Mark Zuckerberg and Xiaomi Inc CEO Lei Jun discussed a potential investment by Facebook in China’s top smartphone maker before its $1.1 billion fundraising last month, but a deal never materialized, several sources said, according to Reuters.
The discussions, at a private dinner when Zuckerberg visited Beijing in October, were never formalized, three of those people said, as the two CEOs weighed the political and commercial implications of Facebook – which has been banned in China since 2009 – buying into the Chinese tech star now valued at $45 billion, the report said.
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One individual with direct knowledge of Xiaomi’s fundraising said the mooted Facebook investment was “not huge, ” but the talks underscore how ties between U.S. and Chinese companies have deepened as China’s tech industry matures, Reuters said.
A Facebook investment in Xiaomi would have raised the international profile of the popular handset maker dubbed “China’s Apple” by its fans and linked it to a U.S. social networking phenomenon with more than 1.3 billion users, the report said.
Facebook, for its part, has long harbored ambitions to expand into the world’s most populous country, potentially with partners. One of the sources said Facebook and Xiaomi began discussing a possible investment in mid-2014, according to Reuters.
Xiaomi’s Lei was partly put off by the potential for political fallout at home of selling a stake to Facebook while the U.S. social network is still banned in China, two of the sources said, adding Xiaomi also feared a tie-up with Facebook could threaten its relationship with Google Inc, a crucial business partner. Xiaomi’s phones are built on Google’s Android operating system, the report said.
Xiaomi ultimately announced last month it raised $1.1 billion from investors. The fundraising valued Beijing-based Xiaomi at $45 billion just three years after it sold its first smartphone. The company had revenue of close to $12 billion in 2014, Reuters said.
Zuckerberg has eyed China as a critical piece of his vision to connect the global population. But, like Google and Twitter, the social networking giant has been blocked by China’s internet censors, who cite national security concern, according to the report.
“Facebook wants to get into China, and Xiaomi is keen to expand outside, so they both recognize the importance of working together, ” said one of the sources, none of whom wanted to be named due to the sensitivity of the matter, Reuters said.
Xiaomi and Facebook declined to comment on the report.
Xiaomi is China’s biggest smartphone maker, according to some industry analysts, and trails only Samsung Electronics and Apple in global market share, Reuters said.
A strategic partnership with Xiaomi would give Facebook another avenue to distribute its apps and potentially provide a powerful ally in its bid to overturn its China ban, the report said.