LeEco lays off the bulk of its staff, COO Atul Jain quits and now the company might exit India: Report

Chinese smartphone giant LeEco has reportedly laid off 85 percent of its staff in India. Senior officers have also left the company and it is looking to downsize its Bengaluru operations.

The smartphone maker made a big splash in India last year when it launched a range of smartphones, TVs and content services alongside a lavish advertising campaign. By some estimates, that campaign cost LeEco Rs 80 crore a month.

The Economic Times, which first reported the layoffs, has spoken to LeEco and industry sources and concluded that the situation does indeed look grim for the company.

In an email sent to LeEco’s employees last year, company co-founder and head Jia Yueting spoke about how the company had emptied its coffers in an attempt to grab market share and expand its businesses at too rapid a pace. He stated his intention to make the company profitable again, but this would also mean drastically scaling back on expenditure.

Following the email, layoffs in India were expected, but it’s now come to light that Atul Jain, COO of Smart Electronics at LeEco has resigned, as has Debashish Ghosh, COO of Internet Applications, Services and Content. Jain and Ghosh were prominent members of LeEco’s India operations.

LeEco apparently told ET that they’re not exiting the country and that they’re scaling back operations inline with their profitability and revenue targets for the year. Industry insiders, however, state that LeEco is quitting the country and that it’s already ceased its offline retail operations.

Reportedly, the sales slump following demonetisation affected the company very badly.

Other Chinese smartphone makers have found success in India through various means. Oppo and Vivo, which are very big in India’s offline space, have survived, nay, are thriving, owing to their investments in manufacturing and an extensive offline retail network in India.

Xiaomi, on the other hand, offers unmatched value for money and of course, Hugo Barra’s star presence. This company has since suffered a slight sales slump and lost Hugo Barra, and is now regrouping to figure out a path for the future.

Huawei has also invested in its offline presence in the country.

While we don’t know whether, and how much, LeEco invested in strengthening its offline presence in India, we do know that the company spent an inordinate amount on advertising and that it wanted to develop a content ecosystem for India. Unfortunately, it appears that the company didn’t have the means to make a dent in India’s cutthroat smartphone market.

If LeEco is indeed exiting the country, its presence was certainly a very brief one. The company officially entered India only in February last year, almost exactly a year ago.

The ET report indicates that LeEco will exit the country in the coming months.