has published an official statement announcing Jia Yueting’s stepping down from the CEO role, and that Jia will remain as the board chair while Liang Jun will take over the position of CEO. Following the announcement, Jia Yueting has held a press conference for the management shift.
It has been pointed out in the articleSun Hongbin Aims For Control Over Leshi As Founder Jia Yueting Steps Downthat after Sunac China invested ￥15 billion in LeEco and saved LeEco from financial crisis, the listed Company Leshi’s new CEO arrangement and major management shift announcement weren’.
Sun Hongbin had revealed LeEco’s strategy adjustments and future plans in details for several times at Sunac China’s press conference: changes of the independent board of the listed company; the retrenchment strategy of the listed company; the management shift of the listed company; the responsibility change of the listed company’s actual holder etc.
After researching on relevant requirements on listed companies in China, TMTPost learned that the law regulates that companies must make public announcements when having major management shift or personnel change that would have a profound impact on operation. However, Leshi did not follow the requirement and made an announcement.
Yesterday in the late afternoon, Leshi finally published an announcement of the management shift. “Jia Yueting has applied to step down from the CEO role and will remain as the company’s board chair, the director of the board strategic committee, member of the nominations committee, and member of the audit committee etc. Liang Jun will replace Jia as the new CEO of Leshi. He will be reporting the operation status to the board chair and the board,” the announcement reads.
Liang Jun has openly stated that Leshi will be separated from Jia Yueting’s personal plan. Leshi has made it one step further towards separating from Jia Yueting.
Liang Jun originally joined Leshi as the general manager and the manager of LeTV in March 2012. In 2014, he became the COO of LeEco’s smart terminal business and later became the president of Leshi’s global smart terminal RD department and the CEO of Leshizhixin.
At present, Liang Jun holds 234,100 shares, accounting 0.01% of the total shares. Leshi also announced that the former CFO Yang Lijie will no longer be acting on any role, and that the board approved that Zheng Wei will be the new CFO.
Yesterday in the afternoon, Leshi held a press conference. Jia Yueting had stepped out with the senior executives of the company.
According to Jia Yueting, LeEco has had major improvements on its management structure. For the very first time, Leshi has its own full-time CEO ( the general manger in the announcement). “LeEco now has many business operations which are growing larger. I already have a lot of duties to tend to, and my energy is limited,” Jia said.
Jia believes that Leshi has entered a pre-mature stage, a fast-growing period, and therefore it needs the board to manage it and improve the structure. “The company should be run by a person with the fitted management ability.”
Jia also stated that every of the seven subsidiaries matter, and different tailored solutions will be applied to drive their development. Jia pointed out that the crisis LeEco encountered last year was caused by two facts: One is that the company was expanding too fast; another is that the company wasn’t strong enough.
Jia Yueting stated that the two main issues will be addressed and the listed company Leshi already has a clear path. “Other subsidiaries will reach their ecosystem form through appropriate approaches,” Jia added. “I will consider giving out part of my shares if it can help us meet the demands of innovation and business cooperation and satisfy the competence demand presented by the cooperation of the ecosystems.”
Additionally, Jia Yueting also answered at the press conference questions regarding Liang Jun, Sun Hongbin, LeSports’ layoff, the smartphone business, LeSEE and the pledge of stock right.
On Liang Jun: Maximizing the value of the ecosystem is crucial
Leshi’s announcement yesterday states that Jia Yueting would step down from the CEO position and remain as the board chair while Liang Jun takes over the CEO role. Leshi also announced that the former CFO Yang Lijie will no longer be acting on any role, and that the board approved that Zheng Wei will be the new CFO.
Jia Yueting claims that Liang Jun is one of the best Internet ecosystem experts LeEco’s ecosystem has nurtured. Maximizing the value of the ecosystem is incredibly crucial. Liang will focus on the listed company’s strategies and make the corporate structure more reasonable. The company will pay more attention to the products, enabling LeEco to become a product and innovation-driven enterprise. This adjustment would be of great help to Leshi’s development.
