Meitu confident of global success despite bumps in the road
The past two and a half months has been a both a tough and exciting time for Chinese technology company Meitu.
Since its December initial public offering in Hong Kong, the Xiamen-based company has seen its shares drop below their offering price and its signature app surge to fame in overseas social media, followed by a public relations crisis sparked by data privacy concerns.
But the company’s global ambitions haven’t been dented.
“Few Chinese companies can reach overseas users,” company chairman Cai Wensheng said on Monday. “Meitu will be the leading one.”
Cai said Meitu now has over 430 million users abroad. The company plans to tap markets in Europe and North America, set up more international offices, and eventually turn its video and live-streaming apps into global social platforms.
However, these ideas have yet to be appreciated by Hong Kong investors who are surrounded by financial and property giants.
Two months ago the company raised US$629 million in the city’s largest tech IPO since 2007, but the stock has been hovering below its offering price before edging back up to HK$8.50 only three weeks ago. The shares closed at HK$9.16 on Monday, a 7.76 per cent rise from the IPO price.
“I think we are undervalued, but this is the market,” Cai said. “Hong Kong needs some time to adapt because it has so few tech companies.”
The company has been trying to convince investors of its ability to earn profits. An e-commerce platform catering to female consumers would be launched in March, while in app advertisements based on each user’s taste will start to pop up this year. Cai said the company aims to eliminate losses by the end of 2017.
Yu Jianpeng, an analyst at ICBC, said Meitu will find its apps more difficult to attract advertisers compared to social networking platforms. “Meitu is basically an editing tool,” he said. “It has a large number of users, but they don’t open it frequently. Investors still can’t see a clear way for it to better monetize its traffic.”
In reaching overseas markets, the company also has to address doubts that would never be a problem home on the mainland.
In January, its main app went viral on overseas social media with Twitter users circulating anime-style photos of US president Donald Trump and Russian leader Vladimir Putin that were produced with the Meitu app. At one time, the product moved up more than 1,000 places in Apple’s US app store to rank 11th among all free apps.
The sudden popularity was then followed by media reports saying the apps were collecting information unrelated to photo editing, such as location and phone identity, and sending it to Chinese servers.
Meitu said in a statement that it did not sell data in any form, and that the data was only collected for optimising performance and developing in-app advertisements.
Some netizens even accused Meitu of being racist by whitening people’s skin via the app, although users can also darken their skin colour in photos.
Cai believes the controversies arose because the app became “too popular”, but he admitted that cultural differences pose the biggest challenges in going global.
For example, programmers at Meitu need to figure out which kind of skin effect users from each country prefer.
“Chinese and Japanese women both like white skin, but they like different kinds of white,” the 47-year-old chairman said. “Japanese like to have more blush than Chinese.”