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Purchase of Irvine’s Vizio Opens Up American Market for Chinese Firm

August 19, 2016

Posted in Corporate Law

photo - vizioThe $2 billion sale of Vizio to Leshi Internet Information & Technology Corporation (known as LeEco) is expected to result in the Chinese firm’s much broader reach into the American market. LeEco sells a variety products and the company tries to marry content (some of it of its own making) with the sale of its electronics, according to the Los Angeles Times.

  • LeEco’s Le 2 pro handset sells for $166 in China but for another $15 you get a one-year subscription to the company’s entertainment offerings (Disney’s “Zootopia,” DreamWorks Animation’s “Kung Fu Panda 3,” and live sports broadcasts including Major League Baseball, NBA games and European soccer matches).
  • If you own a LeEco Internet enabled television any shows you stream or bookmark on your phone will be queued up automatically on your TV (and vice versa). The phone is also a remote control for the television set.

That kind of “synergy” may be coming to future Vizio (or LeEco) smartphones sold in the U.S. where, until now, the company is practically unknown. In China and India LeEco has sold millions of phones and televisions. By buying Vizio LeEco enters the U.S. market without having to build its own brand from scratch.

The company hopes to sell 20 million TV sets globally in 2017 and to start selling its smartphones in the U.S. in the first quarter. Combining their handsets with a TV brand American consumers already know could result in Americans taking a chance on a phone company they’ve never heard of. The fact there are practically no regulations on internet streaming in the U.S., compared to heavy regulation in China, makes the deal that much more enticing.

Analysts predict that LeEco’s low prices could result in very popular TV sets but existing streaming services like Netflix and Amazon Prime could make their goals hard to reach. One goal LeEco supposedly doesn’t have is high profits. Last year its profit was $88 million and its share price declined after the Vizio purchase was announced.

According to the Times, “LeEco has never been a profit-driven company,” LeEco Chief Executive Jia Yueting told a Chinese reporter. “Maybe this answer will let down our investors, but I think the true value of a company is to contribute to society, the human race and customers.”

The Vizio purchase is not LeEco’s only entry into the U.S.

  • It set up a branch of its film production division, LeVision Pictures, in Los Angeles several years ago,
  • Silicon Valley will be the locations of its U.S. headquarters, and
  • LeEco is also behind the electric automobile company Faraday Future which is establishing a plant in Nevada.

“LeEco has a very special affinity for the U.S., and especially Los Angeles,” Jia said at a news conference announcing the Vizio purchase. “The LeEco acquisition of Vizio is another example.”

Forbes magazine ranks Vizio as the 160th largest private company in the U.S. with sales of $2.9 billion in 2015. The magazine states the company employs 400 people. Founder and CEO William Wang owns the majority stake in the company. The sale of the business should close by the end of the year.

You don’t need to be involved in a multi-billion dollar sale or purchase of a business to appreciate the value of legal help. If you are involved in the purchase or sale of a business you face many legal issues. Contact our office today so we can talk about the transaction, the issues that are involved and how we can help protect your legal rights and interests.