Around Shenzhen, since mid-December a cottage industry of more than 1,000 factories that were churning out the boards has shrunk to a couple hundred. “We maybe lost 50% of our revenues after the Amazon announcement,” says Feng, speaking from his shamrock-green factory floor. ... Unlicensed manufacturers had begun copying Chic’s board immediately after it appeared at the Canton trade show. By the summer of 2015, more than a thousand factories—up to 10,000, by some estimates—were making boards for distributors who sold them abroad online. Factories like Feng’s that had been making LED screens or iPhone cases switched to building hoverboards in a matter of days. And many factories, licensed and otherwise, cut corners on safety standards, often by subbing in cheaper, potentially flammable batteries.
Xiaomi’s tale may sound like merely another iteration of that now familiar headline, tech unicorn gallops into wall. But Xiaomi (pronounced “SHAO-me,” with the first syllable sounding like the “show” in “shower”) isn’t just any privately held, multibillion-dollar startup. It’s a rising power in a nation eager to prove that its consumer-oriented companies can compete globally. ... The company didn’t attain that valuation on the strength of its phones, though those get raves in the tech press (and have even made Xiaomi modestly profitable) while selling for half the price of an iPhone. No, private investors judged Xiaomi to be more valuable than FedEx or Caterpillar or Delta Air Lines because of the promise that it could build a network of products, services, and recurring revenues—an ecosystem like Apple’s—not just in China but around the world. ... If anything, Xiaomi’s idea of an ecosystem is more ambitious than Apple’s. Apple focuses on services like iTunes and a tightly focused suite of tablets, computers, and smartphones. Xiaomi envisions a sprawling Internet of things. The company hopes you will someday control your Xiaomi water purifier, Xiaomi air filter, and Xiaomi mood lighting—an entire Xiaomi smart home, essentially—with a few taps on your phone. ... as Xiaomi’s progress slows, there’s growing skepticism that a startup without innovative technology of its own or much success outside of smartphone sales can produce an ecosystem anywhere nearly as big or “sticky” as Apple’s and Google’s. ... Xiaomi’s team works primarily with outside companies. The company partners with hardware startups (and often creates new ones), providing seed money for ecosystem products. Xiaomi avoids taking full control, encouraging the founders to act like risk-taking entrepreneurs. The company gets an exclusive deal to sell most of the startups’ products, and in turn the startups, now numbering 55, get access to Xiaomi’s supply chain, marketing, and even its industrial engineers.
Since 2014, the PGA, the world’s most prominent golf association, has run PGA Tour China Series, a professional league that gives promising young players a shot at graduating to higher competition in the U.S. It’s analogous to Double A minor league baseball in America: Players can put in a couple of years in China and—if they perform well enough—earn an automatic berth into another league that’s one rung below the PGA Tour. The China Tour, in turn, offers golf something it desperately needs: better access to the enormous and growing middle class that makes the country a huge growth opportunity for the sport. ... In a country of 1.4 billion, the potential for the sport is certainly as vast as anyone’s imagination. Estimates of the number of Chinese golfers fall around 1 million, a small fraction of the 24 million who play in the U.S. If just 2% of China’s population played, up from less than 0.1% today, China could become a $2-billion-a-year market for golf products. That would be a godsend for an industry whose growth has sputtered in the U.S. and Europe, where manufacturers like Nike and Adidas are getting out of the golf-equipment business, and courses are closing. ... the country has only about 600 courses (the U.S. has 15,000). Virtually none are the type of cheap, municipal links that cater to beginners. Almost every course is a private club located far outside the city center, behind closed gates manned by security guards. A round during the weekend pushes $200 or more, four or five times the norm in the U.S.—in a country where the typical urbanite has only about $5,000 a year in disposable income.
In the first quarter of 2016, Huawei sold 10 times as many phones as Apple in Finland, according to research firm IDC. And in October it soared ahead of Samsung for the market-share lead. ... Today you can’t stride through Helsinki without encountering a Huawei billboard. You can’t watch Jokerit, one of the country’s top hockey teams, without seeing Huawei’s flower-in-bloom logo. And you can’t find an electronics store where Huawei’s phones don’t outnumber Samsung’s and Apple’s. ... Enter Huawei—probably the most viable contender yet to loosen the giants’ grip. It’s a 170,000-employee company with $61 billion in sales, selling telecom equipment in 170 countries. Since 2014 it has been No. 1 globally in sales of the networking equipment that underpins telecommunication systems, taking the crown from Sweden’s Ericsson. And now its goal is to dominate the market for the phones themselves. It has taken big strides toward doing just that in China and in growing swaths of Europe—helped in those Western countries by side deals with wireless carriers that have not previously been reported.