Xiaomi Ventures, the VC arm of Xiaomi, has bought USD20 million worth of shares in gaming company Westhouse Group. Xiaomi will own 4.71% of Westhouse when the deal is completed.

Westhouse Group, including WestGame and WestGame Founders, was founded as a wholly-owned subsidiary of Kingsoft as early as in 1995. Kingsoft also invested USD5 million in Westhouse this time.

Kingsoft was one of the first Chinese tech companies to develop games in house. And gaming would be a big help to Kingsoft in terms of income.

Lei Jun, now better known as CEO and co-founder of Xiaomi, is still the chairman of the board at Kingsoft. He must know better about how gaming would help Xiaomi with revenues. Jian Xia Qing Yuan, an MMORPG, is one of the most popular video/online games in China’s gaming history.

Xiaomi now has shipped more than 25 million smartphones and another several million separate users of MIUI, the customized Android system developed by the company and also preloaded in Xiaomi phones. MIUI has been generating revenues from mobile gaming, paid software or content, and advertising, with gaming being one of the biggest revenue sources.

Mobile gaming surged in China in 2013. Some mobile developers earned good money in the year, as more users adopted mobile games and mobile payments became even more convenient. More than a few Chinese industry insiders expect mobile gaming market to be bigger than that on the Desktop.

China’s gaming market saw more developers shifting focus from traditional online games to mobile games in 2013. Massive venture capital funding went to mobile gaming market in the year, too. Westhouse has developed more than ten mobile games. Xiaomi must hope a couple of them will turn out to be as popular as Jian Xia Qing Yuan.

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com

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