×
You will be redirected back to your article in seconds

LeEco Puts Brakes on U.S. Expansion Efforts, Lays off 325

Chinese consumer electronics company LeEco officially put the brakes on its ambitious U.S. expansion plans Tuesday, laying off 325 of its U.S.-based staff and in turn acknowledging that it had underestimated the challenges of selling its products and services to North American consumers.

In a statement, LeEco said that it is undergoing “a significant restructuring and streamlining of our business, operations and workforce.” The company said that it was committed to its U.S. business, and to supporting its existing customers, but that any further U.S. expansion would have to wait until it had solved financing issues. “The breadth of our business model is capital intensive, and our leadership has been working to secure the appropriate level of funding for the U.S.”

In the near future, LeEco’s much smaller staff will be focused on Chinese-language customers, according to the statement: “Our goal is to continue to gain momentum. In the past few months, we have gained a large foothold in Chinese-speaking households in the U.S. by offering tailor-made products and content for this community. We believe this provides us an opportunity to build on our strengths and grow from there.”

LeEco was founded as a video streaming startup in China in 2004, and expanded into the consumer electronics space in the following years, building first TVs and connected devices and then phones. But LeEco’s plans went further than that: The company also expanded into the film industry, build a VR headset and a smart bike, and started to work on an electric car — all efforts that were driven by a dizzying network of corporate subsidiaries.

LeEco began to take first steps into the U.S. market in 2015. At first, LeEco only hired a modest team, but then massively accelerated its U.S. expansion in 2016, moving into a new San Jose office and hiring hundreds of staffers. The company even acquired a massive real estate site formerly owned by Yahoo with plans to build a city-like office complex with enough space for 12,000 employees.

In July of last year, LeEco announced the acquisition of U.S. TV manufacturer Vizio for $2 billion to get an instant foothold in the local TV market. And in October, it officially announced its entrance into the U.S. market, where it aimed to sell Android-powered smart TVs and phones and directly compete with giants like Samsung and Apple.

In China, LeEco has successfully been using the concept of flash sales, getting consumers to buy phones and TVs directly from the company online. It it’s motherland, LeEco has also been successful at establishing subscriptions and membership plans, selling access to content as well as expanded warranties and early access to future products.

Both strategies didn’t work in the U.S., where LeEco was slow to launch its products in retail stores, and online sales remained far below company expectations. The company’s Ecopass subscription plan, which meant to turn consumers into paying subscribers and repeat customers, was officially killed last month.

LeEco’s failure in the U.S. wasn’t just driven by not being able to understand the local market. The company also struggled with a rapid turnover of executives hired to lead the U.S. branch, and dozens of reviews on Glassdoor reveal what can best be described as a toxic work environment.

But LeEco’s ultimate undoing may have been a massive cash crunch, which forced it to abandon the Vizio acquisition last month, and now let to the company all but giving up on most of its U.S. plans. LeEco founder Jia Yueting, who stepped down from the company’s CEO post this weekend, acknowledged as much in a letter to employees late last year.

In that letter, which was at the time leaked to Bloomberg, Jia foreshadowed this week’s actions by writing: “We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy.”

More Digital

  • BURBANK, CALIFORNIA - JANUARY 18: (EDITORIAL

    Dax Shepard, Bobby Bones, 'Breakfast Club' Among iHeartRadio Podcast Awards Winners

    iHeartRadio launched its first ever Podcast Awards on Friday (January 18) in Los Angeles. Among the winners in 22 categories were “Whine Down with Jana Kramer” (Best Entertainment TV Podcast); “Armchair Expert with Dax Shepard (Breakout Podcast); “Bobbycast” (Music Podcast); and “The Breakfast Club” (Best Multicultural Podcast). The winners were determined by iHeartRadio listeners. Taking the top prize of Podcast [...]

  • Velvet Buzzsaw trailer

    Netflix Original Movies: What to Look Forward To in 2019

    Following the biggest fourth-quarter worldwide subscriber gain ever and some controversy around increased prices in the U.S., Netflix looks to keep its momentum going into 2019. From Jan. 18 through March, the streaming site will release 10 original films, including action-packed thrillers, a post-apocalyptic sci-fi, quirky comedies, inspirational dramas, an artistic horror movie and a viral [...]

  • The Beatles Eight Days a Week

    Imagine's Documentary Arm Sets First-Look Pact With Apple (EXCLUSIVE)

    Brian Grazer and Ron Howard’s Imagine Documentaries has set a first-look pact with Apple to develop non-fiction features and series. The deal comes as Imagine is investing heavily in the premium non-fiction arena. The company in June recruited RadicalMedia veteran Justin Wilkes to head Imagine Documentaries as president. The deal suggests that Apple sees docu [...]

  • Walt Disney HQ LA

    Disney Unveils Financial Data for DTC Unit, Sets April 11 for Investor Presentation

    Disney has rejiggered its business segments for earnings reporting to make room for the new unit housing its global streaming operations. Disney on Friday released restated earnings for fiscal 2018, 2017 and 2016 to give investors and financial analysts better visibility into its spending on the launch of the Disney Plus, ESPN Plus and other [...]

  • Facebook Logo

    Release of Docs to Reveal How Facebook Made Money Off Children

    Documents related to a 2012 lawsuit against Facebook in which children, sometimes unwittingly, spent their parents’ money on games via the social site will be unsealed, according to a Monday ruling from the United States District Court. The court gave Facebook ten days to file unredacted documents in accordance with the ruling. The 2012 lawsuit [...]

  • Facebook Logo

    Facebook Sets Up New Product Group for AR Glasses (Report)

    Facebook has restructured its augmented and virtual reality research division and set up a new group tasked with building augmented reality (AR) glasses, according to a new Business Insider report. Facebook acknowledged the move in a statement given to the publication, saying that the move affected “a few hundred people.” The group has already built [...]

More From Our Brands

Access exclusive content