(Yicai Global) Feb. 11 -- Chinese tech and software maker Xiaomi has teamed up with a domestic cigarette producer to manufacture electronic cigarettes as it looks to combat slowing growth of its smartphone sales.
Beijing-based Xiaomi and Jinjia Group have set up a joint venture named Shenzhen Yinwei Technology, the latter said in a statement on Jan. 30. The new company has a specialist team designing new tobacco products, including e-cigarettes and other electric smoking systems, which it hopes to bring to the market this year.
Jinjia did not disclose how much each firm invested in the venture, but a source close to Xiaomi said it would run independently and that whether its products will make it into official Xiaomi stores is not yet clear.
Xiaomi's smartphone sales only gained 1.4 percent from a year earlier in the fourth quarter, industry data shows, a sharp contrast from its full-year growth of more than 30 percent. The firm sold just 30 million units in the last quarter of 2018, down 15 percent from the previous three-month period.
It is looking to find new business areas as smartphone sales slow, and also plans to look into major home appliances this year, founder Lei Jun has said. Xiaomi already makes a broad range of smaller gadgets for the home, many of which can be controlled and connected via its Mi Home mobile app.
The sluggish phone sales are a result of lower-than-expected sales of mid- to high-end handsets, an anonymous industry analyst told Yicai Global. He believes the future is grim for Xiaomi in the sector, as rival Huawei Technologies is bringing out new products and Apple is slashing prices to revive its waning sales in the country.
Editor: James Boynton