on the experience of our past performance to form the current new retail landscape for Mi Auto. We have our own delivery centers. That means customers can collect the cars and also buy their cars at the delivery stores. We will also increase the integration of our cars with our 3C products. Going forward, our offline stores will expand their sales floor areas. Some investors are also renovating their existing car dealer stores to make it suitable for our 2S stores in the future. Customers can buy our cars in these three places. Mi Home has been doing very well in digitalization and standardization, so customers can enjoy very good service. After the product launch on March 28th , you can experience our cars in 60 stores in 29 cities.
We are recruiting new dealers nationwide, so we expect more dealers in the future. When we start out, we wanted to focus on those markets with strong demand. As for the ecosystem, after we started our sales of cars, we will start a closed loop of Car x Home x Human , but there is a long way to go. We will build better business models, and customers will have better stickiness with Xiaomi products, which I believe will bring some benefits to our internet services as well. Thank you.
Next question comes from Citi, please.
Good evening, management. I have two questions. The first question has to do with your cars. SU7 is very appealing, and its sales will start soon. But I'd like to know your plans for future products, any products in the pipeline. Can you please shed some light on it?
Second question, with the development of AI, we've seen the potential of large models on cloud. What's the potential and what are the opportunities for Xiaomi in large language models? But in terms of application, we're still not clear what possible applications could there be in terms of AI. Can you please share with us some information of AI being available on the terminals and different devices?
Well, regarding automobile, well, rather than focusing on products in the pipeline, I'd like to talk about the current car. Our goal is to become one of the top five car players in the next 15 years- 20 years. That means we're not going to limit ourselves to any market segment. Rather, we will be a global car player. The first car that we launch this year is a C-class luxury sedan. This is our very first car.
It takes three years to develop a car. That means, of course, we're developing some product. To disclose any details, but as you can understand, cars must be developed in parallel. I think now we need to sell the car, make it a good product, make sure that we have good customer satisfaction, and we can deliver a good customer experience. That's the most important thing at this moment. You've also asked about AI large models. Xiaomi took the strategy of combining devices and cloud. Of course, on-premise deployment is not comparable to cloud technologies, but on-premise has lower costs and good privacy protection. We've seen higher computing power with on-premise devices, and we have seen higher efficiency of large models. We will see lower costs and higher efficiency in on-premise devices. On 14 Series, we've embedded a lot of AI functionalities.
With 14 Ultra, there are even more AI functionalities using our on-premise capabilities. With Ultra and 14 2.0, we will have more AI functionalities being embedded and built-in with the current and future smartphone deliveries. Thank you.
The next question comes from CICC.
Thank you, Mr. Lu Weibing. Thank you, Alain Lam. I have two questions. First, in internet services, both top-line and GP margin have seen record highs, especially revenue from advertising. So how do you plan to increase the profitability of internet services, especially advertising? My second question is a follow-up question on your expectation for the smartphone market. Given your sales strategy, how do you look at the competition in smartphone markets, especially in overseas markets like Latin America?
You asked how we could improve the GP margin and revenue level of internet services. I believe there are a few things to consider. First, existing customers.
Last year, globally, existing customers increased by 10%, adding 60 million new users. Totally, we had 629 million users globally. To Xiaomi, we believe our internet will take into account our laptops and tablets. As for a high-end smartphone brand, customer contribution matters a lot. We believe high-end markets have contributed a lot to our recent development. On top of existing customers, we're going to improve customer experience, and we're going to monetize more from customers. I think these three things have helped us a lot deliver some positive changes over the past three years. You asked specifically about our advertising business. I have nothing to add. Perhaps my colleague can supplement some information. You've also asked about the competition in smartphone markets and Latin America. I think competition is always there. I don't think there is a particular year of intense competition. You will have competition here and there.
To Xiaomi, Latin America and Africa are two very potential markets. For example, in Africa, last year, our market share was less than 10%. But you can see that in North Africa, Egypt, Morocco, and Algeria, our market share was 20%. That means in sub-Sahara Africa, our market share was probably lower than 9%. And in sub-Sahara Africa, you have the largest market in Africa. At the end of last year, our market share was 20%. I just came back from Nigeria. In the largest market in Africa, we could reach 20%. That means we can do that in other markets as well because 20% is never the upper limit of our market share growth. I visited Latin America last year. In Colombia, our market share was 30%, but it was only 5% in Argentina. That means there is still some room for growth.
