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Is Gionee in troubled waters? 50 percent employees expected to be laid off

This is the worst time for Gionee, which had the advantage of being early to the Indian smartphone industry.

Gionee is one of the first Chinese brands that entered the Indian smartphone market. The company made its debut in 2012 and since its then, the company has witnessed lots of highs and lows.

However, it now seems that the company is in troubled waters. The recent research from Canalys reveals that Gionee has suffered the most in terms of shipments. Gionee shipped an all-time low of 150,000 units with shipments down 90 percent year on year. This is not it, the company had a mere 2.2 percent of market share in 2017, as per a report by IDC.

This is the worst time for Gionee, which had the advantage of being early to the Indian smartphone industry. CMR report further reveals that Gionee is registering a negative growth in India has the company has reported negative growth of 46 percent. But could be possible reasons behind the decline of a brand that was once very popular in India.

Sources familiar with the development at Gionee India said to The Mobile Indian, ” Company is drastically cutting down on the manpower as well and plans to lay off around 50 % of its employees in India.”

They further said, “Those employee which still continuing with the company in leadership postion are doing so just because of the uncleared outstanding dues.”

The problems in the home country

Gionee’s continuous decline in the Indian smartphone market can be connected to China. The company is not able to keep up with other smartphone markers in its home country. Plus, the brand has been dragged in numerous controversies, which at the end of the day, has led to its downfall. A recent report from China revealed that Gionee suffered the worst decline, with shipments down by about 70 percent to 1.6 million.

The company is facing a severe cash crunch as it is not able to pay its suppliers, Nikki Asian Review reported in mid-January. The fall of the company can be also determined from the fact that it has laid off 50 percent of jobs at its headquarter and also from its main manufacturing plant in Dongguan.

This is not it. The company’s Chairman and Chief Executive Liu Li Rong have been dragged in court cases as well. The local court has frozen 41.1 percent stakes of Rong for two years. Although the exact reason was not disclosed, multiple local reports suggest that it was due to ‘gambling debts’. This clearly shows that Gionee is having a tough time in China, which indirectly has affected its Indian smartphone business as well.

Some India-centric problems

Talking about India, Gionee has been silent for a while now. The company launched its last smartphone, the M7 Power in India in November 2017 and since then the company has kept mum in terms of introducing new smartphones for the Indian market. Internally, there have to be lots of challenges as well, which has further intensified the problems for Gionee.One example here is the stepping down of Gionee India’s CEO and Managing Director Arvind Vohra. After working for almost five years in the company, Vohra stepped down from the CEO position, though he still continues as Executive Director.

” In India Gionee has a long list of creditors who are waiting for their dues to be cleared for almost 6-8 months,” our sources informed.

The main reason for the decline of this company is the lack of market strategy. The company lacked the aggressiveness and was relatively slow in launching new products for India. This helped other Chinese players like Oppo, Vivo and Xiaomi to take over the Indian smartphone market with their aggressive market strategies and timely launches of smartphones. Gionee, which was one of the prominent players in the offline market, lost its sizeable chunk to Oppo and Vivo, while it never made any big efforts for the online market, which now contributes a noticeable amount of sales of smartphones.

It is high time for Gionee to get its ducks in a row and gets the basic right this time. The company should invest more in launching new products for the Indian market with the strong promotion. Or else the company could end up like LeEco, which is a prime example of how wrong market strategy and rapid expansion can lead to an end of a company.

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