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Big-talking smartphone maker Smartisan might be in trouble

Smartisan’s founder Luo Yonghao has claimed that his smartphones are the best in the world, but they may not make smartphones for much longer

This article originally appeared on ABACUS

Smartphone maker Smartisan has attracted more attention for its eccentric leader and feverish fans than the actual products they make. Now, the company is catching attention for its apparent slide.

Last week, local media reported that Smartisan has a cash crunch, and is planning to lay off as many as 40% of its workers. Rumors have also been swirling that the company’s charismatic founder Luo Yonghao -- likely the only tech leader that’s managed to charge users to attend product launches -- is suffering from depression.

Luo swiftly responded with threats to sue the “hoodlums” and even offered to go to the hospital to check his mental health. But Luo is not denying that Smartisan is in trouble.

“The company really is in a crunch, but please give Smartisan time,” Luo told local press.

And this week, more bad news hit after a subsidiary of tablet maker Coolpad says it will sue Smartisan. Yulong Communications Technology says it’s owed US$650,000 by the smartphone maker for components.

The chain of events has been tough for Smartisan, with analysts saying that while it’s been ahead of the curve in terms of products, it’s also out of touch with the fast-moving smartphone market.
Some are even blaming Smartisan’s slow growth on Luo’s perfectionism. Luo Yonghao, a former English teacher, became famous in 2011 after smashing refrigerators with a hammer in front of the headquarters of German appliance maker Siemens. Apparently, Luo was unsatisfied with their quality.

The hammer has become Smartisan’s symbol -- signaling their refusal to make subpar products. Luo continued with his antics by bashing Xiaomi and Apple, which he accused of losing its soul. After Smartisan launched its new R1 smartphone model featuring 1 terabyte of storage, Luo said Apple “will copy us like crazy”. (Apple has yet to release a smartphone with 1 terabyte of storage.)

The launch of Chinese start-up Smartisan's new smartphone model, the R1 and the TNT workstation led by company founder and chief executive Luo Yonghao, in Beijing. Picture: Smartisan
  But Smartisan fans love Luo’s sharp rhetoric. More than 37,000 people paid to see the R1’s product launch this May helping the company rake up $751,000 in ticket sales.

Based on the 1 million smartphones the company sold in 2017, Luo said that Smartisan expects to sell 3.3 million in 2018. But things didn’t quite go as planned, amid a wider slowdown of Chinese smartphones.

Smartisan's other venture, Bullet Messaging, has also fallen in popularity as fast as it has risen. The so-called alternative to WeChat topped China’s iOS App Store chart for nine days after it launched only to have its daily downloads drop significantly.

Luo has been trying to assure fans and investors through Smartisan’s Weibo channel that everything is fine at the company, and that salaries to staff are being paid on time despite reports otherwise.

We asked the company about its plight, but they declined to comment -- pointing us to Luo’s Weibo account for more information.

Talking about the Coolpad lawsuit, Luo said that they are “negotiating with Yulong and will handle it properly." He added that the two sides initially agreed that some of the costs will be paid off in the form of promotion and publicity, but the arrangement got complicated after staff reshuffles both in Yulong and in Smartisan.

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