Xiaomi-linked companies have faced increased scrutiny from China’s regulators, with some pausing planned initial public offerings after being questioned about their close relationship with the smartphone giant, reports the Financial Times. Smart mattress maker 8H, intelligent lighting company Yeelight and commercial operating system maker Shanghai Sunmi Technology have shelved IPO plans in recent months, according to documents and Chinese media reports.
The moves have come after they were questioned by Chinese regulators about being part of Xiaomi’s “ecosystem companies,” a vast array of groups in which the smartphone seller has either directly invested or made commercial arrangements.
The strategy has been an integral part of Xiaomi’s business model. As of March, the company said it had invested in more than 400 companies worth RMB 59 billion ($8.8 billion), including smart vacuum company Roborock. Xiaomi’s net profit for last year, by comparison, was RMB 19.3 billion.