Car-hailing platform Yidao Yongche is rumored to have fallen into financial distress after its founder and former CEO claimed that 1.3 billion RMB was appropriated from the company by its top stakeholder, LeEco.

The futures of both Yidao and LeEco seem dim, as both continue to struggle to survive these turbulent times. And the impact on China’s ride-hailing market remains yet to be seen.

When interviewed by CGTN on LeEco’s financial troubles, Professor Paul Gillis from Guanghua School of Management of Peking University said the reason was rushing into things.

“LeEco had a great plan of expansion into the US, they did a splashy opening, and bought quite a bit of land in California, San Jose and Silicon Valley. It had a promising start and hired some really talented people from other companies. But it was spending like a drunken sailor. It launched in the US but didn’t have the product to launch. It wasn’t a well-managed process, and they needed a much longer runway to take off, and they didn’t have enough capital to get there.”

Professor Liu Baocheng, from the Center for International Business Ethics at the University of International Business and Economics, expressed concerns that laws and regulations that could prevent monopoly in business were not sufficient.

“Implementation and enforcement of the law are in question because we do not have highly trained judges and lawyers to deal with those issues. And there are also political considerations in the legal judgment. Also when a new industry is on the horizon, the law is normally tolerant at the beginning. There is higher threshold for further entry of other competitors.”