Strategic push puts Xiaomi onto center stage

A new model of smartphones unveiled by Xiaomi Corp in Beijing. The smartphone maker has charted a roadmap for a bigger presence in the video and content services market. [Wang Jing / China Daily]

Chinese smartphone maker charts roadmap for bigger presence in video and content services market, reports Gao Yuan.

Xiaomi Corp, an emerging handset maker, said on Wednesday it had made a 1.8 billion yuan ($294 million) investment in online video provider iQiyi, a unit of search giant Baidu Inc.

Shunwei Capital, an investment firm set up by Xiaomi founder and CEO Lei Jun, will be an investment partner of the Beijing-based handset maker. Like Xiaomi, Baidu has also increased its investment in the video website with an undisclosed amount.

Gong Yu, chief executive of iQiyi, said the site will help Xiaomi "greatly enlarge" its video resources, which it plans to deliver to its hardware users free of charge. Most of the investment will be used to produce self-made video contents, according to Gong.

He said the companies will also expand cooperation in the mobile segment, where Xiaomi is on track to become the largest smartphone vendor in China during this quarter. Both the companies did not disclose how much of a stake in iQiyi Xiaomi got from its investment.

Lei pledged to invest $1 billion in the company's video content development business a month ago.

Earlier this month, Xiaomi hired Chen Tong, the founder of China's largest micro-blogging network Sina Weibo by user numbers, to oversee the cultural and media businesses.

"We will mainly invest in video makers in the future," Chen told China Daily on how he will spend the remaining $600 million budget.

"There are some potential investment plans going on but we are not ready to disclose them," he said.

Last week, Xiaomi injected an undisclosed amount in Youku Tudou Inc, a major rival of iQiyi. It marked Chen's first major move since joining Xiaomi.

The two companies will jointly develop content and technology, including multi-screen online video services, the statement said, and work together in the production and distribution of online videos and movies.

"The partnership aims to accelerate the development of its multi-screen media and entertainment ecosystem," according to Youku Tudou.

Analysts said the high-profile moves from Xiaomi will steer the landscape of the rapidly growing online video sector.

Tian Zheng, vice-president of the business solutions unit at Analysys International, said good video resources have always been scarce for companies like Xiaomi. "Unlike LeTV, which is planning to become a hardware maker/content provider, the biggest disadvantage of Xiaomi's ecosystem is the lack of fresh content," Tian said.