The six most tragic failure cases of Chinese enterprises!

3 months ago? 1 Business Original

Abstract: Yitang was born great, but his death was not glorious. It can only be described as dull or even miserable. Other dead websites would more or less have some assets acquired by other companies. After recuperation, there may be a chance to come back, but Yitang has been reduced to the end where no one renewed its domain name and became an auction item.

1. Real Kung Fu

Case Characteristics: Entrepreneurs are in civil strife - they can endure hardships but not share joys

Lessons for entrepreneurs: There are no eternal brothers. , only eternal interests

Lessons from VC: Whether the equity structure is reasonable is an important basis for judging the quality of a project

McDonald’s and KFC are very popular in China, but Chinese food chains have always been aggrieved. People keep jumping out to challenge foreign fast food. From "Red Sorghum" more than ten years ago to "Real Kung Fu" which is very popular now, "Red Sorghum" has long been missing. "Real Kung Fu" seems to have some kung fu, and there are more and more chain stores.

Like the name of the company, in August 2009, a real kung fu performance broke out at the Guangzhou headquarters, which caused quite a sensation in the investment and entrepreneurial circles: *** Same founder and company Pan Yuhai, the major shareholder, appointed his brother Pan Guoliang as "Deputy General Manager" and sent him to work at the headquarters. However, after being rejected by Cai Dabiao, the actual controller and chairman of "True Kung Fu", a fierce dispute broke out.

To sort out the contradictions in management rights of "True Kung Fu", we have to start from the beginning. In 1994, Cai Dabiao and his friend Pan Yuhai opened a "168 Steamed Products Store" in Chang'an Town, Dongguan. It later gradually became a national chain store and was renamed "Double Seeds" in 1997, and finally "Zhen Kung Fu". The equity structure of Zhen Kung Fu is very simple, with Pan Yuhai holding 50% and Cai Dabiao and his wife Pan Minfeng (Pan Yuhai's sister) each holding 25%. In September 2006, Cai Dabiao and Pan Minfeng agreed to divorce. Pan Minfeng gave up 25% of his equity in exchange for custody of their children, so the equity between Pan Yuhai and Cai Dabiao became 50:50.

In 2007, "True Kung Fu" introduced two venture capital funds: domestic-funded Zhongshan Linkage and foreign-funded Today's Capital, which invested 300 million yuan, each holding 3% of the shares. In this way, after financing, the equity structure of "Zhen Kung Fu" becomes: Cai and Pan each hold 47%, VC each holds 3%, and the board of directors has 5 seats, consisting of Cai Dabiao, Pan Yuhai, Pan Minfeng and VC's dispatched directors 1 each.

After the introduction of venture capital, if the company seeks to go public, it is imperative to create a modern corporate management and governance structure. However, Cai Dabiao's efforts to establish a modern enterprise system touched upon the interests of another shareholder, Pan Yuhai. Under the auspices of Cai Dabiao, "Real Kung Fu" implemented an internal management reform that de-"family-oriented" and replaced some of the original family members with professional managers. Management staff, a large number of old employees have left. The company has also successively introduced about 20 middle and high-level managers from catering companies such as McDonald's and KFC, occupying most of the company's important positions. They are basically appointed and authorized by Mr. Cai. Pan Yuhai has obviously been sidelined.

Conflicts between the two sides intensified. On April 22, 2011, the Guangzhou Municipal Public Security Bureau confirmed that Cai Dabiao and others were suspected of misappropriation of funds, job embezzlement and other criminal acts, and arrested Cai Dabiao and other four suspects.

The chaotic competition between Cai and Pan for real kung fu made Capital Today unable to withstand the pressure from shareholders and chose to withdraw. On November 30, 2012, Capital Today transferred all 3% of the equity of Zhen Kung Fu held by its subsidiary Capital Today Investment-(Hong Kong) Co., Ltd. (hereinafter referred to as Capital Today Hong Kong Company) to Runhai Co., Ltd. At this point, Zhen Kung Fu's equity has once again returned to a 50-50 split between Cai and Pan.

