It seems 2018 turned out to be a bad year for Chinese phone makers, Gionee. Earlier this month, reports revealed that Gionee’s chairman, Liu Lirong gambled away 10 billion yuan ($1.44 billion) from the company’s account.
However, Liu denied the accusations in an interview with the state-owned Securities Daily, stating that the amount was too large for the story to be taken seriously. When asked how much he lost, he replied “About one billion.” But he did not specify whether it was in yuan or US dollars.
Furthermore, he confirmed reports of borrowing money from the company with a promise to reveal the amount taken during Gionee’s bankruptcy reorganization plans next month. He also pointed out that “it is inevitable that there will be some public activities, funded by the company.”
This shocking news comes at a time when the phone company is struggling to stay afloat after owing $2.45 billion to several businesses including banks and suppliers.
In a meeting between Gionee and its creditors, the company stroke a deal with major suppliers in a bid to settle the debts. However, about 400 smaller firms which the phone maker also owes have not gotten any news about how Gionee plans to pay its outstanding debts.
According to Beijing Youth Daily, Gionee called for the meeting after major suppliers filed a lawsuit with the Shenzhen People’s Court. The creditors also lost any faith in the phone’s brand willingness to settle its debts amidst reports of its founder incurring monthly losses of as much as 1 to 200 million yuan which Mr Liu claims was spent on marketing.
Once a favourite brand, Gionee has lost momentum after intense competition from other budget smartphone manufacturers such as Vivo and Oppo. Even its launch of its high-end Gionee M2017 some years ago did little to help the image of the brand.
However, Gionee is not the only brand struggling in the Chinese mobile phone industry. Many companies have complained over a drop-in sales while some face debt-related cases like the high profile startup, Smartian.
But despite its financial woes, its devices are still on sale on both offline and online stores. According to reports by the publication, sellers claim that the Gionee M7 records the highest sold item from the brand. They also promise that all Gionee products sold still come under warranty while stocks last.