Alibaba Group Holding Ltd. is paying US$590 million for a minority stake in Chinese smartphone maker Meizu Technology Co.
The deal will help Alibaba push its mobile operating system in China through Meizu’s handsets. In return, Meizu will get access to Alibaba’s e-commerce sales channels and other resources, Reuters reported, citing the companies’ joint statement.
Meizu, based in Zhuhai, Guangdong province, has a less than 2 percent share of the country’s smartphone market. Its reach is crimped by domestic leaders such as Xiaomi Inc., Huawei Technologies Co. Ltd. and Lenovo Group, as well as multinational giants Apple Inc. and Samsung Electronics Co. Ltd.
Together, the leading five brands accounted for nearly 60 percent of China’s smartphone market in the fourth quarter of 2014, said Nicole Peng, a Shanghai-based analyst with data research firm Canalys.
Aside from the intense competition, Alibaba and Meizu must contend with flagging sales of smartphones, even though China is the world’s largest market for the devices, the report said.
Smartphone shipments in China fell to 389 million units in 2014, from 423 million the previous year, according to the Ministry of Industry and Information Technology.
– Contact us at [email protected]