Chinese smartphone maker Xiaomi Corp. is facing increasing threat from counterfeits hitting its sales, as fake products flood the markets both inside the country and abroad.
The company could sell only 14.6 million units of Mi Power Bank battery pack for smartphones last year, less than half of what it should have been, Bloomberg said quoting Xiaomi's CEO Lei Jun.
"What is the biggest problem? There are many fakes," Lei said, adding, "If there were no counterfeits, our sales would be double or triple. The product has been recognized by everyone."
Revenue loss to Xiaomi as a result of counterfeits to Mi Power Bank is projected to be atleast $115 million. The company sells at least three variants of the Mi Power Bank in China, priced in a range of about $7.90 to $21.
Founded in 2010, Xiaomi witnessed rapid growth to emerge as the top smartphone vendor in China, the world's second largest smartphone market. Valued at about $45 billion, Xiaomi is regarded the most valuable start-up globally.
The company's smartphone shipments more than tripled to 61.1 million units last year with revenues seeing a two-fold increase. Xiaomi's sales are estimated to increase to 120 billion yuan ($19 billion) in 2015, up from 74.3 billion yuan last year, Lei said.
Markets in China "facilitate the distribution of significant quantities of counterfeit merchandise for consumption in China and abroad," the office of the US Trade Representative said in its review of "Notorious Markets" released on 5 March this year.
This prompted China's Vice Premier Wang Yang to assure that his country will increase efforts in 2015 to take on the growing menace of piracy and counterfeiting.