Gionee is on the verge of bankruptcy — and it’s about more than just its chairman allegedly gambling away $144 billion

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(Photo source: Soho.com)

  • The Chinese smartphone company, Gionee, is reportedly at the brink of bankruptcy with total debt of 17 billion yuan ($2.45 billion).
  • According to reports in the Chinese media, the company’s chairman and chief executive, Lui Lirong, is partly to blame in lieu of his gambling debts.
  • Lirong, himself, admits to ‘borrowing’ company funds to gamble.
The Chinese smartphone manufacturer, Gionee, is reportedly on the verge of bankruptcy according to the South China Morning Post. And the company’s present troubles are being blamed on Liu Lirong, the company’s chairman and chief executive, and his gambling debt.

Lirong has admitted that the company has a 17 billion yuan debt ($2.45 billion). Out of this amount, it owes banks 10 billion yuan, upstream suppliers 5 billion yuan and around 2 billion yuan to advertising agencies.

The matter gets murky as Lirong has admitted that he ‘borrowed company funds’ to finance his gambling, blurring the line between personal and company assets. He has also defended himself, stating that he didn’t lose 10 billion yuan ($1.44 billion), as is being alleged, but only around 1 billion yuan ($144 million).

But even before Lirong’s alleged wrongdoing came to light, things were already going south for Gionee. The company that was once one of the mainstream brands in China and other Southeast Asian countries, started to lose its foothold in the market early last year, much before this entire revelation.

According to Lirong, the company has been facing losses since 2013.

Market leaders like Huawei, Oppo and Vivo — the company’s main competitors in China — were already gaining on Gionee’s smartphone sales declining in 2017.

Gionee and India

Gionee was one the first Chinese smartphone brands to enter India in 2012. Yet, it was unable to establish itself in the highly-competitive market. According to Counterpoint, it only had an overall market share of 2.2% in 2017, and 4.6% market share when it began offering selfie-focused smartphones.

As an aftershock to what was happening to the brand in the Chinese market, Gionee’s sales started to dip in India as well come 2018. At that same time, Chinese media reported that a local court had frozen 41.4% of Lirong’s stake in the company -- the reason cited was ‘gambling debts’.

Despite its many hurdles, Gionee has asserted that ‘it’s here to stay’ and that despite numerous reports, they are not scaling down operations but merely restructuring their plans in the country.

See also:
Phone companies cut production by up to 15% before GST

Apple is betting on old iPhones to gain market share in India

How much more brands can India’s handset market absorb?
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