Corporate China
PUBLISHED : Tuesday, 27 May, 2014, 8:53am
UPDATED : Thursday, 29 May, 2014, 6:00pm

Weibo: Smartisan charms techies, Jumei's Chen on defensive

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

The tech world was buzzing this past week over the launch of yet another domestic smartphone brand, though I'll admit I was a bit puzzled by all the microblog posts from a wide range of executives. It was only after I consulted one of my Chinese friends that I realized the launch of the inaugural smartphone from domestic newcomer Smartisan was far less about a new product, and more about Luo Yonghao, China's most famous English teacher. Meantime, newly rich tech executive Chen Ou was sending out his own series of microblog posts aimed at detractors who credited his family connections with the success of his newly listed online cosmetics seller Jumei International (NYSE: JMEI).

Let's start our weekly microblogging round-up with Smartisan, which likes to point out its English name derives from a combination of the words "smart" and "artisan". That combination certainly seems in line with the company's bid to tap the market for mid- to high-end smartphones. The artisan image also jibes with its odd choice of "hammer" as the Chinese name to describe its new series of phones.

I read a few online reviews of the phone, which formally launched last week and got generally positive reception. But I was puzzled by all the attention for what seemed like yet another smartphone launch until my friend explained the Luo Yonghao connection. For others who are less familiar with this man, Luo sits atop an empire of English-language teaching materials, and his name is known by almost any Chinese who has spent time abroad or aspires to do so.

That would explain the gush of posts from tech executives about the launch for the Smartisan T1. Executives discussing the launch included officials from smartphone chip giant Qualcomm (Nasdaq: QCom), e-commerce leaders Alibaba and JD.com (Nasdaq: JD) and newly listed mobile game developer Sungy Mobile (Nasdaq: GOMO). A post from online clothing seller Vancl vice president Xu Xiaohui was typical of the bunch, including more praise for Luo than the actual new T1 model

My friend informs me that Luo has no background in smartphones, which makes me wonder whether this new model will be able to differentiate itself from the many other new domestic brands flooding the market. But then again, Xiaomi's charismatic co-founder Lei Jun had little or no background in smartphones, and his company has become one of the hottest names in the area in the last two years. So perhaps there's some hope for Smartisan, though I personally find the company's name and image its trying to cultivate just slightly pretentious.

From Smartisan and Luo Yonghao, let's turn our attention to Chen Ou, who was justifiably proud when his company Jumei successfully launched its recent New York IPO. Weakening market sentiment forced Jumei to cut its initial fund-raising target by more than half, with the company ultimately raising $245 million (HK$1.9 billion). But then it managed to price its shares quite strongly, and saw the stock rise 10 per cent on its first trading day.

Chen should have been pleased at the IPO performance, which made him a rich man. But instead, he was bristling on his microblog last week over remarks from some detractors who were attributing his success to his status as a princling, the derogatory term given to the sons and daughters of well-connected government officials. It seems that Chen's father was a high-level official in the mid-sized Sichuan city of Deyang. Chen himself is one of China's youngest Internet executives at just age 30, and was educated in Singapore and the United States.

In his post on the matter last week, Chen points to his own academic success, including his receipt of several academic scholarships. While Chen is probably responsible for much of his own success, his family connections almost certainly were an important factor in his ability to go abroad and receive a top-notch education.

But such roads to success seem relatively common these days for the younger Chinese generation,whose parents spend heavily both in terms of money and milking their personal connections to give their children the best chances of success. Based on my extremely limited knowledge in this case, Chen's own path doesn't look too unusual and even seems less extreme than many of the other cases one reads about these days.

To read more commentaries from Doug Young, visit youngchinabiz.com

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