It’s been a rocky journey for popular Chinese smartphone manufacturer Xiaomi recently, what with having to face criticisms that it has ripped off Apple’s products and privacy issues with the Redmi Note.
Now there’s another bump in the road for it after Taiwanese authorities found out that Xiaomi hasn’t been all that truthful about the number of products it made available during each flash sale in the country, and slapped a NTD600,000 ($20,000) fine on the company.
Xiaomi typically sells its smartphones in batches, creating hype around its trademark flash sales which usually see thousands of devices being snapped up in minutes.
Last year, Xiaomi held three separate flash sales in Taiwan for its low-cost Redmi device — on December 9, 16 and 23 — claiming to be releasing to the public 10,000 units each for the first two sales, and 8,000 units for the third one. Subsequently, it said that the the first batch sold out within 9 minutes and 50 seconds, the second within 1 minute and 8 seconds, while the third took merely 25 seconds.
Side angle red 520×437 Xiaomi gets slapped with a $20,000 fine for misleading consumers in Taiwan
Taiwan’s Fair Trade Commission, however, investigated these claims and found that Xiaomi only sold 9,339 devices in the first flash sale, 9,492 units in the second one, and 7,389 for the third. The figures aren’t actually that drastically different, but because Xiaomi had boldly advertised that there were 10,000 units up for grabs, the FTC decided that it has violated a fair trade regulation in Taiwan of not matching up to its advertising claims.
The FTC found that what happened (during the first flash sale) was that Xiaomi gave 1,750 priority ‘F-codes’ to people who could place their orders without having to go through the flash sale, thus diminishing the stock that was publicly available. It also likely went through technical issues, which led to it being unable to pinpoint the exact number of customers that had already placed an order, resulting in it prematurely ending the flash sale without releasing all the Redmi units.
As Xiaomi typically trumpets its achievements in its flash sales (for example, its new Mi 4 smartphone took just 37 seconds to be sold out), this latest move in Taiwan may bruise its reputation, but it is also a tad petty on the authorities’ part to zoom in on the difference of a few hundred units — given that it already acknowledged technical issues may be at the root of it. Well, at least the $20,000 fine shouldn’t hurt Xiaomi that much given it pulled in $5.3 billion revenue in the first half of this year.