Xiaomi, the Chinese electronics company which was recently listed as the second most valuable startups across the world, is now under investigation for violating laws in its home country. The Government of China has passed a new advertising law banning the misleading advertising for products and is made effective from September 1st, 2015. With this new law the advertisers cannot use the words like organic, original, natural, or leading.
These are the first major improvements made after the laws first introduction in 1995. Xiaomi has used the term ‘Best’ while advertising their products, if it’s proven that Xiaomi has done that willingly, then the company will be fined a minimum of USD 31,000 which may not make any financial difference for the company.
There are rumors that one of its rival company in China is behind the this case. Xiaomi is the first internet based company to be investigated after the implementation of this new law in the early last month. As of now, the company is being investigated by Beijing Ministry of Industry and Commerce over the use of the term ‘Best’ in their recent advertising.
With the huge growth of popularity and demand for Xiaomi products, this can be expected as we had seen similar kind of attacks on Uber, Flipkart, and few other successful startups. Earlier in 2014, Xiaomi was banned in India for selling its products after the Delhi High Courts ruling over the patent infringement case. The Swedish company Ericson alleged that Xiaomi had violated eight of its patents, later the company was allowed to sell the Snapdragon powered smartphones but not the MediaTek powered smartphones in India.
Last month we had reported that few of the smartphones from Xiaomi, Huawei and Lenovo that were sold through 3rd party websites are shipped with pre-installed malwares. While Xiaomi in reply said that, the brand recommends not to buy the devices from 3rd part websites.