Yiding Group goes bankrupt: Vice President writes an article to warn O2O entrepreneurs not to waste money blindly

A few days ago, a bankruptcy news caused a stir in Fuzhou. Yiding Group, a well-known local IT company, announced bankruptcy, and Yiding Chairman Wu Jianrong lost contact.

As a 15-year-old company with over 2,000 employees, Yiding has won various honors: Top 100 Chinese Chain Enterprises, Top 100 Chinese Software Enterprises, and Top 50 Most Valuable Growing Enterprises in China in 2013, etc.

However, after the transformation to O2O, the "empire" that Yiding Group spent more than 10 years building collapsed.

According to information, in the PC era in the early 2000s, Yiding quickly grew its business by assembling computers and obtained Apple sales agency rights in 2008.

However, YIDING's offline stores expanded too rapidly, reaching 391 stores nationwide in 2012, many of which were unprofitable.

After transforming into O2O this year, YIDING Group launched YIDING.com, which includes four businesses: YIDING Home, Maker Space, Global Shopping, and Smart Life, with the intention of building a leading IT service O2O platform in China. At the same time, YIDING Group has also invested heavily in establishing Easmart Smart Life Centers in more than a dozen cities across the country.

According to the plan of Yiding Group, the annual sales revenue of O2O will reach at least 10 billion yuan within three years from 2016. However, today Yiding Group has declared bankruptcy, hundreds of its branches across the country have been closed, and the company's owner Wu Jianrong is currently out of contact.

After the bankruptcy, Lin Dezhi, vice president of Yiding Group, published an open letter of more than 4,000 words, which not only explained the deep reasons behind the company's over-expansion, but also warned entrepreneurs in the O2O field to consider the issue of "burning money".

Regarding Yiding's increasing capital investment, Lin Dezhi said that it was the banks and manufacturers that put him in the vortex: "The bank said, your business is so good, I will give you a loan, it's okay, lend more; the manufacturer said, your business is so good, I will grant you a credit, is 100 million enough, I will give you 300 million. In this way, a capital chain that relies on loans to maintain operations was formed."

Lin Dezhi said that he had mentioned this issue to Wu Jianrong. "In fact, I talked about this topic with my boss when I first started working at the group. I said, 'Brother, can we not lay out such a huge plan and just focus on one of the businesses? That's what BAT should do.' Later I learned that he also had his own difficulties: he simply couldn't stop. Only with a big layout could he tell a big story, and only then would banks and manufacturers continue to support his system that doesn't make money and relies on loans to maintain it."

Lin Dezhi believes that the question that all O2O companies that rely on burning money to maintain operations need to think about is: "Should they expand their scale first, or solve the problem of profitability first? When the tide recedes, we will know who is swimming naked."

Finally, he also mentioned that Wu Jianrong reflected on three points before running away: first, never borrow money from a bank; second, never borrow money from private individuals; third, do what you can.

The following is the full text of Lin Dezhi’s open letter:

We are willing to pay for our mistakes!

As I type this, the time is 23:56, and it is still November 30, 2015. Although this winter was not too cold, Yiding still couldn't make it.

Just today, Yiding declared bankruptcy.

Before this, Yiding had already gone through 15 years.

Today, Yiding's posts went viral on WeChat Moments: some people missed him, some were sad, some were sympathetic, and some were gloating. . . As for us, we felt relieved at the same time as we felt sad. Yes, you read that right, relief. Carrying such great pressure to move forward is too tiring for the company, the boss, and the employees. Now, we are relieved.

Since this afternoon, I have received hundreds of calls, and my ears are still burning. There are concerns from friends, sympathy from colleagues, and interviews from the media. Before this, I never thought that Yiding had such a great influence. But forgive me, I really don’t want to answer the following calls. I have said the same thing a hundred times, you try it? Moreover, the fact is as I said in the previous WeChat, I don’t know more than you.

All I know is that the company will be declared bankrupt today, and I knew about it a few days before the official announcement, that's all. Before writing this article, I was singing at a KTV with a few friends. I don't want to respond to various rumors in society, because as the government and judicial authorities intervene in the investigation, the truth will come to light. Moreover, I really don't know too much. And I don't want to be interviewed. I have worked in the media for 15 years, and I know that many times the spokespersons are the ones who take the blame, you know.

But later, some false rumors continued to ferment on the Internet, and some people said harsh and unpleasant things. I think that although what I know is limited, I should still tell everyone. Maybe it is subjective and one-sided, but after all, I was there, and it is more real than the groundless speculation outside.

