Just as Apple wants to build its own car, Chinese automaker Geely now wants to make smartphones. A subsidiary of Zhejiang Geely Holding, parent company of Volvo Cars and Hong Kong listed Geely Auto, it has completed the acquisition of a majority stake in local smartphone maker Meizu. This is just what the Geely group needs.
Meizu has not enjoyed much success in the smartphone market despite a nearly two-decade history, some competitive technology and a premium line-up. On its own it has little chance of taking on local rivals, let alone Apple and Samsung on the global stage. Bigger forces are at play too. Global smartphone shipments fell more than a tenth year on year in the first quarter, with China’s falling 17 per cent.
Yet for Geely Auto, the timing seems perfect. Net profit fell 12 per cent to Rmb4.7bn last year. Swedish subsidiary Volvo Cars’ sales growth has slowed. Its reported sales dropped 27 per cent to 49,900 cars in June compared with the previous year. US sales fell 31 per cent.