• Sat
  • Aug 23, 2014
  • Updated: 6:38pm
Corporate China
PUBLISHED : Monday, 21 October, 2013, 3:25pm
UPDATED : Monday, 21 October, 2013, 6:07pm

Weibo: Xiaomi finds fans in Facebook, Vancl

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

High-flying smartphone maker Xiaomi is at the centre of 2 recent strings of microblog posts, one touching on an interesting new connection with Facebook (Nasdaq: FB) and the other hinting at an increasingly cozy relationship with struggling online clothing seller Vancl. Interestingly, Xiaomi's talkative co-founder and chief executive Lei Jun is largely absent from the dialogue in both cases, which each has sensitive overtones, implying that perhaps we could see more news in the weeks ahead.

The Facebook angle looks the sexiest of these 2 bits because it involves 2 big personalities and a US social networking giant that is noticeably absent from China. The brief series of posts came last week on Sina's (Nasdaq: SINA) popular Weibo service, often called the Twitter of China. It chronicled a new friendship taking shape between Facebook's high-profile co-founder Mark Zuckerberg and Hugo Barra, who recently left a top position at Google (Nasdaq: GOOG) to join Xiaomi.

Barra said in a Weibo post that he had an "important new follower" on Facebook, which turned out to be Zuckerberg. Xiaomi's Lei Jun quickly jumped in with his own brief message congratulating the "mighty" Barra on his new Facebook fan. 

Barra made global headlines last month when he left his job as a top executive for Google's popular Android smartphone operating system to assume a top-level position at Xiaomi, the fast-rising smartphone maker that aspires to become the Chinese equivalent of Apple. (Nasdaq: AAPL)  Most industry watchers presume that one of Barra's major tasks will be helping Xioami to globalize its business, following the strong success of its smartphones in China.

Meanwhile, Facebook fans will know that Zuckerberg has also said several times that China is an important part of his company's global strategy, even though Facebook is currently blocked in China due to political sensitivities. Zuckerberg has made several trips to China, and Facebook at one point was reportedly in talks for a potential Chinese joint venture with several local partners, including online search leader Baidu (Nasdaq: BIDU).

So, does this sudden new friendship between Barra and Zuckerberg mean anything? I suspect the immediate answer is "no", as Zuckerberg almost certainly follows many people on his Facebook account. But this does seem to show that Zuckerberg hasn't taken his eye off China, and perhaps that Barra and Xiaomi could someday become important bridges to finally bringing Facebook to the world's biggest Internet market.

From this brief series of posts, let's turn our attention to another series that shows a budding friendship between Xiaomi and online clothing seller Vancl. Just last week a series of rumours began circulating on Vancl's failure to pay its suppliers, in its latest setback due to stiff competition in China's e-commerce sector. At that time, Vancl CEO Chen Nian denied any problems, blaming the arrears on logistical issues.

Chen also happens to be old friends with Lei Jun, and the pair reportedly held some lengthy talks about how to turn Vancl around. I had previously said that Lei was quite busy with Xiaomi, and was unlikely to have the time or resources to spend on a Vancl turnaround. But now this latest series of posts seems to indicate the 2 companies' relationship is quickly evolving. Most of the posts come from Vancl Vice President Xu Xiaohui, who sings the praises of Xiaomi phones. He adds that Vancl's mobile platform will offer Xiaomi models, in line with Xiaomi's strategy of selling most of its phones online. 

As I've said above, one of the most interesting elements of this story is Lei Jun's absence from the dialogue. As one of Chen Nian's old friends, Lei could easily use his own Weibo account to help promote Vancl. But instead, Lei's unusual silence hints that maybe something is happening behind the scenes. I doubt we'll see an outright acquisition of Vancl by Xiaomi in this case; but I also wouldn't be surprised if we do see more tie-ups, including a much-need cash infusion into Vancl by either Lei personally or by Xiaomi.

(Johnson Gao contributed to the research for this posting)

To read more commentaries from Doug Young, visit youngchinabiz.com

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