XIAOMI Technology Ltd., China’s largest smartphone maker by shipments, has invested 1.26 billion yuan (US$203.7 million) in home appliances maker Midea Group Co., in a deal aimed at boosting its presence in the market for Internet-connected home electronics.

    The investment by Xiaomi gives it a 1.29 percent stake in Midea, Shenzhen-listed Midea said in a statement yesterday. Xiaomi will acquire 55 million shares in Midea at 23.01 yuan each, representing a 6.8 percent discount to Midea’s Friday closing price of 24.70 yuan. Midea makes consumer appliances such as air conditioners, washing machines and rice cookers. Midea’s shares closed up 5.99 percent at 26.18 yuan yesterday.

    Lei Jun, Xiaomi’s founder and chief executive, owns 77.8 percent of Xiaomi he co-founded in 2010 and the remaining stake is held by other shareholders. Xiaomi made a profit of 347.48 million yuan on 26.58 billion yuan in revenue in 2013, according to Midea’s statement.

    The statement provides for the first time an official snapshot of Xiaomi, a company that became the most popular smartphone vendor in China and the third-largest vendor in the world this year, thanks to a lineup of handsets that are considered high-quality yet relatively inexpensive.

    Xiaomi has grown in just over four years to become the top-selling smartphone vendor in China in the third quarter, and among the world’s largest. Its success at home has been driven by its strategy of selling smartphones with features to rival the best handsets of Samsung Electronics Co. and Apple Inc., but at around a third of the price. Xiaomi has said it saves on costs by selling its devices online and adopting inexpensive marketing tactics such as using social media.

    With operating profits of 485.77 million yuan in 2013, Xiaomi’s operating margins of less than 2 percent lagged far behind the two market leaders, Apple and Samsung.

    In 2013, Samsung’s mobile division reported 18.7 percent operating margins while Apple reported 28.7 percent for the fiscal year ended in September 2013. South Korea’s LG Electronics Inc.’s mobile business posted 0.5 percent operating profit margin.

    Xiaomi overtook LG to claim the No. 3 spot in the third quarter with 5.6 percent of the global market share, according to Strategy Analytics. (SD-Agencies)