Gionee Goes Bankrupt, its CEO Lost 140 Million Euros in a Casino
The Chinese manufacturer reported bankruptcy in interesting circumstances, which was also countersigned by the Shenzen intermediate people’s court.
The mobile brand Gionee, which in 2012 reached 5% of the market in China and its smartphones are sold in other major countries has declared bankruptcy and has gone into liquidation.
Its CEO and founder, Liu Lirong, has been accused of appropriating company funds to use them in gambling. During the investigation, it was discovered that Liu Lirong had lost 140 million euros in a casino. Liu has assured that he has not used money from the company, but he did acknowledge that “he had borrowed some funds from the company.”
The CEO assures that the bankruptcy of Gionee has nothing to do with his problems with the game. Liu Lirong explained that between 2013 and 2015, Gionee was losing 12 million euros per month. And those losses doubled the next two years.
Gionee is a Chinese mobile brand that tried to differentiate itself from the rest by creating luxury mobiles, or with very peculiar characteristics. Founded in 2002, during the first decade it grew enough in China to start exporting its mobiles, beginning in 2013.
In 2016, the company presented the Gionee M2017, a luxury mobile phone with an exclusive design and a battery of 7,000 mAh, a technical achievement considering its thinness. Yes, the mobile already cost 950 euros in 2016. That has been the great problem of Gionee – the lack of diversification. It focused on luxury mobiles (like Vertu, another company that also closed), and sales did not go along.
A Shenzhen court has declared Gionee bankrupt, after verifying that it owes 20.2 billion yuan (3,000 million euros) to 648 creditors, mostly banks. It also takes time without paying suppliers and advertising agencies.
Despite all the closure of Gionee, the company may not be closed its door. Now it enters a period of liquidation, but it could still be saved. The company has hired a group of consultants with the intention of restructuring the company. According to Liu Lirong, it could return to profitability within 3 to 5 years.