Update (1/3/2017): We have added LeEco’s official statement at the end of this post. The company has categorically denied its exit from India. You can read the complete statement at the end of this article.
Are you planning to buy a new smartphone or SmartTV and tempted to opt for ‘Super’ LeEco devices? It’s time for you to think again! The company which made a blockbuster entry in the Indian market almost a year ago, and splurged copious amount of money wherever possible, is now struggling to keep its head above water.
A hyperactive expansion ranging from smartphones to driverless cars has caused a sharp dip in company’s fortunes and now “Aall izz NOT so well” within the organization.
This isn’t entirely out of the blue, though. Last month, LeEco chairman Jia Yueting acknowledged the shortage of funds in an open email to his staff. And now, the parent company has squeezed the fund supply to the India unit which has led to a messy situation. To make things even worse, the company has now fired substantial percentage of India R&D team from its research and development facility at Bangalore, as per the information rallied to us by independent sources. There have been layoffs in LeEco’s operational offices in Bangalore and Hong Kong Headquarters as well.
As EconomicTimes notes, the company which started selling its smartphones at off-line retail stores in June this year is now retracing from it due to a shortage of funds. In addition to this, it has slashed 1,000 in-shop temporary jobs and even thrashed advertising budget significantly.
So Why Should I Worry?
- It’s unlikely that you will find anyone to complain to for redressal of consumer issues.
- We don’t expect LeEco to push software and security updates in future.
- After sales support will take a hit.
- Streaming services which were earlier used as a bait to lure customers will take a beating.
We hope this trouble in LeEco paradise ends soon, even though it doesn’t seem very likely. If rumors (from credible sources) are to be believed, the company might even exit from India after clearing out the remaining stock.
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LeEco Official Statement
India is one of top 3 markets for LeEco globally and moving into 2017 the company’s resolve and determination to realize the true potential of the company’s operations here are only further strengthened.
We believe that people are integral to an enterprise’s success and true value can be unlocked only if the scale and nature of business operations and the talent force are well aligned and in complete synergy. As we transit to a more strategic phase of our operations in India, it is the appropriate time to assess and take steps to ensure the sustainability and profitability of our business.
Our business strategy has been re-calibrated in view of the overall volatility and uncertainty that is forecast for the global economy in the coming year. India being a fledgling operation, LeEco’s priority is to be an agile and nimble organization that can withstand economic headwinds and sustain a profitable operation, at all costs. To this end, LeEco has implemented a right sizing exercise across all its offices in various geographies, including India. The company wishes to reiterate that the decision process was not led by performance or competence parameters but entirely guided by business imperatives.
Being an internet company, LeEco intends to concentrate on and bolster its online business. Adding an important dimension is LeEco’s proven O2O model, which will also be integral to the business. The company will adopt a laser-sharp focus on overall organizational efficiency, capacity-building and talent nurturing while remaining unwaveringly committed to maintaining a sustainable and profitable business model.
In ensuring a right sized organization, LeEco has shown the utmost consideration for the affected employees. Besides ensuring 100% legal compliance to all labour related regulations, LeEco has been extremely sensitive and humane in its approach. The company is open to offering outplacement services to affected employees who specifically seek assistance to orient them toward the future and help them feel supported as they started their new life as a job seeker.
These decisions have not been taken whimsically, but is a necessary part of LeEco’s efforts to transform the company and steer it to the path of profitability. The current roadmap envisages LeEco’s businesses remain rooted to the realistic growth path that the company has set for itself. A newly-launched India-specific website; a robust product pipeline in the offing; a more consumer-centric LeMall – LeEco’s own e-commerce market place – are all powerful signals that LeEco is determinedly ushering in change which is the new norm, especially in the fastest-changing internet technology landscape. It will also go a long way towards helping retained employees feel positive about the organization, optimistic about their future and committed to working towards a brighter tomorrow.