SHANGHAI • Strolling along a tree- lined Shanghai street with friends, Ms Hu Dongyuan pulls out her smartphone and does what millions of Chinese women do daily: Take a selfie, digitally "beautify" their faces and pop it on social media.
Such virtual makeovers, typically involving lightening skin, smoothing out complexions and rounding the eyes, have propelled selfie-editing app Meitu to the top ranks of downloads in China.
With more than 450 million active Chinese users, Meitu is now gaining traction abroad, using its more advanced features to challenge Instagram and Snapchat, which depend largely on filters and stickers.
China has a world-leading 700 million mobile Internet users, vast numbers of whom use such apps to fuss over their digital appearance.
"It's the same as with clothing and make-up. They are all ways for people to better present themselves," said Ms Hu, a travel agency employee, who likens Meitu to a cheap, non-permanent form of cosmetic surgery.
She added: "Everyone uses it as a kind of personal advertisement."
Meitu, which means "pretty picture", launched a Hong Kong initial public share offering in December that valued the company at US$4.6 billion (S$6.5 billion) at the time, despite consistently posting losses.
It was Hong Kong's biggest tech IPO in nearly a decade.
Analysts call Meitu a test case of the global potential of Chinese apps, particularly those aimed at women, a powerful consumer force.
"(Meitu) has really appealed to the beauty concept of China's post-95s," said Mr William Chou, an Internet analyst at Deloitte China, referring to those born after that year.
"Photo-sharing is a global phenomenon but China has climbed to the top of the world in this."
The selfie-editing craze highlights how Chinese lives are increasingly lived online, making a person's virtual appearance as important as their real one, said psychology professor Yu Feng of Xi'an Jiaotong University.
Chinese millennials were seizing the chance "to control themselves and their world", Dr Yu said.
Meitu and domestic competitors like Camera 360 and Poco shrewdly cater to Chinese beauty preferences for lighter skin and rounder eyes - key features allow easy modification of such attributes on screen.
Founded in the eastern city of Xiamen, Meitu initially provided photo-editing software for PCs, introducing its first selfie app in 2013.
Meitu's half-dozen applications, including one for altering video, are regularly among the top photo-app downloads in countries as diverse as China, Russia, Japan, India and Malaysia.
Yet profits remain elusive. Meitu lost 2.2 billion yuan (S$450 million) in the first half of last year.
"Meitu's big problem has always been that it came up with this killer app - and the usage is unbelievable. It's crazy. But they never had a clear business model underneath it," said Mr Jeffrey Towson, professor of investment at Peking University.
Meitu did not respond to requests for comment.
Hungry for revenues, it launched its own phones designed for selfie- taking in 2013. It sold just 646,446 in the first 10 months of last year, a tiny amount in China's massive market. Phone sales nevertheless make up more than 95 per cent of Meitu's revenues.
It now promises to build an online "ecosystem" of apps and devices based on selfie-processing, which could include selling advertising space - as Instagram does -and launching a fashion-focused e-commerce platform.
"Our mission is to make the world more beautiful. Our wish is to build a beauty ecosystem," the firm's IPO prospectus said.
Deloitte's Mr Chou said investors were ignoring Meitu's current losses in hopes it can pull off the planned business makeover.
AGENCE FRANCE-PRESSE
