Facebook CEO Mark Zuckerberg apparently spoke with Xiaomi CEO Lei Jun about the social network making an investment in the Chinese smartphone manufacturer. However, the two companies never came to an agreement, according to Reuters, which cites unnamed sources familiar with the matter.

Facebook Inc Said To Mull Xiaomi Investment

Facebook said to talk with Xiaomi

The two executives are said to have spoken at a private dinner in October during Zuckerberg’s visit to Beijing, according to Reuters’ sources. They reportedly talked about the commercial and political implications of Facebook making an investment in the Chinese company, which now carries a valuation of $45 billion. The social network has been banned in China since 2009, so any investment it might make in a Chinese company would certainly have strong implications.

One of Reuters’ sources said if Facebook had ended up investing in Xiaomi, it would have just been a small amount. The talks were said to have begun in the middle of last year.

Facebook targets China

More and more U.S.-based technology companies have been coming to the realization that China, the world’s most populous country, presents a wealth of untapped sales potential for them. Facebook is no different, but the social network has faced even more challenges than most Western companies because it has been banned by the Chinese government. Zuckerberg has been trying various tactics to woo the Chinese government and get the ban on his company lifted.

If Facebook did end up investing in Xiaomi, it would not only give the social network a key partner in China, but it would also raise Xiaomi’s profile. Many Chinese refer to the smartphone maker as “China’s Apple,” although the phones it makes are far less expensive than Apple’s phones. Securing an investment from Facebook, which has more than 1.3 billion users around the globe, would be a huge win for the growing Chinese company.

Why a deal didn’t materialize

According to Reuters, Xiaomi’s CEO was concerned about the possibility of political fallout from selling part of the company to Facebook because of the ban on the social network. The executive was also reported to be worrying that a deal with Facebook could damage Xiaomi’s relationship with Google, which is already a very important partner for the Chinese smartphone maker. Its phones run on Google’s Android operating system.

Xiaomi raised $1.1 billion in funds last month, and the talks with Facebook reportedly came before that fundraising round. Some of the investors that took part in the fundraising round include All Stars Investment, DST Global, and Yunfeng Capital, which is owned by Alibaba founder Jack Ma. Xiaomi earned a valuation of $45 billion in the funding round, and it’s only been three years since the company sold its first smartphone. Last year, Xiaomi’s revenue was around $12 billion.