A second-tier Chinese smartphone company Gionee, which owes 20.2 billion Chinese Yuan (nearly $3 billion) to648 creditors, has officially filed for bankruptcy.
According to the reports, a court in Shenzhen has accepted the Gionee application for liquidation bankruptcy. It had been stated that the founder of Shenzhen-basedGionee admitted he may have used company assets to gamble at a Hong Kong-listed casino in Saipan.
Liu Lirong, Gionee’s Chairman and Chief Executive, “admitted that Gionee’s total debts amount to 17 billion yuan, with 10 billion yuan of this owed to banks, 5 billion yuan to upstream suppliers and about 2 billion to advertising agencies”.
When asked how much he lost gambling, Liu said, “a bit more than 1 billion yuan“, which may actually be to the tune of 10 billion yuan ($1.44 billion).
Gionee, which was ranked behind Apple in the sixth place for handset sales in China last year, started to face problems and difficulties when suppliers halted component sales after failing to receive payments for several months.
Liu claims that the company was losing around 100 million Yuan ($14.4 million) a month between 2013 and 2015. Also, the losses per month doubled in the last two years. Founded in 2002, the phone maker was once a mainstream brand in China and India, selling nearly 40 million handsets in 2016.
Gionee, which established its presence in India in 2012, claimed in February this year to have retail presence in over 42,000 stores and has 600 exclusive service centres in the country. It also claimed a customer base of 1.25 crore in the country.
In the first quarter of 2018, Gionee shipped an all-time low of 150,000 units with shipments down 90 per cent year on year, according to Counterpoint Research.
Gionee is the second company after Chinese conglomerate LeEco that shut operations in India last year after financial crisis hit it hard.