Three years later, the case of Cai Dabiao, the former president of Real Kungfu, was settled. According to the second-instance judgment of the Guangzhou Intermediate People's Court, Cai Dabiao was convicted of job embezzlement and misappropriation of funds and was sentenced to 14 years in prison. As the final judgment of Cai Dabiao's criminal case came into effect, 41.74% of the real Kungfu equity held by Cai Dabiao has entered the judicial auction process. It is rumored that the equity valuation is as high as 2.5 billion yuan.

2. Yitang

Case Features: The largest financing case in China’s Internet industry

Lessons for entrepreneurs: No matter how much money you have, you must spend it sparingly , otherwise the winter will be difficult

Lessons from VC: victims of the era of "turtles" + "concepts"

In the Internet industry, the birth and death of a company are difficult to attract people's attention , but this company is undoubtedly an exception: it was once an upstart and was born in a high-profile manner; it has achieved nothing, and is so depressed that even its domain name was auctioned off. This company is Yitang.

In 1999, on the eve of the bursting of the first Internet bubble, Tang Haisong, who had just received an MBA from Harvard Business School, founded Yitang Company. Its "dream team" consisted of 5 Harvard MBAs and 2 University of Chicago MBAs composed. With an attractive entrepreneurial plan, Yitang received two rounds of financing of approximately US$50 million from two well-known American venture capitals, DFJ and Sevin Rosen. To this day, this is still one of the largest private equity financing cases in China's Internet field.

Yitang claims that it is not just an Internet company, but also a "lifestyle group" that is committed to creating and introducing internationally advanced lifestyle products through the Internet, retail and wireless services, and fully serving The so-called "Ming and Yellow Generation" are young people aged between 18 and 35 who define China's economic and cultural future.

Yitang.com emerged overnight, quickly conquered major universities, and quickly "burned money" across the country: in addition to establishing branches in Beijing, Guangzhou, and Shenzhen, Yitang also recruited people and carried out large-scale publicity activities in various places. At the end of 2000, the Internet winter suddenly hit, and Yitang burned most of its money and was still unable to make a profit. From 2001 to 2003, Yitang continued to cooperate with professional companies to launch handbags, backpacks, condoms, underwear and other daily necessities, which were sold online and offline at the same time. At the same time, it also quietly tried mobile phone wireless business. In the next two years, Yitang relied on its SP business to survive. The only thing that could leave an impression on users was to become the official news release website for the CET (Level 4 and Level 6) exams.

In September 2005, Yitang decided to completely overturn the previous development model and follow the then popular Web 2.0, launching a personal virtual community website called hompy.cn. Subsequently, except for a few pages such as Yitang's mailbox, Yitang transferred all other pages and traffic to the new website hompy.cn. In this way, the once-famous Yitang website transformed into a new web2.0 website. In 2006, Yitang sold its best SP assets (license resources) to Qihoo Company at a low price in exchange for US$1 million in an attempt to make a last ditch effort on hompy.cn. However, hompy.cn was shut down in 2008 and Yitang Company was left with only an empty shell. The former "dream team" also chose to leave after the company burned out all its money.

In May 2009, the etang.com domain name was put up for public auction due to non-renewal, and the final bidder won it for US$35,000.

Yitang was born great, but his death was not glorious. It can only be described as plain, even miserable. Other dead websites would more or less have some assets acquired by other companies, and they might have a chance to come back after recuperating, but Yitang has been reduced to an auction item with no one renewing its domain name. It can be said that Yitang has not made any contribution worth mentioning to China's Internet. Perhaps its only contribution is to provide an extremely failed investment case. It is an aristocrat born with a silver spoon in its mouth. Tens of millions of dollars in capital only gave it a sigh.

