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A $5 billion app that makes your selfie more beautiful is set to IPO

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Angelababy: now endorses Meitu

When it comes to the art of the selfie, Kim Kardashian knows a thing or two. According to the reality TV star, lighting is critical for taking a flattering photo. It is also important to find the best angle: “For me, I know my perfect angle, it’s my chin down.” It also helps to take as many pictures as possible to get the best shot. Kardashian admits she often takes 300 photos until she finds the perfect one.

In China, however, most selfie devotees rely on Meitu. The beautifying mobile application allows users to colour-correct their complexion, smooth over their blemishes, and even enlarge the iris to make their eyes look bigger.

The company is so successful that it is now planning to go public. Last week, the Xiamen-based firm filed a listing application in Hong Kong for an offering that could raise up to $1 billion, which would value the firm at $5 billion. If successful, it would be the second-biggest tech IPO globally this year, after Japan’s mobile messaging app Line in July.

Founded in 2008 by Cai Wensheng, Meitu got its start by releasing a watered-down version of the Adobe Photoshop software that allows users to edit images quickly on their desktop PCs. However, Cai soon found that users mostly used the platform to airbrush their faces. He also bet that the smartphone would replace the PC, so the firm changed tack and released Meitu Pic, a one-touch mobile beauty app that has made the company a household name.

The app, which is free for download, is straightforward to operate: users only need to make a few taps on the screen and soon they’ll appear thinner, taller and fairer. The app also has built-in filters to enhance the images. Sharing is also a breeze, because Meitu allows users to post the edited images on multiple platforms like WeChat, Sina Weibo and Instagram.

“When it comes to image editing, there is no software better than Adobe Photoshop. But the problem with that is Photoshop is complicated to navigate and is not ideal for non-professionals. Meitu, on the other hand, makes the application so straightforward and easy to use. It is great for someone with no Photoshop background,” one tech blogger concludes.

The company soon followed up with Meipai, a similarly easy-to-use video editing platform that also comes with flattering (read: soft and blurry) filters. As of the end of October last year, it boasted 170 million users while Meitu Pic has over 500 million users.

Perhaps the main reason for the popularity of Meitu’s apps is that they are appealing to women. “We have done some studies on selfie habits, and we found that 70% of women take selfies, and only 15% of them are willing to do it without any make-up,” says Wu Xinhong, the company’s chief executive. “Meitu is not only about embellishing your photos and showing them to others. The point is that the more you take beautiful selfies, the more confident you will become.”

Still, beneath the glossy surface, Meitu has a blemish. Despite having such a large user base, the company is not yet profitable. Between 2014 and the first half of this year, it reported a net loss of Rmb6.2 billion ($930.65 million). Cai says he was reluctant to open the platform to advertisers because he didn’t want to sacrifice user experience. Instead, since 2013, Meitu has been making hardware with its own brand. Smartphones accounted for 95% of its sales in the first half of this year, while the gross margin for Meitu’s app business was negative 5.9%, according to the company’s listing prospectus.

Meitu smartphones come with a 5-inch HD screen, along with two 21-megapixel cameras (front and back, obviously) and a full light for taking selfies even when lighting is poor.

The company has recently tapped actress-model Angelababy to endorse its smartphones. Meitu also set up an office in Los Angeles last month and plans to open another one in Tokyo, saying overseas expansion is its main focus for this year.

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