CELLPHONES: Xiaomi Hit By More Copycat Allegations

Bottom line: New copycat claims by a Japanese air purifier maker reflect the kinds of challenges Xiaomi will face as its profile rises, slowing down its global expansion and potentially undermining its cool image.

Xiaomi faces new coypcat allegations

The last couple of months have been a tough time for smartphone sensation Xiaomi, which is becoming a growing target of accusations that increasingly portray the company as China’s leading copycat. The latest such accusations are coming from a Japanese firm, which says its designs were ripped off for a new line of high-tech air purifiers that Xiaomi announced earlier this week. Those allegations come the same week that Xiaomi was penalized in India for illegally using patented technology from telecoms equipment giant Ericsson (Stockholm: ERICb), and 2 months after Xiaomi was slammed by a top Apple (Nasdaq: AAPL) executive for being China’s copycat supreme.

If there’s anything positive to say about all these new attacks, it’s probably that Xiaomi is fast emerging as a sort of “teflon company” that doesn’t ever seem to suffer negative effects from such negative publicity for too long. The growing number of attacks also reflects the fact that Xiaomi is drawing growing attention on the global stage, as it attempts to compete with world leaders like Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930).

According to the latest headlines, a Japanese company called Balmuda is saying its designs were copied in a new line of smart air purifiers announced by Xiaomi. (Chinese article) Balmuda’s accusations cover the external design of the devices, as well as their inner workings. Xiaomi earlier this week announced the air purifiers, which are part of its broader effort to build an ecosystem of Internet- and wifi-connected smart devices that can talk to each other and be controlled remotely by users over their smartphones. (previous post)

Xiaomi has responded to the allegations with its own statement that, like previous replies, looks rather weak to me, saying its air purifiers have many different features from Balmuda’s. Anyone sensing deja vu in this case is probably thinking of the Apple incident back in October, or the more recent copycat allegations from Ericsson earlier this week.

The Apple incident stemmed from comments made by top company designer Jonathan Ives, who called Xiaomi’s smartphones copycats of Apple’s own iPhones. (previous post) Xiaomi didn’t have much to say in response to Ive’s comments, which were especially hurtful since Xiaomi likes to consider itself as a homegrown Chinese version of Apple.

Then just this week, a Delhi court reportedly ordered Xiaomi to stop importing and selling its smartphones in India, the company’s second largest market as it embarks on a global expansion drive. (previous post) In an update to that story, Ericsson has come out and said it has tried to get Xiaomi to pay royalties on the technology for the last 3 years but without success. (Chinese article)

Xiaomi hasn’t said much about the case yet, except that it hasn’t received the order from the Indian court and is studying the situation. But based on my knowledge of Chinese companies and how they often behave, I’m inclined to believe Ericsson’s version of the story. Xiaomi could get away with its copycat behavior for the first few years of its life while it operated in China, where enforcement of intellectual property (IP) laws is weak and Chinese companies are often favored over their foreign rivals.

But now that Xiaomi is venturing out into the bigger world, it’s being challenged by international peers, many of which may have valid IP infringement claims. I do expect that Xiaomi will eventually find solutions to many of the complaints, and the company won’t suffer too much from negative publicity. But these clashes could slow down its global expansion, and ultimately undermine its image as a cool Chinese gadget maker.

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