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Gionee may go bankrupt as chairman loses $144m at casino (Update: Reorganization?)
Update, December 17, 2018 (5:31PM EST): Thanks to a ruling from the Shenzhen Intermediate People’s Court, Gionee’s bankruptcy proceedings moved forward.
According to Chinese news outlet iFeng, Gionee may soon see a complete reorganization as a result of the court’s decision. Gionee has reportedly been losing anywhere from $143,804 to $28.7 million each month since its financial troubles began.
Liquidation is still possible, thanks to a bankruptcy liquidation application that the court recently accepted. Reorganization remains the more likely outcome. If a reorganization happens, Gionee chairman Liu Lirong might be forced to step down.
You can read the original article below to learn more about Gionee’s current circumstances.
Original article, November 29, 2018 (5:18AM EST): Gionee doesn’t have the same presence or popularity as the likes of Huawei, Oppo, Vivo and Xiaomi, but it’s been a long-standing smartphone manufacturer. Now, it looks like the Chinese brand is in dire financial straits, and on the verge of bankruptcy.
According to the Securities Times (h/t: South China Morning Post), the company has failed to pay suppliers and has met with them to work on a deal. The meeting comes after 20 suppliers filed an application for bankruptcy reorganization with the Shenzhen Intermediate People’s Court on November 20.
The Chinese language Jiemian website also reported last week that Gionee chairman Liu Lirong lost over ten billion yuan ($1.4-billion) while gambling at a casino in Saipan. But Lirong later told the Securities Times that he had lost over one billion yuan ($144-million).
The chairman claims that he didn’t misappropriate Gionee’s cash to gamble, but suggested that he may have been “borrowing company funds.” It makes for a massive shift in fortunes for one of China’s stalwart smartphone brands, which had seen high growth in the likes of India as recently as last year.
According to Counterpoint Research, Gionee accounted for 4.6 percent market share in India when it came to selfie-focused smartphone brands (OEMs offering a selfie camera above 8MP) in Q1 2017. The manufacturer was also listed as one of the top five fastest growing brands in the 15,000 to 30,000 rupee price bracket during the same period.
Nevertheless, Gionee saw a sharp decline in worldwide shipments in Q2 2018, along with Lenovo, Micromax, and Sony. And with the top five brands in China capturing a massive 87 percent of the region’s market-share in Q3 2018 (compared to 81 percent a year ago), it seems like tough times are ahead for smaller Chinese OEMs (whether their executives gamble away fortunes or not).