By XU Shiqi
Gome, once a major retailer of home appliances, is sinking in a sea of scandal. On October 15, Gome's app was swamped by messages of frustration towards HUANG Guangyu, the founder of Gome, for failing to pay salaries.
Gome's woes began a year ago when a number of employees filed a lawsuit for unpaid salaries. Subsequently, many employees, including executives, left the company. The company had 32,000 employees at the end of 2020, but only 10,000 now remain.
The company is in a dire situation. Many features of Gome's shopping app have become inactive. Live streaming, seen as the last lifeline, no longer operates around the clock.
While customers can still make purchases on the platform, numerous complaints have surfaced regarding undelivered products and unprocessed refunds.
Gome's stores aren't faring much better. All stores in Guangdong Province have reportedly closed. Some subsidiaries have not paid employees since November last year.
On the brink of bankruptcy, according to the company's H1 report, sales revenue of 415 million yuan (US$57 million) was a staggering 95 percent down.
Currently, Gome's assets stand at 11.2 billion yuan, with a substantial 78.3 percent debt-to-asset ratio. The interest-bearing loans amount to 7.6 billion yuan, of which 5.9 billion will come due within a year. The company only possesses 2.4 billion yuan in cash and equivalents, far short of the amount needed to cover its debts.
All year, Gome has struggled to delay what seems inevitable. Live streaming on Douyin and Kuaishou was an insubstantial attempt to buy more time for the company to navigate the crisis.
