SMARTPHONES: Xiaomi Gets US Black Mark

Bottom line: Xiaomi’s poor handling of a case involving malfunctioning fitness bands in the US is unlikely to erupt into a crisis, but shows how unprepared the company is for moving into PR-savvy western markets.

Smartphone maker Xiaomi just can’t seem to catch a break in the final days before the Lunar New Year. Earlier this week the company made headlines when Hugo Barra, its prized foreign catch who was heading its global expansion, announced he would be resigning and returning to his home in Silicon Valley. Now the latest negative headline is also coming from the US, where media are reporting that blacks are complaining that Xiaomi’s wristband-style fitness tracker doesn’t seem to work for people with dark skin.

It does seem somewhat coincidental that this pair of negative items have occurred in the same week, since Xiaomi has largely fallen from the top news pages these days. If we wanted to say that bad news comes in threes, I could even mention another more significant headline saying Xiaomi’s share of the global smartphone market fell to 3.7 percent last year from 5.2 in 2015. (press release) But that’s a story for another day.

Instead, let’s return to the other story that may look less substantive on the surface, but won’t do much for Xiaomi’s reputation in the US, where it may be planning to launch its smartphones later this year. According to the headlines, US blacks are complaining that Xiaomi’s MI Band2 doesn’t pick up their heart rates accurately unless they move it to parts of their body with lighter skin, such as the palms of their hands. (English article)

The issue apparently dates back to the fitness band’s previous model, and blacks in the US have complained about it since last October. Unlike other fitness trackers that can cost $100 or more, Xiaomi’s model has distinguished itself from the pack with its extremely low price of just $20. A report on the matter points out that the fitness band’s maker, Miui, says it’s “on the case”, though there’s nothing more beyond that.

This particular problem looks like another minor glitch for Xiaomi, which was running into a nonstop stream of similar technical issues last year related to product delays, malfunctions and the like. In this case the problem does come in a relatively sensitive area, since anything race related is always sensitive in the US.

It is a bit curious that Xiaomi didn’t move more aggressively to address the problem, since it apparently first appeared early last fall and was allowed to continue into a next generation of devices. I can just imagine the kind of conversations that probably took place in the Xiaomi offices. “But we’ve already designed and begun manufacturing the next generation of devices”, was probably what the project manager said when learning about the problem.

Snowball Effect?

Of course western product managers know that this is exactly the kind of negative publicity that can snowball into a crisis if not handled properly, especially because it involves a sensitive topic like race.  In this kind of case, a PR-savvy western company would have probably issued a statement apologizing for the problem, stop selling the product and offer refunds to people who already bought it, and freeze any new deliveries until the issue was fixed.

Then of course there’s Xiaomi, which is a very Chinese company, despite counting a few westerners among its top brass. As I pointed out at the top of this post, one of those is Hugo Barra, who is leaving next month but should technically be overseeing this matter since he’s head of global sales and marketing. But I suspect the matter is too small for Barra and is being handled by some of his underlings, who probably aren’t so savvy in this kind of thing from a PR perspective.

At the end of the day, it’s quite likely this whole matter will blow over and Xiaomi’s reputation won’t suffer too much in the US. That’s one of the advantages of being a no-name company in the US, or anywhere else for that matter, since nobody really cares about you if you’re not famous. But if Xiaomi really does harbor global ambitions, it will need to step up its public relations game in tandem with its sales and marketing efforts. Otherwise it will risk suffering very negative publicity if something like this ever happens once the company achieves any level of broader name recognition.