India’s Ratan Tata Buys Stake in China’s Smartphone Maker Xiaomi

Posted: April 27, 2015 in Econ 101, Free Trade, Technology and Energy

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India’s Ratan Tata buys in to China smartphone maker Xiaomi

Apr 26, 2015

Tata Motors Chairman Ratan Tata addresses shareholders at the company's 64th Annual General Meeting in Mumbai on August 25, 2009. the head of India's leading vehicle maker said the country was seeing its initial signs of recovery in the auto sector but there were tough challenges on the road ahead. Tata Motors consolidated earnings for the year 2008-09 showed a net loss of 25 billion INR (520 million USD) compared to a net profit of 21.7 billion INR in 2007-08. AFP PHOTO/Indranil MUKHERJEE (Photo credit should read INDRANIL MUKHERJEE/AFP/Getty Images)
©AFP Ratan Tata

Ratan Tata, the Indian industrialist, has invested an undisclosed sum in China’s biggest smartphone maker, Xiaomi, giving a boost to the company’s Indian expansion plans.

“India is our biggest market outside of mainland China and also an extremely important one. Our goal is to become number one in the next three to five years and we are keen on partnerships here,” said Bin Lin, Xiaomi co-founder and president, in a statement.

Since his retirement in 2012 as chairman of industrial conglomerate the Tata group, Mr Tata has become an active venture investor in Indian e-commerce start-ups. Mr Tata, whose current title is chairman emeritus of Tata, made the investment with his personal wealth and the stake will be held independent of the group.

The announcement on Saturday follows a visit to India by Xiaomi last week. During the visit, former Google executive Hugo Barra, now Xiaomi’s vice-president for international operations, unveiled the company’s newest handset, the Mi 4i, which will sell for INR12,999 ($204).

It is the first phone that Xiaomi has launched outside China. Localised versions of the Mi 4i will also be begin selling in Malaysia, Indonesia, Singapore, Taiwan and Hong Kong next month.

Xiaomi controlled 4 per cent of India’s smartphone market in the fourth quarter last year, according to market researcher IDC. Market leader Samsung controlled 22 per cent, followed by Indian vendors Micromax, Intex and Lava. Smartphone penetration in India trails that of China, leaving room for fast growth.

Xiaomi raised $1.1bn late last year in a venture capital funding round that valued the company at $45bn. The company has used a viral marketing campaign to sell its high-spec, low-cost smartphones and vault over more established manufacturers to become the market leader in China.

The company has also branched out into online music and internet-enabled set-top video boxes that act as a substitute for cable TV.

Xiaomi’s expansion plans in India hit a snag in December when the Delhi High Court banned the company from selling smartphones pending a further hearing on alleged patent infringement against Swedish technology group Ericsson. The ban has since ended.



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