Xunlei's team-up with Xiaomi a shrewd strategy

Xiaomi's financial and market position not only will enhance Xunlei's US listing but will also create a powerfully symbiotic relationship between two compatible Internet brands.

Xiaomi's smartphone business is inherently linked with Xunlei's fast-growing e-services.

In addition, Xiaomi's dominant market position in the Chinese mainland recently enabled it to embark on its first foray into international expansion with market entry in Singapore, Malaysia and India.

While JD.com's success with its Nasdaq launch and the likely Xunlei and Alibaba listings has produced positive investor input, it must not be forgotten that these companies will face major challenges in their pursuit of international brand-building.

An initial splash on the Nasdaq or any other major US or European stock exchange also leads these young Chinese companies to becoming exposed to the full force of global competition.

In order to build internationally, strategic alliances and/or possible joint ventures with similar-sized, Internet companies may prove critical to long-term, sustainable success.

Teaming up with Xiaomi, therefore, represents an extremely shrewd, strategic maneuver by the Xunlei management and one that other Chinese companies with similar, global aspirations could emulate.

In so doing, many small and medium-sized Chinese companies will be following the international expansion successes enjoyed by South Korean chaebols.

In effect, these family-owned conglomerates have been able to establish the necessary joint working relationships between younger, smaller Korean firms with global expansion aspirations.

Sansung is very much the jewel in the chaebol crown, the proof in the chaebol pudding, by rising to global brand status as a result of participation in a multitude of industry alliances under the chaebol umbrella.

If Xunlei or any other Chinese company is to reach anything like Samsung-status in the future, it must engage in a series of alliances and joint ventures with suitable partners. Xunlei's teaming up with Xiaomi is an exciting step in this direction.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer on marketing at Southampton Solent University's School of Business. The views do not necessarily reflect those of China Daily. 

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