LeEco discovers the hard truth about the US market

Posted by

Chinese brand, LeEco, was started in 2004 as a video-streaming service and quickly spread its wings into smartphones, TVs and electronic cars. The brand has done very well in China and has a growing Indian presence. The company launched an aggressive push for the US market.

The Chinese brand wouldn’t be the first to try to win that market. Before LeEco was BlackBerry and there was Nokia. But LeEco’s push in particular has been the most aggressive.

LeEco spent heavily on setting up a Silicon Valley headquarters, as well as purchasing a 49-acre property in California. The company quickly launched several new products that included a streaming media service, an electric car, a bicycle, a VR headset, as well as Android-powered TV sets and smartphones. The launch event was with a lot of fanfare.

What was the point of all the flamboyant show of muscles? At the launch of new products late last year, Jia Yueting, chairman and CEO of LeEco was reported as saying, “Only with the recognition of US customers, can we win over customers in the world.”

I do not even know what that means. That the rest of the world will not accept LeEco products if the US market does not accept them? That doesn’t sound very wise. And to be honest, what exactly was it that LeEco was bring to the US market that was different (read: better) than consumers there have been used to? No-one has been able to pin down any such thing.

A planned acquisition of US television maker Vizio for US$2 billion failed, and along with it went LeEco’s hopes to grab a foothold with Vizio’s factories and distribution network.

Scaling Back

Bloomberg reports that LeEco has axed 325 jobs from its US operations and will keep 50 staff to support existing customers. The company is also shutting down its Android-powered smart bikes and operations in California.

The official statement from the company is that they are facing “challenges with raising new capital” which has meant that they haven’t been able to implement everything they had lined up.

The US Market

LeEco has learned what others before it found out – that the US market is a tough nut to crack and can leave even the strongest of brands reeling. It was tough going for those brands when the US market was not yet saturated. It has to be many times harder now that it is saturated and brands that are strong there are now exploring other markets for growth.

The US is not a market to jump into presumptuously. LeEco was wrong. The brand does not need the US market’s approval to succeed elsewhere in the world. It needs to take a leaf from other brands – like Huawei and Xiaomi – who are selling very well elsewhere despite having minimal US presence.

One comment

  1. That is unfortunate for them and in truth, they don’t seem to have anything new to offer to the US. Who knows they may have blown Nigeria away if they had entered Nigerian market with the same aggression.

Leave a Reply

Your email address will not be published. Required fields are marked *