07 January 2019

In major TV push, China’s Xiaomi buys 0.5% stake in TCL


A veteran TV maker just got a notable refresh as it enters the age of connected devices. Xiaomi, the Beijing-based firm best known for budget smartphones, has bought 65.2 million shares, or 0.48 percent, of Chinese home appliance maker TCL, said TCL in a statement to the Shenzhen Stock Exchange on Sunday.

Shares of TCL, the world’s third-largest LCD TV manufacturer, jumped nearly 4 percent in morning trading on Monday, giving the company a market cap of $36 billion.

The financial gesture deepens an existing alliance between the duo. On December 29, the companies signed a strategic partnership that would see them collaborate on various fronts, including R&D in integrating smart devices with “core, high-end, and basic” electronic parts. To put in layman’s terms, the joint effort focuses on chips and will make it easier for TCL devices to incorporate into Xiaomi’s operating system, where an expanding universe of third-party gadgets reside. The partners may also make co-investments in the hardware field.

The tie-up provides “tremendous help” for Xiaomi as it ups the ante in home appliances, wrote Xiaomi founder and CEO Lei Jun on Weibo, China’s closest answer to Twitter, in a reply to TCL’s CEO Li Dongsheng. During the third quarter of 2018, smart TVs helped drive revenue growth for Xiaomi’s non-smartphone hardware segment, shows the company’s financial results.

“[Our partnership] helps facilitate the transformation and upgrade of China’s manufacturing industry,” wrote Li, whose company started in 1981 as a cassette manufacturer.

Xiaomi has long been keen to team up with manufacturers to make its own branded devices instead of producing them itself. By early 2018, Xiaomi reached nearly 100 such partners, many of which Xiaomi had invested in to harness bargaining power in the supply chain, from what a smartphone should look like to how much it’s priced at. Xiaomi’s retail stores — available online and in physical manifestations — have also opened doors to third-party brands in an effort to broaden product selection.

Xiaomi’s close ties with its ecosystem partners result in an inventory of affordable products rivaling the likes of Fitbit and Apple. During the third quarter of 2018, Xiaomi topped the global chart by shipping 6.9 million units of wearables. Apple and Fitbit came in second and third with 4.2 million units and 3.5 million units, respectively, according to market research firm IDC.

Xiaomi derives most of its revenues from smartphones, though Lei Jun has long envisioned a future in which internet services will be the firm’s main force. This segment, which Xiaomi has marketed as its key financial differentiator against other phone brands, includes sales from mobile games, internet finance, paid content among a slew of services available through Xiaomi’s connected devices.


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