In North Korea, China's Xiaomi gets the people's pulses racing

September 8, 2016 7:04 AM EDT

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BEIJING/SEOUL (Reuters) - China's smartphone and accessory maker Xiaomi Inc [XTC.UL] is winning hearts and minds in North Korea with its wearable fitness band, Chinese state media said on Thursday, a symbol of the isolated state's increasingly sophisticated consumer classes.

The Mi Band 2, selling for $35 in Pyongyang compared to the China price of 149 yuan ($22.36), sold out at the North Korean capital's international trade exhibition, the official Xinhua news agency reported.

Xiaomi did not immediately respond to a request for comment.

North Korea is home to a rising class of consumers known as "donju" meaning "masters of money", thanks to a growing unofficial economy.

North Korean state-owned businesses have attempted to capture some of this new cash with homegrown products, but cheaper and more technologically advanced Chinese imports are easily available in markets and shops.

"The people of (North Korea) are pursuing high-quality life as much as anywhere else in the world," said Gong Yunhong, a salesperson running the booth selling Xiaomi's bracelet, according to Xinhua.

On a trip to the reclusive country in May, a Reuters reporter noted several people on the streets of Pyongyang wearing Xiaomi-style fitness trackers.

Xiaomi - which at the end of 2014 raised funding at a valuation of $45 billion, but which since then has been struggling with flagging growth and aggressive rivals - has expanded into various countries outside its homeland, but does not list North Korea among them.

Nor has the start-up flagged any intention to enter the country, which has long been subject to crippling sanctions over an ongoing nuclear missile programme and severe human rights abuses.

Xinhua's report noted that North Korean owners of the Mi Band 2 were unable to connect the fitness device to their mobile phones, rendering some functions useless.

Bluetooth has recently been disabled on North Korean-made mobile phones. Most domestically produced devices do not have Wifi enabled and the internet is an intranet, while uncensored access to the outside world is reserved for a small circle of elite and privileged figures.

($1 = 6.6640 Chinese yuan renminbi)

(Reporting by Paul Carsten in Beijing and James Pearson in Seoul; Editing by Muralikumar Anantharaman)



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