Chinese electronics brand Xiaomi Corporation reports a 9.7% drop in its third-quarter revenues as demand is battered by “zero-COVID” in China.

Reuters reports that its sales in the three months to the end of September were $9.81 billion. During the same period last year, that number was $10.9 billion. 

The company’s net income was only $300 million. Compared to $720 million in the same period last year, this has been a 59.1% decrease. Bloomberg says the net loss amounted to $210 million. In addition, the company had reduced values on multiple segments to over $420 million, including investment losses.

Reuters cited China’s “zero-COVID” policies, which dented the consumption of electronics. According to research firm Canalys, shipments of smartphones dropped 9% globally and 11% in China in the third quarter. In addition, Xiaomi’s smartphone sales, which account for over 60% of its overall sales, decreased by 11.1% from the previous year.

According to Bloomberg, Xiaomi was able to raise its market share in Europe while the world was spending less on electronics due to inflation and slowing economic growth. 

The publication quoted Xiaomi president Wang Xiang saying, “The challenge in China is COVID. The pandemic situation is still volatile. There’s still room for growth in overseas markets.”

Reuters added that Xiaomi has sought out new markets for expansion. It entered the electric vehicle market last year and has promised to start mass production in the first half of 2024.

Xiaomi enjoyed a brief period of growth in 2021 after U.S. sanctions struck down competitor Huawei Technologies. However, that did not last long, as the company revealed its first-ever quarterly revenue loss in May. Revenue for the second quarter also tumbled 20% from the prior year in August.

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