Ninebot's acquisition of Segway is signaling the end of "copycat China"
Two companies have sealed a deal that’s raising eyebrows: Segway, the struggling American maker of disgraced self-balancing scooters, has been bought by Ninebot, the Chinese rival that Segway recently accused of copying its signature two-wheelers.
Ninebot announced the curious acquisition for an undisclosed sum on Wednesday, which followed a combined $80 million investment from mega-rich Chinese smartphone company Xiaomi, investment firm Sequoia Capital and other backers. The two electric scooter makers will still operate as separate brands with their own products, but will unite under a “strategic alliance” to develop smarter, greener short-distance transportation vehicles.
The deal comes as a bit of a surprise given the companies’ history. Just seven months ago, Segway filed a trade complaint accusing Ninebot and other Chinese companies of violating its patents. Their products indeed resemble one another, but Ninebot has insisted it “independently owns its intellectual property.”
By itself, Segway is an interesting choice for an acquisition. The New Hampshire-based company’s self-proclaimed “future of transportation” didn’t quite catch on in America, perhaps aside from sometimes being the ride of choice among mall cops. (TIME once named Segway one of the 50 Worst Inventions.) Faced with limited success, Segway ended up being sold off twice to investors, once in 2009 and then again in 2013. The first, British investor Jimi Heselden, died in an ironic, tragic Segway crash in 2010, and the second, Summit Strategic Investments, intended to “refocus” Segway over several years, but that project was never completed.
Still, the Ninebot-Segway deal makes a lot of sense as it relates to China. Ninebot and its backers want to put an end to not only the copyright feud with Segway, but also to a larger, nationwide controversy that Segway called China’s “widespread pattern of infringement”—or what’s also been labeled “copycat China.”
“Today it’s not just copycat China,” Sequoia Capital partner Neil Shen said during Ninebot’s announcement in Beijing. “China will expand, through its own innovations and through acquisitions.”
Though the copycat reputation has long been a source of amusement, profit and convenience for China and its Western observers (the raging counterfeit markets, the full-scale copies of European cities, the fake Western hotels shamelessly named “Haiyatt”), the emphasis on imitation over innovation has contributed to a slow-down in China’s economic growth, according to China Market Research Group. China’s annual GDP growth rate continued to be sluggish at 7.7% in 2013, one of the lowest figures the country has seen in the past 20 years, according to the World Bank:
Some have attributed China’s lack of innovation to how private businesses proliferated only after being granted permission to operate during China’s economic reform in the 1980s. Others have dug deeper to argue the culture has historically prioritized hard knowledge at the expense of fostering creativity.
The Ninebot acquisition appears to be an active step towards unwinding China’s copycat problem by promoting innovation. After all, Ninebot’s most recognizable backer, Xiaomi, appears to be financing the journey. Xiaomi is an innovation king in its own right, having found massive success by filling a void in the market: high-quality, low-end smartphones. It’s also branched out into air purifiers and power strips, both of which are smartly angled towards the nation’s pollution problem.
But will Ninebot and Segway find a niche in China? It’s possible. And perhaps they already have. Chinese cops can sometimes be seen riding Segways and other electric scooters, and consumers there appear to have taken to the vehicles more than Americans have. In fact, former high-ranking leader Bo Xilai reportedly gifted his son a Segway, and tourists can often be seen renting Segways to zoom around cities from one destination to the next.
The Ninebot acquisition has the potential to give the vehicles an innovation jolt to boost affordability, smart technology and functionality, as the greater Chinese economy attempts similarly to ramp up businesses’ creativity. With Ninebot and Segway working together, perhaps the electric scooter can finally find a substantial customer base—even if it’ll never become cool.