Welcome to Xiaomi Group's 2025 Q3 results presentation, investors' conference call, and webcast. If there are any issues, you may hang up now. During the Q&A session, if you have questions, please press star. Once you have canceled, please press star too. May I ask the General Manager of the IR department and PR department to host this call? Good evening, everyone. Welcome to Q3 2025 earnings call for investors of Xiaomi Group and also the webcast. Before we begin, let me remind you, in this event, there may be forward-looking representations and statements, and they will be affected by different uncertainties and risks. In the future, there will be various factors that may lead to the situation that the points made today may not happen. When it comes to information about the market, they are outside of Xiaomi company's channels. There are information and financial metrics that are unaudited, non-IFRS, criteria-based. In attendance today, we have Partner and Group President of Xiaomi, Mr. Lu Weibing, Xiaomi Group Vice President and CFO, Mr. Alain Lam. At the beginning, Mr. Lu will share our latest strategic updates and also our business operations. After that, Mr. Alain Lam will present our results for Q3 2025. After that, we will move on to Q&A. Now, I will pass the floor to Mr. Lu. Good evening, everyone. Welcome, and thank you for joining our Q3 2025 earnings call. As you already read from our financial statements, this quarter, Xiaomi once again delivered a solid financial performance. In Q3, amid a rapidly changing external environment and intense competition, Xiaomi's business lines maintained steady growth. Group total revenue reached RMB 113.1 billion, up 22.3% year-on-year, marking the fourth consecutive quarter exceeding RMB 100 billion. Group gross profit margin reached 22.9%, up 2.5 percentage points year-on-year, hitting a new record high. Our adjusted net profit reached RMB 11.3 billion, up 81% year-on-year, setting a new record high. In terms of specific business operations, there are several highlights. First, our Xiaomi 17 series achieved remarkable success, with total sales increasing by 30% compared to the previous generation. The Pro version accounted for over 80% of sales, with the Pro Max model proving most popular. We achieved a historic breakthrough in the RMB 6,000+ price range. Our major home appliance factory commenced operations. This marks our third-largest scale smart factory, following its smartphone and EV facilities, representing a significant stride forward in smart manufacturing. Internet revenue reached a record high. Innovative segments, including EV, AV, and other AI and other new initiatives, achieved profitability for the first time in a single quarter. Given recent changes in the external environment and industry competition, there are several key concerns about Xiaomi, such as whether Xiaomi can ensure supply chain stability and future trend of smartphone gross margins amidst rising memory costs and rapidly shifting supply-demand dynamics, impact of industry competition on our IoT business, and updates on our EV initiative. Today, we will answer these questions and share information and more insights with you. First, regarding personal devices, in Q3, we ranked among the top three in global smartphone shipment, with market share of 13.6%. Apart from India, we achieved year-on-year market share growth in all regions except India. In China, our smartphone shipment saw another year-on-year increase in market share, reaching 14.9%. We ranked second in Latin America and the Middle East, with market share increasing 1.5 and 0.5 percentage points year-on-year to 17.9% and 16.9%, respectively. We ranked third in Europe, Southeast Asia, and Africa, with market shares increasing by 0.5, 1.2, and 0.9 percentage points year-on-year to 20.9%, 16.7%, and 12.6%, respectively. During the recent Double 11, Xiaomi smartphones secured a top spot in domestic smartphone sales for the third consecutive year, claiming number one position across all major e-commerce platforms. This year marks the fifth year of our premium strategy. Our premium strategy yielded significant results. In Q3 this year, market share in the RMB 4,000-RMB 6,000 smartphone segments in mainland China increased 5.6 percentage points year-on-year to 18.9%. Targeting the ultra-premium segment above RMB 6,000 is the new objective for the second five-year phase of premiumization. Our 17 Pro Max, starting at RMB 5,999, during Double 11, claimed a double crown for both sales volume and revenue among domestic smartphones in the RMB 6,000+ segment. Continuous breakthrough in the ultra-premium segment not only optimized our product portfolio but also drives sustained growth in overseas sales volume. We continue to drive premiumization through breakthrough in core foundational technology. In August, we officially launched Xiaomi HyperOS 3, delivering a comprehensive upgrade across core experience, functional features, and AI capabilities. We further enhanced system fluidity and responsiveness while introducing the groundbreaking Xiaomi Hyper Island for an entirely new interactive experience. Following the launch of Xiaomi HyperOS 3, overall user feedback matrix showed significant improvement. Xiaomi 17 Pro Max is innovatively adopting a Super Pixel array, delivering 2K-level display quality while consuming