Meitu Inc (美圖) is to form a venture with Foxconn Technology Group (富士康) to expand in Southeast Asia and India, as the Chinese mobile photo software firm seeks to triple sales at its burgeoning smartphone unit.
Both companies are set to put “tens of millions” of dollars into the venture, with investment to increase as the business grows, Meitu chairman Mike Cai (蔡文勝) said in a telephone interview.
The Xiamen-based company will own 55 percent of Meitu Mobile Pte Ltd, with Foxconn’s FIH Mobile Ltd (富智康) holding the rest.
Meitu applications that help users edit and share selfies — or self-taken photographs — have attracted 920 million users and prompted the company to sell its own phones.
The partnership with FIH — a contract manufacturer for Xiaomi Corp (小米) and BlackBerry Ltd — will tailor devices to local markets while targeting shipments of 5 million smartphones next year.
“Our experiences complement each other, so we may as well form a marriage and take on the market together,” Cai said. “Foxconn can help us expand more quickly, while Foxconn is transforming from just a contract maker to do more product sales.”
About 40 percent of sales would come from outside China, he said.
The companies are targeting Southeast Asia because Cai and Foxconn founder Terry Gou (郭台銘) see the potential in developing markets, FIH chairman Vincent Tong (童文欣) said, confirming details of the Meitu venture.
FIH is seeking to add new products and expand beyond contract manufacturing.
The stock lost 1 percent to close at HK$4 in Hong Kong, the lowest since March 19.
Meitu has sold about 1 million smartphones since 2013, when it started integrating its selfie software with devices.
The company expects sales of 1.5 million to 2 million units this year, Cai said.
The company’s apps allow users to adjust their appearance, such as by lengthening and slimming their legs, helping Meitu climb to the top of Apple Inc’s App Store photo and video rankings in China, according to market researcher App Annie.
Cai’s expansion will take on Xiaomi and Huawei Technologies Co (華為). The venture with FIH is expected to start in the second half of this year.
Meitu is setting prices above its Chinese rivals, as Cai expects female users to be prepared to pay more for a better camera and image quality.
The Hello Kitty version of Meitu’s M4 released this week sells for 2,499 yuan (US$403), while a model scheduled for later this year would sell for more than 3,000 yuan, he said.
That compares with Xiaomi’s Mi4, which retails for 1,799 yuan.
“We’re aiming for the mid and high end, and tapping into the female market,” Cai said.
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