LeEco is Unstoppable: Becomes Largest Shareholder of Coolpad Group

LeEco, the Chinese brand which was pretty much unknown in India less than a year ago, is now pretty much unstoppable. LeEco is now the largest shareholder of Coolpad Group and its Founder, Chairman, and CEO Jia Yueting has become the Chairman of the Board and the Nominating Committee of Coolpad. For the record, LeEco is now a 28.9% shareholder of Coolpad.

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While this will certainly help Coolpad in the long run, it will bring LeEco unprecedented opportunities to catapult itself in to one of the leading smartphone makers going around. This is more of a collaborative effort than a standard merger on the part of the two companies and clearly LeEco is now calling the shots.

LeEco and Coolpad will adopt a dual-brand strategy where the two brands co-exist and target at different market segments. The two will also collaborate extensively in resources sharing, business development as well as technology research.

– Jia Yueting

This dual-brand strategy that Mr. Yueting is referring to will push LeEco’s market share up by a few notches.  Coolpad is already a reputed brand and ships a lot of smartphones in the Asian market so a dual-brand strategy does make sense. Killing the Coolpad brand and letting the LeEco brand grab all the headlines is definitely not something on Mr. Yueting’s mind.

This news has already caused a stir in the Chinese smartphone market. Coolpad’s stock surged by a little over 20 percent a few days ago. That is just a sign of things to come.

LeEco and Coolpad combined will now compete for the top smartphone brand slot in China over the next 12 months. LeEco and Coolpad combined will be able to sell about 60 million smartphones and that will push them in the top 4 bracket in China easily. The fact that the two brands are deciding to continue to  operate separately stands to benefit both of them.

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Apart from operating in separate market segments LeEco and Coolpad will also share resources, as Mr. Yueting pointed out, and this sharing of resources will entail building and shipping products together. The first attempt at this is already underway. LeEco and Coolpad have worked to bring a new smartphone called the LeEco Cool1 to the market and it is expected to launch early next week.

The Cool1 will be the first flagship phone after the coming together of the two smartphone companies. Other than building products together the companies will also benefit from each other’s excellent marketing wings. Coolpad has been known to market products in China in the trusted hype-your-product-before-launch manner and with a phenomenal debut year in India, LeEco has proved that it boasts of arguably the best marketing division of all smartphone brands coming out of China.

The India angle

LeEco and Coolpad have strong presence in India now. LeEco has unleashed its LeEco superphones and Super3 TVs in India to a rousing welcome from the media and the consumers alike. Super3 TVs may not outsell LeEco’s smartphones but they are sure to give the Android based Smart TV market in India a much needed facelift. Not only do LeEco products look great, the quality of their hardware and the well incorporated software is something other brands can learn from. However, this focus on quality will not surprise anyone who has followed LeEco in the Chinese market.

The Chaoyang, Beijing based company is one of the largest online video companies in China, which is why they are able to provide great on-product services to consumers on their smartphones as well as their Smart TVs. For those unfamiliar with the Chinese Internet landscape, let me just say that it takes a lot to be a leading online video company in the world’s most populous country where over 52% of the population is Internet savvy. And now they want to replicate that success in the world’s second largest Internet savvy country.

With this new development I expect LeEco to give some of the leading smartphone players in the Indian market a run for their money by the end of 2017.