Xiaomi Corp, the world’s fourth largest smartphone supplier, on Tuesday reported an 87 per cent drop in net profit in the quarter ended June 30, as the global smartphone market continued to slow down. The Beijing-based company’s net profit for the second quarter fell to 2 billion yuan (US$284 million), down from 14.6 billion yuan a year earlier. Total revenue grew 15 per cent to 51.9 billion yuan, up from 45.2 billion yuan a year ago, driven by an increase in the average selling price of the company’s smartphones. Despite the industry slowdown, Xiaomi founder, chairman and chief executive Lei Jun said the company was gearing up for potential major growth opportunities. “Looking ahead, we will continue to strengthen our research and development capabilities and investments”, especially in the areas of 5G, artificial intelligence and the Internet of Things, he said in a statement on Tuesday. The company, whose shares were up 3.17 per cent to close at HK$9.43 in Hong Kong on Tuesday, has so far invested in more than 270 companies, with an aggregate book value of 28.7 billion yuan. Xiaomi awards shares worth US$24 million to staff as it celebrates status as Fortune Global 500 company Lei also indicated the inroads being made by the company in its overseas operations. “Thanks to Xiaomi’s relentless efforts, we have managed to achieve solid growth in our businesses,” he said. The company reported a 33.1 per cent increase in revenue from its overseas markets to 21.9 billion yuan in the second quarter. Hong Kong-listed Xiaomi pledged to continue building and expanding new retail channels outside China. It was operating 520 Mi Home stores overseas as of June 30, representing a 92.6 per cent year-on-year increase. In India, the company had more than 1,790 Mi Stores catering to the country’s tier-two cities and rural areas in the same period. China’s Xiaomi pushes global smartphone expansion as it monitors US trade ban on Huawei “The official commercialisation of 5G in June has brought about new opportunities to China’s smartphone market,” Xiaomi chief financial officer Chew Shou Zi said in a conference call after the company’s quarterly earnings announcement. Chew said Xiaomi, which introduced its maiden 5G smartphone in Barcelona in February, will release a second 5G handset in China in the second half of this year, without providing any details. As part of that effort, he said Xiaomi, Oppo and Vivo have formed an open alliance that is reportedly for wireless file transfers between the Android smartphones of the three companies, which represent the biggest Chinese rivals of Huawei Technologies. “We welcome more brands to participate,” said Chew, adding that some brands have already approached their group. He indicated that Xiaomi was also increasing investments in core components, with an eye on building “an ecosystem of advanced supply chains in China”. He did not elaborate. Smartphone maker Xiaomi sets up technical committee to build an engineering culture as it pushes into artificial intelligence But in China, the world’s largest smartphone market, Xiaomi, Oppo and Vivo have all lost market share last quarter amid Huawei’s sharpened efforts in the country , as it deals with the US trade blacklist and security concerns about its products in various markets. Xiaomi saw a 19 per cent drop in shipments last quarter in China, which was the biggest decline among the country’s major handset vendors last quarter. “We see no signs that competition is easing, as Huawei continues to outperform in the space,” said Ronnie Ho, an analyst at CCB International, in a report published last week. Global smartphone shipments declined 2.3 per cent last quarter to 333.2 million units, but Huawei still managed to increase its market share to 17.6 per cent on shipments of 58.7 million units, according to IDC. For more insights into China tech, join our Facebook group, subscribe to our Inside China Tech podcast, and download the comprehensive 2019 China Internet Report . Also roam China Tech City , an interactive digital map at our sister site Abacus .