In a recent development, LeEco was reported to have laid off 85 percent of its staff and that it may quit its operations in India. However, the company tells Gadgets 360 that it has no plans to exit the market, though it did confirm layoffs, calling it an “optimisation exercise” . It also confirmed the exit of the COOs of two verticals. The company claims that “India is one of the most strategic markets for LeEco”, and that it is only changing its strategy from “fast market expansion to healthy and sustainable growth”. LeEco also stated that it will launch its next-generation TV in the coming week.
LeEco says that it plans to introduce several products in the Indian market this year, in the TV to smartphone segement, and that it is even going to invest in marketing initiatives as well. “Contrary to reports in certain sections of the media, LeEco has a healthy product pipeline for India this year. In fact, the company is gearing up for the launch of its next-generation TV scheduled in the coming week. Premium models of smartphones too are to follow. LeEco television and smartphone business continues in India and has gained significant market recognition. All this certainly does not signal a company in wind-up mode,” LeEco told Gadgets 360 in a statement.
The company however does acknowledge a shift in business strategy, and an “optimisation” of workforce. LeEco also confirms that two senior management executives from the company have resigned, COO of Smart Electronics Business Atul Jain and COO of Internet Applications Debashish Ghosh. Gadgets 360 has learnt that several other employees have also effectively resigned from the company, but the 85 percent layoff reported cannot be confirmed.
Playing down these resignations, LeEco said that in India it “continues to operate with a very experienced team comprising senior team leaders and business heads.” It adds, “The resource head count in India is well aligned to the scale of operations envisioned and in line with industry benchmarks. Moreover, LeEco India has a robust R&D team working for India as well as LeEco globally, as the company values the R&D function, as it is integral to long-term business. ”
Talking further about the motivations for the layoffs, LeEco further says in its statement, “The company’s recent moves were well thought out and planned as part of a longer-term strategy for the Indian market, and not triggered by the purported slump in sales due to demonetisation.”
In December, LeEco had confirmed layoffs and had touched on the revamped strategy as well. “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,” the company told Gadgets 360 then, a statement it reiterated again on Friday for the motivation behind its “optimisation exercise”.
The company is seeing a tough phase financially by expanding too fast in various markets, and burning out cash too quickly. Last year LeEco’s founder and chairman Jia Yueting had also said that his company was facing financial obstacles due to the rapid pace of growth in various businesses.
However, in January, LeEco managed to secure a new round of investment worth CNY 15.04 billion ($2.2 billion or roughly Rs. 14,856 crores) from property developer Sunac China Holdings giving it some breathing space hopefully.
To recall, LeEco entered the Indian market in in January last year via the online-only route, and entered the offline market in June, before proceeding to further expand its retail partnerships.