Microsoft CEO Buzzes Beijing Smartphone Maker, Talks Mutual Benefits for Sino-U.S. Tech Relations

Microsoft CEO Satya Nadella visited President Xi Jinping, smartphone-maker Xiaomi and the prestigious Tsinghua University this week on his third trip to China, calling on strategic partners as he discussed the U.S.-China relationship.

Nadella has been charged with breathing new life into the U.S. software giant, which was a pioneer in the early computing days with its PC operating systems, but has lately been overtaken by younger companies like Google and Facebook. The company counts China as one of its most important markets, and its investments over the years include a research and development (R&D) center that currently has 200 regular R&D staff in Beijing, according to the company’s website.

Nadella took the helm at Microsoft three years ago, and his Beijing trip this week was his third in that capacity.

One of his first meetings was on Monday with Xi, underscoring the importance that China’s top leaders are placing on technology as they try to move the country away from its manufacturing roots to higher value-added industries. Other high-tech leaders who have met with Xi during recent China trips include Facebook founder Mark Zuckerberg and Apple CEO Tim Cook.

The day after he met with the president, Nadella paid a call on Xiaomi Inc., a local smartphone-maker that was once one of China’s hottest high-tech companies before falling out of favor. Xiaomi formed a major alliance with Microsoft last year, taking over about 1,500 patents from the U.S. giant in what both sides called the start of a long-term partnership. No financial terms of that deal were disclosed.

Microsoft had briefly made a major play at the smartphone business after its blockbuster purchase of Nokia’s related assets in 2014. But it shuttered the business just two years later after failing to gain traction. At the time of the sale to Xiaomi, analysts said the acquisition could help the Chinese company defend itself from patent-related litigation in its bid to go global.

Xiaomi co-founder and CEO Lei Jun confirmed Nadella’s visit to the company in a post on his microblog, saying discussions were held without providing any detail.

“After our discussions ended, I gave him a Xiaomi MIX 2,” Lei said, referring to his company’s latest model whose screen takes up nearly the entire front surface and has received generally positive reviews. “Xiaomi and Microsoft have very close cooperation in smartphones, notebook computers and cloud services,” he added.

Also on Tuesday, Nadella visited the prestigious Tsinghua University, China’s leading science school, where he toured a lab and addressed a group of business students. In response to a question on the U.S. China relationship, Nadella said the two sides need to learn from each other and shed the idea of a zero-sum game. The U.S.-China technology relationship has grown tense over the last few years, with foreign firms accusing China’s new national security law of being over-intrusive. At the same time, the U.S. has vetoed a number of proposed purchases of local high-tech firms by Chinese companies, also citing national security concerns.

“At a time like this where China’s own contributions to fundamental technologies, whether it be in autonomous cars or electrification or in other fields, I think the U.S. can benefit a lot from learning from what is happening here,” Nadella said, according to a transcript of his remarks. “And China can continue to benefit by welcoming some of the world-class innovation in technology that comes out of the United States. … In fact, I’m a believer that it’s always important in all partnerships to look at how you can grow the pie for everyone, versus viewing it as a zero-sum.”

Nadella spent most of the day on Wednesday at a developers forum in Beijing.

Contact reporter Yang Ge (geyang@caixin.com)