3. Shangyang Technology

Case Features: The case with the largest first-round financing amount and the largest number of co-investors in China

Lessons for entrepreneurs: being defeated by the market It’s not scary, it’s scary to be internally disintegrated

Lessons from VC: Executives of large companies may not necessarily be leaders of start-up companies

Shangyang Technology was established in early 2003. It has been shrouded in a dazzling aura since its birth.

First of all, the company’s founder and CEO is Zheng Changxing, the former COO of China Netcom. The management team also includes Chen Shuo, the former vice president of Huawei, and Mao Senjiang, the general manager of the network products department, who come from a wealthy family;

Secondly, at the beginning of its establishment, the company received an initial financing of US$58 million from a number of well-known venture capital institutions. The main investors Walden invested US$18 million, DCM invested US$10 million, Intel Capital invested US$7 million, and NEA invested US$18 million. With an investment of US$5 million, other investors include Sycamore Ventures, Morgenthaler Ventures, Jerusalem Venture Partners, Sumitomo Group’s investment company Presidio Venture Partners, STAR Venture, Hitachi, Itochu, Shanghai United Investment Co., Ltd., etc.

Shangyang Technology has been selected as one of the top 100 private companies in Asia by the well-known American RedHerring magazine. Its goal is to become a leading next-generation service platform (NGSP) provider in the communications field and is committed to opening up A new era of free communication with "free communication without boundaries". The main business is fixed network value-added solutions, broadband wireless solutions and enterprise communication solutions. At that time, telecom operators were also preparing to make a big effort in value-added services - China Telecom's "Internet Star", China Mobile's "Monternet", China Unicom's "Unicom Unlimited", this transformation became Sungyang Technology Provides huge room for development. Although Shangyang has several good core businesses, such as UU Yuxin, it failed to seize the market opportunity. More than 2 years later, due to poor management since the company was founded, Zheng Changxing was forced to "dismissal". Shangyang Technology laid off a large number of employees and its business began to transform, from an equipment solution provider in the past to an Internet value-added service provider. In the market, it not only competes with multinational giants such as Microsoft MSN, Skype and Googletalk, which are well-known in the field of instant messaging, but also faces challenges from domestic instant messaging tools such as QQ, Sina, NetEase, 263 and other local companies. In the end, Shangyang Technology's business did not "grow" like its name. In the end, its dream was shattered and it exited the market in 2006.

Shangyang Technology has fallen to this point. According to people familiar with the situation, it is due to management problems. First, the company focused on R&D and neglected the market, and could not grasp the market. In terms of R&D, the first phase of financing had been used up, and there were still few decent products. Second, there were serious gangs within the company, and the business divisions were working independently. At the same time, the “composition” from senior management to employees is extremely complex. There are “turtles” and “natives”, some from state-owned enterprises, some from foreign companies, some from start-ups, some from Fortune 500 companies, and even those led by Huawei’s management team. The old department that came here has stayed in Shenzhen and is out of control.

Chen Liwu of Walden International has rich investment experience in the investment field. Zheng Changxing and others are star-level and practical management teams. The large capital injections of more than ten well-known investment companies are enough to illustrate that China The space and attractiveness of the communications market. The combination of these positive factors highlights the pity of this case.

4. Blog Network

Case Features: The Flag of China’s Internet Web2.0

Lessons for Entrepreneurs: Don’t underestimate the latecomer advantage of giants< /p>

Lessons from VC: Choose the right track, but also the right athlete

Fang Xingdong, this name is absolutely well-known in the Chinese Internet community. He is the "Internet standard bearer" and the "Father of Chinese Blogs" It is said that it has made indelible contributions to the development and popularization of China's Internet Web2.0.

In 2002, Fang Xingdong founded the predecessor of the blog network (Blog China). In the following three years, the website maintained a monthly growth of more than 30%, and its global ranking once soared to more than 60 places. In 2004, it received US$500,000 in angel investment from Shanda founder Chen Tianqiao and SoftBank SAIF partner Yang Dong. In September 2005, Fang Xingdong raised another US$10 million from famous venture capital firms Granite Global Ventures, Mobius Venture Capital, SoftBank SAIF and Bessemer Venture Partner, triggering an investment boom in China's Web 2.0.

