Qihoo CEO says he was 'stabbed in the back' after LeTV invests US$352m in smartphone maker Coolpad
LeTV, an online video content provider and one of the latest Chinese companies to enter the smartphone industry, has bought an 18 per cent stake in Chinese smartphone maker Coolpad for US$352 million.
LeTV is now Coolpad’s second largest shareholder, after purchasing the shares from Data Dreamland Holding, which now owns about 20 per cent of the company.
Coolpad, which is mainland China’s third largest smartphone company, has over 5,000 mobile-related patents that may be of interest to LeTV as the latter branches into the smartphone industry.
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 a bid to court Hong Kong audiences, the company is also splurging up to HK$1 million per episode on the television dramas it produces for the city.
Chinese internet security giant Qihoo’s chief executive Zhou Hongyi was not pleased about LeTV’s latest investment. According to TechWeb, Zhou wrote on WeChat that "whoever stabbed me in the back and is trying to screw me, my principle is that I will definitely f**k back".
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.
India is one of the world's fastest growing smartphone markets, and Chinese smartphone makers have been expanding into the subcontinent rapidly, with Xiaomi launching its Mi4i device at an event in New Delhi in April.
“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.”