A Mercedes-Benz S600 offers faint reminder of a once high-profile Chinese smartphone brand
- Mercedes-Benz S600 was one of 18 cars owned by Gionee, which is undergoing liquidation after filing for bankruptcy last year
- At its peak, Gionee sold about 40 million handsets a year and was popular with consumers in China’s smaller cities
A Mercedes-Benz S600 was auctioned on Alibaba’s Taobao marketplace as part of bankruptcy proceedings earlier this month, offering the faintest of reminders of a once-high profile Chinese smartphone brand, which collapsed abruptly under the weight of unpaid debts brought on in part by its founder’s gambling habit.
The luxury car was one of 18 cars owned by Gionee, the Shenzhen-based smartphone manufacturer founded by Liu Lirong that filed to be wound up in December. Fourteen of the fleet were sold for a combined 4.15 million yuan (US$600,000) during the 24-hour auction that closed at 10am on May 10, according to data from the Taobao marketplace. The S600 car attracted 186 bids and sold for 2.1 million yuan, 40 per cent higher than the starting price.
At its peak in 2016, Gionee sold about 40 million smartphones a year and ranked among the top 10 brands in China. Its mid-budget handsets were popular among consumers in the country’s smaller cities and also sold in Southeast Asia, competing with the likes of Oppo and Vivo. But while the latter have thrived, Gionee is no more.
Liu was known for signing up celebrities like Andy Lau Tak-wah to endorse its products. He was to become even more known for a gambling habit that reportedly contributed to the demise of the manufacturer. Attempts to reach Liu for comment through Gionee’s former representatives were unsuccessful.
The end came last year when suppliers stopped selling it components after failing to receive payment for several months. Production ceased as a result, adding to the weight of unpaid debts. In December, a Shenzhen court accepted Gionee’s application for liquidation. The company reportedly owed some 20.2 billion yuan (US$3 billion) to creditors.
Gionee is one of the dozens of smartphone brands that have been consigned to history in China’s ultra-competitive handset market, which like the car industry has consolidated over the years to a handful of stronger competitors led by the likes of Huawei and Xiaomi. Along the way, South Korea’s Samsung has found itself marginalised and even mighty Apple’s iPhone has struggled lately in China because of perceptions its pricing was too rich.
In an interview with Securities Times in Hong Kong in November, Liu said he borrowed company funds to gamble at a casino in Saipan and lost more than 1 billion yuan. The company had been losing money on operations since the beginning of 2013, with average monthly losses of at least 100 million yuan between 2013 and 2015, widening to at least 200 million in the past two years.
As a second-tier smartphone brand in China, Gionee used to compete with rivals such as Meizu, Nubia and ZTE. In November 2017, Gionee unveiled a range of eight full-screen smartphones at a grand product launch in Shenzhen, with premium models aimed at competing with the bezel-less handsets from market leaders Apple and Huawei.
At the launch event, Liu told the audience that the company was the world’s first smartphone supplier to equip all of its new handsets with the full 18:9 aspect ratio displays – an emerging trend seen on mobile handsets at that time.
Gionee may well be remembered as a cautionary tale of overspending during the golden age of China’s smartphone industry, when sales doubled each year between 2010 and 2012. Smartphone manufacturers competed among themselves to spend lavishly on marketing campaigns, hiring top celebrities to attract consumers. Gionee spent 9 billion yuan on marketing and investments between 2015 and 2017.
Today, Gionee’s flagship online stores on Alibaba’s Tmall and JD.com are gone. And only some surviving stock is being sold by third-party retailers at steep discounts.