Alibaba places China smartphone business bet with $590m Meizu deal

Pedestrians walk past a store of Meizu smartphones in Nanchang city, East China's Jiangxi province, November 29, 2012. [Photo/IC]

As well as intense competition, Alibaba and Meizu must contend with flagging sales of smartphones, even though China is the world's largest market for the devices.

Some 557 million people access the Internet via mobile devices, according to government data. But shipments in China were 389 million phones in 2014, down from 423 million the previous year, according to China's Ministry of Industry and Information Technology.

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Smartphone maker Meizu faces stiff branding issues by Jack Freifelder with China Daily

Chinese smartphone maker Meizu Technology Co will look to sell its smartphones in the US later this year, but the move could prove difficult because of the company's lack of brand recognition, according to analysts.

"If we went to Times Square and polled 100 people, or even 1,000 people, about top smartphone companies, Meizu is not going to be on that list," Ramon Llamas, a research manager with the International Data Corp's (IDC) Mobile Phones Team, said Monday in an interview with China Daily. "For a company like Meizu, differentiation is going to have to be key."

"If you look at some of the other Chinese companies, they all got their start at some of the smaller regional carriers - things like Cricket Wireless, Virgin Mobile USA and MetroPCS," Llamas added. "That was their foothold in the market. General market trends were favorable about two to four years ago, but the window is closing in the US."

Meizu said in December that previewing its smartphones at this year's International Consumer Electronics Show (CES) in Las Vegas was the first step in the company's attempt to bring its products to the US. Reuters reported on Jan 10 that more than 1,800 Chinese companies had products on display at the show.

"Meizu believes there's room in the US market for another player," the company said in a Dec 18 press release in announcing it would be at the 47th annual CES.

The consumer electronics company is based in Zhuhai, Guangdong province and manufactures smartphones and music players that are available in Hong Kong and on the Chinese mainland.

"For a small company like Meizu to come in, it strikes me as a bit of a bold move," said Wayne Lam, senior mobile handset analyst with international market research firm IHS Inc. "The North American market is a very developed market, and it's different from the rest of the world in that the handsets tend to skew at the higher end. Meizu doesn't have that branding or the marketing to really stand on its own."

"As a Chinese manufacturer, it boils down to who their partners are in rolling things out," Lam added.