Chinese smartphone maker Xiaomi, Inc. plans to invest US$200 million in Chinese home appliance maker, Midea Group.

Both companies intend to work together to develop new smart home products.

Midea, a Guangdong-based company established in 1968, is known for developing home ware such as kitchen appliances, air conditioners and refrigerators.

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"The deal between Xiaomi Technology and Midea will see strategic cooperation between the two companies in smart home initiatives and electronic products," said Xiaomi.

Xiaomi, the third largest smartphone maker in the world, said it hopes to invest in 100 tech companies that specialize in developing smart hardware devices.

With the investments, the Chinese giant will be able to sell the new products on its online shopping store, including on Alibaba's TMall site.

The Chinese company recently unveiled its Mi Air Purifier due to launch on Dec. 16 in China. The air purifier delivers about 406 cubic meters of clean air per hour.

The company also invested US$40 million earlier this month in U.S.-based wearable and fitness device maker Misfit Wearables Corporation along with other Chinese investors.

The move by Xiaomi aims to diversify its product line.

TagsMidea, Home Appliances, smart home