Isn't "copying" / "cloning" the greatest hack of all? Billions of dollars have gone into the design of smartphones. Why would you go and invest more and play the catchup game? in something that established players are very good at?
The innovation of xiaomi is not in smartphone itself. But how it is manufactured to achieve such value and the process which it is sold.
So if I put it in terms that startup people that find acceptable: cloning apple is just an great bootstrap mechanism. They are hugely profitable on the back of apple's marketing budget.
If they achieve greater prominence globally, they inevitably will have to innovate on the phone itself, but then they will also have the budget to do so.