LeEco: Dumpster fire flames get higher – China’s latest business and technology news

Business & Technology

A summary of the top news in Chinese business and technology for June 5, 2017. Part of the daily SupChina news roundup "South China Sea: Does China have ‘contempt for other nations’ interests’ or is the U.S. ‘irresponsible’?"

LeEco was founded as a streaming video company in 2004 by Jia Yueting 贾跃亭, an entrepreneur who started his career working in a humble local tax office in Shanxi Province and — through a string of businesses in coal, mobile phones, and internet — built a fortune estimated at 42 billion yuan ($6.2 billion) by Hurun, a company that compiles lists of wealthy Chinese people.

Jia is not known for his modesty: In 2016, he told CNBC that Apple was “outdated” and that “their innovation has become extremely slow.” At the same time, Jia was promising investors and the media that LeEco would deliver a huge new range of products, including drones, electric and self-driving cars, “smart” bikes, and VR headsets, while simultaneously launching an ambitious expansion program in the U.S.

There does not seem to be enough cash in LeEco’s coffers to realize any of Jia’s plans. Last month, TechCrunch reported that “after a months-long parade of endless red flags…the company announced that it would be laying off 325 employees in the U.S. alone.” On June 3, the New York Times said (paywall) that LeEco “has turned to murky and potentially risky ways to stay afloat, including tapping China’s shadowy informal banking system.” Despite its deteriorating financial situation, “the company courted small investors by promising good rates of return and playing down risks” even as it “filled the lobby of its offices with potted plants to keep angry creditors from loitering there.”