Chinese consumer electronics manufacturer LeEco recently closed its only store in Moscow and may be preparing to leave Russia entirely, sources from the local wireless industry said on Tuesday. The move is said to be prompted by LeEco’s financial troubles that started in early 2017 after the company found itself unable to continue returning its loans it took out in previous years in an effort to fund a wide variety of ventures and experimental projects that are yet to become profitable. In a statement provided to one local media outlet, a LeEco representative claimed that the Chinese original equipment manufacturer (OEM) isn’t planning on leaving the transcontinental country and is instead looking to revamp its general business strategy, adding how the aforementioned closure of the Moscow store isn’t meant to be interpreted as a sign that LeEco is entirely giving up on Russia.
The new strategy that the firm is currently developing should improve the performance of its foreign operations, including those in Russia, the company official told Hi-Tech Mail, without elaborating on the matter. The local brand of the company previously announced that it’s planning to sell one million devices in Russia over the course of 2017, but most industry watchers agree how that goal isn’t attainable anymore. During the first quarter of 2017, LeEco is estimated to have sold 19,400 devices, whereas its Russian unit recorded around 21,000 sales over the three-month period ending June 30. Even if the company doesn’t leave the country in the immediate future, it’s currently dubious whether it can even reach 100,000 sales in the country this year. The final quarter of the year is by far the most profitable one for consumer electronics vendors in Russia, though LeEco only sold around 27,500 smartphones in Q4 2016 and its performance is unlikely to be better this year in light of the fact that it closed its only outlet in Moscow and is unlikely to have the means for funding a major marketing campaign in the country.
It’s still unclear whether LeEco will manage to bounce back from its recent issues and keep the majority of its businesses afloat, as most large lenders are unwilling to borrow significant resources to the struggling company that was recently described as “a Ponzi scheme” by the co-founder of Chinese tech giant Tencent.