Though LeEco had recently topped up its deep coffers to save itself from a cash crunch, the Chinese hardware maker now seems to be consolidating its operations across the globe — starting with India. The company has reportedly handed pink slips to 85 percent of the staff members, coupled with resignations from the top brass as well. It is currently also said to be involved in a down-sizing exercise at their Bengaluru engineering center.
Since the company was suffering from a cash crunch and had already mentioned its consolidation plans, thus, there were no doubts about its layoffs plans for India. This layoff exercise has mostly affected the Delhi and Mumbai offices, which are now running with a skeletal staff in tow, reports Economic Times, citing three industry officials.
These officials further continued to add that the layoff exercise can be attributed to the ongoing financial crisis at the Chinese giant, which is looking to focus on its home and U.S operations. And India is no longer an attractive market for LeECo since its sales have massively declined post the demonetization exercise. They believe the said move only fastened their pace of reeling back from India, giving us a surprise kick in the gut. These actions from the company us of the imminent collapse of LeEco’s South Asian operations.
But, the exit of two of their prominent senior-level executives wouldn’t have been expected. LeEco’s now parted ways with Atul Jain, COO of smart electronics business and Debashish Ghosh, COO for Internet apps, services, and content. They’ve both resigned from their current positions, confirms LeEco India COO Alex Li. He further added that the company is not looking to exit the country but has new models in the pipeline.
Further, he added that LeEeco has restructured and reimaged its business propositions in India over the last couple of months. And, the company has taken steps to align the scale of its operations with the resources available in hand. This has been done to reactivate growth and rejuvenate the business. With regards to the same, Li said,
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.
This development comes on the heels of the company’s decision to curtail its expansion and product release plans for the country in December. LeEco, the company which invested a huge ₹80 crores per month to advertise its range of hardware products, also made its timely exit from offline sales channels around the same time. This led to the loss of over 1,000 in-store temporary jobs, a strategy shift with focus on e-commerce ops.
Earlier last year, the company’s CEO Jia Yueting had already acknowledged that LeEco was plagued with an intensive cash crunch due to the ambitious scale of its global expansion coupled with the back-to-back product release timeline. He had then announced that the company needs to cut on its global expansion and product release pace, while also holding down its electric car production ambitions.
But, LeEco has since has received an investment of over $4 billion to consolidate and stabilize its operations. It has reportedly also set up its electric vehicle ‘LeSee’ production plant and is working with Tesla-rival Faraday Future to help make their product ‘FF 91’ come to life. The said electric vehicle is being developed through a collaborative effort between these two companies.