Calling for help

Zhuhai government invests in embattled Meizu


Zhuhai government invests in embattled Meizu

Over the years, Huang Xiuzhang’s disdain for Lei Jun, founder and chairman of Xiaomi, has been well documented.

When Xiaomi unveiled its most recent flagship phone, the Mi 9, at a price of just Rmb2,999 ($470) – i.e. half as much as the Samsung Galaxy S10 – Huang, who is the founder of rival smartphone maker Meizu, was dismissive: “People who are cheap cheapen the whole industry.”

Back in 2012, when consumers complained that the battery life of Meizu’s MX2 model was weaker than Xiaomi’s handsets, Huang angrily replied: “Go away if you are not satisfied. Some people just blindly repeat what other people say.”

Huang is a notorious perfectionist. Meizu’s handset designs are often described as a work of art: he is known to spend millions of yuan on prototypes to find the right dimensions; he also overhauls the entire supply chain to produce a new model (it should come as no surprise that he sees the late Steve Jobs as his role model).

Lei, on the other hand, is a savvy marketer. He understands what it takes to influence consumer behaviour. To that end, Xiaomi’s latest smartphone now uses a Qualcomm processor and Sony camera. The company was also one of the first to make full screen handsets in China.

“In the end, users could recall all the various specs of a Xiaomi phone but no one could describe what sets Meizu apart,” ikancai, a tech news portal, concluded when it compared the pair. “So Lei Jun was hailed as a genius. Huang, meanwhile, was reckoned to be stubborn and ostentatious.”

Huang is going to need to do more to convince consumers of Meizu’s worth. The company that was once valued at Rmb30.5 billion ($4.7 billion) is now on life support. Sales have dwindled from 25 million units a year in its heyday to around 8 million units today. The number of employees at the Zhuhai-based firm also dropped from 4,000 two years ago to 1,000 today. It has had to close down many of its retail stores.

The troubled smartphone maker recently finalised a round of funding from Honghua, a Zhuhai government-backed fund. In the wake of the deal, Honghua has a 2% stake. Huang, meanwhile, will remain the largest shareholder and internet giant Alibaba will likewise retain its position as the second-largest shareholder in the company, says Time Weekly.

Founded in 2003 by Huang, who flunked out of high school when he was 16, Meizu got its start as a manufacturer of MP3 players. Sensing that it was only a matter of time before MP3 players were displaced by smartphones, Huang ventured into handset manufacturing in 2006 churning out smartphones that were based on Nokia’s Symbian operating system.

The next year, Apple launched the iPhone and Meizu released its flagship phone the M8, selling as many as 100,000 units in two months.

It took Huang two years to perfect his next smartphone, the M9, which switched to the Android operating system. The handset was so popular that it became the best selling smartphone in China in 2009. Lei Jun, too, was a fan. He even expressed an interest in acquiring Meizu from Huang but was rebuffed, according to Jiemian.

Undeterred, the next year, Lei founded Xiaomi. In 2012, Xiaomi sold as many as 7.1 million smartphones, compared with Meizu’s one million. The following year, Meizu reached two million units but Xiaomi was already at 20 million.

Zhuhai is not the first city government to to try to revive a local handset maker with a cash injection. In 2017, the Chengdu government lent Rmb600 million to the struggling smartphone maker Smartisan to help keep it afloat.

But Meizu might continue to struggle in the highly competitive smartphone handset marketplace. According to research firm Canalys, sales fell by 3% year-on-year to 88 million units in the first quarter of this year, the lowest in six years. With the exception of Huawei, shipments for all the other major brands have decreased.

Small wonder then that even Huang claims that he’s had enough. “If I can choose, I wouldn’t want to be the largest shareholder; it is too tiring,” he wrote on a Meizu forum at the beginning of this month.

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