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China's Xiaomi caps hardware profit margin at 5% indefinitely

Any extra money will be passed to users via 'reasonable' means, says CEO

HONG KONG -- Chinese smartphone maker Xiaomi on Wednesday announced that it will forever limit its net profit margin of hardware sales to a maximum of 5% in the lead up to a multi-billion dollar IPO later this year.

Xiaomi, now the world's fifth largest phone maker, said it will distribute the extra profits to users by "reasonable" means if the margin exceeds the ceiling, as it restated its philosophy of making innovation affordable for everyone.

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