One of China’s top video content platforms may be finding that a U.S. expansion is a bridge too far.
The expansion of Chinese companies into the U.S. market has never been easy or smooth. LeEco expanded its business to the U.S. this year, and LeEco’s CEO Jia Yueting’s letter, obtained by the Global Times on Monday showed that the company’s expansion to U.S. had gone too far, because of limited capital and resources, resulting in “an apparent lack of momentum” in various businesses.
Management should be held responsible, Jia said in the internal letter, and he volunteered to receive an annual salary of only RMB 1 (US$0.15) from the company forever.
Brian Hui, head of LeMall Global & SVP, overseas O2O and VP of Le Holdings Group Marketing responded to TechCrunch reporter Jon Russell’s questions about the current status of the company at TechCrunch Beijing. Hui said that the company is moving to phase two, to focus on building more healthy financial operation and that it will focus on the development of the self-driving car to launch it in the market by the end of this year.
There is a problem with non-listed LeEco’s growth pace and organizational capacities,” Jia said in the letter. So the letter says it cannot sustain the business.
Hui: If you read the letter, it’s not about whether it’s sustainable or not sustainable. It’s not about running out of money. It’s how you can spend money wisely… You go through a very aggressive user base growth period before you enter a financially sustainable period. I think this is pretty normal, applying to any kind of startup.
The company has grown from 30 to 600 in U.S. That’s too fast.
Hui: Fast is not about staffing. It’s more about whether you hire the right people and invest in the right areas.
There was speculation that there were employees who didn’t get paid, that’s where the discussion started.
Hui: That is not true. We will always want to sustain our trust and We still maintain a very good relationship with them.
Huge companies in China that are doing commerce don’t target America, rather they target South East Asia and India. Amazon is huge in the U.S. How do you make people use your service? That’s tough.
Hui: Even one percent of possibility can prove that you have the possibility to disrupt the market. We will enter U.S. market with our partners.
If you have the ambition to have other disruptive services, you want to provide the best service to your customer. And to add value to the customer, you need to have something that couples the entire experience. That’s Internet and cloud.
What would you like to say to the people who are watching LeEco?
Hui: I think the most important thing is about not just the letter, but the substance in the letter. Between the choices of hiding things, we generally share the challenge we are facing today. The consistent message of the ecosystem we are trying to build, I hope and I believe that if the crowd here or the users pay attention to LeEco, and the users who are using our products and services, you will share and believe that the ecosystem we are trying to build is not just for now but for the future.
— A version of this article first appeared on TechNode.