1More: China’s Answer to Beats

With an investment from Chinese smartphone maker Xiaomi Corp, three former Foxconn executives have established an audio device company called 1More Inc. to challenge Apple Inc.’s audio unit Beats Electronics LLC in the global market.

After selling over 10 million earphones in China in 2014, the two-year-old startup is now looking to expand into the U.S. and other overseas markets.

“Our strategy is to offer premium quality audio devices at mid-range prices. We want to be the Lexus in the global audio market, not Toyota or BMW,” Gary Hsieh, 1More co-founder and chief executive told The Wall Street Journal in a recent interview.

To speed up its global expansion, 1More is in talks to acquire or invest in a foreign audio brand, said Mr. Hsieh, adding the company plans to go public in the near future but it hasn’t decided on the listing location yet.

1More’s investors include Xiaomi and venture capital firm GGV Capital as well as Singapore sovereign wealth fund GIC Private Ltd. But 1More declined to disclose the amount of investment and its current valuation.

The Shenzhen-based company is fighting a tough battle against global headphone makers including Apple-backed Beats, which has established itself as a stylish and quality audio brand in the global market. 1More is joining Xiaomi, Lenovo Group Ltd. and other Chinese technology companies aiming to change the perception that made-in-China products are cheap and of low quality.

The majority of 1More earphones sell for less than US$33 each, but the company claims that they are durable enough to pass a washing machine.

1More started as an earphone maker but the company’s ultimate ambition is to make audio devices that connect people through chat-centric communications, said Mr. Hsieh.

As an example, 1More has unveiled a “smart bear” that supports China’s most popular instant messaging application, WeChat, run by Chinese Internet giant Tencent Holdings Ltd.

Users can talk to the connected bear directly and it will record and send voice messages to linked WeChat users. The smart bear will also help broadcast voice messages sent by WeChat users.

1More said the smart bear targets children and elderly people who don’t usually text on mobile devices. It has yet to disclose a retail price.

The company also said it plans to launch earphones that support WeChat’s voice message and other instant messaging applications including Japan’s LINE and Facebook Inc.’s messenger.

Mr. Hsieh’s aspiration for a leading audio brand dates back to his previous job at Foxconn. He helped the world’s largest contract electronics manufacturer win Apple’s order to assemble its electronic music player iPod in early 2000.

The former Foxconn general manager set up his own brand 1More in 2013 as he says he knew the hardship of low-value contract manufacturing after spending a decade with Foxconn.

Compared to other well-established audio brands such as Beats and Bose Corp., he admitted that 1More’s biggest challenge is to raise its brand awareness outside China.

Instead of pouring money into expensive advertisements, the company wants to use social media and word-of-mouth, which have worked very well for Xiaomi’s smartphones.

The company actively interacts with consumers on China’s Twitter-like platform, Weibo, and says it responds to customer feedback as soon as possible.

Learning from the success of Xiaomi’s fans, 1More has also invited consumers to participate in the development of its new products. It also sells a company mascot called 1More Bear to its fans.