LeEco has reportedly fired 85% of it’s India staff and might be looking to exit the country as well.
According to an ET report, LeEco’s financial crisis has reached at a point that the company has fired 85% of employees in India, including two top leadership. The Chinese electronics company is also rumoured to exit Indian smartphone due to major financial crisis at the parent firm in China and may just focus only at Chinese and the U.S. market from now on.
The firm was reportedly spending Rs. 80 crore a month on its advertising budget in India only and exited the offline market in December. About the two top executives, LeEco’s COO Atul Jain and Debashish Ghosh from India are said to have resigned because of company’s plan of exiting South Asian nation, noted ET reported citing three top industry sources.
Jia Yueting in November had written an email to all LeEco’s employees mentioning about financial crisis acknowledging faulty policies of global expansion and company going way too far away from smartphone business to self driving cars.
Ever since the entry to Indian smartphone market, LeEco has been aggressive in its approach and has offered massive discount and free content with all it’s devices. To recall, LeEco had entered India in January 2016 with online flash sales of Le 1s and the Le Max. Later in June the company expanded it’s footprint to offline market. The company had even inaugurated its first manufacturing facility for ‘Make in India’ in August and it’s own e-commerce website LeMall.
UPDATE (4:35pm IST): LeEco has reached out to us with an official statement noting that “the company wishes to reiterate that in India it continues to operate with a very experienced team comprising senior team leaders and business heads. […] Contrary to reports in certain sections of the media, LeEco also has a healthy product pipeline for India this year. In fact, the company is gearing up for the launch of its next generation TV scheduled the coming week.”
Read full statement below:
3rd March 2017
LEECO : STATEMENT FOR MEDIA
India is one of the most strategic markets for LeEco and hence does not have any exit plan. In the past one year, LeEco India has gained market recognition and the initial stage of market seeding has been successful. Now LeEco India has upgraded its strategy from fast market expansion to healthy and sustainable growth, which is the normal renewal of business strategy and execution.
The company’s resolve and determination to realize the true potential of the company’s operations here remains steadfast. To improve operation efficiency and to develop in a sustainable way, LeEco India has optimized its organization, to emerge as a more flexible and efficient operation to cope with the tough competitive market scenario in India. The report that has appeared overlooks the context resulting in distorted facts.
The company wishes to reiterate that in India it continues to operate with a very experienced team comprising senior team leaders and business heads. The resource head count in India is well aligned to the scale of operations envisioned and in line with industry benchmarks. Moreover, LeEco India has a robust R&D team working for India as well as LeEco globally, as the company values the R&D function, as it is integral to long-term business.
Contrary to reports in certain sections of the media, LeEco also has a healthy product pipeline for India this year. In fact, the company is gearing up for the launch of its next generation TV scheduled the coming week. Premium models of smartphones too are to follow. LeEco television and smartphone business continues in India and has gained significant market recognition. All this certainly does not signal a company in wind-up mode.
Further, to support the new upcoming products, LeEco will also invest in marketing initiatives in India which will be in tandem with the sales objectives. The selection of marketing tools and tactics will also be guided towards making a sharp, well defined and targeted appeal to our core consumer groups. The company’s recent moves were well thought out and planned as part of a longer-term strategy for the Indian market, and not triggered by the purported slump in sales due to demonetization.
There has undoubtedly been some misrepresentation and misunderstanding of LeEco’s business leading to ill- conceived messages being reported, which regretfully has caused considerable damage to the brand. The company hopes that wiser counsel will prevail and LeEco’s interest is well protected. The Indian operations will undoubtedly adopt a laser-sharp focus on overall organizational efficiency, capacity-building and talent nurturing while remaining unwaveringly committed to maintaining a sustainable and profitable business model.