Chinese cell phone manufacturer Gionee, which owes CNY 20.2 billion (US$ 3 billion) to 648 creditors has filed for bankruptcy.
Reportedly Gionee has also not paid its ad agencies and suppliers. The liquidation bankruptcy petition filed by Huaxing Bank has accepted by a Shenzen-based court. Twenty large suppliers have also filed a suit against Gionee.
Gionee was losing US$ 14.4 million every month during 2014 and 2015, and the losses have doubled in the past two years. It also roped in reorganisation consultants last week, as chairman Liu Lirong hopes to turn it around in 3-5 years. But the mess has been compounded by a personal weakness of Lirong himself – his propensity to gamble.
Reports revealed that he lost US$ 1.4 billion of Gionee’s cash in a bet at a casino recently. Lirong himself countered that he had lost only around US$ 144 million though he also apparently confessed to using the company’s funds.
Founded in 2002 in Shenzen, Gionee was a major player in the Indian smartphone market not so long ago. It posed a formidable challenge to leading players. Moreover, it was one of the pioneers in selfie smartphones with a 4.6% share of the segment in 2017 according to Counterpoint.
However in the first quarter of 2018, the shipments reached 150,000, the lowest ever and a drop by 90% yoy. Its last big announcement was the launch of two smartphones – Gionee F205 and Gionee S11 Lite – in April 2018.
In China, Gionee ranked 6th after Apple in smartphone sales in 2017. However, other Chinese brands like Xiaomi, Oppo and Vivo have taken the lead over Gionee the market since then. Notably another Chinese smartphone brand LeEco closed shop in India in 2017.
There are still chances that Gionee may turn it around, since the liquidation petition may be turned into reorganisation. But to do that, Lirong has a lot to put in order, professionally as well as personally.