less power than a 1.5K display. Global supply chain is undergoing a new cycle, with storage costs currently entering an extended period of sustained increase. However, having navigated various raw material cost cycles, we have established a robust supply chain management system and contingency mechanism. We remain confident in ensuring stable raw material supply. Regarding pressure on the future gross margin from rising storage costs, in the short term, we can mitigate cost pressure through product mix upgrades, ASP increase, and other measures. At the same time, we hope everyone recognizes that business beyond smartphones will provide stable support for our overall profitability. Over the past 10 quarters, our mobile, smartphone times AIoT segment has consistently maintained gross margin above 20%. In the long term, we'll continue to emphasize, advancing premiumization and building differentiated product capabilities based on self-developed chips and operating systems, aiming to reduce marginal impact of commodity price volatility on financial metrics. Second, impact of industry competition on IoT business. In Q3, our IoT business revenue was RMB 27.6 billion, marking seven consecutive quarters of year-on-year growth, gross margin 23.9%, achieving seven consecutive quarters of year-on-year gross margin improvement. Although our IoT business encompasses a wide range of product categories, we adhere to a clear picture: to be an industry contributor that drives value creation through product and technological innovation. Therefore, we neither initiate price wars nor blindly follow them. We do not rely on low price to capture market share. Instead, we activate user demand and propel industry development by enhancing product value and increasing innovation investment. In Q3, our ASP for refrigerators, air conditioners, and washing machines all achieved year-on-year growth. In September this year, we launched the Mijia Tri- Zone Washing Machine Pro, which garnered a 99% positive rating across all e-commerce platforms following its release. In October, Xiaomi's smart home appliance factory commenced operations, marking the completion of our major appliance business integrated industrial cycle spanning design, R&D, and product validation. This smart factory is designed for peak annual capacity of 7 million units. Moving forward, more high-quality smart home appliances will be designed, developed, and manufactured here, continuously supporting Xiaomi's strategy to elevate all product categories. Overseas IoT revenue also reached record highs this quarter. In 2026, we will intensify our overseas market expansion to drive further growth in IoT revenue. In Q3, we delivered 108,796 new EVs. Cumulatively, we delivered 265,967 new EVs in the first three quarters. In October, monthly delivery exceeded 40,000 units. We are enhancing monthly delivery capacity through ongoing technical upgrades and expect to complete a new delivery target this week. Next year's delivery scale is projected to maintain steady growth. Our smart EV, AI, and other new initiative segment achieved first-quarterly profitability. We continue expanding our sales network. By the end of September, we had opened 402 EV sales centers across 119 cities in mainland China. Our service network now comprises 209 locations covering 125 cities. In September this year, we offered Xiaomi car owners customization services, once exclusive to luxury vehicles. We firmly believe that enabling everyone globally to enjoy a better life through technology should include providing opportunities for personalized self-expression. We recognize that the EV industry still holds abundant dynamic scenarios and user needs awaiting our fulfillment. We are confident that our next vehicle will earn user recognition and support. Overall speaking, in July 2025, we were named to the Fortune Global 500 list for the seventh consecutive year, ranking 297th. We aspire for Xiaomi to become a top 100 global company by 2030. We remain unwavering in our commitment to high-pressure, intensive investment in foundational core technologies. This year, R&D expenses will exceed RMB 30 billion, with projected R&D investments surpassing RMB 200 billion over the next five years. AI is driving profile transformation across all industries, with over 1 billion devices connected globally. Xiaomi leverages AI to deliver a ubiquitous intelligent experience to users worldwide. We believe deep integration of AI with the physical world represents the next frontier in intelligent technology. We began intensifying our AI investment several quarters ago. While we cannot disclose too much, our progress in large AI models and applications has far exceeded expectations. We are confident that in the near future, we'll continue to deliver surprises for everyone. Finally, I would like to thank all our users for their support. As always, we extend our gratitude to our employees and partners for their continued trust. That concludes my presentation for today. Now, let me turn over to CFO Alain. Thank you, Mr. Lu. Good evening, everyone. As Mr. Lu shared with you just now, in Q3 2025, guided by the group's core operational strategy of steady and progressive advancement, all business segments continued to demonstrate resilience. In Q3 2025, we achieved total revenue of RMB 113.1 billion, up 22.3% year-on-year. Gross