Smartphones, Xiaomi, and the Chinese Dream
Can the world’s biggest economy actually innovate? Clay Shirky explores China at a crossroads.
Smartphones have to be made someplace, and that place is China. In just five years, a company named Xiaomi (which means “little rice” in Mandarin) has grown into the most valuable startup ever, becoming the third largest vendor of smartphones, behind only Samsung and Apple. China is now both the world’s largest producer and consumer of a little device that brings the entire globe to its user’s fingertips. How has this changed the Chinese people? How did Xiaomi conquer the world’s biggest market? Can the rise of Xiaomi help realize the Chinese Dream, China’s bid to link personal success with national greatness?
Clay Shirky, one of the most influential and original thinkers on the internet's effects on society, spends a year in Shanghai chronicling China’s attempt to become a tech originator—and what it means for the future course of globalization.
A Fareed Zakaria GPS Book of the Week
"An engaging new book ... Shirky looks inside China’s weird world of retail ... a perfect primer for anyone looking to do business in China." —Fortune
"I will read anything Clay writes, but when he's writing about the intersection of Chinese manufacturing and the Western Internet, man, is that ever in my zone." —Cory Doctorow, Boing Boing
"Bite-size but substantive case study." —Publishers Weekly
"A compact, accessible, and intelligently delivered update on China's evolving economic and political front via one particularly accomplished electronics venture." —Kirkus Reviews
"Shirky accomplishes more in 128 pages than most books would in 1000. Little Rice is a company profile, industry narrative, country history lesson, political dissection (sometimes bordering on polemic), a review of the current state of globalization, and discussion of its future." —800-CEO-READ
"Shirky investigates the rise of the Xiaomi start-up culture ... Recommended for those who enjoy reading about how mobile technology works and particularly in exploring its impact on global business." —Library Journal
A couple of years ago, while I was doing some work at NYU’s Shanghai campus, I got lost on the subway. As a New Yorker, it takes a lot to make me feel like a country mouse, but at triple the population of my hometown, Shanghai does it. Even though the Shanghai subway system is amazingly well-provisioned with directions in English, I got out at the wrong stop. I didn’t figure this out right away, because the subway exited into a mall, just like at my stop, and Shanghai has so many malls—36 million square feet of retail space will be built this year—it can be hard to tell one from another.
Walking in a daze through a vast collection of hallways and shops, I did the very thing people who build confusing malls wanted me to do: I slowed down and started looking around, whereupon I noticed a booth selling mobile phones, a thing I happened to need at the time. I saw a particularly nice one, all black, rounded sides, quite stylish, whose logo read Mi3. I decided that a Mi3 would be as good a phone as any, so the vendor and I did that curious pointing and gesturing thing people do when transacting with no common language except money, and ten minutes later, I had my phone.
There is not much a middle-aged guy can do to seem au courant to eighteen-year-olds, but that phone did it. For the next several days on campus, whenever I needed to do anything on my phone, one of the Chinese students would ask, “Where did you get that?”Not,“What kind of phone is that?”—they all recognized it. The Mi3 was a huge hit for Xiaomi, the startup that made it, selling faster than the company could produce them. I had managed to get my hands on a phone so popular, the company couldn’t always keep up with demand, making me briefly the envy of teenagers (not a familiar feeling, before or since).
Xiaomi (pronounced like the “show” in shower, plus “me”) is the thing that many people in the West don’t think exists: a company that can create products that aren’t only made in China, but designed in China, and beautifully so. For decades, the rap on Chinese manufacturing has been, “Oh sure, they can make lots of copies cheaply, but they can’t design new products.” Over the forty years that China has been open for business, the country’s manufacturers have mastered increasingly complex sourcing and assembly for increasingly complex products, especially electronics. (The iPhone box may say “Designed in California,” but it is built in Shenzhen.)
For anyone watching this rising mastery of quality, the question has become,“When will Chinese design rival its counterparts in the rest of the world?” Owning a Mi3 made it clear that, at least for electronics, the answer was “2013.” It was of high quality and moderately priced—more expensive than most smartphones, but at 2000 yuan (about $330), it was cheaper than a similar Samsung, at around $400, and much cheaper than an iPhone, at over $500—but those virtues are virtues of purchasing and assembly. The Mi3 is also beautiful.
All smartphones are a slab of black glass with three or four buttons on the case, so phone design tends toward rearranging these minimal elements. The Mi3’s minimalism was to make a thin phone seem even thinner by making the screen look as if it ran from one edge of the phone to the other. On many of Xiaomi’s early phones, and most strikingly on the Mi3, the edges of the phone case curve away so sharply from the screen that the eye discounts them as part of the same surface. This was a trick, of course—you can’t make a cheap phone if the case doesn’t stick out past the screen—but it was a good trick, and more importantly, it was a trick that meant that people inside Xiaomi were thinking, very carefully, about what a good phone would look like.