If VCs who are active in China later do not know terms such as Blog, Podcast, RSS, P2P, etc., and do not look at blogs, podcasts, videos, dating and other projects, it is a sign of falling behind.

Subsequently, "Blog China" changed its name to "Blog Network" and announced that it would be a blog-style portal, known as "the world's largest Chinese blog website", and also called "Super Sina in one year, and listed in two years" ” goal. As a result, in just half a year, Blog.com's employees expanded from more than 40 to more than 400. It is said that 60%-70% of the funds are spent on personnel salaries. At the same time, he also spent a lot of money on many projects such as videos, games, shopping, and social networking. Tens of millions of dollars were quickly squandered. This started a three-year period of intense personnel turmoil for the blog network. Almost all the top management was lost, and Fang Xingdong's CEO position was also replaced by a decision-making group. By the end of 2006, the staff of Blog.com had been reduced to more than 40 people at the time of the financing.

Not only is the blog network facing a broken capital chain and unsustainable operations, but its business is also shrinking and a large number of users are being lost. In order to get rid of the predicament, in 2008, Blog.com planned to split its blog China and bokee into two independent companies, and after the split, they would turn to high-end media and SNS respectively. However, in October of the same year, Blog.com was involved in the crisis of layoffs and closures. It announced that all employees were free to leave or stay, but no wages were paid. This move was considered to be no different from Blog.com's direct announcement of dissolution.

In fact, not long after BlogNet raised money, Sina launched a public beta version of its blog with a high profile. By the end of 2006, the blogging power of portal websites represented by Sina had completely surpassed emerging vertical websites such as BlogNet. . Subsequently, blogs became the standard configuration of almost any portal website, and the portal website easily copied the path that Fang Xingdong and his colleagues had worked hard to explore and open up. Later, SNS social networking sites such as Facebook, Campus, and 51 began to gain popularity, which had an impact on blogs that cannot be underestimated. The attention of netizens and the capital market have also begun to neglect blogs.

In addition, both Fang Xingdong himself and those who are familiar with him agree that he is a scholar or literati, not a business leader who is familiar with management and strategy. He does not control a team of hundreds of people and tens of millions of dollars. level of funding. As a product of the Web 2.0 era, blogs are undoubtedly a major leap forward in the development of the Internet, leading the Internet into the self-media era. Blogs themselves are successful. But for the blog network, it has caused investors to lose a lot of dollars, and it has gone from being a pioneer in leading Web 2.0 to an outcast that no one cares about. It is undoubtedly a failure among failures.

5. PPG

Case features: The hottest case in China’s venture capital industry

Lessons for entrepreneurs: One of the purposes of starting a business is to make money, but it cannot Just make money

Lessons from VC: In due diligence, human nature investigation is the most difficult and important

PPG was established in October 2005, and its business model is to sell through the Internet shirt. The concept of light assets and reducing circulation links, coupled with the bombardment of TV and outdoor advertising, quickly established PPG as a market leader. The slogan "Yes! PPG" and Daniel Wu's confident smile are everywhere in the world.

In the third quarter of 2006, PPG received the first round of US$6 million in joint investment from TDF and JAFCO Asia. In April 2007, PPG received a second round of investment of 10 million U.S. dollars. In addition to the first round of additional investment from TDF and JAFCO Asia, PPG also introduced KPCB, which is the largest risk in the United States. Investment fund, as famous as Sequoia. From 2006 to 2007, e-commerce was very popular in the VC investment circle, and PPG was a leader among them. It could be described as an absolute star project. Countless peers were envious of these VCs who were lucky enough to invest in it.

At the end of 2007, PPG had begun to have some problems disclosed by the media, such as payment arrears, product quality complaints, etc. However, PPG was still sought after by several venture capital institutions, and Sanshan Investment Company fended off other competition. Rivals have invested more than $30 million in PPG. Sanshan Investment claimed that it chose PPG because it was very optimistic about its market, model and team, and revealed that PPG had planned to be listed on NASDAQ in the United States in early 2009.