margin reached a record high of 22.9%, up 2.5 percentage points year-on-year. Our smartphone times AIoT segment generated revenue of RMB 84.1 billion, with gross margin of 22.1%. Since establishing the mobile times AIoT business segment, we have achieved year-on-year growth for three consecutive quarters, with gross margin increasing by 1.3 percentage points year-on-year. For the smartphone segment, revenue for the quarter reached RMB 46 billion, accounting for 40.6% of total revenue. Our global smartphone shipments reached 43.25 million units this quarter, marking a 0.5% year-on-year increase and extending our streak of year-over-year shipment growth to nine consecutive quarters. Our premium strategy has yielded significant results, with continuous enhancements in product competitiveness. According to third-party data, in Q3 2025, our share of premium smartphone sales in mainland China reached 24.1% of total smartphone sales, up 4.1 percentage points year-on-year. According to Omdia's data, we ranked third globally in smartphone shipments this quarter, with a 13.6% market share, maintaining a top-three global position for 21 consecutive quarters. Third-party data indicates that we ranked second in mainland China's smartphone sales during Q3 2025, with market share up 0.7 percentage points year-on-year. In 57 countries and regions globally, our smartphone shipment ranked top three and among the top five in 68 countries and regions. In Q3 2025, our mobile phone gross margin stood at 11.1% due to intensified competition in mainland China. For IoT, last quarter, our revenue was RMB 27.6 billion. This quarter, overseas IoT business revenue hit a record high. This quarter, our IoT gross margin was 23.9%, up 3.2 percentage points year-on-year. As of 30th September 2025, our IoT platform had connected over 1 billion IoT devices. According to Omdia's data, in Q3 2025, our tablet shipments ranked among the top five globally and among the top three in mainland China. Our wearable band devices ranked first globally in shipments and second in mainland China. Our TWS ranked second globally in shipments and first in mainland China. In October 2025, Xiaomi's smart home appliance factory officially commenced operations, marking the completion of our integrated industrial ecosystem spanning design, R&D, production, and validation. Phase I of the Xiaomi smart home appliance factory represents a total investment exceeding RMB 2.5 billion, with planned peak annual production capacity of 7 million air conditioners. It has already achieved industry-leading standards in both efficiency and quality. For internet services, we continued to expand our user base. In September 2025, our global MAUs reached 742 million, an 8.2% increase year-on-year. Within mainland China, MAUs reached 187 million, up 11.6% year-on-year. In this quarter, our internet services revenue reached a record high of RMB 9.4 billion, up 10.8% year-on-year. Gross profit margin for the internet services segment reached 76.9% this quarter, benefiting from sustained MAU growth and ongoing premiumization efforts. Our advertising business continued to drive internet services growth, generating revenue of RMB 7.2 billion this quarter, up 17.4% year-on-year. Overseas internet services revenue reached RMB 3.3 billion this quarter, up 19.1% year-on-year, accounting for 34.9% of total internet services revenue and setting a new record high. In Q3 2025, our smart EV, AI, and other new initiative segment generated revenue of RMB 29 billion, accounting for 25.6% of the group's total revenue. Within this segment, revenue from smart EV sales reached RMB 28.3 billion, while other related business revenue amounted to RMB 700 million. This segment achieved a gross profit margin of 25.5%. In Q3 2025, we delivered 108,796 new EVs. With ongoing deliveries of the SU7 Ultra and U7 series, our average post-tax unit price reached RMB 260,000 and, RMB 260,000 this quarter. Our new business segment achieved its first quarterly operating profit of RMB 700 million. We are steadily executing our group's new 10-year goal, making large-scale investments in foundational core technologies and striving to become a global leader in next-generation cutting-edge technologies. In the third quarter this year, our R&D expenses reached RMB 9.1 billion, up 52.1% year-on-year. For the first three quarters this year, our R&D expenses totaled RMB 23.5 billion. As of 30th September 2025, our R&D personnel reached a record high of 24,871, accounting for 44.2% of total headcount. In the first three quarters of 2025, our CapEx reached RMB 13 billion, an increase of 87% year-on-year. We continue to reward shareholders through share buyback. So far this year, we have repurchased about HKD 1.54 billion worth of shares, equivalent to about 34 million shares. In terms of net profit, our adjusted quarterly net profit has hit record highs for four consecutive quarters, reaching RMB 11.3 billion, up 80%, more than 80% year-on-year. Finally, in terms of ESG, in terms of ESG ratings, in October 2025, our MSCI ESG rating was upgraded from BBB to single A, marking the third consecutive year of rating improvement since 2022. In September 2025, we achieved a record high score of 63 points in the latest S&P Global Corporate Sustainability Assessment, marking the second consecutive year of score