The world of smartphone-distributed social media nearly tilted on its axis last October when an investment deal between Facebook and China’s stratospherically successful mobile handset maker Xiaomi came close to getting inked.
For now, we’ll have to be content with the handset that never was, even though it might just have given Google and Apple a real run for their money. The Reuters news agency has just reported the near-deal after being informed by several people (unnamed) who had knowledge of it.
According to one of the unnamed sources:
“Facebook wants to get into China, and Xiaomi is keen to expand outside, so they both recognize the importance of working together.”
Xiaomi has risen high in the three years since it sold its first phone to become China’s top smartphone maker and has been dubbed ‘the Apple of China’. Mark Zuckerberg has clearly been taking a keen interest, eyeing China as a crucial market to enter in order to realise his dream of a totally connected world.
It seems that he and Xiaomi’s founder and CEO, Lei Jun, began discussing a possible investment in the middle of last year. In October, Zuckerberg was invited to a private dinner at Lei’s Beijing home (the two CEOs have actually known each other for some time). Also invited was Facebook’s business development head, John Lagerling, and China head Vaughan Smith.
Had the deal come off, it would have supplied Facebook with a major new avenue to distribute its apps, with millions of new punters opening their news feeds on Facebook. But there was quite a problem to be overcome: Facebook is banned in China (the country’s head internet censor, Lu Wei, is on record as stating that social media, especially non-Chinese services, could be a destabilising influence for Chinese society).
Another complication that appears to have played a part in quelling the deal is Xiaomi’s concern that its relationship with Google may have been damaged (all Xiaomi’s phones are built around Google’s Android OS).
Google and Facebook both want to become “unbanned” in China and building partnerships with major Chinese players is one crucial way of progressing along that path.
For now, the Facebook/Xiaomi deal is toast. But something tells me that Mr Zuckerberg is not giving up on China.