A patent dispute has dealt a blow to Xiaomi’s international expansion, leaving the fast-growing Chinese smartphone maker facing a temporary ban on sales in India and further pressure on margins.
Xiaomi, anointed a valuation in excess of $40bn at its latest fundraising in November, is keen to replicate its popularity in China into other major emerging markets. In April it unveiled plans to expand into as many as 10 foreign markets.
However, a Delhi High Court case suggests that this march abroad may also open it to more patent disputes, with companies demanding it pay royalties — something that rivals are less keen to pursue in China where claims are harder to press. Such payments would, in turn, eat into margins or drive up handset prices. In a ruling on a patent dispute with technology group Ericsson, the court ordered Xiaomi to suspend sales until February, pending a further hearing relating to its dispute with the Swedish company.