improvement. In September 2025, we're successfully included in the Forbes 2025 China ESG 50 list. In October 2025, we're named to the 2025 Forbes Global Best Employers list, marking Xiaomi's third consecutive inclusion on this prestigious ranking. Thank you all. That concludes what I wanted to share with you today. Now we can begin Q&A session. Thank you, Mr. Alain. Now we will move on to Q&A. In order to allow more investors the opportunity to ask questions, please ask no more than two questions each time. Thank you. Thank you. We will begin Q&A session now. If you have questions, please press star one. To cancel, please press star two on your keypad. Thank you. First question is from Morgan Stanley Andy. Please go ahead. Thank you, Mr. Lu and Alain, for the sharing. Congratulations, Xiaomi, for achieving record high profitability in this quarter. I have two questions. First question is about smartphone. The capital market is concerned about the big cost increase in internal memory. We are concerned about the impact on smartphone gross margin. Can you share your expectation about the price change? Also, for EVs, your delivery has been rising in these two months, and your SU7 Pro and Pro Max delivery schedule has been advanced significantly. Can you share with us the reasons behind such change in the future? What is your development strategy for your EVs? What will be the change, and what will be your major directions? Thank you. Thank you, Andy. Let me take your first question, and I will ask Alan to answer the second question. The cost of memories and its impact on smartphone. Now, when it comes to cost increase, I think this is a rather long cycle, a relatively long cycle. For cost increase for memory in the past, usually it would be over in a few years, but now the situation will be different from in the past. Basically, this is because of HBM that caused the change. Right now the cycle is longer because of demand. In the past, for smartphones, basically there are smartphones and notebooks and tablets together. Now there is HBM being added. As a result, there is bigger demand. The supply is insufficient. In 2023, for internal memory, there was the base level in price, and at that time cost continued to fall. I think you are aware of that. I think, for new production and output, there was one factor. As a result, there is a longer cycle of demand increase, but supply did not catch up. That is the basic situation. This caused a big impact on the cost of smartphone. For internal memory of smartphone and the relative cost, there is a price difference, and this price difference will continue to be narrowed. That is my view. Given this long cycle, cost increase, that would be quite a big impact on gross margin for smartphones, tablets, and notebook computers. Because of a bigger ratio percentage of the internal memory, there is quite a big impact on gross profit. Given such impact on gross profit, I have come up with solutions. The first solution is that you have to do something with product. You have to increase price. Comparing with other peers, I think cost increase is bigger than price increase. That is the first point. We have to also do some digestion in the supply side. As a result, there will be a decrease in gross profit. We can also optimize product structure for internal memory cost. Its ratio in high-end product and lower-end product will be different. In the past few years, we have been implementing premiumization, and we have increased our ASP. We hope that the competitiveness of the product can be enhanced. This is something that we have been doing in the past few years. We hope that this can offset some of the cost increase impact. In Q4 and next year, I believe the cost increase of memory in relation to smartphones, tablets, and notebooks, that would be impact leading to a decline in gross margin, but the extent may be different. When it comes to 2026, I think we will be able to ensure our supply. Thank you. Let me supplement to Mr. Lu's answer, and then I will also answer your question about EV. You can see that, starting last year in our financial statements, we have a segment: smartphone times AIoT, and then smart EV, and AI business. In the past quarters, we can see that gross margin is above 20% for smartphone times AIoT. We have the capability to offset the situation. Our IoT gross margin is healthy. For this segment, it is quite stable. It is more than 20% in gross margin. That's the first point I would like to supplement to Mr. Lu's answer. The second question is about EVs. You asked about our delivery volume, which is rising. We are a young company in the automobile industry. In terms of product delivery, we only started for 18 months, but so far our total delivery exceeded 400,000 units in July and August. By means of some transformation, we have exceeded 40,000 cumulative delivery in September and October. Our delivery is rising. As Mr. Lu said, this week we will be able to complete the target of more than 350,000 units set at the beginning of the year. In terms of our delivery capability and also our quality reform, we have put in much, much effort. Recently, if you look at our Pro Max SU7 delivery timetable, it has been shortened a lot. As I mentioned earlier, we enhanced efficiency in order to enhance delivery. At the same time, at present, some materials are