Debt-Ridden LeEco Implements 4.5-Day Weekly Work Model
On January 3, the first work day of 2023, CEO of Chinese tech firm LeEco Zhang Wei issued a letter to all employees, announcing that a 4.5-day working system would be implemented the following day, giving all employees a flexible half-day every Wednesday. This move has made the company, which has been deeply mired in a debt crisis in the past few years, quickly appear on the trending topics list of China’s top microblogging site Weibo, inciting heated discussion.
LeEco said that work time is adjusted to five consecutive hours every Wednesday, such as 10am-3pm or 11am-16pm. Most of the 400 people involved in the new work system need to keep office hours. “Although the working hours have been adjusted, the salary of employees will not change, and the related businesses of LeEco will not be affected,” the company added.
January 4 was the first day of LeEco’s new working arrangement. At three o’clock in the afternoon, when Chinese media outlet Chaintruth arrived downstairs at the LeEco office in Beijing, they ran into many employees who were smiling and leaving the office building. There were only a few people in the work area. The person in charge of LeEco’s marketing department said that when she announced the new working system, employees were calm beyond her expectations, because at LeEco, they never responded to messages related to work or experienced the “996” work culture – a 12 hours per day, six days per week working schedule.
From January 3, many web users poured into LeEco’s Douyin live-streaming room to seek employment, which caused the cumulative number of viewers to exceed 100,000 – nearly 20 times from the previous month. On January 4, sales from the live-streaming channel exceeded 60,000 yuan ($8,727).
Many web users expressed envy – one wrote, “how can I join this department quickly?” – while some people wondered whether LeEco’s working system would become a new trend, attracting other internet companies to follow suit. In addition, many people wonder whether this practice complies with the law.
As the first video-based website firm to list A-shares in China, LeEco was founded by Jia Yueting in 2004. In 2016, due to the rapid expansion, LeEco fell into a debt crisis of over 10 billion yuan. Jia has never returned to China since he announced that he would attend a conference in Los Angeles, US on July 5, 2017. Since then, the public wondered about LeEco’s debts and when Jia will return home. In 2020, LeEco was delisted and in 2022, it gradually decoupled from Jia after he entrusted Zhixin Cloud Network Enterprise Management (Tianjin) Co., Ltd. to exercise the voting rights and other shareholders’ rights corresponding to its 600 million shares. As a result, Zhixin Cloud Network has become the new largest shareholder of LeEco.
In a letter to all employees, Zhang Wei mentioned, “With everyone’s efforts, the company’s business in 2022 was stable, and achieved a cash flow balance. Although there were five weeks of work from home in the first three quarters, the overall performance targets were achieved as scheduled.”
However, LeEco’s financial situation is still poor. In the first three quarters of 2022, LeEco’s operating income was 267 million yuan, down 10.04% year-on-year, but its operating costs were as high as 598 million yuan, up 2.85% year-on-year. Its net losses were 353 million yuan, an increase of 118.35% year-on-year, while total liabilities were 22.31 billion yuan.
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LeEco’s revenue now mainly comes from membership income and hardware products. Specifically, it owns the copyright of classic television works such as Empresses in the Palace, The Legend of Mi Yue, White Deer Plain, and Happiness as Flowers. “Empresses in the Palace saved the prosperity of LeEco,” some netizens said. Although the show has been broadcast for more than 10 years, its annual income still reaches tens of millions of yuan.
Regarding LeEco’s next step, the individual in charge of LeEco’s marketing department said, “We will launch a series of products such as new smartphones, TVs and smart door locks.” On January 4, it announced that its new 5G smartphone, the S1 Pro, will be unveiled soon.