Date
21 September 2017
Xiaomi's business practices are not going down well with its rivals but that's not stopping founder Lei Jun from pursuing his own unique strategy. Photo: Bloomberg
Xiaomi's business practices are not going down well with its rivals but that's not stopping founder Lei Jun from pursuing his own unique strategy. Photo: Bloomberg

Here’s why Xiaomi is being called a thief

It took Xiaomi just a few years to become the best selling smartphone brand in China. Now, it’s targeting another big market — smart home appliances.

Xiaomi just launched its first air purifier. To quickly build a complete smart appliance line, it is acquiring a 1.28 percent stake in home appliance maker Midea Group for 1.26 billion yuan (US$203 million).

However, the deal is not going down well with other industry players.

Dong Mingzhu, president of Gree Electric, called the new partners “two thieves” coming together to form a group.

Gree Electric and Midea have outstanding patent disputes.

Dong bet Xiaomi founder Lei Jun last year that the smartphone company won’t outgrow Gree in five years.

Last week, Xiaomi unveiled its smartphone-controlled Mi Air Purifier, heralding its entry to the Chinese smart home market.

Like its other products, Mi Air Purifier is cheaper than anything in the market with similar functions and specifications.

Mi Air, which delivers 406 cubic meters of clean air in an hour, sells for 899 yuan against 4,000 yuan for a competing brand.

Chinese media was quick to point out similarities between Mi Air and air purifiers made by Japan’s Balmuda, which makes electric fans.

These include their tall, rectangular shape and boxy filters.

It’s not the first time Xiaomi has been accused of stealing ideas from other companies.

Jony Ive, head designer of Apple Inc., called Xiaomi a design thief.

Xiaomi chief executive Lim Bin responded, saying, “you can only criticize after you have tried our products, and we are more than happy to send him one”.

Just a week ago, a judge banned Xiaomi handsets in India due to a patent dispute with Swedish telecom equipment maker Ericsson AB.

Lei built his strategy around quality products at affordable prices.

Although Xiaomi products enjoy great popularity among value-conscious customers and budget consumers, razor-thin margins and patent issues could put the strategy to the test.

Xiaomi’s operating margin was reportedly under 2 percent last year, one-tenth those of of global smartphone brands such as Apple and Samsung.

That means Xiaomi has to sell considerably more handsets to earn the same amount of money.

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RA

EJ Insight writer

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