Liu Lirong, the founder of Chinese smartphone maker Gionee Communication Equipment Co., reportedly lost US$700 million in one bet in a Saipan casino.
The loss led to Gionee’s sudden collapse as Liu had embezzled money from the company, according to the reports.
Founded in 2002, Gionee was one of the oldest mobile phone brands in China.
Liu was known for his bold decision to sign up Hong Kong superstar Andy Lau Tak-Wah as a product endorser in 2015, and the bet paid off handsomely.
Thanks to the promotional campaign featuring Lau, the brand successfully cracked markets in second- and third-tier cities in the mainland.
Targeting the middle-range segment of the handset market with a price tag between 1,000 to 2,000 yuan, Gionee continued hiring other stars to promote its products and was ranked seventh in sales in the China market, having sold about 15 million units last year.
Gionee was rumored to be targeting an initial public offering with a valuation of 100 billion yuan (US$14.42 billion).
However, following rumors of overdue payments in March, 20 suppliers filed an application with the Shenzhen Intermediate People’s Court for a bankruptcy restructuring of the company last week. To their dismay, however, the creditors found that around 10 billion yuan of the company’s cash was missing and the accounting records were a mess.
Media reports had it that Gionee’s financial woes could be traced largely to Liu’s gambling addiction in recent years, and that he lost US$700 million in a single game.
Some quarters have floated another possibility: the gambling loss might just be a cover for Liu’s money laundering activities as he tried to move funds outside China through the casinos.
It’s hard to ferret out the truth: who can really tell what actually happened in a casino in Saipan?
This article appeared in the Hong Kong Economic Journal on Nov 26
Translation by Julie Zhu
[Chinese version 中文版]
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