Meizu's recent actions have raised a lot of eyebrows. At the end of last year, the company celebrated hitting 20 million sales in 2015, marking a 350% increase. But just as the celebration was underway, Meizu made its first major move of the year: cutting staff by no more than 5%.
In an open letter, Meizu President Mei Yongxiang stated that the company had grown to nearly 4,000 employees. He described the layoffs as part of a "corporate end-end elimination mechanism" aimed at building a stronger team. However, the move has sparked speculation about the company’s future strategy.
Some industry insiders believe that Meizu is preparing for a fierce competition against Xiaomi and Huawei, and the layoffs are a way to streamline operations before a potential market battle. Yet, instead of showing confidence, Meizu’s leadership has been more cautious this year. The sales growth target was lowered to 25%, and Vice President Li Nan warned that pricing strategies can be risky.
So, what’s really behind the cuts? In general, corporate layoffs often fall into two categories: either due to financial pressure and the need to cut costs, or as part of a strategic restructuring. According to telecom expert Xiang Ligang, Meizu’s situation seems closer to the latter. However, the company hasn’t revealed which departments were affected.
Companies are usually the first to sense market changes. Li Nan’s emphasis on cost-effectiveness and competition signals that the smartphone market—especially the sub-1,000 yuan segment—is getting tougher. Xiaomi, once the benchmark for budget phones, saw its shipments drop by 8% in the third quarter of 2015, marking its first decline. Meanwhile, many suppliers in the industry have also struggled, with over 16 Chinese phone manufacturers shutting down in 2015. These closures highlight the declining profitability of low-cost models.
Back to Meizu, the company achieved 20 million sales in 2015, with most of its success coming from the "Charm Blue" series. Three out of five flagship models featured this affordable, high-profile strategy—similar to Xiaomi. But unlike internet-based companies like Xiaomi or LeTV, Meizu, founded by Huang Zhang, started as an MP3 player brand. Its business philosophy leans toward traditional manufacturing, focusing on quality and profit rather than aggressive price competition.
Still, Meizu understands that the cost-effective model helped it survive and return to the mainstream. After celebrating the 20 million sales milestone, Li Nan hinted that the company might shift away from this approach, returning to its original philosophy: “Many think scale is the key to survival, but in reality, profit is.†In 2016, Meizu plans to push its PRO series into the premium market.
However, the challenge remains. Having relied on the "Charm Blue" strategy to gain popularity, Meizu now needs to reposition itself as a high-end brand. This transition is not easy. Whether it can successfully break free from the budget model and win over consumers will determine its future success.
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