China Smartphone Maker Xiaomi Vows to Move Online Services Overseas

• BY CADE METZ  
 
• 10.22.14  |  
 
• 3:30 PM  |  
 
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Hugo Barra.  Ariel Zambelich/WIRED

In a move that could show the way forward for many Chinese companies hoping to compete in the worldwide tech market, China smartphone maker Xiaomi, one of the largest smartphone manufacturers in the world, says it will shift its online services to machines running outside the country.

Hugo Barra, the former Google executive who oversees Xiaomi’s international operation, made the announcement this morning with a post to Facebook, saying the move will affect all oversees users. “In early 2014, we kicked off a massive internal effort to expand our server infrastructure globally,” wrote Barra, who worked on Google’s Android operating system at the U.S. search giant. “This is a very high priority for Xiaomi as we expand into new markets over the next few years.”

He painted the move as a way of improving the speed of its smartphone services in places like India, Indonesia, Malaysia, the Philippines, and Taiwan, while also ensuring that user data is securely stored. In most cases, Xiaomi’s services will run atop overseas installations of Amazon’s popular cloud computing services. But the clear subtext of the announcement is that Xiaomi wants to allay fears that it’s sending user data back to Beijing and potentially sharing it with the Chinese government. “They’re trying to reassure users internationally that their data won’t be in China,” says Adam Segal, a senior fellow for China Studies at the Center for Foreign Relations.

Earlier this week in India, one of the countries where Xiaomi has expanded its operations, the New India Express reported that the Indian Air Force is warningthat Xiaomi phones are sending data back to servers in Beijing, and this followed a report from security company FSecure that Xiaomi was grabbing personal smartphone data without permission.

Barra did not respond to a request for comment on the matter, but he has apologized for such data collection in speaking with other news outlets in the past.

For Segal, Xiaomi’s announcement is merely a first step towards convincing overseas users that the company won’t compromise their data. “You’d have to wait to see the details to see how reassured you’d be,” he says. “Even if the servers are outside of China, they could be mirrored back into China. They’ll have to work pretty hard to reassure people.” But he believes this kind of move could provide a template for other Chinese tech companies looking to expand their operations overseas.

Thanks to assumptions that Chinese companies are too close to the Chinese government, the Chinese networking hardware manufacturer Huawei has faced difficulties overseas—with many questioning whether the Chinese government has installed back doors in its hardware—and as Segal points out, the same issues hang over not only Xiaomi but other online Chinese companies, such as WeChat. “We know that the relationship between companies and the government is very close,” Segal says.

There is no hard evidence, he says, that companies are freely sharing data with the government, but the fact of the matter is that many overseas pundits, policy makers, and businesses believe that they do. As Chinese tech companies increasingly move their operations overseas in an effort to capture international dollars, they will have to address these fears. “We haven’t had that many Chinese companies go global yet,” Segal says. “Xiaomi and WeChat are first consumer companies to do so, and this announcement is reflective of a next stage of development.” Chinese e-commerce giant Alibaba recently IPOed in the U.S. but it has yet offer online services Stateside. If it does, Segal says, he suspects it too will do so from local machines.

Correction: The story originally called Xiaomi China’s largest smartphone maker. It is now one of the top five smartphone makers in the world, but it still trails Chinese phone makers Lenovo and Huawei.