China's LeEco founder cedes control of listed unit amid cash crunch
- Author: Zachary Reyes May 23, 2017,
May 23, 2017, 5:50
The board approved longtime Lenovo executive Liang Jun, who joined Leshi as an executive in 2012, to replace Jia as CEO.
Last month, LeEco not only abandoned its plans to acquire US -based TV maker Vizio, but also nixed its video service EcoPass.
Yueting Jia has stepped down as LeEco's chief executive. Leshi's finance chief Yang Linjie, who resigned for personal reasons, will also be replaced by Zhang Wei.
LeEco recently raised nearly $2.2 billion from new investors including Tianjin Jiarui Huixin Corporate Management Company and Sunac China Holdings, but another major backer made a decision to cut its losses.
The firm has also trimmed loans by almost half from a peak of 10 billion yuan (RM6.2 billion), Jia said.
The company started out as a video platform before rapidly expanding into producing consumer electronics such as smartphones, televisions and even an electric bicycle, and entering markets such as India and the US.
While Yueting will step down from the position of CEO, he will continue to be the chairman.
LeEco encountered a cash crunch past year that Jia said was the result of that aggressive growth, with the company subsequently seeking billions of United States dollars in new funding, cutting staff and abandoning a deal to acquire USA television maker Vizio.
"Leshi should focus on what they're strong at, which is their core business in content. Videos and entertainment is now one of the major industries in China, and less resources should be invested towards businesses such as driverless cars", Fok said, adding that LeEco's auto business requires major financial investment and should only be a focus when there is a strong technology partner. However much pressure he's facing from within his own ranks, it also looks like this is in response to inroads by one of the company's largest shareholders (Sunac China Holdings). Leshi halted share trading in April, citing pending restructuring plans at the time.