Xiaomi Technology's set-top box suspended services a week after it debuted in Beijing as rumours circulated that the device is under government investigation for violating broadcasting rules.
The set-top box, which connects the internet, mobile devices and television sets, was reported in the media to be working with unlicensed online video programme providers and to have been put under investigation by the State Administration of Radio, Film and Television (SARFT), the country's broadcast watchdog.
Beijing-based Phoenix New Media cited sources close to the authority as saying that it has required Xiaomi to rectify the product.
Xiaomi said on its microblog that its set-top box would stop offering video services from yesterday due to systems maintenance.
A spokeswoman said the company had no comment on the reported government investigation.
Calls to the authority went unanswered yesterday.
Xiaomi, known for its popular low-price smartphones, has been seen as China's answer to Apple. Last week, the company launched "Xiaomi Box", a similar product to Apple TV but with a more tempting price. The box would broadcast online films, games, music and other applications on television, and is priced at up to 399 yuan (HK$496) each.
Wu Chunyong, an analyst, said the internet-television industry had just started to boom on the mainland and there were a lot of underground set-top box makers offering illegal content.
"How the government authority will deal with Xiaomi's case will reflect its attitude towards the future development of the industry, showing whether they would like to loosen or tighten control over it," Wu said.
Lei Jun, the chairman of Xiaomi, said at the launch event that the product would meet all the government rules when sales start next month. Prior to that, the company sold about 600 trial set-top boxes to dedicated users.
The central government has long imposed tight control on television programmes than internet content.
In a SARFT document, all set-top box manufacturers are required to get content only from the seven licensed internet-television content providers in the country including China National Television.