Xiaomi the way: a Chinese tech giant gets bigger

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1:04The Economist.

1:11Hello and welcome to The Intelligence from The Economist. I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world.

1:26With Britain and Argentina, there's a little bit of that don't-mention-the-war vibe. The Falkland Islands are still a touchy subject. But as the region becomes more important to the likes of Russia and China, the two sides have plenty of reason to cooperate. And as the final of the European Women's Championship approaches this weekend, we take a look at women's sports more broadly. They're on a tear, and they'll do better still by not copying the men's games when it comes to growth and governance.

2:03But first...

2:11The Chinese company Xiaomi is the world's third largest smartphone maker after Apple and Samsung. Don Wineland is The Economist's China business and finance editor. Its founder, Lei Jun, is really no stranger to success. So 10 years ago, he was already setting Guinness World Records by selling millions of smartphones in very short periods of time. So he sold 2.1 million smartphones in about 24 hours. And he's been doing this for a long time. He has a track record of marketing things very, very well. And the reason why the company has been in the news more recently is because last year, Xiaomi entered a completely new market.

2:57This is the dream car we built for our friends. I'd like to share with you. It launched an electric vehicle for the first time. It announced in 2021 that it would push into this electric vehicle market. And then by March 2024, it was selling these cars. So it did this very quickly. In June this year, it launched its second model, which is an SUV.

3:30And in just three minutes, it was able to sell 200 ,000 cars over the internet. It hasn't delivered those cars, but it has sold them and people are waiting to receive them. And now Lei Jun hopes to sell its EVs overseas as well. Tell me about this rampant success. How did Mr. Lay do it? Is he just a consummate pitchman? So he's come to be known as the Steve Jobs of China. Years ago, he was accused of imitating Steve Jobs and Elon Musk. But he's really come into his own recently. And part of the success of Xiaomi is his success. He's one of the only CEOs in China that people just absolutely adore.

4:16In recent years, Wuhan University has attracted a lot more attention just because he graduated from there. Xiaomi's roots are in very cheap smartphones. In 2011, it started selling phones on a razor-thin margin. So they didn't really make a whole lot of money, but they were able to reach lots of people in China who couldn't afford iPhones. And from there, Lei Jun has been able to sell his customers ever more expensive goods. So the smartphones are actually quite a bit more expensive now, but he's also selling refrigerators and all sorts of electronic devices that cost a lot more. And of course, now he's selling electric vehicles, which can cost anywhere from$35 ,000 to$50 ,000.

5:02Yeah, but electric cars are a very different kind of beast, very different supply chains, a very competitive market. How has he been so successful just switching over to that? One of the things people talk about is the fact that China has amazing EV supply chains. So it's the biggest producer of EVs in the world. And it's pretty easy to tap into them if you know what you're doing and you have a lot of capital. So we should say Lei Jun has been able to master China's EV supply chains, but he didn't create them himself, obviously. There was a lot for him to work with. So this is a big part of what has made this EV project work.

5:43And it's worth pointing out that Apple tried to do this as well and failed. You know, they gave up on their electric vehicle project. One reason why Leijun succeeded and Tim Cook, the CEO of Apple, failed is because Leijun took full control over the EV project. And it said that Tim Cook wasn't managing his project day to day. So that could be why Xiaomi was able to do this and Apple was not. Xiaomi's EV project is part of a much bigger transition for this company. In the past, it outsourced almost all of what it made. So all of its smartphones and air conditioning units were made in other companies' factories.

6:26And now it is making a lot more of its devices by itself. And it built its own EV factories as well. It is becoming its own supply chain. In some ways, obviously, it's still tapping into many of the country's supply chains, but now it's designing, for example, its own semiconductors. It still needs a company to manufacture those semiconductors for it, but it designs them itself. It helps design its own batteries. It chooses how to put them into the EV. So it's really a hybrid of a manufacturing company and a company that still does quite a bit of outsourcing. So it seems very clear that Mr. Le is moving very fast here.

7:13No danger of him moving too fast? Well, there has been a lot of criticism this year on the pace at which the company is moving. There was a horrific accident that occurred in March where three university students were killed on a freeway. They were driving Xiaomi's first model, and they were using an autonomous driving system, and it crashed and killed them. So there are questions about whether or not the company is taking shortcuts or whether or not its safety standards are high enough. And everyone thought that this was going to really hurt the launch of its second EV model, which was coming three months later.

