Chinese tech firm that once vowed to disrupt Tesla and Apple faces delisting under pile of unpaid debt

The Chinese tech company that once called Apple “outdated” and vowed to disrupt Tesla is facing delisting in China, leaving billions of yuan in unpaid debts and hundreds of thousands of retail investors out of pocket.

Leshi Internet Information & Technology, founded in 2004 by Jia Yueting – who went on to become a poster boy for China’s emerging tech prowess, had trading in its shares suspended on Monday after a former chairman of the company, who poured some 15 billion yuan (US$2.4 billion) into it in a rescue bid, resigned earlier in the month.

“Basically Leshi has become insolvent. It has 7.5 billion yuan worth of debts due by this year, mostly directly owed by unlisted related parties … but it has no valuable assets that could be sold to repay the debts for now … the company is facing an extremely big risk of delisting,” Sun Hongbin, the former chairman, told mainland media firm Zhitongcaijing.com.

Sun, founder and chairman of property developer Sunac China Holdings, had taken over from Jia last July. He resigned on March 14, calling his investment in Leshi “a failure”.

“The resignation decision was made mainly out of consideration for retail investors. Some use my name as a reason for continuing to buy Leshi. Retail investors do not read the fundamentals of the company, they just curse me when they lose money. I cannot afford this,” Sun said in the interview published on Sunday.

Leshi had around 185,875 retail investors in the third quarter of last year, according to the company, the latest official figure available. But Chinese media firm Caixin said that small investors rushed to buy into the company after its previous share suspension ended on January 24 this year, betting it would recover. Caixin said the number of retail investors increased by more than 80 per cent to 336,000 in 13 trading days.