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Asian Business News
Xiaomi Invests in Home Appliance Maker Midea
From the Wall Street Journal of Sun, 14 Dec 2014 23:48:45 EST
Xiaomi's logo is seen outside the company's headquarters in Beijing. Xiaomi has invested $204.7 million in local home appliances maker Midea.
Xiaomi's logo is seen outside the company's headquarters in Beijing. Xiaomi has invested $204.7 million in local home appliances maker Midea. Bloomberg News

HONG KONG—Chinese smartphone maker Xiaomi Inc. has invested 1.26 billion yuan ($203.7 million) in local home appliances maker Midea Group Co. , in a deal aimed at boosting its presence in the market for Internet-connected home electronics.

The investment by Xiaomi, China’s biggest smartphone maker by shipments, gives it a 1.29% stake in Midea, the phone maker said in a statement late Sunday. Xiaomi said it would acquire 55 million shares in Midea at 23.01 yuan each, representing a 6.8% discount to Midea’s Friday closing price of 24.70 yuan. Midea, listed on the Shenzhen stock exchange, makes consumer appliances such as air-conditioners, washing machines and rice cookers. Midea’s shares were last up 5.5% at 26.05 yuan.

A separate disclosure by Midea on the Shenzhen stock exchange Monday showed that Xiaomi’s founder and chief executive, Lei Jun, owns 77.8% of Xiaomi and the remaining stake is held by other shareholders. Midea also disclosed that Xiaomi posted a net profit of 3.5 billion yuan on revenue of 26.5 billion yuan in 2013. The Wall Street Journal first reported in November that privately held Xiaomi’s profit nearly doubled in 2013, citing confidential documents.

Xiaomi has grown in just over four years to become the top-selling smartphone vendor in China in the third quarter, and among the world’s largest. Its success at home has been driven by its strategy of selling smartphones with features to rival the best handsets of Samsung Electronics Co. and Apple Inc., but at around a third of the price. Xiaomi has said it saves on costs by selling its devices online and adopting inexpensive marketing tactics such as using social media.

Xiaomi has been investing in so-called ‘smart’ hardware companies, including Misfit Wearables Corp., a San Francisco startup that makes wearable fitness trackers.

Xiaomi said the latest Midea deal allows the two companies to cooperate in “smart home initiatives and electronic products.” It didn’t go into specifics, but the investment is seen as being part of Xiaomi’s push into home appliances that are connected to the Internet. Xiaomi will start selling an air purifier in mainland China from Tuesday, with preorders for the product taken last week, the company said. The air purifier will be able to connect to wireless networks and be remotely controlled by smartphones, allowing users to monitor the air quality in real-time, the company says.

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