Chinese Smartphone Maker Meizu to Raise Funding and Set up R&D Center in the US to Take on Xiaomi

3 min read

Meizu as a smartphone maker isn’t so well-known to the world outside mainland China as Huawei, ZTE and, more recently, Xiaomi. However, Huang Zhang — aka J.W. (Jhon Wong), founder of Meizu is a legendary figure in China’s consumer electronics market. For a long time he was the chairman of the board but now is back to retake CEO job, as Meizu officially announced today.

In his talk to employees on last Friday, J.W. announced big plans that the company would introduce external funding, change the shareholding structure and establish a R&D center in the U.S.. The company has confirmed of talks with potential investors, saying Gree, one of the largest air conditioner makers in China, will possibly make the biggest contribution in this round.

For the first time Chinese customers queued up for a designed-in-China smartphone.

Founded in March 2003, Meizu was one of the most famous MP3/MP4 player brands in China before it shifted focus to making smartphones around 2006.

The first model M8, with a Windows CE6.0 -based custom operating system, was launched in February 2009. Then Meizu decided to adopt Android instead and would launch M9, pre-loaded with Android 2.2, in January 2011. M9 was warmly welcomed that for the first time Chinese customers queued up for a designed-in-China smartphone.

Meizu would launch other three Android models of MX series in the next two years. But Xiaomi, founded no earlier than April 2010, would steal the show and become today’s hype in China’s smartphone market.

Meizu MX3, Launched in 2013


Xiaomi stole the show.

There were several factors that helped Meizu become a well-received brand. First, J.W. was one of the first tech founders in China that interacted with users in an online forum. A sense of belonging keeps Meizu users sticking around. J.W. then became a charismatic figure.

Second, Flyme, the customized Android system by Meizu, is well refined from the original; third, since M8, Meizu phones have been with high specs and at comparatively low prices than those for smartphones by Apple, Samsung and so on.

“Aren’t those common practices in China?” you may ask. If those sound familiar to you the chances are you read stories about Xiaomi. Several days after Xiaomi launched its first smartphone in 2011, J.W. accused Lei Jun, co-founder and CEO of Xiaomi, of stealing Meizu’s business secrets for the former once visited Meizu as a potential investor.

What’s true is the first two Xiaomi smartphones were like Meizu’s a lot. Xiaomi also cultivated the online forum culture, has been working hard on its custom Android ROM and sells phones at even lower prices. Meizu built brick-and-mortar retail stores, similar to Apple Retail Stores, and Xiaomi started establishing those too from last year.

Xiaomi has been touting that MIUI, the custom Android ROM, will generate future revenues through paid content/services and advertising after the one time sale of the hardware. But it’s not necessarily a difference between the two as Meizu is also able to make money there. Partners like Wandoujia, the mobile app/in-app content search service that is pre-installed in some Meizu phones, will surely bring, or has started generating, income for Meizu later on.

To take on Xiaomi.

The latest models by Xiaomi and Meizu are pretty close in specs, prices alike. But it is rumored that the number of Meizu phone shipments in 2013 is way smaller than Xiaomi’s. It is widely agreed that Xiaomi’s success has a lot to do with marketing while Meizu had been a low-key company till it felt threatened by the former recently. Meizu did a high-profile launch event for its latest model in 2013, but it didn’t turn out so impressive as Xiaomi’s.

J.W. is now back to tackle it. He, who never appeared at any launch event or any tech events in China, said he should practice speaking in public — Xiaomi’s Mr. Lei is famous for faking Steve Jobs at the company’s first launch event.

There will be more practical changes than creating hypes. Meizu announced to lower the price for MX3 to where average Xiaomi phone is sold for.

Meizu has been self-funded since the founding ten years ago and the founder had no intention to raise funding from outside investors. J.W. said he recently came to realize external financing could help the company be more capable given current smartphone market is at a market-share grabbing stage.

There was no incentive programs for the sake of increasing employee performance or attracting talent from outside, either. That will change too.

In his talk on last Friday, J.W. also said they’d establish a R&D center in the U.S. sooner or later. Last month, Meizu management confirmed of a new model with Ubuntu built in saying its American partner (possibly Canonical) would help bring it to the U.S. market.