WEIBO TALK: Xiaomi Celebrates, Jumei Defends In Court
Quiet has fallen over much of the blogosphere in this week before Christmas, though buzz was lingering around smartphone sensation Xiaomi as it wrestled with a patent dispute that threatened to halt its nascent overseas expansion. Xiaomi chief Lei Jun was also full of congratulations for his company as it scored a court victory that partially lifted an order banning the sale of its phones in India. Meantime, Lei’s many friends and admirers were offering their congratulations as Xiaomi’s co-founder celebrated his 45th birthday.
Meantime, another courtroom battle saw the chief executive of online cosmetics seller Jumei International (Nasdaq: JMEI) reacting to a series of class action shareholder lawsuits filed against his firm last week. This kind of lawsuit is quite common, and usually comes anytime bad news causes a stock to suddenly drop. Still, the case was obviously an eye-opener for Jumei CEO Chen Ou, and serves as a good reminder of the many dangers that await Chinese tech firms that list overseas.
Xiaomi & Jumei
Xiaomi has roared into the headlines over the last 2 years on its trendy and affordable smartphones, which it has promoted with a savvy marketing campaign that relies mostly on the Internet for sales. But Xiaomi has also become a magnet for negative buzz these days, and was in the headlines last week after being ordered to halt sales of its phones in India amid a patent dispute with global telecoms technology giant Ericsson (Stockholm: ERICb). (previous post)
The court order made global headlines, and created an embarrassment for a company that tries to portray itself as a Chinese innovator equivalent to global tech giant Apple (Nasdaq: AAPL). The setback drew a wide range of commentary from tech executives, who had very different things to say on the matter. The most thoughtful post came from Li Dongsheng, chairman of TCL (HKEx: 1070; Shenzhen: 000100), who talked about the similar challenges his company faced when it embarked on its own global expansion for its core TV and cellphone businesses about a decade ago. (microblog post)
Meantime, Xu Xinquan, a senior vice president at e-commerce giant JD.com (Nasdaq: JD), brushed off the importance of patents in general, saying they were a minor obstacle that could be easily purchased. (microblog post) Of course that’s easy to say for a website operator like JD, which is much less dependent on such patented technology than gadget makers like Xiaomi.
Other interesting remarks came from Huawei executive Ma Bing, who commented on the growing number of “hooligans” that illegally copy other companies’ intellectual property. To understand that comment, one has to realize that Huawei prides itself on spending billions of dollars each year on R&D, and has registered thousands of patents. It’s also just slightly jealous of Xiaomi’s rapid success, which contrasts with its own much slower progress to develop its smartphone business.
Xiaomi’s Lei Jun didn’t comment directly on the copycat allegations, but did happily post the good news when an Indian court partially lifted the ban in India, his company’s second largest market. (microblog post) Lei quickly revealed afterwards that he was celebrating his birthday last week, commenting that the new court order was his best present of the day. (microblog post)
Lei received birthday wishes from a number of other tech executives with ties to him and his company, reflecting his role as one of China’s oldest and most influential high-tech pioneers despite his relatively youthful age. Those wishing him well included Chen Nian, CEO of online clothing seller Vancl, and Sheng Fu, CEO of recently listed security software maker Cheetah Mobile (NYSE: CMCM). (microblog post)
The mood was more somber at Jumei, whose CEO Chen Ou was pondering the next step after his company was sued for misleading shareholders. That particular grievance dates back to July, when Jumei was exposed for hosting sellers of counterfeit goods on its site. That sparked a longer term sell-off that saw the shares tumble from as high as $38 in mid-August to their current level of around $15. The action looks a bit like bullying by big US law firms, since at least 4 such companies all put out similar announcements last week announcing class action lawsuits.
Chen was understandably subdued about the lawsuits, pointing out they only showcased bad news about the company and failed to recognize Jumei’s achievements. (microblog post) He later became more philosophical, saying the developments would help his team regain their fighting spirit. (microblog post) I do feel some sympathy for Chen and his team for facing this kind of lawsuit so soon after Jumei’s IPO. But then again, Chinese companies also need to learn that life after a high-profile IPO has many challenges, and this kind of lawsuit is just one of many such challenges that companies face.
