Update | Alibaba invests US$590m in China smartphone maker Meizu

Alibaba Group announced an investment of US$590 million in mainland’s smartphone maker Meizu Technology Corporation for a minority stake in the company, paving the way for Meizu to use the e-commerce giant’s operating system.

Mainland smartphone makers are developing their own operating systems that offer greater customisation of devices to differentiate themselves from rivals at home and abroad. Hangzhou-based Alibaba doesn’t make smartphone hardware but it launched its YunOS 3.0 operating system in 2011, which supports more than 40 handset models, according to Alibaba.

Alibaba did not disclose the size of its stake in privately held Meizu. Seperately, Haitong Kaiyuan Investment also joined this funding round to invest US$60 million. The Chinese smartphone market is experiencing fast growth, with homegrown brands gaining more market share. But the competition between home grown brands like Meizu, Xiaomi and Coolpad is getting super intense.

Headquartered in Zhuhai, Guangdong Province, Meizu desperately needs some competitive edge in the competition--- Xiaomi, Huawei and Lenovo are all much more successful in terms of sales.

Xiang Ligang, Beijing-based Xiang Ligang, the founder of telecommunication portal CCTime, said Meizu has lagged behind because it does not have has no enough capital support. “Meizu started smartphone business earlier than Xiaomi and in terms of technology it is pretty strong.”

“But the momentum of Meizu has been kind of weak due to a shortage of money,” he said.