Xiaomi Secures $1 Billion Loan On Global Expansion Efforts
Chinese smartphone maker Xiaomi Inc. has secured a $1 billion loan to boost its drive into brick-and-mortar stores and help push expansion overseas, developing its international focus and build out its offline sales presence.
The three-year syndicated loan comes as China's tech giants look to diversify their businesses as e-commerce growth slows, with rivals from Baidu Inc to Alibaba pushing into new areas from cloud computing to artificial intelligence. It follows a three-year $1 billion syndicated loan in 2014.
"New retail, which is the integration of online and offline retail, and globalization are two of the company's top five strategic areas for development. The syndicated loan will further boost its efforts to develop these areas," Lei Jun, Xiaomi CEO and Founder, said.
18 banks across Europe, the Middle East, India, Taiwan, Hong Kong, and other parts of China have contributed to raise the money, such as Deutsche Bank and Morgan Stanley served as joint global coordinator, with Bank of China (Hong Kong) Limited, Deutsche Bank AG, and Wing Lung Bank.
"The global syndicate of top-tier banks is a strong endorsement of Xiaomi by the international capital markets," Xiaomi Chief Financial Officer Shou Zi Chew said.
Xiaomi has 149 "Mi Home" retail stores in China, but plans to use the money to build a presence internationally, like in India, where it has opened its first non-China store, and where it hopes to get to 100 openings in the next two years.
The move comes after a record-breaking second quarter, where the company reported a strong 70% increase from Q1 in smartphone sales, which reached 23 million units shipped, and a massive 121% year-over-year growth in the estimated numbers for 2016.
The Chinese tech giant has seen a recent return to form in phone sales after being hit by competition from rival Huawei Technologies Co Ltd. and brands Vivo and Oppo.
The company is also strengthening its hardware efforts to better compete with the likes of Apple and Samsung on an international scale.
It aims to use in-house made system-on-a-chip components in its newer smartphones as it's entering the smart speaker market with the imminent launch of the Mi AI speaker, and also signed a patent deal with Nokia to work on artificial intelligence and virtual reality.
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