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China / Across America

LeEco to lay off 325 workers in US branch

By Lia Zhu in San Francisco (China Daily USA) Updated: 2017-05-24 10:41

Chinese technology company LeEco announced on Tuesday that it will lay off approximately 325 people in the US, two days after its founder Jia Yueting stepped down as CEO of its publicly traded arm Leshi on Sunday.

"The challenges with raising new capital have made it difficult in the past few months to support all of our business' priorities. As a result, the capital we do have will have to be highly focused resulting in a significant restructuring and streamlining of our business, operations and workforce," the company said in a statement.

May Zhu, a San Jose, California-based spokeswoman for LeEco, declined to provide the company's current US headcount. But CNBC cited an unnamed source as saying that only 60 employees will be left after the cut and the current headcount in the US was more than 500.

A current employee at the San Jose campus, who asked to remain anonymous, said employees had been leaving the company continually since early this year.

As a result of a severe cash crunch stemming from overextension into various business ventures, LeEco said it has to "take a phased approach to the US market".

Under the restructuring, LeEco will focus on the Chinese-speaking community to watch the company's Chinese content library. Last week, the company "finalized on-shoring our customer care call center" to enhance the customer experience, according to the statement.

LeEco started out in China in 2004 as a streaming website known as Letv. It now makes TVs, smart phones, electric vehicles, electric bicycles and virtual-reality headsets, with a mission to "remove the barriers between screens".

Looking to expand into the US market, LeEco opened North American headquarters in San Jose in April of last year with 250 employees. Shawn Williams, chief administrative officer of the San Jose campus, said at the opening event that 800 more staff would be hired.

The company scrapped its ambitious plans one after another shortly after a high-profile launch event in San Francisco last October marking the company's formal entry into the US.

A month later, Jia issued a letter to employees saying the company had "blindly sped ahead" into new markets and was bleeding cash.

Earlier this year, LeEco dropped plans to buy US TV-maker Vizio for $2 billion, and Faraday Future, an electric vehicle startup primarily backed by LeEco, also ended talks with the city of Vallejo, California, in March for a planned second factory on a 157-acre site on the city's Mare Island.

The electric-vehicle startup reportedly failed to pay the primary contractor of a 3 million-square-foot factory in North Las Vegas under construction at a cost of around $1 billion late last year.

Nevada state Treasurer Dan Schwarz told China Daily in an earlier interview that he believed "Jia doesn't have any money" and "Leshi isn't making money".

Last month, the company said it had less than $15 million in sales in the US in 2016 - far short of its goal of $100 million.

The company also reported it sold the 49-acre Santa Clara property to Chinese developer Genzon Group, less than a year after buying the site from Yahoo for $250 million.

liazhu@chinadailyusa.com

 LeEco to lay off 325 workers in US branch

LeEco's LeSee Pro concept car on display at the 2017 Consumer Electronics Show in Las Vegas, Nevada. AFP

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