Gionee on verge of bankruptcy as its founder admits to losing 1 billion yuan in gambling

Liu Lirong Photo: GSM DOME

The founder and CEO of Shenzhen-based Gionee, a Chinese smartphone maker, has admitted to massive gambling losses, but denies that his bets are the reason why his company is now going bankrupt.

Liu Lirong, a Chinese tech tycoon, in an interview with Chinese business newspaper Securities Times denied media reports that he had lost up to 10 billion yuan ($1.44 billion) at the Hong Kong-listed Imperial Pacific Resort casino on the island of Saipan.

"I did participate in gambling in Saipan, but how could I possibly lose that much? If it is true, shares of Imperial Pacific should have surged," he said.

When asked how much he had lost in gambling, Liu said: "A bit over 1 billion yuan," adding that "I may have used company assets to gamble."

However, he denied that Gionee's current financial troubles were primarily the result of his gambling and attributed the business failure to increased industry competition and poor relationships with parts suppliers.

"Gionee had been losing money since the beginning of 2013, with average losses of no less than 100 million yuan per month between 2013 and 2015, and the monthly loss further widened to no less than 200 million yuan in the past two years," said Liu.

He also admitted that the company's total debt amounted to 17 billion yuan, with 10 billion yuan owed to banks, 5 billion yuan to upstream suppliers, and about 2 billion to advertising agencies.

Founded in 2002, Gionee holds about 6 percent of China's smartphone market, following other handset brands like Huawei, Xiaomi, Oppo, and Vivo - which held a combined 78 percent market share in the third quarter according to a report by the research agency Counterpoint.

On October 26, a court in Shenzhen added Liu to the country's blacklist of social credit.

According to a statement released by the court, he must pay over 200 million in debt before he can be removed from the list.

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