Plausible Deniability, Xiaomi’s Real Business Model?


September 4, 2014 by ...

‘We did not steal user data’, Xiaomi said until it was proven they had.

‘It was not our battery chargers which were tested by the Chinese government and caught fire; they were fakes.’ Xiaomi claims after scathing governmental report.

‘Sure Lei Jun invested in a show which raked Smartisan, a competitor over the coals. But this had nothing to do with the ‘sneak attack’ ‘. Magazine operator says when confronted with this fact.

Xiaomi is never to blame?

It would appear that each time Xiaomi gets caught in a pickle, they spin doctor their way out of it. What is becoming increasingly obvious, at least to people in China, is the risk one runs when buying ‘Xiaomi’ gear.

“How can we be sure it is ‘really’ a Xiaomi?’ says one.

“According to Xiaomi, all of the problems it has are due to fakes. Are there any real Xiaomi phones out there?’ Says another.

The common thread in the current Chinese narrative is how Xiaomi seems to absolve itself of blame when it is probably at fault, as explained in the opening.

Online only sales model convenient way to pass the buck

To many Chinese, Xiaomi uses its cloak of invisibility, ie selling 99% of its gear online, in order to avoid responsibility for product defects, issues and complaints.

Even in China it is hard to buy a Xiaomi product directly from Xiaomi, which means one has to purchase through a re-seller. Ultimately, it will be the re-seller who is blamed should anything go wrong. Xiaomi essentially washes its hands of the whole thing.

This is precisely what Xiaomi did when the Chinese government claimed that Xiaomi chargers were unsafe as tested. Xiaomi kit, among others, presented a fire hazard and did not meet Chinese standards. Xiaomi’s reply was that those were knockoff Xiaomi gear and not the real deal. By virtue of their sales model, Xiaomi could make such a claim.

For example, if the government had tested Sony, it would go directly to the source and buy the good. Sony would have no recourse but to accept the fact that its product had failed and rectify it. Xiaomi, on the other hand, does no such thing. They state that the tested product was not genuine Xiaomi and thus they have no culpability. Due to Xiaomi’s lack of real stores, the claim could be real. Who knows where the product came from in the first place?

My experience

I essentially tested this hypothesis yesterday when I attempted to buy a ‘Xiaomi’ fitness band. I live in China and thought this would be an easy task. But it was not. Xiaomi was not selling the fitness bands to consumer so I had to find another purchase avenue.

Due to the fact that I could not buy directly from Xiaomi, I accessed Taobao, a Chinese Ebay clone and searched. There were myriad suppliers of the kit and each claimed they had the genuine article. When I pushed them, however, their answers became suspect. They said they would not return the gear and laid specious claims to the fact that the bands ‘may not work’ with non-Xiaomi phones. I was assured that they probably would, but I would get no guaranty, nor refund it it did not.

I then asked about refunds in general and was given the same reply ‘non-reply’.

It struck me that much of what the Chinese have been grousing about is true. I was willing and able to buy Xiaomi kit, but at the end of the day was unsure if it was:



-real but potentially flawed

Needless to say, the whole experience left me uninspired. Why spend $15 on a piece of equipment which may or may not work and is backed by a disclaimer that I will eat the loss if anything happens?

Such a thing would not happen with the Fitbit that I own. I know from whom I bought it and to whom I need to speak when things go awry. There is a direct line of communication from me to them with no room for confusion. The opposite is true of Xiaomi.

Xiaomi proudly does not hire marketeers

I then considered how Lei Jun and Hugo Barra extol the virtues of the fact that they spend no money on marketing. This would make sense if marketing were only advertising, but it is not. It generally includes the sales component which comprehends both pre and post sales care. Absent this link, Xiaomi is too disengaged from the consumers. The feedback loop is distorted.

With a business model like this it will difficult for Xiaomi to contend in the long run. It is simple to knockoff Jobs and produce on the cheap, but quality is a concern to most of us nowadays. Quality does not only deal with the product itself, but the respect given customers. Such a high level of disengagement is sure to negatively impact Xiaomi in the long run. It already has done so to me.






6 thoughts on “Plausible Deniability, Xiaomi’s Real Business Model?

  1. […] new tagline, they said, ‘It wasn’t me,’ and blame it on a knockoff. Once again, it was not Xiaomi gear which was the problem, but some Shanzhai […]


  2. […] the one they gave when a guy in Hong Kong first reported about Xiaomi data theft. Xiaomi initially said nothing and then slowly but surely admitted to what they had done. In the end Xiaomi sent out a patch to […]


  3. […] Many Xiaomi phones have the shelf life of a bananna. Due to their sales modle, however, getting a return can be difficult if not impossible. Many phones are sold through resellers and Xiaomi may or may not recognize them as legitimate. If Xiaomi says they are not you are shit out of luck. You lose your money and ohone. You can do nothing. All Xiaomi has to do is to say you bought a pirated version and you have no recourse. Their lack of … […]


  4. […] Xiaomi’s marketing kit bag is a litany of non quotes and accusations that it is not genuine Xiaomi gear which catches fire and fails Chinese quality tests. By selectively rolling out its product across […]


  5. […] waited to read the tea leaves before explaining about their initial security breach. They wanted to gauge the fallout before replying. Due to less than rancorous ‘outrage’, customer angst was subdued. […]


  6. […] Xiaomi is short on innovation, contrary to what many say. In other sections, I have exposed the business model which Xiaomi has also cribbed from various […]


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