According to DigitalTrends Xiaomi is not joining Sony and Samsung by waterproofing its phones the idea has the potential to backfire. Basically the reason is that any damage phones receive could compromise its water protection. When a phone is damaged, by a slighty cracked screen or broken camera module, its water protection would fade giving the user a false sense of security.
So the bloke who tries to show off to his mates by sticking his mobile phone in a pint of beer might suddenly find himself killing his phone and getting miffed with the manufacturer.
The cost of waterproofing a phone is also very high. Xiaomi said it might consider doing it if punters were happy with paying 20 to 30 percent more for the feature.
Since Xiaomi is mostly interested in competing on price that is not really an option. In fact it keeps its prices down by flogging older gear, working on online, having a smaller portfolio, and making sure it is close to Chinese manufacturing plants.