While has announced its entry into the car-making field, the city where the business will be housed remains undetermined, making it a target of competition from several Chinese cities.

The city of Wuhan in central China has communicated with Xiaomi and is now actively promoting the project to locate there, the Wuhan Municipal Bureau of Commerce said in a recent response to a question on a message board in the Changjiang Daily.

For local governments, attracting a car company to the city would undoubtedly give a significant boost to local economic growth, especially if the car company is owned by China's largest smartphone maker.

Ever since Xiaomi officially announced its car-making decision, the residents of Wuhan, the hometown of Xiaomi CEO Lei Jun, have suggested that the Wuhan city government bring in Xiaomi.

In early April, Wuhan's Commerce Bureau replied to such messages, saying that the city has been working closely with Xiaomi, and since the Xiaomi smart car business was officially established on March 30, the city has attached great importance to it and actively carried out contacts with it.

Local media outlet ushknews.com said on April 2 that Wuhan Economic Development Zone has set up a special working group to communicate with Xiaomi "proactively and enthusiastically" to showcase the city's high-quality automotive ecosystem and business environment.

The Wuhan Economic Development Zone has a nearly 30-year history of development and is currently focusing on the automotive industry as a pillar industry. The city is promoting the transformation and upgrading of traditional automobiles to next-generation vehicles.

On March 30, Xiaomi announced on the Hong Kong Stock Exchange that it planned to set up a wholly-owned subsidiary for its smart electric vehicle business.

Xiaomi's initial investment in the automotive business is RMB 10 billion ($1.54 billion), with an expected investment of $10 billion over the next 10 years, and Lei Jun will also serve as CEO of the smart electric vehicle business.

Previously, there were rumors that Xiaomi had already determined the city where the car business would be located, but on July 23, Wang Hua, general manager of Xiaomi's public relations department, said that the news that Xiaomi's car manufacturing had not landed in Beijing, Shanghai and Wuhan was not true, and all information was subject to official disclosure.

SAIC-GM-Wuling, Xiaomi partner on 'Internet ecology'