Alibaba Meizu deal a smart connection

Alibaba’s surprise investment in smartphone maker Meizu will secure a technology development stream the online giant could never have hoped to create on its own.

Alibaba this week announced it would pay US$590 million for a minority stake in Meizu Technology Corporation, one of China’s leading smartphone manufacturers. The Alibaba Meizu deal will see the two companies collaborate at both strategic and business levels “to achieve a deeper integration of Meizu’s hardware and Alibaba Group’s mobile operating system”, Alibaba said in a statement.

It’s a win-win. Meizu gains a prime space for selling its mobile phones and other devices on the biggest suite of online marketplaces in China, further adding to Alibaba’s sales.

Alibaba will provide Meizu with resources and support in the fields of eCommerce, mobile Internet, mobile operating system and data analysis with the aim of developing Meizu’s smartphone ecosystem.

“The investment in Meizu represents a significant expansion of the Alibaba Group ecosystem and an important step in our overall mobile strategy as we strive to bring users a wider array of mobile offerings and experiences,” said Jian Wang, chief technology officer of Alibaba Group.

“This strategic collaboration with Alibaba Group will enable Meizu to further develop our smartphone business and our smart devices ecosystem,” said Meizu’s president, Yongxiang Bai.

While globally not as well known yet as rivals Xiaomi or Huawei, Meizu is known for its technology and sophisticated product design.

The Chinese smartphone market is experiencing rapid growth, with homegrown brands gaining an increasing market share. At the end of 2014, China had more than one billion mobile phone users and about 40 per cent of them use smartphones, according to IDC.

Alibaba online businesses include Taobao Marketplace , Tmall.com , group buying platform Juhuasuan, online travel site Alitrip, global Chinese goods store AliExpress and wholesale marketplace 1688.com.