I believe Xiaomi will still have some room for growth in smartphone. If we need to surpass Samsung, I mean, that's not just lip service. We're really doing that. Alain Lam, anything to add?
Well, I'd like to add a few numbers. The few regions you mentioned, for example, in Africa, last year, our shipment increased by 45%, and the market only increased by 6%. As Mr. Lu Weibing said, our market share was only 8.9%. So there is some room for growth. In Latin America, the market increased by only 2% in shipment, but we increased by 11%. We have a market share of 16% in Latin America, ranking us third in the market. That means there is some room for growth. As for internet business, a number of customers will grow, and there will be more high-end customers. I'd like to add two things.
First, last year, you probably saw that there was huge growth in advertising investment in the market as a whole. Of course, that was a boost to our business. As for international markets, with a larger user base in overseas markets, we are better at monetizing on international markets. Overseas markets took up 28% of the internet services as a whole. Of course, some of the advertising revenue came from overseas because we are working with more business partners, and we've attracted more advertisers with larger user bases. Thank you.
The next question comes from Huatai Securities.
Thank you, management. I have two questions. Both Mr. Lu Weibing and other investors mentioned AI, which is a hot topic. Mr. Lu Weibing mentioned the positive impact of AI on smartphones. Generative AI and large models will probably have a positive impact on IoT as well, I believe, is that the case?
How do you enable your ecosystem and your OS with AI technologies? Second, you touched upon the good demand from emerging markets. As a global brand, will you launch more products on top of smartphones in overseas markets in 2024?
You asked about AI and its applications in the ecosystem. I'd like to give you a quick example. If you experience the built-in AI system in our cars, you will see that our AI system with the large models will understand the input very accurately. In the future, AI will become an important part in all products in our product lines, including all the products in the ecosystem. It's not to show off with superficial AI capabilities. There are some small features, but if you look at our operating system, there is something called HyperMind. This is active intelligence.
That means in the future, we hope our AI can actively perceive the need of human beings rather than passively receiving instructions from human beings. You've also asked about specific markets. I think it's very clear. Emerging markets are very important to Xiaomi, be it Latin America, Middle East, Africa, or Southeast Asia. They're all important. Today, most of the products available in these markets are smartphones, wearables, tablets, TVs, and scooters, etc. We have more products to offer, but we still have some room for growth for these available products, and there are still other products which have not yet been available in those markets. In Chinese markets, IoT accounts for 50% of our products, but the number is only 20% in overseas markets. There is a huge market. However, we need to build better capabilities. We will lose control when we go to overseas markets.
This is the most important thing when we are building a safe and highly efficient overseas market, and I think this will offer some inspiration for our future development in any market. Thank you.
In the interest of time, now we are going to take the last question from CLSA Securities.
Thank you. I'd like to ask two questions. The first has to do with R&D expenses. In 2023, you invested hugely in R&D. Mr. Lu Weibing said Xiaomi would be a car maker covering all product categories rather than one market segment. So could you please elaborate on your R&D expenses? My second question has to do with AI again. I have a question that has to do with mid- to long-term development of your company. How do you see the role of AI in improving your profitability?
Can AI bring to Xiaomi some new profit models, or do you see AI merely a strong advantage for Xiaomi? How do you compete with other market players with your AI capabilities?
Last year, our R&D expenses were RMB 19.1 billion. The CAGR growth over the past few years maintained a rather significant growth rate of our R&D investment. If you read our financial statement, R&D was a strong contributor to our profitability. I believe we will be committed to more R&D investment. I cannot give you specific numbers, but I don't think we have any questions on that direction. You asked about development. Well, is AI good or bad news to Xiaomi? Well, internally, we could confirm that it would be good news in terms of customers, scenarios, and applications. We're going to use the AI technology in the most positive way. We have smartphone users.
We have 1 billion users globally, so we can cover the most scenarios possible. We have a huge amount of data, and with that, AI can play an even more important role. I believe in that sense, AI will be a positive factor for Xiaomi, and with AI, we will find more profit models going forward using AI technologies.
That is, thank you. This concludes.