still subject to constraints. We are enhancing our SU7 and SU7 Max delivery capability. In the future, we can accelerate our delivery cycle of other products. These are my answers to your two questions. Thank you. Okay, very clear. Thank you, Mr. Lu, and thank you, Alain. Thank you. Next question is from Citi Kyna. Please go ahead. Thank you, management, for this opportunity. I have two questions. First, based on Andy's question, I have a follow-up regarding your overall strategy. As what Mr. Lu said about demand and supply and the overall layout, and also the impact on smartphone from memories. Next year, in terms of your smartphone strategies, in terms of profitability, are you going to make adjustments to your delivery strategy regarding premiumization in the future? You set a target of 30 million. In the future, will you be subject to price adjustment impact? Are you going to reach the target earlier than expected by making some adjustments? Secondly, I have a question about EVs. For those who have already bought your EVs, regarding subsidies to them next year, what will be the impact on your gross margin? Given this impact, given your efficiency enhancement, is it enough to offset, or will it give more room for more development next year? Thank you. Regarding smartphone retail price, if it increases, then our judgment is that there will be a downturn in the overall smartphone market. That is my overall judgment. How much? Of course, I can't really quantify in detail now. For smartphones, it is still a retention market for the time being. In the past few years, when it comes to product quality and experience, it is very good. I think that is the situation. That's my overall view for Xiaomi. In 2023, we have been seeing that our sales volume and also our profit and scale, we have seen a change in our strategy. In the past, we made a judgment of the overall market. Market share is still important to us in the China market in the past few years. If you look at our peers, last year, we had 15.8% share and now around 17%. I think that's our overall strategy. Still, we have to try to enhance our ASP by 2030. We hope that we can achieve a scale of 30 million in terms of our premium strategy. In five years' time, every year, I hope that would be an increase by like 2 million-3 million units. So far, our premiumization direction will not change. I will defer to Alain to comment on your next question. Thank you, Mr. Lu. First of all, regarding EVs' gross margin, in relation to EVs this year, we delivered more than 350,000 units. This still accounts for a small volume in the industry. As you know, the total in China is 22 million units a year. Within the short term, volume is still our target, and gross margin is not our most important target. With the vacancy tax, we can see some of the peers have also introduced some similar concessions. Now, our delivery cycle is longer. We hope our users will continue to support our EVs. Regarding the vacancy tax, regarding next year's ASP and our tech, and our gross margin, there will be certain impact. However, our current gross margin is at a healthy level. We hope that while we can maintain or guarantee our delivery, we can still maintain a healthy gross margin. Thank you. Thank you. Next question is from CICC Wenh ai Chih, please. Mr. Lu, Alan, good evening. I have two questions for you. First, AIoT numbers. In this announcement, you said that the AIoT connected device for the first time exceeded 1 billion, and the growth rate is more than 20%. Just now you said that for AI, no matter whether it is the MiMo model and the subsequent launches in the future, in relation to AI layout and also combining with or connecting with your tablets, smartphone, notebook, and appliances, what would be the ecosystem and application of AI? Second question is about large appliances. In Q3, large appliance business, because of phasing out of national subsidy and competition, there is some year-on-year pressure. In the future, what will be your tactics in large appliances? For overall IoT business, what is the outlook? Thank you. Regarding IoT connections, I think you can pay attention to our directions and a few information. First, in 2023, from MIUI to VLAN, MIUI, and so on. Now they have become the HyperOS. That is the first thing I would like to share with you. We are operating a whole ecosystem. We hope that with deeper integration, we can offer a better experience. Besides, starting from October, we announced an open-source model, and that is Xiaomi MIUI code. It is like a large model. That's MIUI code. Xiaomi uses the large model technology in the home scenario. We believe that for smart home appliance, this is going to be a very good exploration. AI large model plus Xiaomi IoT devices, these are connected and integrated. At the same time, for smart home appliance, it will get away from traditional hardware-based system. We are moving into a new way of delivery, interacting, vision as well as language. This is very important. Besides, we will go according to these two directions. In the future, I'm sure the business will rise. We have built our large model team for one year or so. Very soon, you will see its output. We hope to have better algorithms, power consumption, and so on. These are some of our targets. At the same time, we have to focus on our own strengths