LeEco and its smartphone affiliate Coolpad seek bigger market share

Chinese internet major LeEco and its smartphone affiliate Coolpad Group Ltd said they will jointly sell 50 million to 60 million handsets this year, which will help them become the fourth largest smartphone maker in China.

The announcement came shortly after Jia Yueting, founder and CEO of LeEco, became the chairman of the Hong Kong-listed Coolpad. In the past two years, LeEco acquired 28.9 percent share of Coolpad for more than 3 billion yuan ($452 million).

Liu Hong, co-founder of LeEco, said Coolpad will remain independent in its operation, retain its brand and employees, and it will be able to leverage LeEco's sprawling industrial presence to grow business.

"LeEco's smartphones will target China's online population while Coolpad will stick to the offline-retailing channels. The two brands' products will also be different," Liu said.

According to him, Coolpad's roughly 10,000 patents and its abundant experience in supply chain, research and development will help LeEco accelerate its globalization effort, preventing it from getting involved in patent disputes.

LeEco, founded in 2004, started as a video-streaming service provider akin to Netflix Inc, but it rapidly grew into a heavyweight with presence in smartphones, TVs and cloud computing.

Last month, the company said it will launch its products in the United States and Russia later this year, highlighting its determination to take on Apple Inc in the global area.

Currently, LeEco only occupies a quite limited presence in China's smartphone market, but its ecosystem strategy can give it an edge. It sells smartphones and TVs that include a LeEco membership that allows their users to watch TV shows and movies.

Coolpad, once one of the top four players in China's smartphone market, hopes to leverage LeEco's new business model to revive its business.

On Tuesday, the two companies unveiled a new phone, priced from 1,000 yuan, to target young consumers.