Chinese content provider LeEco announced that it will purchase US television brand Vizio for $2 billion. Until recently, few consumers in the US had even heard of LeEco. In China, it is a pretty big deal. Called the “Netflix of China,” LeEco’s services runs the gambit from Amazon-like shopping, driverless cars, online content, smart phones to TVs. And that’s not even the full list.
LeEco has been trying to break into the US market for some time now and that task has finally been accomplished. But what does that mean for the Vizio brand?
In 2015, Vizio accounted for one out of every five TVs sold in the US. By and large, Vizio TVs are generally well reviewed and, with a 20% market share, there are a lot of US consumers that would agree.
But don’t be surprised if LeEco kills the Vizio brand.
If true to form, LeEco will first change Vizio’s name to be in sync with the rest of its products. It will join the family of LeTV (everything in LeEco’s stable begins with Le) and LeEco will incorporate its acquired brand into what it refers to as its “premium ecosystem user interface.” That will allow consumers to have access to LeEco’s online content with 100,000 TV episodes and 500 films. Compare that to Netflix (4,300 movies) and Hulu (5,300).
Why Vizio will become something else.
But LeEco is not really buying Vizio to get into the TV business in the US. It is buying Vizio to get all of its businesses in the US, particularly its mobile phones and driverless cars. That is further proof that Vizio is doomed.
Chinese companies have traditionally had a difficult time in the US. American’s won’t buy Chinese car brands (though we buy US brands made in China). We shy away from Chinese TV brands – TCL, Hisense, and ZTE – as well as Chinese phone brands like Xiaomi, Huawei and Meizu. Again, we have no problem buying Chinese-made products owned by western companies. But, considering the current economic and political climates, there is something about Chinese companies that leads Americans to reject them.
The once strong rallying cry of “Made in the USA” has switched to “I don’t really care where it’s made as long as it’s not a Chinese company.” What’s odd is that we have little problem when a Chinese company buys a US company such Starwood Hotels, Smithfield Foods and GE’s appliances division. When a Chinese company enters the US market as its own Chinese brand, however, we dig in our heels.
This is the problem that LeEco will face if it really wants to be successful in the US market. It will be much easier for it to succeed if it kept the Vizio brand intact instead of bringing it into the LeEco ecosystem of brands.
If Vizio becomes LeTV, the acquisition will fail.