Jia Yueting, CEO of LeEco Holdings Ltd, presents LePhone 2,the second generation smartphone manufacturered by the company during a product launch event held on April 20, 2016 in Beijing. (Photo provided to chinadaily.com.cn)
Chinese internet company LeEco announced last weekend that its founder Jia Yueting had been appointed as the new chairman of the board of domestic smartphone maker Coolpad Group Ltd.
Holding a total 28.9 percent of Coolpad's shares, the company has become the largest shareholder of the handset manufacturer.
LeEco first invested HK$2.74 billion($353 million) to buy Coolpad's shares on June 28.
In mid-July, the company bought another 11 percent of Coolpad's shares from Data Dreamland, the former largest shareholder, for HK$1.047 billion.
According to James Yan, research director at Counterpoint Technology Market Research, leading video content provider LeEco's move to invest in Coolpad aims to enlarge its subscriber base.
The two companies have been working together to launch a new flagship named Cool 1.
A certified Weibo user, believed to be the official account of the new brand, was registered in late July on the twitter-like social media platform.
A series of promotional posters have been posted online by the account, showcasing a new handset launch event to be held on August 16 at the LeSports Center, originally the Beijing Wukesong Culture & Sports Center.
According to online rumors and unconfirmed pictures released on the website of Telecommunication Equipment's Network Access Managements (TENAA), the new handset will be in the upper echelon with Qualcomm's latest Snapdragon 820 chip and 4GB of RAM. Also the phone will equipped with 2K display, 64GB of storage, and 3,500mAh battery.
Users are able to have interchangeable operating systems, as both LeEco's EUI and Coolpad's CoolUI, which are all Android Marshmallow-based, will be featured on the device.
According to the company, before the stock deal, Coolpad's 2016 global sales target was 30 billion yuan -- 70 percent from China and 30 percent from overseas -- and the company predicted its overseas market sale will increase 100 percent year-on-year within the next 3 to 5 years, making its overseas sales equivalent to its China sales.
"The strategic significance is more important than the actual sales volume for the forthcoming new device since it's the first co-developed phone," said Counterpoint's Yan.
Some industry analysts noted that the online marketing and online distribution business model that initiated by domestic smartphone maker Xiaomi and followed by many vendors including LeEco, has met a slowdown period as the first smartphone upgrade tide has ebbed.
"Online sales currently accounted 30 percent of the total 450 million units sales volume in the country. The core competitiveness for the nation's top ten players that rely heavily on online distributions to boost their sales will be their brands' reasonable performance," Yan added.
Coolpad's products will be introduced on LeEco's online distribution channels and LeEco's video content-powered "eco-system" business model will also be ingrained in Coolpad's gene, producing more video accessibility to its future hardware and software.
In addition to more than 500 direct offline stores in China, Coolpad will also boost the new alliance's market expansion in North America, Europe, Asia and Africa.
"We hope the combined sales of both brands will reach more than 100 million units in 2017," Jia, head of both LeEco and Coolpad, said on his Sina Weibo account.
Being a traditional handset maker, Coolpad, which used to collaborate with telecom carriers to promote its new phones, has currently faced fierce competitions from the other domestic new comers in both online and offline sales perspectives, and the company has been keen to seek new partners to break through its predicament.
Last year, the company launched Coolpad Note 3 in India through local e-commerce distribution channels.