as well. Regarding phasing out of national subsidy and its impact on large appliances, my view is this: for national subsidy, it is only a help in a certain stage, but it will not exist forever. No matter whether it is increased or decreased, we have to understand that it will not be forever. We also would consider when national subsidy will be terminated and what we should do in the future. If you look at some of our data this year, in Q3, you will realize that our ASP is still rising. Our product structure is still good. Our innovative products are being launched continuously. Our gross margin is at a good level. Besides, our globalization is accelerating. I think all these are some good ways to solve, changes or tackle changes in the external environment. Number three, in September, in Wuhan, we started our operation of our smart home appliance factory. We have spent almost 10 years' time. If you have the time, please go to Wuhan to take a look at our smart home appliance factory. It is quite a good one. The environment is good. The equipment is very advanced. It does not look like a traditional home appliance factory. It is very advanced and very smart. It is highly automated, and AI technology is used in the overall layout and design. For smart home appliance factory, the technology is also very advanced. This helps our production process. We can also empower our working partners. I think that in the area of large appliances, these are our directions. Regarding competition and national subsidies phasing out, there will be short-term impacts, but there will not be long-term impact on our direction. Basically, we are implementing, we are executing according to our targets. There will not be change. There will not be big change to our overall objectives and targets in relation to large appliances. Thank you. Thank you, Mr. Lu. We do look forward to some more pleasant surprises in relation to AI models. Thank you. Thank you. Next question from CITIC. [Ying Xu], please. Thank you, management. Thank you, Mr. Lu and Alan. I have two questions. I am [Liu Bingxi]. First question about automated autonomous driving. Recently, Mr. Lei on Weibo talked about upgrading in terms of autonomous driving. In the future, what level can you reach because of such enhancement in autonomous driving? Regarding your overseas development, so far, what is your progress? What is your store layout, and what is your future plan? In the process, how do you strike a balance in terms of traditional distributors in overseas markets? These are my two questions. Thank you. Autonomous driving, my view is this. I think for future smart EVs, autonomous driving is a critical point. All along, we have been working on that. Autonomous driving is a very important direction for our EV development. Basically, we are working towards this macro direction in our investment and deployment. You can see that there are low, mid, and high configuration, high-standard configurations. When it comes to algorithm, we are equipped with LiDAR and also very high-level configurations. In the future, we have upgraded to 1,000 clips. In the past, 3 million. Now we have upgraded that to 10 million clips. That means the quality of our driving has improved a lot. You can see from all our parameters and data, you can see the enhancement from 3 million clips to 10 million. Recently, there were also a number of announcements, HHG, new version, and so on. I think you are able to see all the enhancements. Recently, you may be paying attention to our large model. Recently, the MiMo model had made much progress. In April, we have introduced another model, in May the multimodal model, in September the large language model. Language, voice, and multimodal. All these have been announced. In the future, no matter whether we talk about the autonomous driving or our cabin, that is our cockpit, that would be big support. And our algorithm is enough. We have enough amount of data. I think all these will enhance the overall assisted driving experience. You can pay attention to our advancements. I'm sure you have paid attention to the details showcasing our strengths. For overseas, we are following our established strategies. For East Asia, Korea, Japan, we have already penetrated the markets in Europe also. For Southeast Asia, we are building our stores in high density. Latin America, North Europe, and so on, we are doing a lot of work. For new retail, we are doing a lot of development in overseas, and efficiency is also being enhanced. I think our output is quite satisfactory. Recently, I went to Singapore, and I took a look at our store. It is very good. The scale is 2 million. This year, in terms of categories in overseas, comparing with mainland China, there is still a gap in the Japanese market. Many categories are not there. In terms of product channels, I find them very good. There is no conflict between these developments. For traditional channels, I think they are more professional channels. They sell smartphones. They sell large appliances. They are specialty stores mainly. For Xiaomi, very often, many of our product categories are placed and sold together. If you come to Hong Kong, you can see many of our stores. If you go to Fortress, and also, for example, Broadway, you can get our products in Europe, in Spain. You can also see different scenarios. But