Xiaomi to Buy Stake in Youku Tudou in Content Push

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Xiaomi Corp., China’s largest smartphone vendor, will buy a stake in Youku Tudou Inc. as the closely held hardware maker broadens into content to bolster sales of devices.

Xiaomi will acquire Youku Tudou shares on the open market and also license content from China’s most popular video-streaming site, the companies said in a statement today that didn’t give the size of the stake. Joy Han, a spokeswoman for Xiaomi, and Jay Chen, a Youku Tudou spokesman, both declined to comment on the amount of the investment.

Lei Jun, Xiaomi’s chief executive officer, has pledged to initially invest $1 billion in content to help sales of its Mi Box, a set-top box to receive videos, and its Mi TV Internet-ready television set. Chen Tong, a former editor-in-chief of Sina Corp.’s website who was hired last week, will spearhead the thrust into TV and video content with Xiaomi co-founder Wang Chuan, according to today’s statement.

Youku Tudou and Beijing-based company Xiaomi will jointly develop content and technology, they said in the statement. The cooperation will include investing in online video and movie production.

Xiaomi is in talks for a funding round that values the smartphone maker at about $40 billion to $50 billion, people familiar with the matter said this month. Alibaba Group Holding Ltd., Asia’s largest Internet company, bought about 17 percent of Youku Tudou earlier this year.

Xiaomi, which means millet in Chinese, was founded in 2010 to make software for mobile devices running Google Inc.’s Android system, and the company introduced its first smartphone in China the following year.

In September 2013, Xiaomi broadened its product portfolio by adding Mi TV, an Internet ready device that runs an operating system based on Google Inc.’s Android.

With no manufacturing facilities of its own, Xiaomi’s TV’s are built by Wistron Corp. and Pegatron Corp., Han said.