Suning ZTE implements strategic cooperation while exploring mobile phones while doing VR

Suning has just announced its investment in Nubia, and its cooperation with ZTE (15.70 +0.96%, BUY) has quickly moved from the capital level to the strategic level.
On January 20, 2016, Suning and ZTE jointly held a global strategic cooperation conference. Suning’s Suning Yunshang (12.19 +1.41%, BUY) signed a cooperation agreement with ZTE, PPTV and Nubia respectively. In the basic ICT field, ZTE will provide Suning with support for big data and cloud computing technologies; in the terminal market, Nubian Mobile and Suning will jointly achieve two sales targets of 10 million units in the next three years. At the same time, the two sides announced that they will jointly explore VR technology and strengthen cooperation in Internet finance and virtual operators. Prior to this strategic cooperation, at the end of 2015, Suning’s Suning Rundong invested Nupa in 1.93 billion yuan, accounting for 33.33% of the shares, ranking second largest shareholder.
The outgoing ZTE CEO Hou Weigui and Suning CEO Zhang Jindong also appeared in the strategy conference. Hou Weigui said in his live speech that the cross-border cooperation between ZTE and Suning will be the new normal for ZTE to build a benign ecosystem of M-ICT.
In the past three years, two 10 million units were realized. Suning’s Suning Cloud and ZTE, PPTV and Nubia signed a cooperation agreement. The cooperation has risen from the business and capital areas to the strategic level, involving smartphones. Cloud computing, big data, communication equipment, smart home and other fields.
In terms of infrastructure, ZTE will build cloud infrastructure such as cloud desktops, big data centers, and distributed databases for Suning; the two sides will cooperate in big data, explore the value of retail data, and expand the O2O cooperation space; Nubia will be an entry point for Internet applications such as Suning payment tools and a vehicle for all things connected. The two parties stated that ZTE's IPTV/OTT basic technology and Suning's entertainment content and channel advantages complement each other. The two sides will have huge cooperation space in smart TV and large video content, and it is expected to continue cooperation in the fields of Internet finance, virtual operators and IPTV in the future.
As the second shareholder of Nubia, Suning has proposed a clear support plan for Nubia, announcing that its O2O omnichannel resources will give priority to the promotion of Nubia, and will achieve the sales target of 10 million units of Suning channels in the next three years. Meanwhile, Suning Its PPTV will provide strong content support for Nubia. The two sides plan to build customized models, and cooperate in the construction of Internet ecology in depth. In the next three years, the sales target of 10 million PPTV handsets will also be achieved.
In 2015, the competition of mobile phone brands became more and more fierce, especially the strong mobile phone brands such as Huawei, VIVO and OPPO, which made the survival of Internet mobile phone brands encounter challenges. The sales of Xiaomi were not expected in the whole year. Meizu started the layoff plan. The cruelty of the Red Sea market. Right now, the almost consistent trend among mobile phone manufacturers is going offline.
"In 2015, the market has given a clear signal, and doing well under the line can guarantee profit. It is difficult for mobile phone companies on the Internet to make money. Cooperation with Suning's online channels, sales to Nubian offline channels. The help is great, but the layout advantage of Suning's channels in the third-tier to sixth-tier cities is not obvious. The Nubian online market needs to go to the retail stores in the county-level market, but the threshold for the independent construction of the offline market is very high. If Nubia can use the financial strength to expand channels, enhance brand power and product cost performance, there will be opportunities for a turnaround." Wang Yanhui told reporters.
Nubian’s public information for Suning Rundong’s first show shows that Suning Rundong, the main body of Nubian’s investment, is an investment group within Suning Holding Group, and Nubian is also the first show of Suning Rundong.
ZTE promised to abandon the preferential subscription rights for capital increase and share expansion in the process of capital increase and share expansion planned by Nubia.
In June 2015, Nubia was officially renamed as Nubian Technology Co., Ltd. by ZTE Mobile Communications Co., Ltd. and announced that it officially operated independently from ZTE's parent company. This time, so many shares were given to Suning, and ZTE intends to let Nubia find a way out of independence. Suning Rundong’s investment also released a signal that Nubian may be listed separately in the future.
In the announcement of the introduction of Suning Investment, Nubia and Suning Rundong agreed on the rights of the investor's qualified IPO claim and the right to sell. According to the announcement, Suning Rundong has the rights of preferential subscription rights, joint sale rights, anti-dilution rights, qualified IPO claims, sale rights, and priority liquidation rights according to the agreement of the investment agreement, which mentions that Nubia is in the investment agreement. In the period of failure to achieve a qualified IPO, Suning Rundong enjoys a series of rights to sell shares.
From the announcement of ZTE, as a network mobile phone brand that has just been established for three years, Nubia is also hungry for funds. In the past three years, Nubian's operating income has increased year by year. From January to November 2015, its operating income was 5.216 billion yuan, and its operating profit was 194 million yuan, but the net cash flow was 600 million yuan. After the introduction of financing by Internet brands such as Xiaomi, Meizu and Hammer, Suning’s funds are necessary for Nubia.
Wang Yanhui, secretary general of the China Mobile Alliance, believes that Zhongxing Microelectronics, a subsidiary of ZTE, has obtained a 2.4 billion yuan equity investment in the National Integrated Circuit Industry Fund. From the perspective of ZTE’s operation, it is highly probable that Nubia will embark on an independent IPO.
As a high-end mobile phone sub-brand of ZTE, Nubia, which was established in October 2012, has always been a low-key style. This brand, which mainly relies on Internet channels, sold only 5 million units in 2014. Supply chain people told the Daily Economic News reporter, "It is estimated that Nubian's shipments in 2015 will be between 7 million and 8 million units.