Xiaomi Corp., China’s largest smartphone vendor, and Shunwei Capital will invest $300 million in Baidu Inc. (BIDU:US)’s IQiyi.com to increase access to online content as more people watch videos on mobile devices.
Joy Han, a spokeswoman at Xiaomi, today declined to comment on the size of the stake held by the smartphone maker and Shunwei. Both Xiaomi and Shunwei Capital were co-founded by Xiaomi Chief Executive Officer Lei Jun.
Xiaomi, started four years ago to make software for devices running Google Inc.’s Android operating system, has branched out into smartphones, tablets, Internet-ready televisions and TV set-top boxes. To bolster Xiaomi’s device sales, Lei has pledged to initially invest $1 billion in content.
“Xiaomi puts a high value on the importance of video in the future development of the Internet,” Lei, who is also chairman of Shunwei Capital, said in the statement.
The smartphone vendor may make a further investment in IQiyi, Gong Yu, chief executive of the online-video provider, said at a briefing in Beijing.
Baidu, which already holds a controlling stake in IQiyi, also will invest in the online-video provider, the four companies said in an e-mailed statement. Baidu, Xiaomi and IQiyi will jointly develop content and technology products, especially for mobile Internet, according to the statement.
Mobile devices have become the major channel for watching video online, the companies said in the statement. More than 60 percent of IQiyi’s traffic comes from mobile devices, it said.
Content Push
Xiaomi began its push into content this month, first by hiring Chen Tong, a former editor-in-chief of Sina Corp. (SINA:US)’s website, to spearhead Xiaomi’s thrust into video.
The company followed up by announcing it would buy an undisclosed stake in Youku Tudou Inc. (YOKU:US), China’s most popular online video site. As part of the agreement, Xiaomi will be able to license content from Youku and the two companies plan to develop content and technology, as well as jointly invest in online video and movie production.
Xiaomi is in talks for a funding round that values the smartphone maker at about $40 billion to $50 billion, people familiar with the matter said this month.
Xiaomi, which means millet in Chinese, was founded in 2010 to make software for mobile devices, and the company introduced its first smartphone in China the following year. In September 2013, Xiaomi broadened its product portfolio by adding Mi TV.
The company became the world’s third-largest smartphone vendor in the quarter ended September by capturing 5.6 percent of the global market, the first time it cracked the top three, according to Strategy Analytics. Xiaomi trailed only Suwon, South Korea-based Samsung Electronics Co. and Apple Inc. (AAPL:US) of Cupertino, California, during the period.
Lei this year began the company’s biggest push beyond its home base of China, by expanding into 10 markets including India, Brazil, Russia and Mexico.
To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net; Sarah Chen in Beijing at schen514@bloomberg.net
To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Robert Fenner, Lena Lee
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