You can be on Entrepreneur’s cover!

Did CEO's Billion-Dollar Gambling Loss Led to Gionee Declaring Bankruptcy? The Chinese smartphone manufacturer fails to pay nearly $3 billion to 648 creditors, reports say

By Pooja Singh

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur Asia Pacific, an international franchise of Entrepreneur Media.

Facebook

Chinese smartphone maker Gionee has been going through some tough times for a while now, and the company has finally filed for bankruptcy.

According to reports, the Chinese court in Shenzhen has accepted the Shenzhen-based smartphone maker's application for liquidation. It is said to owe 20.2 billion Chinese Yuan (nearly $3 billion) to 648 creditors, including banks, suppliers and agencies.

Money issues

The news comes a month after a report in The South China Morning Post that said the company's founder, chairman and chief executive officer Liu Lirong may have used company assets to gamble at a Hong Kong-listed casino in Saipan.

While responding to earlier reports that gambling loss of 10 billion yuan (US$1.44 billion) had resulted in Gionee's fall, Liu admitted, in an interview with Securities Times in Hong Kong, that he did participate in gambling in Saipan, "but how could I possibly lose that much (10 billion yuan)? If it is true, shares of Imperial Pacific (the casino owner) should have surged." He added the company had been losing money since the start of 2013, with average losses of no less than 100 million yuan per month between 2013 and 2015, and the monthly loss further widened to no less than 200 million yuan in the past two years, reports The South China Morning Post.

The downfall

The fall of Gionee, which secured the sixth spot behind Apple for handset sales in China last year, started in 2016, with devices seeing a drop in quality and an unexplainable spike in price. It did, however, sell about 40 million handsets that year. By the year 2017, the situation got worse as pressure from market leaders, Vivo, Huawei and Oppo, increased. They offered more attractive phones at the price points Gionee used to compete in.

The Shenzhen company, however, still managed to launch eight, full-screen Android smartphone models during a product event in November 2017. But it began facing problems when suppliers halted component sales after failing to receive payments for months. It also had to reduce its workforce by 50 per cent owing to financial woes stemming from an expensive marketing campaign. In a course of three years, the company has spent a combined 9 billion yuan (US$1.4 billion) in marketing and investments.

Recently, Gionee had hired consultants to streamline and restructure the company in a bid to strengthen itself.

According to an October report by research agency Counterpoint, four brands—Huawei Technologies, Oppo, Vivo and Xiaomi—dominate sales of smartphones in China, owning a combined 78 per cent market share in the third quarter.

Market share

Founded in 2002 in Shenzhen, Guagdong, Gionee was among the initial brands that offered selfie-centric phones and had a good market share in China and was among the prominent players in Taiwan, Bangladesh, Algeria, the Philippines, Nigeria, Vietnam, Myanmar, Nepal, and Thailand, especially in India where it challenged established brands like Nokia and Samsung. In the subcontinent, the brand claims to have retail presence in over 42,000 stores and has 600 exclusive service centres.

Pooja Singh

Former Features Editor, Entrepreneur Asia Pacific

 

A stickler for details, Pooja Singh likes telling people stories. She has previously worked with Mint-Hindustan Times, Down To Earth and Asian News International-Reuters. 

Business News

James Clear Explains Why the 'Two Minute Rule' Is the Key to Long-Term Habit Building

The hardest step is usually the first one, he says. So make it short.

Fundraising

Why Women Entrepreneurs Have a Harder Time Finding Funding

Intentional or not, most investors are more likely to give money to males. That needs to change.

Side Hustle

He Took His Side Hustle Full-Time After Being Laid Off From Meta in 2023 — Now He Earns About $200,000 a Year: 'Sweet, Sweet Irony'

When Scott Goodfriend moved from Los Angeles to New York City, he became "obsessed" with the city's culinary offerings — and saw a business opportunity.

Growing a Business

How To Leverage Social Media to Optimize PR Success and Increase Your Brand Awareness

Entrepreneurs can establish authority and trust in their industries through the strategic use of social media, leveraging platforms for podcast appearances, guest posts, and consistent, quality content that aligns with their brand's mission.

Leadership

You Won't Have a Strong Leadership Presence Until You Master These 5 Attributes

If you are a poor leader internally, you will be a poor leader externally.

Business News

Microsoft's New AI Can Make Photographs Sing and Talk — and It Already Has the Mona Lisa Lip-Syncing

The VASA-1 AI model was not trained on the Mona Lisa but could animate it anyway.