LeEco, the Chinese upstart who has recently only been making headlines for its dearth of capital and the problems it is currently facing due to the same. Now, this is one of the most significant instances, which suggests that the company is now plagued with the issue of management exodus.
The latest executive to depart from the technology giant, as per source familiar with the matter, is Winston Cheng. He was appointed as the LeEco’s Global Head of Corporate Finance and Development. He has now decided to depart the company after a two-year long stint to join China’s leading e-commerce company JD.com Inc. Cheng is possibly switching places to get away from LeEco’s existing cash crunch.
At JD.com, he has been added to the core executive team as the President of international operations. He will now be responsible for leading the company’s new business initiatives including investments in new technologies, mergers and acquisitions to expand their business presence. This is extremely important for JD.com as it competes against Jack Ma-led e-commerce giant Alibaba in the land of dragons.
Prior to joining LeEco, Cheng has held managing director roles at major and well-known investment groups such as Merrill Lynch, Goldman Sachs, and Salomon Brothers. This will not be the first time he has been involved with JD.com, though it would surely be a more direct involvement this around. Cheng was part of Merrill Lynch’s crew, the lead underwriter, which worked upon the e-tailer’s public offering back in 2014. Also, he was the one who advised JD.com the same year when Tencent bought a 15 percent stake in the company.
We’ve contacted both LeEco and JD.com for more info on the development. While the latter has reverted back and declined to comment on market rumors, as they put it, a LeEco spokesperson* said that it does not comment on individual personnel matters.
Now, we’re all aware of the fact that is LeEco is currently suffering from a rather massive capital crunch. The Chinese giant has been faced with this condition due to its ambitious goal of rapid global expansion coupled with back-to-back product release timeline. The company’s founder Jia Yueting then admitted that the company set sight on far-reaching goals and was doling out cash relentlessly.
However, it is currently doing damage control and has bagged fresh investments (from several investors in multiple rounds) to the tunes of around $6 billion to keep its ship afloat for some time.
Back in July last year, LeEco announced that it would acquire the widely popular TV maker Vizio. This decision helped the company build some hype around their brand and their expansion plans to the United States. But, just last week, the Chinese giant announced that the $2 billion transaction has fallen through due to regulatory headwinds. The decision is mutual and the two will instead explore partnerships focused upon content and its distribution.
This is a significant decision for LeEco as it currently isn’t in a position to be spilling out capital on deals as large as this one. Also, the company recently decided to sell off the land it had purchased from Yahoo to set up its American offices for $260 million, which is $10 million more than the amount spent. It has also scaled back its operations in India and handed out pink slips to over 85 percent of the staff members. Some major senior-level executives called it quits at the Chinese giant, but it is helping out Tesla-rival Faraday Future build its electric vehicle, with autonomous capabilities.
*[April 15, 08:15 pm IST]: Updated with LeEco’s statement
