Experts comment on LeEco: Only if the company survives can it achieve poetry and distant places

"It's hard to find a true friend in life." At this moment, Jia Yueting should have a deep understanding of this sentence. Just recently, LeTV, which was facing capital chain problems, received a "life-saving money" of 16.8 billion yuan, of which 15.041 billion yuan came from Sun Hongbin, Jia Yueting's fellow villager in Shanxi. At 13:30 pm on January 15, LeTV held the "LeTV & Sunac Strategic Investment and Cooperation Conference" in Beijing to introduce strategic investors.

"Living is not LeEco's DNA. Any company that is decided by the board of directors will not become a disruptive company." This is what Jia Yueting said last year after admitting that LeEco was in a financial crisis. But this time, in order to "live", LeEco and Jia Yueting are likely to become "a company decided by the board of directors". Of course, improving the corporate governance structure and checking the power of one company is not a bad thing for LeEco, Jia Yueting and investors.

The capital chain crisis has put LeEco on the brink of death. Before receiving the 16.8 billion yuan "life-saving money", Jia Yueting had also sought financing from "good Chinese classmates" - classmates from a business school, but nothing came of it. At the beginning of the month, LeEco's first mass-produced car FF 91 was released, which was also seen as more of a crisis public relations move, and the authenticity of its pre-order data was also questioned by the market. Only the parties involved know the taste of it. Now, LeEco has "survived" with the "life-saving money", but the price paid for the alliance is not a small amount.

After all, the development of an enterprise cannot rely on "gambling on life". Long-term arrangements must be made in terms of corporate governance structure and capital chain. As the saying goes, only by living can there be a future, and only by "surviving" can an enterprise have poetry and a distant future. The 15 billion investment is not a timely help from "a good Chinese fellow" as claimed by the public opinion. In Sun Hongbin's view, "I am a businessman, and this is a business." Big business never talks about feelings, but only about price.

Judging from LeEco's current situation, it objectively lacks bargaining chips for this "friendship". After the "capitulation", Sunac will be deeply involved in LeEco's management and operation, occupying 2 of the 5 seats on LeEco's board of directors, and have veto power over LeEco's management and operation, becoming a "company whose board of directors makes decisions". Secondly, Sunac can send financial managers to LeEco's three companies. Although Sunac, under Sun Hongbin's rule, has been constantly "rescuing" companies in distress, the interests of the company have always come first. Third, LeEco Zhixin's valuation has shrunk by 6 billion yuan, and Jia Yueting needs more than 6 billion yuan to redeem the pledged shares within a year.

To some extent, the so-called "not wanting to live in disgrace" is a very dangerous sentiment. Without the constraints of the board of directors, LeEco is essentially "decided by Jia Yueting alone". Although this helps improve the company's decision-making efficiency in the early stages of the company, it is likely to dig a grave for the company as the scale of development grows. It must be admitted that the unrestrained "blind rush" of the leadership is an important cause of LeEco's crisis.

The "disruptive companies" mentioned by Jia Yueting are of course innovation. Although innovation and risk-taking are the core connotations of entrepreneurship, this does not mean that the growth of a company must be "gambled" with it. Innovation is the soul of the development of modern enterprises, but if we only emphasize innovation and lack the corresponding risk management awareness and mechanism, the company will sooner or later get into trouble. Enron, once known as the most innovative company in 2000, went bankrupt in 2001. According to statistics from the American Innovation Economics Association, 90% of corporate innovations fail. The collapse of giant companies is everywhere in China and abroad, and "disruptive companies" cannot ignore risk control.

As a public company, LeEco, from the perspective of modern corporate management concepts, improves the internal corporate governance structure of the board of directors, management, etc., is the most important link in risk control. Through internal control, it regulates corporate governance and corporate operations, and prevents various risks such as business, finance, and law, which is the institutional guarantee for the sustainable and stable development of the enterprise. In this sense, only companies that abide by the rules can "survive" and achieve poetry and distant places.

Of course, it is too early to make a judgment on LeEco’s subsequent development based on Sunac’s involvement. After all, to prevent LeEco from changing from Jia Yueting’s “personal empire” to a “two-person empire”, it is necessary to strengthen the integrity and diligence of the board of directors and establish a supervisory mechanism for the management, such as comprehensive performance evaluation and incentive constraints. At the same time, it is necessary to promote the fairness and transparency of LeEco’s corporate governance system, which is not only related to LeEco’s future, but also to the protection of the interests of small and medium shareholders and stakeholders of public companies. There is still a long way to go in the governance of my country’s capital market and public companies. If it is an internal company affair, the relevant regulatory authorities can just watch it as a spectator, but if it touches the public interest, they cannot stand idly by.

Finally, it is worth praising that when resolving the crisis, Jia Yueting did not "hang out with the rich" or look down on private enterprises like some other companies did. This is quite wise. After all, the fact that he and Sun Hongbin were able to truly "do business as business" is the biggest highlight of this incident.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.