then, in fact, I don't see big conflict among these different channels. Thank you. I have no other questions. Thank you. Thank you. Next question is from Zoe of UBS. Please go ahead. Thank you, management, for taking my question. So we have talked about storage and memory a long time. I have a small follow-up question. Just now, Mr. Lu said that you have been proactive in inventory management. For your existing inventory level, comparing with the beginning of this year and same period last year, what is it like? About [Miloco], after launch, in the smart home appliance development, it has aroused much discussion. Many software hardware vendors are doing a lot of supporting facilities. My question for the management is, can you share with us about [Miloco] in the medium term? What is your plan? After the exploration stage, are you going to maintain the openness of the ecosystem, or when you reach a certain level, are you going to internalize it, to your own, within your own, Xiaomi ecosystem? Please. Okay. Regarding our management, we are, when there is cost decline, then we will not keep inventory and vice versa. Everybody is doing this. This year, you want to build up your inventory, but you may not be able to do it. At present, I think our situation is okay in the industrial chain. I think, if you think of Samsung and other partners in the U.S., we have good working relationships. We have good working relationships with other domestic suppliers. In terms of the supply chain priority, I think we are exercising good management. You do not need to worry too much about our inventory. If you look at our gross margin of products, you will see for yourself. I think we are doing quite well. I think people know the impact of cost on gross margin. I think our management has been quite good. You do not need to worry. You talked about [Miloco]. Yes. As I mentioned earlier, we have been cultivating deeply in AIoT, and we have spent one year in exploring about large models. I think we have got a clear view for traditional smart home appliance. We have also been making it smarter with our large models. There is better interaction between human and machine. I think we will keep our ecosystem open in the future. I think we will share more about R&D with you. Do not worry. We will maintain openness of our ecosystem. Thank you, Mr. Lu, for the answer. That's all from me. Thank you. Thank you. Next question is from Huatai Securities. Huang Leping, please. Thank you, Mr. Lu and Alain. I have two questions. First is about storage or memory. In the past few years, Mr. Lu said that the overall smartphone market is stable. There are like six to seven players all over the world and with more or less stable volumes. What do you think about this wave? Will this wave lead to big change in the overall smartphone market? In terms of product and pricing strategy, how are you going to change? After this cycle, how can you make one step upward? That's my first question. Second question about the positioning of your factory. For large appliance business of Xiaomi, you are within top three in various categories. After the opening of the Wuhan factory for your large appliances product lines, what is its role in the future? When Wuhan factory stops production, how are you going to go up one step or one platform in the large appliance business? Okay. Today, globally, the smartphone industry has entered a relatively stable situation. Apple, Samsung, 200-odd million for us, so more or less. Other vendors like 150 million. That is the situation. Given such overall layout, within a certain period of time, there will not be much change. This time, cost increase is very big, and it is going to last longer time. That would be bigger volatility. Cost digestion for each player will cause impact. The cycle is more or less the same for all, but if your ASP is relatively low, then you will be subject to more impact. The cost increase will do larger impact on these players in Q3. In Q1, Q2, cost increased, but not to a large extent. In Q3, the cost increase was big. In Q3, we can digest the Q2 inventory. In Q4, the inventory will be that after-price increase. You can see the market reactions in China. I do, I think the layout is not formed yet. We have seen an increase by one percentage point for Xiaomi, but then the gap has not widened. There is much inflation this year at the highest 17 points, at the lowest around 3 points. The difference is one to two points among different companies. At the end of the day, I believe it is a must that we will see a different layout. Who is better prepared than who will be better off? When you are in a difficult position, in a more competitive situation, your strengths will help you survive. We need to rely on our own strengths to enjoy a better position. I think we also have to look at the long-term position and long-term supply. Basically, the overall situation is quite certain. Changes in China, the impact will be bigger than that in the global market. Regarding our Wuhan factory, my view is this: in terms of factory and OEM, I think we are walking on a two-pronged approach. That is our long-term strategy for smartphones and large appliances. When we build the large appliance factory, we give a lot of focus to our working partners. We had much communication. Of course, we have accumulated long-term