Alibaba tries its hand at smartphone manufacturing
Alibaba Group Holdings has bought a $590 million minority stake in Chinese smartphone manufacturer Meizu Technology. The deal, announced on Alibaba Group's media site Alizila, is expected to help Alibaba push its YunOS mobile operating system in the Chinese market.
According to reports, Alibaba Group did not disclose how big its holding will be in the privately owned handset manufacturer. However, the two companies had previously signed a strategic agreement in October 2014, which saw them work together on the launch of Meizu's Flyme smartphone. At the time, Meizu said that ‘more cooperation’ would take place between the two companies in the future.
This latest investment will see Alibaba and Meizu collaborate “at both strategic and business levels to achieve a deeper integration of Meizu's hardware and Alibaba Group's mobile operating system,” the companies said in a joint statement.
According to an Alizila report, last year Meizu equipped a version of its flagship smartphone with the Alibaba’s YunOS (an Android open-source project-based Linux distribution OS developed by its AliCloud subsidiary).
The agreement will see Alibaba Group provide Meizu with resources and support in e-commerce, mobile Internet, mobile operating systems, and data analysis with the aim of developing Meizu's smartphone ecosystem.
Meanwhile, Alibaba Group's online shopping marketplaces will become distribution channels for Meizu's smartphones and other devices. “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 Alibaba Group chief technology officer Wang Jian in a statement.
While Meizu is a marginal player in the Chinese market compared to manufacturing juggernauts like Xiaomi or Lenovo, the Guangdong province-based company employs more than 1,000 people in the industry and since its establishment in 2003, has opened 600 stores in regions including Hong Kong, Israel, Russia, and Ukraine, and has added four smartphone models to its portfolio.
The half-a-billion-dollar stake comes as Alibaba founder and chairman Jack Ma warned that the Chinese Internet company is facing difficult tasks in the road ahead after its historic IPO last year. In an interview with China Central Television, Ma pointed to pressures from the attention his company had generated and expectations of great performance in whichever industry it plans to enter.
“No one was optimistic about us in the past, but we knew we were a lot better than what people thought,” he said. “By contrast, now people think we are omnipotent, very capable, very rich, and we can succeed in whatever we do. This is very dangerous for us.”
However, the company has been working hard to diversify, pumping investment into a number of companies, including joining a $600 million funding round for Chinese taxi app Kuaidi Dache, and snapping up a controlling share in online marketing firm AdChina.
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.