In yet another Chinese smartphone company going bust, Gionee, which is said to owe CNY 20.2 billion (nearly $3 billion) to 648 creditors, has reportedly filed for bankruptcy.
According to media reports, a court in Shenzhen has accepted the Gionee application for liquidation bankruptcy.
A report in The South China Morning Post last month said that the founder of Shenzhen-based Gionee admitted he may have used company assets to gamble at a Hong Kong-listed casino in Saipan.
In an interview with Securities Times, Liu Lirong, Gionee's Chairman and Chief Executive, "admitted that Gionee's total debts amount to CNY 17 billion, with CNY 10 billion of this owed to banks, CNY 5 billion to upstream suppliers and about 2 billion to advertising agencies".
When asked how much he lost gambling, Liu said, "a bit more than CNY 1 billion", which may actually be to the tune of CNY 10 billion ($1.44 billion).
Gionee, which ranked behind Apple in the sixth place for handset sales in China last year, began facing difficulties when suppliers halted component sales after failing to receive payments for several months.
"For comparison, Liu claims that the company was losing around CNY 100 million ($14.4 million) a month between 2013 and 2015. The losses per month doubled in the last two years," Gsmarena.com cited an iFeng report to claim.
Founded in 2002, Gionee was once a mainstream brand in China and India, selling nearly 40 million handsets in 2016.
Gionee, which established its presence in India in 2012, claimed in February this year to have retail presence in over 42,000 stores and has 600 exclusive service centres in the country. It also claimed a customer base of 1.25 crore in the country.
In India, after running domestic operations for almost five years, Gionee India's CEO and Managing Director Arvind Vohra stepped down in August 2017. David Chang, Global Sales Director for Gionee, then started leading the India operations.
In the first quarter of 2018, Gionee shipped an all-time low of 150,000 units with shipments down 90 per cent year on year, according to Counterpoint Research.
Ending a brief hiatus amid restructuring plans in India, Chinese smartphone maker Gionee in April launched two smartphones.
There has been no buzz from Gionee in India since then.
Gionee is the second company after Chinese conglomerate LeEco that shut operations in India last year after financial crisis hit it hard.