In 2008, dozens of imitators of the PPG model appeared, including VANCL, Youshan.com, and CARRIS. Not only did PPG lose its status as the industry leader, it was riddled with lawsuits, and its executives were dispersed, it also There are reports that founder Li Liang has absconded with his money. Li Liang said that he went to the United States to prepare for the opening of an American company in mid-2008, and has not been seen in China since then.

At the end of 2009, the business myth that was once hailed as "Dell of the clothing industry" and "a model of light companies" finally burst like a soap bubble. The PPG headquarters has long been deserted and in a mess. The court execution order posted on the wall shows that PPG has closed its doors. Many consumers cannot get the goods after paying, so they angrily call PPG "Brother Liar" . Subsequently, the only thing left by PPG that could be called an "asset" - the registered trademark "PPG", was not taken up by anyone at the auction. PPG has received a total of about US$50 million in investment from the above-mentioned well-known VCs. Complete closure also means that US$50 million will be lost. At the 2009 Internet Conference, Sohu IT selected the most failed investment website in the past five years, and PPG ranked first, becoming the biggest investment joke on China's Internet in recent years.

Afterwards, someone revealed the real reason for PPG’s failure: Founder Li Liang was listed on the market to do e-commerce, but the supporting logistics and warehousing were his own company, or indirectly related to him. He kept By sending money to these companies, the investor's money goes into his own name in disguise as a fee. All the money was transferred, and Li Liang was gone too. He was premeditated and prepared to collect money from the beginning. He was smart, diligent, and capable of execution, but his starting point was not pure.

VANCL, one of the imitators of the PPG model, is developing very well. It can be said that the vitality of the PPG model is beyond doubt. The business model is part of a company's success, and more importantly, the operators who execute this business model. PPG failed because of its people, not its business model.

6. Asia Interactive Media

Case features: The first mainland Chinese company to be listed in Japan was ordered to delist

Lessons for entrepreneurs: overseas listing The company’s shareholders are not as easy to bully as domestic investors and VCs

Lessons from VC: Since IPO is the best exit channel, cash out as soon as possible after listing and run away

As the first company in the The delisting of Asia Interactive Media Co., Ltd., a mainland Chinese company listed on the Tokyo Stock Exchange in Japan on September 20, 2008, has generated greater influence and visibility than its listing a year ago, and constitutes the largest share of Chinese companies in recent years. The worst effects on overseas capital markets. An important by-product of this incident was that Zhang Fan, the co-founder of Sequoia Capital China Fund, which led the investment in it, sadly resigned and even stayed away from the VC industry.

In 2002, Cui Jianping founded Beijing Kuanshi Network Technology Co., Ltd. (hereinafter referred to as "Kuanshi Network") and began to engage in TVPG business. In July 2004, Asia Interactive Media, the overseas holding company of Kuanshi Network, was established in the British Bermuda Islands. Asia Interactive Media claims to be "China's leader in providing cross-media platform TV program guide solutions." Its sales revenue is mainly from TV advertising agency business, supplemented by TVPG (TV Program Guide) and EPG (Electronic Program Guide).

In October 2005, the company received investment from Sequoia Capital. After Sequoia Capital, Asia Interactive Media has successively absorbed Nomura Securities Company of Singapore (holding 38.89% of the company’s issued shares), Merrill Lynch Japan Securities Company (11.88%), Japan’s largest advertising company Dentsu (2.70%), NTT Mobile Communications Company, Japan's largest satellite communications company JSAT, Itochu, and other famous Japanese financial and advertising companies. Before the listing, Sequoia Capital accounted for 11.56% of the company's total share capital, and Zhang Fan was also a director of Asia Interactive Media. In fact, Asia Media is the first domestic investment project led by Sequoia Capital China Fund.