“Gionee’s debts stand at 17 billion yuan ($2.4 billion) at the moment, including money owed to banks, suppliers and advertising agencies”
Gionee is reported to be perilously close to bankruptcy, according to media reports originating from China. The smartphone manufacturer, which once had a reasonably decent amount of market share in China and foreign markets such as India, has been on a steady decline — Gionee fired more than half of its staff from its factories earlier this year. Now, the company is in severe crisis mode, to a point where it has been unable to pay off its suppliers’ bills, and is meeting them to come to an agreement, reinstating their near-bankrupt status.
Furthermore, Gionee’s founder, chairman and CEO, Liu Lorang, has recently admitted to a Securities Times interview in China that he lost over one billion EMB ($144 million or about Rs 1,006 crores) at Hong Kong-listed Imperial Pacific casino, while gambling. A previous report had stated that Lorang lost 10 billion yuan ($1.4 billion), which he has denied in the interview. Lorang further admitted that he “may have” used company funds for personal purposes over the last 16 years, although there has been no disclosure of what sum of money he has borrowed from the company that he founded.
A South China Morning Post report states that Gionee’s debts stand at 17 billion yuan ($2.4 billion) at the moment, including money owed to banks, suppliers and advertising agencies. Several members of its core staff, including its media relations team, have been fired. It is a striking turn of events for a company that may not have been ruling the roster, but was seemingly doing well enough to steer clear of bankruptcy. In 2016, Gionee sold 40 million devices worldwide, and held nearly 5% of the market for selfie-oriented smartphones in India in Q1 2017. Over the last three years, the company has spent 9 billion yuan ($1.3 billion) in advertising campaigns across all its markets, most of which often included heavy celebrity endorsements.
Even in November 2017, Gionee overhauled its smartphone lineup, launching eight Android-powered smartphones, all featuring 18:9 displays. Upon this launch, its founder Lorang claimed that Gionee became the first company to have converted its full portfolio of phones into full-screen displays. Even this headline-grabbing act could not significantly pull the company out of its dire circumstances. Lorang has now revealed that the company has been losing at least 100 million yuan ($14.4 million) every month since 2013, an amount that has doubled since 2016. Gionee’s staggering marketing spends, given its steady, sizeable losses, seem more than questionable now.
It now remains to be seen how Gionee’s immediate future plays out — whether funds are pumped in and raised to recover whatever survives of the brand’s once-imminent prospect (it still holds 6 percent market share in China). While there has been no clear statement of action as of now, a declaration is indeed expected in the coming days.