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Xiaomi looking to invest US$ 1 billion in Indian startups

Livemint:  November 20, 2017

Bengaluru: Chinese phone and appliances maker Xiaomi Corp. will invest as much as $1 billion in 100 startups in India over the next five years, seeking to create an ecosystem of apps around its smartphone brand, chief executive Lei Jun said in an interview.

Lei said Xiaomi and its sister company Shunwei Capital, which have purchased stakes in six Indian internet companies including Hungama and KrazyBee, will invest in businesses such as content, financial technology, hyperlocal services, including mobile phone repairs, and manufacturing in order to increase the adoption of mobile internet in the country.

“In China, in the past four years we’ve invested $4 billion in over 300 companies. In the next five years, we will invest in 100 companies in India. We will basically replicate the most successful ecosystem business model of China in India. We will have all types of services and products and integrate them. That is the Xiaomi business model. We focus on a few key things and everything else, we let our partners provide. We’ve reached just a huge scale in seven years because of this partnership/affiliation model,” Lei said.

Xiaomi, one of the world’s most valuable privately held tech companies, is the most prominent Chinese investors in India after the two internet giants, Alibaba Group Holding Ltd and Tencent Holdings Ltd. If the company meets its investment target, it would become one of the most prolific internet investors in India. Unlike Alibaba and Tencent, Xiaomi is only looking for investments that will expand mobile internet usage and hook customers to its phones in a smartphone market that is defined by fickleness among shoppers in constant lookout for the next new thing. By providing entertainment content and other services, Xiaomi is hoping to make its value-for-money phones more lucrative to customers and differentiate its offering from those of rivals such as Samsung, Vivo, Oppo and others.

“Any apps that increase the frequency of usage of smartphones—we’re interested in this. As long as it is related to acceleration of mobile internet. We only pick minority stakes. The purpose is to work closely (on the business side) with these companies,” Lei said.

Xiaomi, which entered India in 2014, accounted for 23.5% of smartphone shipments in the country in the September quarter, according to research firm IDC, becoming the joint No. 1 smartphone vendor in India. Samsung also had 23.5% share in the quarter. In the preceding three months, Xiaomi’s market share was 17%.

Xiaomi, which last raised equity capital at a valuation of $45 billion in late 2014, sells its phones in some 60 countries. India is the company’s biggest market outside of China, where it sells a variety of products including televisions, smartwatches, air purifiers, water purifiers and others. The company will introduce other products in India over the next two quarters, Lei said.

Xiaomi’s valuation makes Lei, a successful serial entrepreneur, one of the richest men in China. Among his previous ventures was Joyo, an online book retailer bought by Amazon when it entered China.

Lei said that the company wasn’t planning to list its shares any time soon. “Right now, we do not have such plans. Being a public company has its advantages and disadvantages. We can only go for an IPO when we feel comfortable. We have enough cash. We haven’t made any losses except in 2015 when we lost a little bit of money because of working on global expansion.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.