Recently, 24 "Lotus Series" trademarks will be put up for public auction, with starting prices ranging from 822,900 yuan to 6,582,900 yuan, and the cumulative estimated price is more than 70 million yuan.

After the "Lotus Series" trademark auction information was exposed, the market lamented this once-famous trademark. Lotus Health's stock price fell by nearly 4% in early trading on July 8. Among the 24 "Lotus" trademarks in this auction, they include words or graphics such as Lotus, Lotus Shangpin, Lotus Dew, Central Plains Lotus, June Spring, Lotus Feng, Lotus Treasure, Lotus Hair Treasure, etc. The trademarks being auctioned are not ours. The "Lotus" MSG trademark that is commonly thought of is just another trademark registered by an affiliated company.

For an old brand with a long history and wide popularity, trademarks are important intangible assets. This time, all 24 of the trademarks at the bottom of the box were put up for auction. What happened to Lotus MSG that has been reduced to this? According to investigations, there are dozens of legal proceedings involving Lotus MSG, including loan contract disputes, corporate loan disputes, etc. In addition, the company also has multiple records of persons subject to execution. In March 2021, the amount executed exceeded 200 million yuan.

Is Lotus MSG, which once accompanied us, going to die?

my country's MSG production has entered a stage of rapid development since the 1980s and has become the world's largest MSG producer. Lotus MSG was founded during this period. In the 15 years from 1983 to 1997, the annual output of Lotus MSG increased from 400 tons to 120,000 tons, an increase of nearly 300 times; the output value also increased from 9.45 million yuan to 2.23 billion yuan. MSG output Ranking first in the world, with a domestic market share of 43.4%, it has become a veritable "MSG King". In 1998, Lotus MSG was listed on the Shanghai Stock Exchange. Within three years of its listing, the export volume of Lotus MSG alone reached 100,000 tons. Not only was it difficult to rival domestically, it also became the pride of domestic brands abroad.

In 2002, Lotus MSG reached the top! However, with the promulgation of the Environmental Protection Law, rising costs, the country's macro-control, and employee salary payments of up to 100 million yuan, Lotus MSG's capital flow was tight, costs remained high, and performance shocks occurred. By 2003, Lotus MSG It suffered its first loss five years after listing. This is how Lotus MSG's debt journey begins.

From 2006 to 2009, Lotus MSG was punished for several disclosure violations, and the company’s then-directors, supervisors, and senior executives were warned and fined. Starting in 2010, Lotus MSG began to lose money for a year, and its profits fluctuated throughout the year. The profit was generally between 20 and 30 million yuan, while the loss was 3.5 billion yuan. In years of turning around losses, large government subsidies and debt restructuring played a key role. In 2017, this fluctuation came to an abrupt end. In this year, the company's net profit was -103 million yuan, and the loss expanded to 333 million yuan in 2018. In May 2019, Lotus Health was listed as a breach of trust person by the Xiangcheng City People's Court of Henan Province for failing to repay the loan on time due to financial constraints. Up to now, the total amount of executions against Lotus Group has exceeded 200 million yuan. Today, Lotus MSG has reached the end of the trademark auction.

The execution exceeded 200 million, and the repayment was repaid by auctioning the trademark. Where did Lotus MSG fail?

1) Blind diversification

Around 2000, Lotus MSG invested in many industries unrelated to the MSG industry, such as clothing factories, medical equipment factories, mineral water factories, etc. All ended in failure, all the money wasted, and some even ended up in lawsuits. This is not over yet. Since then, it has tried to diversify its business into shoemaking logistics, smart agriculture, finance and other fields. However, it has achieved little and fell into an insolvent situation, which ultimately hindered the development of its main business.

2) Poor internal management

Creating two sets of true and false books, disputes over equity, occupying funds of listed companies, etc. At that time, Lotus MSG Group, the controlling shareholder of Lotus MSG, had occupied a large amount of listed company funds for a long time. By 2004, the amount occupied had reached 949 million yuan. According to some old employees, corruption has long been rife from sales to senior executives.

3) Primitive accumulation has been consumed in large quantities

In order to reduce costs, Lotus MSG has changed its raw materials to wheat since 2001. By 2003, Lotus MSG had invested more than 700 million yuan in wheat production. Technical transformation to replace corn in the production of monosodium glutamate. At the same time, Lotus MSG was fined more than 12 million yuan because it was discovered by the Environmental Supervision Office of the former State Environmental Protection Administration to secretly discharge sewage in 2003. Coupled with investment in new projects, Lotus MSG’s original accumulation has been exhausted.

4) Jiyi "Capital Players"

In 2014, Lotus MSG changed owners, and Xia Jiantong and his Ruikang System took over Lotus MSG and became the actual controller of Lotus MSG. As soon as they came up, they changed Lotus MSG to Lotus Health, preparing to use Big Health to reverse the decline. Later, they added listed companies such as Soft and Long-distance Cable under their control. A year later, he invested more than 70 million yuan to participate in the establishment of four companies including Lotus Intelligent Fertilizer Industry, Modern Agriculture, Premium Trading, and Shenzhen Qianhai Lotus Health Enterprise Management Company. It was difficult to move forward without money. Just when Lotus Health was having financial difficulties, in 2016, Xia Jiantong spent more than 70 million pounds to fully acquire the old British football club Aston Villa. In 2019, Lotus MSG sold its wholly-owned subsidiary "Canon Thermal Power" for 1 yuan. The latter suffered huge losses of tens of millions every year. In October of the same year, the court offered a reward of 300,000 to Xia Jiantong to find his whereabouts.

In January 2021, Xia Jiantong was approved for arrest. During this period, Gu Huamei briefly became the actual controller of Lotus Health. Currently, the controlling shareholder of Lotus Health is Wuhu Liantai Investment Management Center, and the actual controller is Li Houwen.

5) The MSG market is shrinking

According to relevant statistics, from 2013 to 2018, the consumption of MSG in the Chinese market has dropped from 1.146 million tons to 890,000 tons. It is expected that by 2023 By 2020, China's MSG consumption will drop to 770,000 tons. MSG is just a basic seasoning. It is difficult to create new innovations in terms of product form and taste. In contrast, the iterative updates of condiments such as chicken essence, soy sauce, and oyster sauce continue to create new taste experiences and healthier consumption services for consumers. Under this situation, MSG lost its market competitiveness and the market shrank, causing Lotus MSG to lose its former status.

From being number one in the industry to being on the verge of bankruptcy, due to disorderly diversified investments, several changes of ownership, and poor internal management, Lotus MSG has faded out of the market amid consumption upgrades and continuous innovation in the industry. The Lotus MSG auction trademark should be used to alleviate the shortage of funds. But this may be just a drop in the bucket for Lotus MSG.