Coolpad's CEO Liu Jiangfeng: Alibaba, LeTV And Xiaomi All Competing To Invest In Or Acquire Smartisan

There’s never short of news about Luo Yonghao, founder of Smartisan Technology, or Smartisan smartphones. Probably, his next move and the future of Smartisan smartphone has already become one of the major concerns in China's tech world near the end of 2016.

(Chinese Version)

There’s never short of news about Luo Yonghao, founder of Smartisan Technology, or Smartisan smartphones. Probably, his next move and the future of Smartisan smartphone has already become one of the major concerns in China’s tech world near the end of 2016.

On September, 21st, Smartisan’s financial record was released to public for the first time when one of its investors went public. However, Smartisan’s financial record suggested that its sales performance wasn’t quite satisfactory, which again brought Luo and his smartphone to public attention.

According to public data from Baotuan Ventures, a Chengdu-based subsidiary of Tap4Fun, Baotuan invested 30 million RMB (around $5 million) into Smartisan Technology on March, 16th, 2015 at a valuation of 2.11 billion RMB (over $316 million), and thus acquired 1.13 per cent stake of the company.

Tap4fun, a mobile game company, has already released a series of games including Spartan War and Galaxy Empire. But our real focus should be: Smartisan Technology lost 462 million RMB (over $63.8 million) in total in 2015, and 192 million ($27.8 million) in the first half of 2016 (unaudited result).

At the same time, Smartisan Technology’s total asset also shrank a great deal, from 825 million RMB (around $123.7 million) near the end of 2015 to 296 million RMB (around $44.3 million) as of June, 30th, a decrease of around 500 million RMB (around $75.0 million).

As a matter of fact, never has Smartisan been running well. Although it has already released three new products, it is reported that the total shipment volume of these smartphones is less than one million. Even LeTV, which entered the Chinese smartphone market later than Smartisan and was known for its emphasis on ecosystem, sold 1.178 million new models on September, 19th, the day it released the latest model, LeTV Super Smartphone.

The shrinkage of asset might have something to do with the lack of new models to boost its sales.

Poor shipment volume, shrinking asset as well as the lack of new models… It seems that Smartisan’s performance is getting worse and worse from every aspect. All these clues might suggest that Smartisan might be acquired one day in the future.

Many Chinese tech giants are competing to invest in or acquire Smartisan

Although rumor spread a lot about Smartisan’s acquisition, Smartisan’s future remains unknown up till now.

The other days, during the new product (Cool1) release conference of LeTV and Coolpad, Liu Jiangfeng, former president of Huawei, was appointed CEO of Coolpad. To everybody’s amazement, Luo also attended the conference. Some analysts suggested that LeTV might have acquired Smartisan, others pointed out the fact that Liu Jiangfeng and Luo Yonghao got along quite well with each other.

Based on public record, we find that, indeed, Liu speaks highly of Luo and shares similar characteristics with Luo, while Luo also once told TMTpost that he also appreciated Liu.

Although Liu later explained that he invited Luo to come and show his support, you should know that Luo seldom attended competitors’ new product release conference. Liu also responded to rumors about the possible acquisition of Smartisan by quoating a sentence from The Dream of Red Mansions, saying that “Truth becomes fiction when the fiction's true; Real becomes not-real where the unreal's real”. He also admitted that there might be some cooperation between Smartisan and Coolpad or LeTV.

Recently, Liu accepted an exclusive interview with Zhao Hejuan at “TMTpost CEO & Tech Gurus”, a special video program by TMTpost. During the interview, he responded to rumors of the possible acquisition of Smartisan for the first time and also revealed lots of anecdotes.

“Many people want to invest in Smartisan, like Alibaba, LeTV, even Xiaomi, but nobody can tell which company will get the opportunity at last. Personally, I appreciate luo very much,” Liu told TMTpost. (The interview will be released next week.)

Although Luo denied the rumor that Jianguo was sold to Alibaba, while Smartisan was sold to LeTV on Sina Weibo, he also revealed that Smartisan had already completed a new round of financing led by Chinese tech giants. If so, then other major tech giants are indeed competing to invest in Smartisan.

This June, Luo pledged half of his stock rights to Alibaba, so we can’t rule out the possibility that Alibaba will continue to invest in Smartisan. As to LeTV, it also needs the support, design and innovation of brands such as Smartisan. Some analysts predicted that Luo was to announce the details of this round of financing during the new product release conference of Smartisan T3. Liu also told TMTpost that “You would soon find out the answer”.

“Luo is also gradually changing. I also give him some advice, and I really appreciate him,” Liu reiterated several times in the exclusive interview.

The interesting thing, though, is that Liu’s advice to Luo is: “Companies that rely too much on its founder’s personal charm won’t last long.”

Companies relaying too much on its founder’s personal charm won’t last long?

To some degree, Smartisan rose to popularity due to its emphasis on craftsmanship and personal values and preferences. Luo also seemed to be well aware of Smartisan’s problem and has already been making efforts to attach more importance to product instead of his own personal charm. However, Qian Chen, the second chief of Smartisan, still chose to leave Smartisan for unknown reasons.

To the outside observer, Qian’s leave was fatal to Smartisan. However, Luo seemed to know that it was time to find another one to save Smartisan.

For a long time, R&D was the bottleneck for Smartisan to carry out new models. Near the end of last year, Smartisan’s product chain even “collapsed”.

Strictly speaking, Smatisan seems to still be struggling over its product chain. Luo hinted that Smartisan 3, with long battery endurance and two different versions (T3 and T3 L), was to be released in October. Other sources suggest that the new model won’t be released until December.

However, as early as July, insiders at Smartisan revealed that T3 was to be released near the end of August. Later on, some media revealed that it was to be released in September at the LeTV Sports Ecosystem Center. The release time was later delayed several times so that nobody know for sure when will the new model be released exactly.

In July, Luo accepted an interview with Caijing and revealed that he had already enlarged the R&D team so that he wouldn’t repeat the same mistake and release T3 as scheduled.

On the one hand, Smartisan T3 is still not released yet; on the other hand, Smartisan has already been promoting its own VR products. The latest news suggest that Smartisan is to release its flagship model Smartisan T3, Jianguo U2 and VR products in the upcoming new product release conference. If so, then it would be quite a bold move for Smartisan since it’s still suffering from so many problems.

Smartisan’s fans, however, are getter increasingly impatient due to the high defective rate.

“Some old colleagues once asked me what we should do if the fourth product was still not good enough. My answer is quite easy: then we should bury ourselves in developing the fifth product,” Luo once said.

He also admitted that the worst outcome for Smartisan was to be acquired, and that if such thing really occurred, then it must be his own fault.

As a matter of fact, Luo has already been controlling his desire to express himself and control the company too much, as well as instilling his personal preferences and values in the company.

It is our wish that Smartisan, with increasing focus on product and less and less reliance on Luo’s personal values, will continue to run and develop some really brilliant products to consumers.

(To find what exactly Liu Jiangfeng revealed to TMTpost’ CEO Zhao Hejuan, why did he join Coolpad and LeTV, please subscribe to TMTpost TiVi channel.)

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[The article is published and edited with authorization from the author @Han Pei please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.

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