There are many household names in smartphones. Huawei, Oppo, Vivo and Xiaomi are all very well known brands, but perhaps Gionee will become a household name for all the wrong reasons.
This morning South China Morning Post is reporting that Gionee is on the verge of bankruptcy, and that Gionee’s Chairman is likely responsible for this catastrophic result. To make matters worse, gambling could be the reason why Gionee is in severe financial distress.
The South China Morning Post is reporting that Gionee has failed to pay suppliers. As a result of these delayed and absent payments, Gionee has met with their suppliers to structure a deal and perhaps payment terms. It’s very possible that these suppliers will simply settle for whatever they get, because there might not be much money left in Gionee’s bank account.
This is because Gionee’s chairman and CEO Liu Lirong admitted to gambling at a casino in Saipan and losing over $1.4 billion dollars. Lirong later revised that number down when he last week told the Securities Times that he had lost over one $144-million dollars (over one billion yuan)
In what could potentially be classified as typical gambling addict behavior, Lirong claims he does not have a gambling problem and at no point misappropriated any of Gionee’s funds. However, Lirong did suggest that he may have been “borrowing” company funds. The end result is that Gionee is in serious financial peril, and the best working theory is that Lirong gambled it all away.
Setting aside the current financial status of Gionee and the cause of those financial issues, how big of an impact would a collapse of Gionee have on the smartphone market? Counterpoint Research reported that Gionee held a 4.6 percent market share in India for camera (or selfie) focused smartphones in the first quarter of 2017. Gionee has been a fast growing company in India, but without a healthy balance sheet, it is unlikely that they will be able to continue that aggressive growth. This is already showing itself to be true as Gionee has been among companies to have the largest decline in shipments to India in Q2 2018, again as highlighted by Counterpoint Research’s report.
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