Xiaomi to shut over 1,000 stores in China as company shifts focus to profitability

Xiaomi has announced a major shift in its retail strategy, moving away from aggressive expansion to a focus on quality, efficiency, and profitability. Reports indicate that the company may close more than 1,000 underperforming Xiaomi Home stores across China in 2026, GizmoChina reports.

Wang Xiaoyan, Senior Vice President of Xiaomi Group and President of Xiaomi China, confirmed the decision in a notice to dealer partners. The internal communication specifies that stores opened before January 1, 2025, will undergo a performance evaluation, with outlets meeting both low-efficiency and loss-making criteria slated for closure. Xiaomi has committed to covering 27.26 million yuan ($3.8 million) in one-time adjustment costs to facilitate the shutdown process.

“This move aims to help our dealer partners cut losses and stabilize operations,” Wang stated. According to the company, the closures could reduce annual partner losses by up to 72.46 million yuan ($10 million), reflecting a trade-off between short-term financial impact and long-term sustainability.

Dealers opting to continue operating flagged stores will lose access to company-assigned store managers starting January 1, 2026. Xiaomi will no longer cover staffing responsibilities for these locations, transferring full operational risk to the partners.

The restructuring extends to Xiaomi’s electric vehicle (EV) retail division. The company plans to streamline its EV store staffing model from the current 1+2+11 structure to a leaner 1+1+5 configuration, aiming to cut labor costs and improve efficiency.

“This decision marks a significant reallocation of resources,” Wang added. Xiaomi will now prioritize its EV segment and high-margin products, aligning operations with growth areas and signaling the company’s intent to build a leaner, more profitable retail network.

In related news, Xiaomi is reportedly developing a new AI assistant named Mi Chat, underscoring the company’s push into emerging technology and digital services.

By Vafa Guliyeva