7:53But as I mentioned earlier, it really hasn't. The company has sold lots of its new EVs, and people seem to almost have forgotten about this accident that happened in March. And you started off by saying that now he has big plans beyond China. Definitely. The company plans to open 10 ,000 shops overseas in the next five years or so, and they want to start selling their EVs by 2027. So you can see that this company is really, really pushing hard to swallow up some of the markets that are currently captured by Apple and Samsung, not just in China, but overseas. But that's a big ask in a lot of markets.

8:33Do you think Xiaomi can do it? Well, it's going to be difficult on the marketing side of things for Xiaomi in overseas markets because I don't think smartphone users in Africa and Indonesia and India really know who Lei Jun is. So that's one challenge. At the same time, they make very good products. They are well-priced, and they have a lot of smartphone users overseas already. So it's not hard to imagine Xiaomi threatening companies like Apple and Samsung in foreign markets on products like smartphones. If we're talking EVs, this is completely different. If they're able to pull this off and their EVs become a hot selling product in Indonesia in the same way that they sell in China, then this is a whole different ballgame.

9:21And Xiaomi has a chance at becoming one of the world's greatest tech companies. But that is really hard. There's not nearly enough EV infrastructure in a lot of these developing markets right now. So whether or not they can pull that last part off is a big question that is yet to be answered. Don, thanks very much for your time. Thank you.

10:09platform. Save money without missing out on the features you need. There are no hidden costs and no limits on features or data. Check out Odoo at odoo.com. That's odoo.com. This episode is brought to you by Capital One. Capital One's tech team isn't just talking about multi-agentic AI. They already deployed one. It's called Chat Concierge and it's simplifying car shopping. Using self-reflection and layered reasoning with live API checks, it doesn't just help buyers find a car they love. It helps schedule a test drive, get pre-approved for financing, and estimate trade-in value. Advanced, intuitive, and deployed.

10:49That's how they stack. That's technology at Capital One.

11:04years because there are more of them. Strategies change. Next up, the South Atlantic. For Russia and China, with 15 Antarctic bases between them, it's a jumping-off point. It hosts lots of Chinese infrastructure projects and the Strait of Magellan, a shipping shortcut to the Pacific that's become a handy alternative to the drought-hit Panama Canal. America is paying attention. Brass hats have visited southern Argentina three times in the past two years. For them, changing strategies represent potential threats. At first glance, the U.S. looks in a very good position to manage any threat in the South Atlantic.

11:44And on the one hand, Javier Millet, the president of Argentina, is a very close ally of the U.S. Kinley Salmon is a Latin America correspondent for The Economist. And then Britain, the U.S.'s longtime close ally, has got typhoon fighter jets on the Falkland Islands. But there are some problems. I mean, Argentina's armed forces are in bad shape, and Britons are there to defend the Falkland Islands from Argentina. Britain, of course, has sovereignty over those islands, but Argentina still claims them. And as part of that dynamic, Britain has tight restrictions on weapon sales to Argentina. So it's a complicated mix.

12:19But there is now a series of reasons, including American enthusiasm, that have created an opening for quiet talks about a new kind of strategic relationship between Argentina and Britain. So Kenley, that is to say talks have begun? When did they begin? They appear to have started right back in February 2024, just shortly after Malay took office. British defence attaches went to the Ministry of Defence in Argentina for the first time in three years. In September of last year, then British and Argentine foreign ministers met and they arranged for a visit by Argentines to family members' graves on the Falklands.

12:55And since then, less publicly, we've seen defense dialogue accelerate. An Argentine delegation visited London in January, and a British one is expected to head to Buenos Aires. And what do we know, if anything, about what's actually being discussed here? Well, of course, it's quite sensitive. I spoke with a wide range of sources. Most of those spoke on the condition of anonymity. But it's clear that Malay wants to modernize Argentina's armed forces. Last year, Argentina replied to be a NATO partner. And Britain is also interested in a deal. It's cautious, but it shares American concerns about Chinese activity in the South Atlantic.

