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Xiaomi’s startup conundrum

Chinese tech major Xiaomi, which led India’s smartphone market before Samsung upped its game, may divest $300 million worth of stakes in companies such as ShareChat, ZestMoney, and KreditBee, as per an Inc42 report. Notably, all of these startups could not outperform the general gloom hanging over the industry, and reported increased losses in each of their last earnings call.

This comes on the heels of the Enforcement Directorate probing Xiaomi India’s royalty payments as part of a larger investigation into alleged money laundering by Chinese firms. Subsequently, company assets worth over D5,500 crore ($673.5 million) were frozen in May. Increased regulatory scrutiny could impact Xiaomi’s bottomline adversely, as well as the growth potential of its second-largest market after China. India’s adversarial approach to Chinese FDI complicates things greatly, but with the startup ecosystem facing a funding winter, finding an easy exit might well prove challenging for Xiaomi.

Karan Karayi
Karan Karayi
A part-time car enthusiast and full-time food aficionado, Karan is forever chasing his next big creative thrill. He also doesn’t enjoy writing in third-person.


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