This is very alarming and could potentially ruin the market for affordable smartwatch. According to Mobile Iron Research director Michael Raggo, the $17.20 dollar smartwatch U8 discovered that the watch is sending something to a random Chinese IP address. Michael did not give any details on the information on what the U8 smartwatch is sending but warned that it could be a threath to individuals privacy, The U8 watch is compatible with both iOS8 and Android, but to be able to make ti work you need to download a pairing app from an IP address, and that is where the danger comes from.
I think there is a huge possibility that the watch might be able to send SMS conversation, passwords, social accounts and other stuff regarding your personal information or might serves as a backdoor to access your phone at will. This is not the first time that a Chinese electronic product was found out to have an extra package on its software, remember that cheap brand smartphone was also found out to have a secret backdoor sending information to an unknown Chinese IP address.