Chinese smartphone manufacturer Meitu has announced a new strategic partnership with Xiaomi. The latter will now license Meitu’s brand, technologies, and hardware for new smartphones. What this simply means is that new Meitu smartphones will be made by Xiaomi while the company will limit its work to algorithms and technologies that improve imaging quality. Meitu is best known for its selfie app and phones.
Xiaomi will be responsible for the design, research, development, production, sales, and marketing as well as the business operations of this partnership. It’s effectively taking control of Meitu without having to pay a dime. Details about the partnership reveal that Xiaomi won’t be paying anything upfront for the deal.
It will only give the company 10 percent of the gross profit from each Meitu phone it sells for up to five years and there are various minimum thresholds built into the contract as well. Xiaomi will pay Meitu $10 million per year thereafter.
Meitu really has been struggling in the smartphone business which is cutthroat enough as it is. The company launched just one smartphone this year compared to the five it launched in 2018. It projects a net loss of between $137 million and $173 million this year.
This deal with Xiaomi will enable the Meitu brand to live on. “With such strategic partnership, we can focus our efforts in developing the next-generation image processing technologies, while leveraging our partner’s economy of scale in research and development, supply chain management and new retail efforts,” Meitu said.