★ LeEco Cuts 70% of US Staff, Refocuses on Chinese-Speaking Americans (May 23, 2017)
I’ve been both intrigued by and enormously skeptical of LeEco’s US market entry from the beginning, as this piece I wrote after its US launch back in October suggests. The company had been successful in China on the basis of a slow evolution from a content to a hardware company, and yet its US launch seemed to have turned that strategy almost entirely on its head without the compelling content that helped it succeed domestically. It also made many of the same mistakes as other Chinese companies attempting to expand into the US by not making enough changes to its playbook when it moved to the US. There have been reports for a few days now about an impending massive cut to the US business, and today has brought official confirmation. There’s no schadenfreude here from me given the large number of people losing their jobs, but hopefully LeEco’s story serves as a cautionary tale for other Chinese companies entering the US market. As the essay and video in the related narrative suggest, this has always been a tough task, and no Chinese company has really succeeded in building a big, successful ecosystem in the US. Even those that have done well more narrowly, such as in low-cost hardware, have taken years to get there and even then aren’t considered in the same class as leaders like Apple, Samsung, LG, or even Sony. Ironically, LeEco’s retrenchment now to serving Chinese-speaking residents of the US would have made a ton of sense as a market entry strategy last year, starting much smaller and more modestly, and slowly expanding out from that core into the broader US market. Instead, that new focus is the result of a somewhat humiliating defeat, caused in equal measures by an overly hubristic and poorly thought out market entry and financial constraints at headquarters that gave that strategy very little time to play out. This could – and should – have gone very differently.
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