China’s highly competitive domestic smartphone market has just taken another interesting turn.
On Monday, reports emerged that Letv, one of the newer entrants in China’s smartphone game, has purchased an 18 percent stake in Chinese phone maker Coolpad through a Hong Kong subsidiary. The shares reportedly cost Letv HK$2.73 billion (about US$350 million), making it Coolpad’s second-largest shareholder.
The deal gives Letv a significant stake in a company that has established mobile phone R&D, manufacturing, and sales channels for phones across China. Coolpad also has about 5,000 mobile-related patents that may be of interest to Letv. It’s a move that’s clearly aimed at strengthening and expanding Letv’s domestic smartphone operations.
The investment and apparent partnership between Letv and Coolpad is bad news for Qihoo 360 and its smartphone joint-venture Qiku. After plunging US$400 million into the joint venture in partnership with Coolpad, Qihoo is now seeing its smartphone-making partner’s interest turn toward aiding a direct competitor. In what most are interpreting as a response to the Letv-Coolpad investment news, Qihoo 360 CEO Zhou Hongyi reportedly posted the following message to his WeChat account:
Whoever stabbed me in the back and is trying to screw me, my principle is that I will definitely fuck back.
It’s hard to know exactly what Zhou is planning, but the Qihoo CEO has never been one to shy away from a fight.