Photo/Shetuwang

May 21 (NBD) – Several employees at Baofeng TV, the TV arm of Chinese internet entertainment and video company Baofeng Group Co Ltd, disclosed Monday that they had received the layoff notification from the headquarters, according to Red Star News, Chengdu Economic Daily's media platform. 

As of press time, Baofeng Group hasn't yet replied to the issue.

Before that, the office of Baofeng TV had already been sealed by the property management center of the mansion where the office was situated for the expiration of the lease. In a notification, Baofeng TV stated the company will move to a new place.

Baofeng TV's ordeals could date back in late 2018 when it was short of TV supplies, which led many of its distributors to turn to other brands for supply and caused a default in employees' wage payment. On May 10, a Weibo user exposed that employees have put up banners to demand unpaid salaries.

National Business Daily (NBD) noticed that Baofeng TV was once the primary business of Baofeng Group. In 2017, the company logged a rise of 40 percent in revenue. During the "618" and "Double 11" shopping galas of the year, its AI TV was the best-seller on e-commerce platform JD.com.  

Last year, Baofeng Group even advanced a strategy "All for TV" to promote the TV unit, but now the business on which the group once pinned great hope has been a drag.

The annual report of 2018 showed Baofeng Group registered a whopping net loss of 1.09 billion yuan (158.0 million U.S. dollars). According to the financial report for Q1 of 2019, the Group again reported a loss of 17.495 million yuan (2.5 million U.S. dollars). Both reports showed the heavy loss was chiefly attributed to Baofeng TV. 

So how come the once-important business is now pulling Baofeng Group back?

Baofeng Group believed that it is the limited financing channels that hindered the TV arm's business development.

NBD found that since its founding in 2015, Baofeng TV had only conducted 4 rounds of financing, raising approximately 1.5 billion yuan (217.4 million U.S. dollars) accumulatively, much lower than its counterparts.

Despite the insufficient influx of capitals, Baofeng TV put much effort in enlarging offline channels, which most employees deemed as a blind expansion.

Meanwhile, Baofeng TV aimed at grasping the market with a low-price strategy but failed to build a clear brand positioning, commented Johnny, an analyst from iiMedia Research.

Additionally, the lackluster performance of the domestic TV industry since 2017 aggravated the company's plight. Data from the Forward Industry Research Institute indicated the TV sales volume declined by 7.3 percent in the first half of 2017 from the previous year. The downward trend has continued till now.

Data shows that Baofeng TV's gross margin of sales stood at -15.29 percent in 2016, -7.15 percent in 2017, and -31.97 percent in 2018. 

Email: lansuying@nbd.com.cn