June 27, 2015 by ...
China is big on indigenous innovation. But of course achieving such a thing is not easily done. A look at the paucity of PRC firms on global innovation indices tells the tale. And then there’s Xiaomi.
China would like for nothing better than companies such as Xiaomi to lead the charge in tech advances. Ever since opening its doors, albeit tepidly, Beijing has been pushing local firms to catch up and join the 18th century.
Since then, by hook or by crook, Chinese firms have done just that. Xiaomi is a great example. Their corporate shelves are stocked with anything but original gear. (Xiaomi on left, Apple on right)
With the backing of draconian laws which prove little more than Beijing does not welcome foreigners, Xiaomi now sells more knockoff goods than any other company.
Beijing is proud because Cisomi means tech, and so what if most of that is pilfered? The communist party after all, is one of the world’s biggest IP thieves itself. A little bit ago they stole the color white from Dupont, and now a Chinese state-owned-enterprise owns the recipe.
Being smart, Beijing does not wants to sever ties with evil capitalists. They despise the fact that companies here rely on foreign goodies to make made-on-China stuff work. And then comes Xiaomi.
Xiaomi uses a lot of chips, and of course that means two things. First off they should pay liscence fees, which means money leaves Beijing. And secondly, they don’t own key tech. Of course Xiaomi does pay lisence fees so Beijing is safe there, but Xiaomi does not control its tech future. In fact, as merely an assembler, they are overly reliant on foreign firms.
In order to resolve this, Xiaomi has bought into Leadcore, a Chinese chipmaker. Setting aside the obvious, like is that really a good idea? Is Leadcore the key to Xiaomi achieving global domination?
The answer is a resounding guffaw. Of course it’s not, but that’s the best Xiaomi can do. Their staff is too busy cribbing designs and snipping code from Android to undertake such things as chip design.
The upshot is that they will now be beholden to Leadcore instead of a handful of others. This will please Beijjng, but further cement Xiaomi as a bush leaguer.
The communist party cash they receive will pad their pockets nicely. And of course one needs to keep the Beijing red happy. But does the move of powering next gen phones with subpar chips separate them from the pack?
Mi thinks not….