$BIDU/ $YOKU - Xiaomi Invests $300 Million In Baidu’s iQiyi, Only $10 Million In Youku

So it is official: China’s smartphone start-up Xiaomi will invest $300 million in $BIDU - Baidu‘s video streaming site iQiyi, rumored for weeks by Chinese media.

Xiaomi earlier this month said it would invest $1 billion in TV content in China, sending China’s Internet fans buzzing with speculations. Last week, Xiaomi struck a strategic investment deal with $YOKU - Youku Tudou to jointly develop content.

Shares of Youku ramped up earlier this month in anticipation that the sizzling hot Xiaomi may drag Youku out of its misery, but all of that excitement evaporated after Youku reported weak third-quarter earnings and the strategic investment from Xiaomi turned out to be just $10 million. Youku slumped 10.8% on Tuesday, ahead of today’s official iQiyi announcement.

Baidu certainly does not lack cash. It sat on $8.4 billion cash as of the end of September. This investment is more a nod from China’s Google to Xiaomi and a promise between the two to work more closely onwards. The monetary disparity between these two deals certainly does not bode well for Youku, which competes directly with Baidu’s iQiyi and has a much smaller cash pile.

By Shuli Ren