China's LeEco touts content ecosystem as it enters U.S. market

Updated 2016-10-24 12:59:44 Global Times

With China's smartphone market approaching saturation, Chinese smartphone makers have set their sights on expanding into the U.S. LeEco is the latest to join in. Unlike Huawei and Lenovo, which have been making inroads in the market for years, LeEco is a newcomer with little brand awareness in the U.S. That being said, the company revealed some big ambitions for cracking the U.S. market at event on Wednesday in San Francisco, the U.S., where it showcased two smartphone models, an 85-inch smart television, and a driverless car. Company executives think LeEco can succeed where other Chinese companies have failed due to its content-based business model, though some analysts question the model's viability.

Most Americans have never heard of LeEco, but that hasn't deterred the Chinese smartphone maker from setting its sights on the U.S.

The company heralded its entrance into the U.S. market with the launch of two sleek smartphones - the premium LePro 3 and the budget Le S3 - at an event called "Ignite the Eco World" in San Francisco on Wednesday.

The company's long-term goal of taking a significant slice of the U.S. smartphone market is crucial for its international expansion plans as sales growth has slowed in its home market.

"As China's smartphone market grows more mature, the county's handset makers have to find new growth from overseas markets," Wang Yanhui, secretary-general of the Mobile China Alliance, told the Global Times.

LeEco has punctuated it plans for the U.S. market earlier this year when it purchased a 48-acre plot from Yahoo Inc in Santa Clara, California, where it plans to build a 3-million-square-foot office complex that can accommodate about 12,000 employees.

"America is the most important global market for us," Jia Yueting, LeEco's founder and CEO, said during the event on Wednesday. Currently, the company employs about 300 people at its U.S. headquarters in San Jose, California.

One of those employees, Guo Jingwei, joined up as vice president of the mobile section of LeEco's North America division after working for years managing the online sales of Huawei's smart devices in the U.S.

"Much like me, many of LeEco's smartphone R&D engineers in North America came from well-established technology firms such as Apple, Huawei and Samsung," Guo told the reporters at the company's headquarters on Thursday.

If LeEco can win over U.S. users, it will be in a much better position to build up market share around the world, he said.

The right time

Walking around the streets of downtown San Francisco, it's hard to spot a smartphone flagship store other than the Apple Store. Apple Inc's iPhone continues to dominate 34 percent of the U.S. market, followed by its arch rival Samsung, which dominates 28 percent, the San Francisco Chronicle newspaper reported on Thursday, citing data from U.S. market consultancy International Data Corp.

Apple targets the upper reaches of the smartphone market. And Samsung is in the midst of a battery scandal, which, analysts said, has created an opportunity for smaller competitors.

"The U.S. market is ready for Chinese smartphone makers to come in, as it is widely believed that local consumers want more options," said Liu Dingding, a Beijing-based independent analyst.

Chinese companies, which offer lower-priced but well-speced products, may be able to slip into niches in the market, Liu said. For example, LeEco has positioned the LePro 3, priced at 9, as an alternative to Google's Pixel handset and Apple's newest iPhone, which both start at 0.

LeEco is one of several Chinese companies aiming to edge into the U.S. smartphone market. China's Lenovo and Huawei also held press conferences in San Francisco in 2016 to promote their budget smartphones.

Content focused

For years, traditional Chinese smartphone makers such as Huawei tried to make a big splash in the U.S. market, but so far have only managed a few ripples.

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