(Yicai Global) Nov. 19 -- Amid a slowdown  in phone sales, small and mid-sized Chinese phone makers are bleeding  the most, as Gionee Communication Equipment's example shows.

Gionee has failed to pay its suppliers,  an insider with a pseudonym of Chen Gang in the Shenzhen-based company  told Yicai Global. One of the firm's more successful products was its F103 model in 2015 which was made and gained certain attraction in India.

China's mobile phone sales fell almost 12  percent in the third quarter in comparison to the same time last year, a  report from China's Ministry of Industry and Information Technology  shows. Gionee's CNY1 billion (USD144 million) Dongguan factory  once produced 100 million phones in a year but amid cooling sales, big  names such as Huawei Technologies and Oppo Electronics have increasingly  taken up smaller players' market shares.

After Gionee's two original equipment  manufacturer deals with local companies fell through, it can hardly pay  for its factory workers food and lodging expenses, the insider added.  The firm has over 600 employees in its Dongguan plant and 200 in  customer service.

Lots of work needs to be done for  restructuring, Chen said, adding that the company is planning to  introduce new phone models and is asking for government support.

Gionee will lay off some employees, with a  compensation of up to eight months, according to the firm's notice in  April. However, this compensation has been delayed, Chen added. 

Editor: Emmi Laine