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Facebook investment in Xiaomi averted by censor fears, report claims

Mon 12 Jan 2015


Facebook creator Mark Zuckerberg was in talks with Chinese smartphone and tech giant Xiaomi prior to last month’s $1.1bn (£726,544) fundraising deal, according to an exclusive report from Reuters.

Zuckerberg is reported to have informally discussed a massive investment in Xiaomi during a dinner with the company’s CEO Lei Jun when he visited Beijing last October. According to the report, fuelled by revelations from unnamed insiders, the world’s third largest smartphone distributor was seriously considering the deal, but was ultimately deterred by the political difficulty involved in associating itself with a global service – Facebook – that has been banned in China since 2009, and by the possibility of alienating its crucial extant business links with Google.

The level of investment discussed was ‘not huge’ according to the Reuters insider, but would have been a very significant milestone in both Zuckerberg’s desire to overturn the Chinese Facebook ban and Xiaomi’s business imperative to expand beyond the Asian marketplace. Both companies have made no comment on the report at this time.

The Chinese company’s star began to rise again this year when it announced 74.3bn yuan (£7.8bn) of pre-tax sales only a week after being named the top global tech start-up. The company, which only began to sell smartphones in 2012, is currently valued at $45bn (£29bn +).

Zuckerberg is married to Chinese-American Priscilla Chan, and famously addressed a meeting at Tsinghua University in mostly creditable Cantonese for thirty minutes during the October visit.

Xiaomi’s biggest market outside of China is India, where it continues to make inroads despite the occasional privacy controversy.

China’s ban on Facebook began in the wake of user-posted material that the Chinese censors found controversial when Tibet began to overshadow sport during the 2008 Olympics in Beijing.

The key to China’s potentially enormous Facebook market is changing the mind of its premier internet censor Lu Wei, who has described the social giant as a ‘destabilising force’. Last week speculation was rife that the cancellation of Sony’s imminent launch of the Chinese PlayStation 4 was due to delays with getting an adequate proportion of the company’s large online gaming approved by the Chinese censors.


Asia China Facebook investment news Xiaomi
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