CEO of LeEco admits to cash shortage
Print Edition
CHINESE conglomerate LeEco, which has invested in high-tech products from electric cars to smartphones, is facing a shortage of cash and suffering from expanding too fast and in too many directions, its CEO said in a letter to staff.
Jia Yueting, a billionaire who wants to take on global tech giants like Elon Musk’s Tesla Motors Inc, said in the letter that the firm was facing “big company disease” after having expanded at an “unprecedented rate.”
The letter casts a shadow over LeEco’s bold ambitions in sectors from online entertainment to cars after the relatively unknown tech firm burst onto the Chinese market over the last few years. Jia has been making a big push in overseas markets as well including the United States.
Jia said the firm needed to make sure that its financial arm was able to “catch up to the growing need for cash,” and cautioned that LeEco’s organizational structure was “lagging behind” the firm’s fast development.
“We are starting to see signs of big company disease, such as low individual performance and organizational redundancies,” Jia said in the letter. “In order to realize the rapid and positive growth of the Eco operation, we will cut costs to reinforce the awareness of capital control and efficient operation.”
LeEco’s listed subsidiary Leshi Internet Information & Technology Corp fell 4.68 percent on the Nasdaq-like ChiNext board in Shenzhen yesterday.
LeEco owed suppliers 15 billion yuan (US$2.2 billion), said market sources, including rival Xiaomi’s CEO Lei Jun.
But LeEco denied to comment on the 15 billion yuan figure, blasting Xiaomi’s post for “unfair competition.”
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