October 29, 2014 by ...
Here is the first installment of a two part story about Xiaomi courting India over security fears. Enjoy…
The biggest Xiaomi news today is not that they are gobbled up by the tens of thousands in seconds. Nor is it that Xiaomi is the pretender to the Jobs-less Apple inc. What many people are talking about is Xiaomi and data security. A blight of negative ink is causing chaos in the executive wing of Xiaomi. A handful of countries are considering banning their kit due to privacy concerns.
Xiaomi’s intial reaction was low-key and contemplative. All that changed with the Indian Air Force (IAF) ‘ban’ on their gear. India is a growth driver for Lei Jun’s firm and crucial part of its global plans. The last thing they wanted was to anger their biggest international customer. In an attempt at staunching the blood flow, Xiaomi wants to break bread with Indian leaders.
Xiaomi and India a match made in heaven?
There are two crucial elements to this story, one is the role that India plays in Xiaomi’s future plans and trust. Lei Jun is making waves about moving production to India in order to satisfy demand there and other parts of Asia as well. For Xiaomi it is a win-win. Chinese labor costs are skyrocketing and moving to India lowers this. In addition, Xiaomi creates jobs for Indian laborers which Modi would love. So what is not to like about this scenario?
Well.. this brings us to point number two, data theft and security.
Chinese telcos are seen as dodgy spy arms of Beijing?
The terms ‘espionage’ and ‘Chinese telcos’ are often used interchangeably and many are wary. Case in point would be Huawei and ZTE. While both claim to be nothing more than private companies trying to make a buck, their actions indicate otherwise. Many consider Washington’s attack on the duo to be protectionist at best and ‘cold war thinking’ at worst. The facts, however, are in Washington’s favor. For example, Bill Gertz recently reported how Huawei tried to infiltrate and hack the NSA via a third party– ie to ‘pull a Snowden’. The attempt was thwarted but speaks volumes.
Why a ‘normal company’ would want to hack an ultra-secret spy agency is anyone’s guess. Logically speaking, however, it seems to indicate a linkage of interests between Huawei and the communist party.
This is not an isolated incident with Huawei which has also been accused of espionage from Australia to Africa. Evidence of this spans the range of ‘yawn’ to ‘no shit? Wow!’ And example of the latter was Huawei’s attack on an Indian telco. In terms of ZTE, accusations are mostly confinded to Africa as that is where they have a large footprint.
What does this have to do with Xiaomi?
Perhaps you are rechecking your browser to make sure that you had clicked on a Xiaomi-related article, and wonder where I am going with all this. ‘What in the heck is this guy ranting about?’ You say and down a healthy gulp of cappuccino.
The fact is that in the Biblical world of Chinese phone companies we have to find an ‘Able’. From what we have heard, ‘Cain’s’ abound and so we are conditioned to believe this.
In China many do not trust
The politically incorrect answer is that we are wary of Chinese firms and security. Due to stringent controls that an authoritarian government demands, Chinese firms define customer privacy differently. These companies can lose their right to operate if they do not play ball with Beijing. When you are months away from becoming the next Alibaba-billionaire, then why not do what the party asks?
Another example of how this plays out is with the Chinese search engine Baidu. This company is a hometown favorite and backed by Beijing’s finest. On a recent trip to Brazil, China’s leader Xi Jinping touted the internet company, literally selling it to the masses. Talk about party backing.
Of course nothing is free and Robin Li, Baidu’s CEO had to return the favor. The result was that Baidu searches in Brazil were censored just as they are in China. The Chinese search firm had exported oppression of free speech.
Wherefor art thou Xiaomi?
Once again we must consider what this means for a company such as Xiaomi. After all, Beijing has mandated that cadres use Huawei phones and nothing else. This would lead one to believe that Lei Jun and Beijing are not as thick as thieves as one might expect. But then again, nobody knows. Lei is a member of the Chinese governmental NPC which means he is a ‘party guy’. His company has also skyrocketed lately, which is much easier to achieve in China if you have a ‘red hat’ or communist party bigwig backing you. By virtue of Lei’s position at the NPC, it is safe to assume he has just that.
And my point is???
Now that you have devoured seven hundred words and yanked tufts of hair from your scalp in frustration and screaming ,’Get to the point man! Get to the point!’
I will succinctly conclude with the following.
Xiaomi’s desire to please Modi and friends is facing an uphill struggle. Lei Jun el al are victims of their ‘Chinese-ness’ as much as their actions. The former they cannot control and rightly or wrongly they will face a higher level of scrutiny due to this fact. Any negative impact of their actions, however, is directly their fault. Lei jun has been around the IT world and understands data security as well or better than anyone. His cavalier attitude towards data theft and repeated attempts and doing so speak volumes.
Stay tuned to learn more in Part 2…