According to Jia, the structural adjustment this time took up a very long time. “The listed company has very high standards for the CEO. We couldn’t find a qualified candidate with both product experience and Internet sense. It’s hard to find such talents in China, or even in the world.”
Subsequently, a conclusion was drawn: it’s more appropriate to select a director for the listed company through internal training and selection instead of finding an outsider that few knows. “Now we have found the most suitable person. We have been thinking about this for a long time. In fact, we started to have this thought around September last year.”
On Sun Hongbin: He is not the second biggest shareholder in my eyes, but a friend
Jia Yueting mentioned that Sun Hongbin, board chair of LeEco’s investor Sunac China, had been having many discussions on Leshi, while his comments on the private companies remained strategic.
“Sun is not just the second biggest shareholder. He has gradually become a friend. We would have in-depth discussions on the tendencies in the industry. Of course, we have our disagreements. We would expand our discussion meeting once a while. The board will make the important decisions. The management team constantly seeks consensus,” Jia said.
Jia Yueting believes that a startup shouldn’t be run by a board, but when an enterprise enters a fast-growing period, the management should meet higher standards. “We believe that Leshi has entered a mature phase, a fast-growing period. It’s time for the board to decide the major directions for the company, optimizing the management structure and letting more capable people run the company.”
On layoffs: Layoffs mainly happened within the private companies
From Jia Yueting’s view, lay-off is part of the structural shift. Jia revealed that LeEco started to consider structural change since LeEco appeared to have liquidity management issues since October last year. “I prefer to call it personnel optimization instead of layoffs,” Jia commented.
Jia mentioned that personnel optimization will truly enable the private companies to bring out the best they could offer. The listed company had also had some optimization moves, but it will continue to attract quality professional talents. The private companies focus more on enhancing the efficiency of the organizations and utilizing the current team and talent pool, maximizing the value.
As for LeSports’ future plan, Jia commented that he wishes that LeSports could be more focused and pay attention to creating value so that LeSports can achieve a profit-loss balance soon. “LeSports’ core value is the users. LeSports’ main focuses in the next phase include member and user acquisition,” Jia said.
On smartphones: The cash plunge has been a lesson
Jia brought up that the smartphone business last year created many miracles last year as over 10 million smartphones were sold in the first year, which is quite rare. However, due to the lack of judgment on the liquidity management and precise prediction over gain and loss, the smartphone business didn’t have enough following capital to keep the operation running. The smartphone business eventually entered a shock state in Q4 last year.
Jia Yueting stated that the smartphone business has a very clear development path, which is to integrate the core competencies in the smartphone field and maximize the value with differentiation advantages. “I believe the smartphone business will generate unique value for this market and bringing different value to users.”
“I am hoping to accumulate useful experience in the coming up strategy execution and evade the issues occurred in the smartphone business effectively when doing the car business,” he said. “Looking from another perspective, current loss might lead to a rewarding result. This might benefit LeEco’s development in the long run. The lessons we had learned in recent time cost us a lot, but they had also been a studying opportunity for us. Losses helped us improve our skills, acquire better a mindset, especially on the operation management. We learned to put operation management in the top position, and that the car industry consumes a great amount of capital.”
In addition, Jia also revealed at the press conference that the series A round financing of LeSEE would soon be initiated. “It won’t take long. It would probably be completed in 2017,” Jia said. “Of course we would bring about the products first as soon as possible. We want to let our users experience what it really feels like to drive an Internet car.”
On the pledge of stock right: The pledged amount has been reduced by 50%
Jia also stated that the pledged capital has been reduced by nearly 50%, an amount that used to be over ten billion. The pledge rate is also gradually dropping.
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Translated byGarrett Lee(Senior Translator atPAGE TO PAGE), working for TMTpost.