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Tianma Writes Off Smartphone Vendor’s Debt
February 12, 2018
 
Tianma Microelectronics has indicated that they created a reserve against ~29.6m in bad debts.  While the company did not disclose if the un-collectables were from one or a number of customers, it is probable that most, if not all come from Chinese smartphone brand Gionee. Tianma had been a primary supplier of smartphone displays to Gionee, which has been under significant pressure to regain both its stature as a smartphone supplier and its financial status.  Tianma does not seem to share the more positive view of Gionee’s founder Liu Lirong, who has stated that all of the company’s debts will be paid off ‘over time’.  The company founder stated that they overspent in 2016 and 2017 on marketing and capital investment to expand the company, but disappointing sales of their smartphones last year negatively impacted cash flow. 
 
Some of Gionee’s suppliers did not seem concerned that the company was facing financial troubles, while another Chinese smartphone vendor Coolpad was showing losses and the founder and key executives were leaving, but courts had frozen Liu Lirong’s assets, which is pretty good indicator that something was amiss and a number of lawsuits have been filed in China and Hong Kong by Gionee suppliers and questions about the company’s India subsidiary’s viability have arisen.  Now that Tianma has taken reserves against Gionee’s debt, other suppliers will likely begin write-offs and lawsuits, which does not bode well for Gionee.