Meitu Inc. will form a venture with Foxconn Technology Group to expand in Southeast Asia and India as the Chinese maker of mobile photo software seeks to triple sales at its burgeoning smartphone unit.
Both companies will put “tens of millions” of dollars into the venture, with investment to increase as the business grows, Meitu Chairman Mike Cai said in a phone interview. The Xiamen-based company will own 55 percent of Meitu Mobile Pte Ltd., with Foxconn’s FIH Mobile Ltd. holding the rest.
Meitu applications that help users edit and share selfies, or self-taken photos, have attracted 920 million users and prompted the company to sell its own phones. The partnership with FIH, a contract manufacturer for Xiaomi Corp. and BlackBerry Ltd., will tailor devices to local markets while targeting shipments of 5 million smartphones next year.
“Our experiences complement each other, so we may as well form a marriage and take on the market together,” Cai said. “Foxconn can help us expand more quickly, while Foxconn is transforming from just a contract maker to do more product sales.”
About 40 percent of sales will come from outside China, he said. The companies are targeting Southeast Asia because both Cai and Foxconn founder Terry Gou see the potential in developing markets, FIH Chairman Vincent Tong said, confirming details of the Meitu venture.
FIH is seeking to add new products and expand beyond contract manufacturing. The stock lost 1 percent to close at HK$4.00 in Hong Kong, the lowest since March 19.
Meitu has sold about 1 million smartphones since 2013, when it started integrating its selfie software with devices, and expects sales of 1.5 million to 2 million units this year, Cai said.
The company’s apps allow users to adjust their appearance, such as by lengthening and slimming their legs, helping Meitu climb to the top of Apple Inc.’s App Store photo and video rankings in China, according to market researcher App Annie.
Cai’s expansion will take on Xiaomi and Huawei Technologies Co. The venture with FIH is expected to start in the second half of this year.
Meitu is setting prices above its Chinese rivals, as Cai expects female users will be prepared to pay more for a better camera and image quality.
The Hello Kitty version of Meitu’s M4 released this week sells for 2,499 yuan ($403), while a model scheduled for later this year will sell for more than 3,000 yuan, he said. That compares with Xiaomi’s Mi4, which retails for 1,799 yuan.
“We’re aiming for the mid- and high end, and tapping into the female market,” Cai said.