Tuesday, 2 January 2018

Embattled LeEco Founder Defies Beijing Order to Return to China

Tech billionaire Jai Yueting, who once boasted that his company would rival Apple and Tesla on the world stage, remains in California, dispatching his wife and brother to deal with the firm's debt crisis. Chinese entrepreneur Jia Yueting, founder of embattled tech giant LeEco, has defied orders from Beijing regulators to return home to China. The disgraced mogul instead sent his wife and brother to the Chinese capital to meet with authorities, saying he needed to remain in California to focus on his ailing electric car startup. China's stock market regulator issued an order on Dec. 25 for Jia to fly back to the country before the end of 2017 to deal with a debt crisis at LeEco's publicly listed internet video subsidiary, Leshi Internet Information & Technology Corp. The China Securities Regulatory Commission said that despite repeated attempts to reach Jia since September, he had yet to turn up in China to deliver on his promise to provide interest-free loans to help with Leshi's "huge amount of debt." "The debt has yet to paid back," the agency said in an unconventional and strongly worded statement. "It has severely hurt the interest of the listed company and investors and has had an extremely adverse social impact." Jia founded LeEco in 2004 as LeTV, an internet video service that grew to become an early market leader. But not long after the firm went public in 2010, he embarked on a wildly ambitious bid for LeEco to become a world-leading maker of both original content and devices, producing everything from smartphones to high-concept electric cars. In the process, he burned though billions — the vast majority of it borrowed — until regulators began to tighten the leash in early 2017. Chinese courts have since frozen millions of Jia's assets as Leshi and LeEco struggle to repay debt owed to a vast array of lenders and suppliers. In April, LeEco aborted a planned $2 billion takeover of U.S. smart TV maker Vizio. Jia was ousted as chairman of LeEco by the company's board weeks later. In early December, he was placed on China's official blacklist of debt defaulters after failing to meet a court order to pay more than $71 million owed to a local securities group. One of the few LeEco subsidiaries still up and running is it's film studio subsidiary Le Vision Pictures. Le Vision has seen a high rate of staff turnover since the parent company's problems became a national embarrassment; but industry sources in Beijing say it continues to pursue new projects (Le Vision didn't reply to requests for comment). The studio's latest release, action-fantasy The Thousand Faces of Dunjia, has earned over $45 million since its opening Dec. 14. Thus far, the legal and regulatory actions taken against Jia have been civil rather than criminal in nature. Local media reports have said it's not yet clear whether the government has the grounds to force him home to China, but many have noted the ominously strong wording of official statements directed at the tycoon. Publicly responding to the order to come back to Beijing for the first time on Tuesday, Jia said over social media service Weibo that he was "deeply sorry and remorseful to society for the negative impact caused by the debt crisis at LeEco." But he added that he was needed at his Los Angeles-based electric car startup Faraday Future. "The financing of U.S.-based FF has made great progress and there is immense work that requires me to guarantee on-time mass production and delivery of FF 91 EV," he said, referring to Faraday's prototype model. Jia added that his brother and wife have been authorized to deal with the issues at Leshi on his behalf. On Sunday, Jia’s wife Gan Wei issued a post on Weibo, with her location geo-tagged to Beijing Capital International Airport, writing: "Back to accomplish a mission. At the beginning of the new year, the tasks on the road ahead will be heavy..."
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