Xiaomi Corp. started an online money market unit to compete with Alibaba Group Holding Ltd., the dominant provider in China’s 10 trillion yuan ($1.61 trillion) market for web-based finance.
Xiaomi, the world’s third-largest smartphone maker, is allying with E Fund Management Co. to offer investments through an application that works on its devices, according to a statement the company e-mailed Tuesday.
Alibaba and Tencent Holdings Ltd., China’s two biggest Internet companies, have also expanded into online banking and finance as China’s growing middle class and wealthy consumers seek alternatives to savings deposits. Xiaomi plans to offer the service to the 100 million users of devices with its MIUI operating system.
Alibaba’s Yu E Bao has grown into China’s largest money-market fund, representing more than a quarter of investments, Fitch Ratings estimated in March. Total assets in the nation’s money-market funds surged to 2.2 trillion yuan at the beginning of 2015, a six-fold increase from 18 months earlier, according to Fitch.
China’s online finance market reached 10 trillion yuan at the end of March, according to research firm Sootoo.
E Fund, Xiaomi’s partner, has 430 billion yuan of assets under management as of December, according to its website.
Xiaomi also plans to introduce loans, exchange-traded funds and other financial products “soon,” according to the statement. The company didn’t disclose any targets for its finance unit.