China-based smartphone manufacturer Xiaomi has agreed to form a RMB12bn ($1.74bn) strategic investment fund in partnership with the government of the Chinese province of Hubei, Caixin reported yesterday.
Xiaomi, Hubei’s guidance fund Yangzte River Industry Fund, and the government of Hubei’s largest city, Wuhan, have agreed to each provide 33% of the capital for Xiaomi Yangtze Industry Fund, with the RMB12bn figure representing the overall target.
The fund will invest in companies that would be able to expand the Mi ecosystem Xiaomi is building around its mobile and smart connected devices. Sales for its core smartphone business have declined of late and the initiative is intended to diversify the company’s offering.
That ecosystem would include a wide variety of connected hardware products ranging from appliances and TVs to robots and component makers.
While not as public a venture capital investor as some China-based corporates, Xiaomi has had a healthy deal flow in recent years, having declared in 2015 that it will invest in 100 companies in a five-year time span, and it has backed several internet operators in addition to hardware developers.
The company’s portfolio includes high-grade video camera producer Yi Technology, downloading and online video technology produce Xuneli, and iQiyi, the online streaming service frequently referred to as China’s answer to Netflix.
Yangtze River Industry Fund, launched in 2015 by the Hubei government with the intention of attracting industries to the region, has some $29bn of assets under management. Its participation in the fund, like Wuhan’s, is meant to attract new industrial production to the area.