Smartphone maker Xiaomi says it has ‘addressed’ accounting errors raised in finance ministry report

  • Xiaomi’s shares have plunged 31.5 per cent since its IPO in June
PUBLISHED : Tuesday, 30 October, 2018, 5:55pm
UPDATED : Tuesday, 30 October, 2018, 5:55pm

Smartphone maker Xiaomi said it has rectified accounting mistakes that were earlier pointed out by China’s Finance Ministry.

Chinese state-run newspaper Shanghai Securities News reported on Monday night that the Chinese Finance Ministry had named Xiaomi, along with e-commerce giant Suning and online game developer Wuhu Shunrong Sanqi Interactive Entertainment Network Technology, for not paying certain taxes.

Hong-Kong-listed Xiaomi’s shares closed down 3 per cent on Tuesday after the report and amid a global market rout on rising US-china trade tensions and a tech sell-off.

“Yesterday’s media reports related to Xiaomi are totally false,” said a Xiaomi spokeswoman on Tuesday, referring to reports that Xiaomi had engaged in cross-border profit transactions and tax evasion.

Xiaomi ships 100 million smartphones, beats target by two months

In mid-October the Finance Ministry issued a report that said in 2016 Xiaomi had made accounting errors related to its amortisation charges, external gift-giving, and reimbursements of invoices, but noted that Xiaomi had already “rectified its errors” on request.

“All the problems mentioned by the Finance Ministry have been addressed and Xiaomi has received affirmation from the ministry,” the Xiaomi spokeswoman said.

Xiaomi’s shares have plunged 31.5 per cent since its IPO in June. Despite its sluggish stock performance, the company has seen strong phone shipments this year. On Saturday CEO Lei Jun said the smartphone maker surpassed its annual shipment goal of 100 million units in October, two month ahead of the original plan.