China Tech Billionaire Adds to Sector Largess With $2 Billion Donation

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The chairman of smartphone maker

Xiaomi Corp.

has given company shares worth more than $2 billion to charity, in the latest huge donation by a Chinese mogul as Beijing deepens its crackdown on the country’s tech sector.

Xiaomi—which overtook

Apple Inc.

as the world’s second-biggest smartphone vendor in the second quarter, according to Canalys—is seen by analysts as less of a priority for Chinese regulators than China’s online giants, given its focus on hardware manufacturing.

But with the handout, billionaire Lei Jun, who is also the company’s founder and chief executive, is following gifts made by leaders at some of the country’s biggest internet companies.

Mr. Lei has transferred about 616 million shares to two charitable foundations co-founded by him, stock-exchange filings late Friday showed. Based on that day’s closing stock price of 28.25 Hong Kong dollars, or the equivalent of about $3.64, the donation was valued at about $2.2 billion. After the transaction, he holds a 10.6% stake in Xiaomi, one of the filings showed.

Last month,

Wang Xing,

founder of delivery giant Meituan, gave away more than $2 billion worth of shares to his charitable foundation. In the same month, ByteDance Ltd. founder

Zhang Yiming

made a gift of about $77 million to set up an educational fund in his hometown, according to the local education bureau. ByteDance owns the short-video app TikTok.

Last year,

Pinduoduo Inc.

founder

Colin Huang

and his founding team donated a 2.37% stake in their company to a vehicle called the Starry Night Foundation, which has pledged to donate $100 million over the coming years to a Chinese university.

“It’s one of the objectives of the government to make sure that private companies are not getting too big and too powerful,” which may exacerbate the rich-and-poor divide in China, said Jefferies analyst Edison Lee. “The donations would help narrow the wealth gap, so that would be aligning with the government’s objective.”

Since late last year, Chinese tech firms have come under intensifying scrutiny from the country’s authorities, who have launched a number of probes and proposed multiple new regulations to ensure fair competition and data security in the booming industry.

Xiaomi hasn’t entirely escaped attention. In March, China’s top internet regulator, the Cyberspace Administration of China, summoned Xiaomi and others to a meeting warning about “deep fake” technology, or the use of machine learning algorithms to create highly convincing manipulated videos, pictures and audio.

Xiaomi’s shares have fallen by 15% this year. In May, the Beijing-based company scored a victory when the U.S. Defense Department agreed to remove it from a U.S. investment blacklist.

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the July 17, 2021, print edition as ‘Xiaomi Chief Gives Shares to Charity.’

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