The mobile phone is a member of a small class of human inventions, a tool so essential it has become all but invisible, and life without it unimaginable. The common desiderata of the world’s adult population (and of most of our children), the mobile phone is the site of a steadily increasing amount of the world’s communication, from selfies to contract negotiations. Jan Chipchase, an ethnographer who has studied the use of mobile phones worldwide, points out that there are only three universally personal items that someone will carry with them no matter where they live. The first two are money and keys; the third is the mobile phone, making it the first new invention added to that short list in three thousand years.
Since launching in the late 1970s in Japan, mobile phones have become the fastest-spreading piece of consumer hardware ever, faster than automobiles or fixed-line phones or even televisions. Because individual wires do not have to be run to individual houses, and because the cost of the handset is shared with the user, mobile phones are far cheaper to deploy than fixed lines, and thus often connect populations that never had connection before. American teenagers have long insisted that they couldn’t live without their phones, but this phrase has real meaning in the developing world, where the kind of information you get from a phone can have a profound effect on the quality of life: Fishermen in Kenya use phones to figure out where they can sell their catch, parents in India use it to locate doctors in other towns, and so on. Mobile phones may be a big improvement over fixed phones, but they are a gigantic improvement over no phones at all.
This dramatic change in what is awkwardly called teledensity is now almost universal. The number of mobile phone users crossed 4.5 billion last year, and because of dual accounts, there are now more mobile subsciptions in the world than there are people. In sub-Saharan Africa, mobile phone penetration is around 66 percent in 2014—two subscriptions for every three people in a region where the phone network extends much further than the electrical grid, leaving it to small-business people to sell phone-charging services using car batteries. Penetration for the world’s heavily indebted poor countries—HIPC to the United Nations, the poorest of the poor to you and me—is only just behind at 58 percent, or three mobile subscriptions for every five people, in countries with barely functioning economies. Meanwhile the countries with the lowest penetration are there not because of lousy economics, but repressive politics. North Korea, Myanmar, Eritrea, and Cuba are the only populous countries with less than 25 percent adoption. Absent direct repression by the state, the citizens of the world are adopting mobile phones at a torrid pace.
All these phones have to be made someplace, and that place is China (as with most things that get made). Of all the things made in China, some are culturally specific enough to resist export; the global market for busts of Chairman Mao isn’t all that much larger than the Chinese market. Others are universal; there is no country-specific version of a 5 mm screw or a Hello Kitty pencil. In between the Chinese-only products and the universal ones, though, are products that could go either way, products made in and for the Chinese market, but which might become global exports. Mobile phones straddle this divide.
Most mobile phones are made in China, of course, but some are made for China. There are the cheap knockoffs, part of China’s tradition of shanzhai manufacturing. Shanzhai refers to mountain villages that make their own goods, and carries the sense of inexpensive and expedient production, including a less than robust concern for patents and trademarks. Some of these goods are simply cheap, barely functional phones, but some are copies meant to look (at least at a distance) like their more expensive inspirations. At the open-air electronics market on Baoshan Street in my adoptive town of Shanghai, these copies take dozens of incarnations. Samsung is a favorite recipient of this flattery, with knockoffs bearing logos like San Song and Svmsmvg. These phones tend toward national markets; neither the Svmsmvg nor the San Song will spread much outside China. Other lures for selling cheap phones are used elsewhere; the Kenyans were offered an Obama-branded phone a few years ago, but it’s not a strategy for all markets.
Then there are the phones designed for East Asian sensibilities. The same region that brought us the selfie stick also brought us Oppo, a company whose phone’s principal selling points include a high-quality camera and custom software that automatically airbrushes photos with faces in them. The ad campaigns emphasize a particularly performative form of femininity, since, in a nice touch, the software makes a guess about the gender of the subject—everyone gets smoother skin, but only the ladies get their lips reddened. Despite successful rollouts in Thailand and Korea, Oppo has not made much of a dent in markets outside East Asia. Their U.S. launch was a bust.
Mobile phones, in other words, have mostly been just another Chinese export—the cheap products for poorer markets are thrown together at minimum cost, while expensive products for the increasingly global group of well-heeled customers are designed elsewhere, whether in Seoul or San Jose, the pattern that led Apple to add the phrase “Designed in California” to its packaging in the first place. This pattern of “designers elsewhere, manufacturers here” has been the norm since the British turned southern China into their workshop in the 1800s, but it is starting to shift. A number of Chinese companies are moving to do everything at home, working to create mobile phones where “Designed in China” means quality, not just shanzhai. (This is the same path famously trod by Sony in the 1970s, when its founder was determined to retire “Made in Japan” as an insult.) The most successful of these new design-oriented companies, and therefore one of the most important mobile phone manufacturers in the world right now, is Xiaomi.