Gionee faces financial crisis as CEO loses millions in gambling
What's the story
A few years back, Gionee entered India's smartphone scene with hopes of taking on players like Huawei, OPPO, and Xiaomi. The Chinese tech giant launched a bunch of low to mid-end devices, but now, its presence has been overshadowed by competition. More worryingly, the company is facing a major financial crisis and is headed toward the situation of bankruptcy. Here are the details.
Problems
Financial crisis: Suppliers, banks remain unpaid
Gionee, which was founded by Liu Lirong 16 years ago, has failed to pay its suppliers for several months now. This has led them to halt component sales and apply for bankruptcy reorganization with the Shenzhen Intermediate People's Court. In a recent interview with Securities Times, Liu said Gionee's total debts amount to 17 billion yuan ($2.45bn), of which $1.4bn is owed to banks.
Reason
So, what happened to the company
Gionee started off well but has now been overshadowed by its competition, particularly Huawei, Vivo, OPPO, and Xiaomi. The company's worldwide shipments have seen a sharp decline of late, and its dominance in China has been toppled by these companies. Going by numbers, in the third quarter for this year, Gionee's market share stood at 6%, while these four companies owned a combined 78%.
Added troubles
Not to mention, Liu lost $144 million in gambling
Gionee's financial problems got even more complicated with Liu's recent gambling loss. A recent report suggested that the co-founder and chief executive of the firm lost $1.4 billion in gambling. However, he corrected that figure, noting that he had only lost $144 million, SCMP reported. The Gionee boss also suggested that he didn't misappropriate those funds, but confused that amount with his private assets.
Information
However, Liu claims gambling loss isn't the only reason
Liu claimed his loss isn't the main reason behind Gionee's fall, noting that the company has been losing money since 2013, with average monthly losses of no less than $14 million between 2013 and 2015 and $28 million in the past two years.