LeTV has been looking to diversify into the smartphone and electric car manufacturing industry after the Chinese government restricted the streaming of overseas programmes and TV series on online platforms.

In December, Qihoo invested US$409 million in Qiku, a joint venture with Coolpad to join the increasingly crowded smartphone industry in China. LeTV’s big stake in Coolpad means that Qihoo’s joint venture partner could now be supporting its competitor in the Chinese smartphone market.

“Coolpad obviously knew what they were doing … although it sends a conflicting message to Qihoo, who put in US$400 million in their joint venture recently,” said Doug Young, an associate professor of financial journalism at Shanghai's Fudan University.

Coolpad has already entered the smartphone market in India, with two mid-tier Dazen smartphones available from this month on e-commerce platform Snapdeal. With LeTV announcing in April that it would launch two of its three devices in India by the end of the year, the company likely hopes to leverage Coolpad’s sales channels in India, according to Young.

“From Coolpad’s standpoint, perhaps they are trying to diversify their partners instead of putting all their eggs in one basket,” Young said.

“LeTV might not necessarily be interested in Coolpad’s manufacturing channels, but in their IP and sales channels since [LeTV] is probably more interested in exporting and overseas sales.”