Qihoo 360 (NYSE:QIHU) today announced a joint venture with Chinese phone maker Coolpad (HK:02369). Qihoo has invested US$409.05 million for a 45% stake in the mobile manufacturer. Smartphones shipped by the JV will be under brand Dazen, a sub-brand of Coolpad.

Qihoo 360’s mobile services, including security, app store and mobile search, will become the default options onthe  full portfolio of Coolpad’s smartphones.

Coolpad is one of the biggest Android phone makers and was one of the first to launch 4G smartphones in China.

Before Dazen, a mid- to high-end smartphone brand only sold online, was unveiled in January this year, Coolpad had been known as a low-end smartphone brand, most of its products having been sold through telecom operators or other traditional distributors. In the first half of this year, one eighth of Coolpad phones were sold online (while almost all Xiaomi phones are sold on its online shop or Tmall store).

About 24 million Coolpad phones were shipped in the first half of this year, generating US$19.3 billion in total revenue, a 55% increase, and US$53.1 million in profit (Xiaomi, the fast-rising star in China’s smartphone manufacturing market, shipped 26.11 million phones in the same period).

Some 36% of Coolpad’s total revenues in the first half of this year were from 4G phone sales, up from 3% in the same period of previous year. Twelve 4G phone models were rolled out in the first half.

Besides Coolpad and Xiaomi, other major players in China’s smartphone include Lenovo, Huawei, ZTE, OPPO, Vivo, and Meizu.

Qihoo 360 previously tried to enter the smartphone market in 2012, partnering with smartphone makers and selling customized models on a site of Qihoo’s. It’s similar to the way that Xiaomi works with hardware product companies. There are still several phone models featured on Qihoo’s online store for hardware products, but it was reported that phones didn’t sell well and Qihoo stopped cooperating with its major partner Huawei.

Editing by Mike Cormack (@bucketoftongues)

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com

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