strengths already. If you go to our Wuhan factory, I will extend an invitation for you to pay us a visit. Our factory is different. The degree of smartness is much higher than other players. If you visit, if you have visited our smartphone factory, actually, our smartphone factory equipment capability is being also transplanted to a large appliance factory. The smart platform is being migrated. The whole control system is done by Xiaomi. This is something that we are very positive about. No matter whether you talk about control system or our equipment, they are all by Xiaomi. Secondly, the degree of automation. If you go to our existing production lines, you'll see our efficiency. Our efficiency of manpower is much higher than others. If you look at our inspection positions, in many positions, for traditional production, they rely on manual inspection. Because they use their naked eyes, the error rate is also higher. For us, we use AI to do inspection. Efficiency and accuracy is greatly enhanced. That is the value of our factory. After realizing such value, we will also transfer this technique to our other OEM factories. They will have to transform the factories based on Xiaomi's standards. It is like Apple. Apple does not have any factory now, but all the OEM factories have to follow their standards. We are talking about the same global standards for Apple. That is what we are doing now. For our own factories, we are manufacturing high-end premium products. These entail higher technology. For the OEM factories and partners, we will ensure that their existing capacities will not be affected. If there is a need to reduce capacity, we will first do it with our own factories to ensure the position of our work, of our partners because we have long-term working relationships. Please do not worry. These are undertakings to our long-term working partners. For our working partners, overall capability and efficiency enhancement, I think this is very helpful. You may feel free to communicate with our working partners to get more understanding. This year, actually, right now for our smart factory, it accounts for only 10% of the total capacity, but it also gives very strong management of our overall smartphone factories. That is my answer to you. Thank you. Thank you. Next question from Goldman Sachs, Timothy. Please go ahead. Thank you, management, for taking my question. I have two questions. First, regarding your business in mainland China, you have 18,000 stores already. In the future, what will be your expansion rhythm and long-term strategy? Overseas IoT revenue has reached a record high. In the future, will it continue to rise with the expansion of overseas new retail? For revenue, overseas revenue growth rate, how much will it be? Second question about expenses. In Q3, for smartphone and IoT segment, operating expenses grew fast. In the future, for smartphone and AIoT segment, what would be the expenses ratio trend? Thank you. Okay. In 2020, 2021, at that time for EVs, our target is to have 30,000 stores, but our first target is 10,000 stores and that was achieved in 2020. In the process, definitely, there will be some issues. In 2022, 2023, we wanted to constrain our capacity. We first focused on our 10,000 stores. After 2023, we accelerated store opening. That happened in 2024 and 2025. After having 20,000 stores, then on this platform, we want to stabilize the operation. Next year, our target is not about store count or store opening. For the newly opened 10,000 stores, we want to enhance its efficiency. For existing stores, we hope that they will do a better job. We will do better personnel training and improve our competitiveness. That is our overall strategy and direction. We will not change that. For structure, we will look at our internal and external environment and see when to accelerate, when to decelerate. For this model, it starts overseas, and we will replicate it. In overseas, I think it will be more difficult than in China. In Southeast Asia, things are difficult. In Thailand, Philippines, we did it fast. In some of the places, things may be much slower. Recently, I went to Bali. The capital has a population of 3 million. The number is not as big as ours. Besides, we also have established our AIoT expansion strategy for our AIoT products. I think they are doing a good job. These are complementary. We have not reached the limit of our potential. There is still a lot of upside. And Alain can answer your question about expenses. I think there are two simple thoughts. First, R&D expenses increased. In terms of R&D expenses, its increase is bigger than revenue growth rate. That's the first most important factor. The second factor is mentioned by Mr. Lu regarding new retail network. This month or this quarter, on a quarter-on-quarter basis, we have an additional 1,000 stores. Among the 1,000 stores, 60-odd stores are big stores. In terms of operation of these stores, it takes time for them to ramp up. Basically, there's increase in selling expenses mainly because of store opening. The next thing is R&D expense increase. These are the two main factors. Okay. Thank you, Mr. Lu, and thank you, Alain. Thank you. Because of time, we will conclude our call here. Thank you for your time. I hope that you will continue to support Xiaomi Group. Thank you. Goodbye. Thank you all. Thank you.