China's Protean Billionaire Jia Yueting Tries To Upset Apple's Smartphone Empire

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This story appears in the November 2015 issue of Forbes Asia. Subscribe

In April Jia Yueting graced the stage of Beijing’s MasterCard MA -0.70% Center, site of the 2008
Olympics basketball games, to promote his company’s first line of smartphones. The 42-year-old chairman of Leshi Information & Technology has one of China’s most popular online video sites for entertainment and sports fare that is an alternative to state-run TV, and was a picture of irony. As often, he wore the blue jeans, gray sneakers and black T-shirt that evoke Apple AAPL -0.29% founder Steve Jobs. But shortly before, Jia published a controversial letter on his Weibo microblog, arguing that the dominance of Apple’s iOS operating system was stifling innovation.
 

Click here for more from this issue’s China’s Richest Jia himself is confident he can upset Apple by selling at-cost high-spec smartphones that come with 6.3-inch sapphire displays. Leshi also makes TVs. As with most consumer electronics, the margins are scant if any on such competitive hardware. The point is to guide the user to Jia’s “smart” content, the basis for his dramatic rise in estimated worth this year, up 224% to $6 billion at No. 17 on the China rich list.

Jia Yueting, CEO of Chinese video site LeTV, says he is not doing too much as the company ventures into smartphone manufacturing and making electric vehicles.(credit: Aska Liu)

The stakes are getting higher. In September Leshi made a big inroad in the Hong Kong market, acquiring exclusive rights to stream English Premier League games there from 2016 to 2019 for reportedly north of $400 million.

But the protean Jia isn’t stopping there. His company is also making electric vehicles that he says will eventually be better than Tesla’s models. In October Leshi acquired a 70% stake in Chinese car-hailing company Yidao Yongche. And Jia is coming to Apple’s home turf, as he plans to officially launch an online store selling Leshi gadgets in the U.S. later this year.

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Facing questions that he was trying to do too much, Jia insisted to FORBES CHINA in a July cover story that he wasn’t straying from his core strategy. To further the bundled sales of Leshi memberships with its Internet TVs, Leshi also produces movies, and its theatrical releases, lucrative in that channel but also fare for subscribers, include domestic hits the Tiny Times series and director Zhang Yimou’s Coming Home.
Investors like it. Leshi stock, listed on the tech-heavy Shenzhen exchange, today has a market capitalization of $15 billion and trades at a P/E of 190.

A Shanxi native who spent his teenage years toiling in a coal mine for a few cents a day, Jia in 2004 saw an opportunity in licensing copyrighted content when China’s online video industry was taking off. Then, as now, he bet against the mainland’s reputed bent for pirated fare. He had previously dabbled in computer training and telecommunications.

Also behind the rise of Leshi, however, is a link to Ling Jihua, aide to then Chinese president Hu Jintao, who is now accused of corruption and other misdeeds. Jia last year disappeared from public view for more than six months when it was found that a family member of Ling invested in Leshi in 2008. He said he was receiving tumor treatments then and dismissed the idea that he used political ties to develop business. Jia told FORBES CHINA that Ling’s brother put in only a small amount and he wouldn’t have taken the money had he foreseen the troubles.

Today capital remains a challenge for Leshi. Jia faces entrenched competition in all the businesses he is venturing into. Smartphone sensation Xiaomi, for one, is taking on Leshi by launching TVs. The two companies attacked each other in June over content offerings. Jia needs to capitalize billions of dollars more to get the jump on all his rivals.
“The listed company has to grow very quickly,” he told FORBES CHINA. “We have to fund all those cash-burning new businesses.”


source - forbes.com