13:30And it's interested in discrete acceptance of its role in the rest of the South Atlantic, even while Argentina maintains that constitutional claim over the Falkland Islands. And Britain also wants Argentina to work with it on just practical ways of improving life for the Falklanders. And then for Argentina, they want this block on military equipment with British components to be changed or perhaps ended altogether. And that policy says any sales that could enhance Argentine military capability aren't allowed when there's British parts involved. But there is crucially some wiggle room. In Britain, their current policy says they can allow sales as long as they're not detrimental to the UK's defence and security interests.

14:11and a first step potentially could be to interpret that last clause a bit more flexibly. Given that UK's defence and security interests now involve perhaps some collaboration, but I guess the question is, given the history between those two countries, how plausible is a really tight security arrangement now? Well, it certainly will be a big shift, but I think there are several reasons to believe it could be possible. The first is that, frankly, few people consider Argentina to be a real threat to the Falklands. One historian I spoke to declared it militarily unthinkable. Britain also seems like it would be more willing to reconsider restrictions if Argentina were going to buy a lot of arms, because that would be a boost to the defence industry.

14:50But that in itself suggests that actually the embargo is more about politics, perhaps, than about protecting the Falklands. I think it also really matters that the US wants a new arrangement. It has publicly stated its support for the modernisation of Argentina's armed forces. They recognize Argentina is a crucial partner, but also that it really does need equipment and training. The American worry is that their equipment must be Western and not Chinese. And the British arms embargo makes that harder. I mean, reading between the lines a bit here, there is great enthusiasm from the U.S. to improve British-Argentine relations.

15:27Why do you suppose that is? Argentina's deliance with America's adversaries is real. Millet himself likes trading with China, and China is clearly very interested in the region. They've got a space station that's operating in southern Argentina and Patagonia already. It's not just China. In 2021, just before the invasion of Ukraine, the previous Argentine government signed a deal with the Russian Ministry of Defense to allow Argentine officers to travel to Russia for training. That all worries the US, and the arms of Bagley complicates all of this in some ways. One former American official I spoke to said the US government was also interested in whether the broader export controls by the UK could be ended altogether.

16:07Now, we should be clear, the UK government says there's no current plans to review its export control policy for Argentina, but it is quite easy to imagine that position shifting. The Trump administration is very pushy, as we've seen in other matters around the world. It's also very close to Millay. And Millay himself is quite flexible compared to Argentina's past on the issue of the forecords. He admits openly the islands are in the hands of the UK and says Argentina won't retake them by force. Of course, none of this is easy. And the main barrier to it all is politics in both Britain and Argentina.

16:40What do you mean by that? Well, first of all, of course, domestic politics means that governments change. And Britain worries about who will come after Millay. even if they see Malay as less worrying, he's going to leave office either in 2027 or 2031. But more immediately in both countries, nationalist opposition could paint talks or any agreement as a retreat. In the UK, we see the Reform Party surging in the polls, and they could certainly put pressure on the government over any new arrangement with Argentina. And in Argentina, Malay has also already been attacked by the Peronist opposition for his utterances on the Falklands.

17:14And so he too may be wary, particularly as he has midterm elections coming up in October. But I think, nonetheless, the overriding thrust of Javier Malay's foreign policy is very tight alignment with America. Yes, he likes to trade with China, but politically, it's a miracle all the way. And the Trump administration has been very clear about the threat it sees in the South Atlantic. So I think that if it pushes harder, both of its two allies may draw a similar conclusion and ultimately act accordingly. Kinley, thanks very much for joining us. Thanks for having me.

18:16It's Kelly, the hop, skip and the jumper. Giuliani saves it. But England get the rebound. And England surely are through to the final of the European Championships. They will face Spain, who beat Germany on Wednesday. Just. Farrah Williams, a former player for England, is excited at the prospect of a second consecutive win. If they are to do it again, it's something that's never been done. Certainly not in England. only Germany I think are back-to-back champions in Europe before and they're coming up against teams that have invested just like we have got even better and they've gone about it and they've got themselves to a final and as I say all of us that you know probably doubted them going into the tournament and put Spain and Germany in the final they've quietened us all up.

19:03That investment Farah's talking about has been part of a surge in popularity in the women's game. Even before this latest edition of the Euros kicked off around 600 ,000 tickets were sold which is more than what was sold across the entire tournament last time around in 2022. Vishnu Padmanabhan is an Asia correspondent and news editor for The Economist and is based in Singapore. But it's not just in football that such attendance records have been broken. They're being smashed in international tournaments for rugby, cricket, and across women's sports in general. There's been a huge surge in interest and investment.

