China-based Xiaomi Inc. has invested 1.26 billion yuan (approximately $203.7 million) in Midea, a home appliance company, in a bid to push its presence in the smart homes sector.
Last week, the popular smartphone maker unveiled an air purifier. Now, with the deal with Guangdong-based Midea in place, Xiaomi is looking to establish itself in the smart homes space and cash in on the burgeoning Internet-connected home device market. Xiaomi now has a 1.29 percent share in Midea.
"The deal between Xiaomi Technology and Midea will see strategic cooperation between the two companies in smart home initiatives and electronic products," noted Xiaomi.
Established in 1968, Midea is synonymous with a plethora of consumer home appliances, such as washing machines, rice cookers, refrigerators, air conditioners and kitchen appliances, among others. In March, the company took the wraps off its smart home dream, which has close to $2.5 billion in funding. Midea's growing success is reflected in its balance sheet; the company recorded a turnover of $18.7 billion in 2013.
In recent years, Xiaomi, which was initially synonymous with smartphones, has been reinventing and diversifying its portfolio of products to include smart TVs, tablets, fitness bands, routers, battery packs, blood pressure measurement kit and an air purifier.
Xiaomi also states (translated) that it will be acquiring 55 million shares in Midea at 23.01 yuan each.
Xiaomi's investment in Midea is part of the company's plan to "groom" and invest in nearly 100 startups so that they will become "more than manufacturing companies" in the long term. Xiaomi intends to invest in hardware companies that produce smart devices so that it can market products via its own online store just like what it did with its fitness tracking Mi Band, which was launched in July.
Xiaomi currently has nearly 25 companies on board its "ecosystem," which includes Misfit Wearables, a US-based hardware startup, and iHealth Labs, which produces the company's blood pressure measurement kit. It is expected to take on board more startups in the near term to boost this ecosystem.
