LeEco says it remains committed to Indian market, has no plans to exit
LeEco, the cash-starved business run by Chinese entrepreneur Jia Yueting, sought to tamp down concern over its Indian operations on Friday, saying that the country remains an important part of its globalisation strategy and there are no plans to exit, even as it acknowledged that two senior executives at its Indian office had resigned.
“India is one the most strategic markets for LeEco and hence we do not have any exit plan,” the Beijing-based company said in a statement. “LeEco India’s strategy is shifting from rapid expansion to a sustainable healthy development. It is a quite normal change for the company’s strategy and execution.”
The company confirmed that Atul Jain, chief operating officer of smart electronics business, and Debashish Ghosh, chief operating officer for internet applications, services and content have resigned. LeEco did not specify reasons for the resignations.
It signed business operations were continuing as normal and that a product launch scheduled for next week will go ahead as planned.
LeEco India chief operating officer Alex Li said there were no plans to exit the Indian market. He also said there had been no mass layoffs at its operations, but added that the unit is going through a restructuring.
He said the company has been reassessing its Indian operations since last year.
“All businesses need to be profitable to be sustainable. That has been the primary objective in taking certain measures, though the numbers [of layoffs] indicated are incorrect,” Li said in a statement.
Concerns about the company’s India operations follow Jia’s comments in November that a cash crunch was the result of a rapid expansion in business.
LeEco launched in 2004 as an online video site but quickly expanded to include smartphones and TVs, movie production, and most recently electric cars.
“LeEco India has upgraded its strategy from fast market expansion to healthy and sustainable growth,” the company said in a statement. LeEco added that China, the US and India remain its most important markets.
Retail investors are concerned that organisational overreach could impact the listed entity -- Leshi Internet Information & Technology Corp Beijing, which trades on the Shenzhen Stock Exchange.
Leshi Internet’s shares ended 5.5 per cent lower at 31.9 yuan on Friday, paring back an earlier loss of as much as 8 per cent.
In a statement on Friday morning Leshi said financial problems at the unit were “short-term”, adding it is in the process of introducing strategic investors into unlisted units under the group.
LeEco secured strategic investment worth 15.04 billion yuan (US$2.2 billion) from property developer Sunac China Holdings in January.
The company reported 2016 operating profit totalled 44.78 million yuan, versus revenue of 21.8 billion yuan. Some analyst flagged concerns that the company may need to dispose of non performing assets.
An internet analyst with a leading state-owned brokerage, who asked not to be identified, said LeEco needs to cut cash-burning projects, such as the expansion in India and its electric car initiative.
LeEco said it has a healthy pipeline of products set to launch in India this year, beginning with a next generation TV scheduled next week.
The company said it plans to invest in marketing initiatives “which will be in tandem with the sales objectives”.