19:40So to your mind, why is that happening? Where is this surge coming from? There are a lot of different factors at play here, right? So one is that there are more women playing sports now. And as more women play sports, the talent pool gets deeper, the level of competition increases, the game's more compelling to watch, more people are drawn in. There's a lot more coverage now of women's sports through streaming and social media. And female athletes are now legitimate superstars on their own. All of this means there's also more investment into the sport. As more money pours in, the quality improves.

20:11And I think another important factor is also social change. Thanks to the Me Too movement over the last years, women's courses have grown much more in prominence in society. And as a result, I think women's sports have also benefited from that. But for all that, Vishnu, we've spoken on the show before about how, for example, salaries haven't kept pace with the men's game. This is not yet parity in a lot of ways, right? If you compare it with the men's sports, there's still a long way to go. As you mentioned, there are huge disparities in salaries. but even if you look at something like attendance so while the last year was around 570 ,000 people who came in and watched the women's teams that was dwarfed by the 2.7 million fans that attended the men's Euros in 2024 and if you go beyond these big events average attendance at the women's Super League which is England's top flight women's football league was around 7 ,000 last season which is a huge improvement from earlier years but it's still very low compared to the men's game And part of this is down, of course, to patriarchy.

21:09So men's sports governing bodies have spent decades holding back women's participation. Women's football was really popular in England in the 1920s, but the English Football Association banned women's football at that time, deeming it unsuitable for women. And so that held them back. And so a lot of this growth in recent years is coming from a very low base. A lot more growth is needed. But how to facilitate that growth, though? I mean, is there a chance that women's sports will ultimately catch up, reach that parity across the board? That's hard to say. So right now, the approach for many sports is to basically copy what's been happening in the men's games.

21:43And that's sort of understandable because a lot of these sports are being run by the same governing bodies that helped men's sports grow. And they are familiar with the models that helped men's sports grow. But that may no longer be as relevant as earlier. For a start, men's sports grew in an era of traditional media. So that meant broadcasting sports to TV and communicating through newspaper, which is no longer the dominant media forms anymore. And then there's the other problem is there is a risk that some in women's sports worry that by just following the men, they just risk becoming sort of smaller versions of the men's sports.

22:13But couldn't that be turned to advantage in the sense that women can grow their own sports free of the constraints of history? Yes, definitely. I think this is a big opportunity for women's sports to break away from men's sports. And one of the reasons they can do that is because women's sports are different to men's sports in one crucial element, especially. and that is the type of fans that they attract. So a lot of the fans from women's sports tend to be younger. Half of the fans that watch women's rugby are newcomers, first time to the sport. They're more likely to take kids to matches and they also engage with sports more on social media than attending matches in person or following it at the pub.

22:54This different audience suggests that women's sports should cater to them differently and that might mean doing things that men's sports haven't done yet. But what do you mean by doing things differently? What does that look like? So one way to do it is to set up separate governing bodies for women's sports. So that's what Women's Tennis did more than 50 years ago when they created a separate tour called Women's Tennis Association. And that has actually greatly helped the sport. Tennis is a leader in gender parity. It's not perfect, but it's definitely better than most sports. Last year, six of the 10 highest earners in women's sports were actually tennis players.

23:26Other changes could involve experimenting with leagues, forming separate tournaments, or it might even be something even more radical, like changing the format of the sport. For example, over the summer, we've had a tournament called World 7th Football in Portugal, which attracted big football clubs to participate. And this was just 7-a-side football, not your traditional 11-a-side football, which could prove to be popular. So I think the future of women's sports lies in this type of innovation rather than imitation. Vishnu, thanks very much for your time. Thanks, Reeson. Thanks for having me.

24:25Transcription by CastingWords Clara Montoya. We'll all see you back here tomorrow for the Weekend Intelligence. It's the third in our deep investigative series on the disappearance of Austin Tice, a journalist in Syria. He was delivered by somebody in the area. Someone betrayed. Yeah, absolutely. I may have mentioned that our newly improved app is a great place to listen. So head there to hear the intriguing first two episodes before tomorrow's conclusion drops.