Chinese tech giant LeEco can’t stop losing money

Their rapid expansion, into everything from electric cars to Smart TVs, is the root of the problem.

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Swapna Krishna
June 28th, 2017
In this article: business, JiaYueting, leeco
Bloomberg via Getty Images
Bloomberg via Getty Images

Chinese tech company LeEco has been busy over the past decade, producing everything from TVs to electric cars (or at least, trying to). But now, the conglomerate is in trouble: They are in a cash crunch and haven't been able to raise enough money to ease the burden.

The crux of the problem is the company's rate of expansion; LeEco debuted thirteen years ago as a Netflix-style streaming video site. Now, it's expanded into almost every sector of consumer electronics. Earlier this year, founder and CEO Jia Yueting acknowledged that the company was in financial difficulty, but a 15 billion yuan investment from Sunac, a Chinese property development firm, was supposed to present a solution to the crisis.

However, the investment simply was not enough. Over the next two to three months, the finances of some of the non-listed business units became even tighter, despite the cash infusion. As reported by Reuters, Jia blamed the choice to use the money to pay off debt and loans, rather than refinance, as the source of LeEco's current difficulties.

So what now? The company is looking to move forward and start production on its electric cars, which is the largest source of the company's financial woes. LeEco will also have to consolidate and sell off some of its non-listed entites, as well as liquidate assets to manage this current crisis.

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