With consumer technology becoming an increasingly lucrative industry, many leading tech companies looking to expand their operations quickly are looking at the M&A (Mergers and Acquisitions) route rather than trying to grow organically, which is why many tech startups are seeing extremely high valuations these days. While many leading companies are already investing in or buying out tech startups with a view to expanding into newer sectors, it is now the turn of Chinese telecom equipment and consumer electronics major, ZTE Corp., to jump onto the bandwagon. The company has announced that it will be tying up with other investors in its home country to set up the Suzhou Partnership fund worth 1.2 billion yuan ($180.38 million) to invest in privately-held startups in some of the industries that are expected to grow significantly over the next few years, including technology, media and communication.
While details regarding the latest developments are still a bit sketchy, ZTE says that it will hold about a quarter of the fund, while its partners will own the lion’s share. In a statement released by the company announcing its plans, ZTE said that investments will only go to companies that are likely to enhance “the competitiveness of the group's main business”. While ZTE recently reported a 16% increase in net profit in the first quarter of this year, the controversy surrounding the company’s alleged business links with Iranian firms in spite of U.S. sanctions on the country is something that is just refusing to go away, even though the company’s temporary reprieve from the trade restrictions imposed by the U.S. authorities earlier this year was extended by two months earlier this week.
While we await further details of the latest development, it will be worthwhile mentioning that ZTE is one of the many Chinese companies in recent times to start investing in global technology startups. Alibaba, Xiaomi and Huawei have already been doing so for a while, and it was recently the turn of fellow Chinese tech giant, Lenovo, to join the party. The world’s largest PC manufacturer recently announced that it has set aside as much as $500 million in a tech startup fund called Lenovo Capital, which will invest in some of the emerging sectors in consumer and enterprise technology, including artificial intelligence and cloud computing.