In fact, it has been very painful for us as executives these days. I haven't slept well for several days in a row. We already know that the company has to declare bankruptcy, and all efforts may be futile. Your employees go to work diligently every day to report to you what they are going to do today, and you have to encourage or guide them as if nothing has happened. In addition, we have to face creditors with underworld backgrounds who have been hanging around the company in recent days. I think it is difficult to handle this kind of emotion without the foundation of the Beijing Film Academy's Performance Department. Of course, most of Yiding's employees are really respectable and lovely. Although some departments have received notices that it is unsafe to have too many people in the company these two days, they still persisted to the end.

The situation today was a bit out of control. Private creditors got wind of the situation, and dozens of hooligans broke into the company and took away everything that could be taken away, from copiers, TVs, and computers to chairs and power strips. This is why we didn't inform the employees in advance, because we were afraid that the creditors' disorderly attacks would cause accidental injuries to the employees. Before the announcement in the afternoon, we had already informed the employees so that everyone could be prepared.

The boss may have really run away. We cannot contact him at the moment. But I think it is a wise choice for the boss to disappear temporarily. Because once those private creditors know that they can't get their money back, who can guarantee that they will not do something that endangers their personal safety? The boss said before that he would never run away. He said that he would take responsibility for his mistakes. According to my understanding, the boss should appear after the creditors' emotions stabilize and the government and judicial organs formally intervene. He once told me frankly that he was mentally prepared to go to jail from the first day of doing business. Because in his opinion, Chinese entrepreneurs cannot be without original sin. This is the sadness of Chinese entrepreneurs, and even more so the sadness of China as a whole.

By the way, let me talk about the boss. He was born in a grassroots family and started from scratch. He developed from a small shop of 20 square meters to a group company with assets of 1 billion, annual sales of 5.6 billion, and more than 2,000 employees at the peak. What did he rely on? In addition to his personal intelligence and the efforts of all employees, there are also banks and manufacturers that have put him in a whirlpool today. The bank said, your business is so good, I will give you a loan, it’s okay, I will lend you more; the manufacturer said, your business is so good, I will grant you a credit, is 100 million enough, I will give you 300 million. In this way, a capital chain that relies on borrowing to maintain operation is formed. The ambition is getting bigger and bigger, the flow of water is getting bigger and bigger, and the business is getting wider and wider, but it’s useless. The traditional computer and mobile phone business is not profitable. The unprofitable business maintained by borrowing is getting bigger and bigger, and it is getting closer and closer to the end. When one day, the payment for goods in any link cannot be collected and there is a crack in the capital chain, you will be dead. These days, the overall economic environment is bad, and there are triangular debts everywhere. No matter how small a company is, the bankruptcy will cause a domino effect.

Of course, I am not saying that the bankruptcy of Yiding is all the fault of banks and manufacturers. The boss's personal blind expansion and advanced layout of some new formats may be more important reasons. Sometimes, being one step ahead or half a step ahead makes you a pioneer, and being two or three steps ahead makes you a martyr. The boss is an entrepreneur with a great vision and pursuit. He does not smoke, drink, visit prostitutes, or keep a mistress. He does not spend much time with his wife and children. He works more than ten hours a day on average. On weekends, he is a perverted workaholic who can call all executives to a meeting at any time if he thinks of any problem. I often sigh that his energy alone is beyond the reach of ordinary people, so it is really unfair that he is not successful. But his ambition is too big. He wants to change the retail format and open more than a dozen smart life experience halls across the country in one go. The investment and loss of each one are astonishing. When he was doing Yiding.com, he intended to create a website that covers all aspects of the future Internet of Things society, to be China's largest and most professional IT technology door-to-door O2O, and to lay out three years in advance to prepare for the legendary Internet of Things society that will be fully launched in 2018. But Yiding.com's business is also money-burning. Yiding.com is planning for 2018, but it has no money to hold on until that day, and banks and manufacturers will not wait until that day. Therefore, Yiding, which relies on loans to maintain its operation, is doomed to bankruptcy. In fact, when I first came to work in the group, I talked about this topic with my boss. I said, "Brother, can we not lay out such a huge plan and just focus on one of the businesses?" That's what BAT has to do. Later I learned that he also had his own difficulties: he couldn't stop at all. Only with a big layout can he tell a big story, and only then will banks and manufacturers continue to support his system that does not make money and relies on loans.

In recent days, he looked haggard, but felt relieved. He said that whether it was bankruptcy or imprisonment, he could finally be free. More than 100 million yuan in interest every year, an unprofitable enterprise, hundreds or thousands of employees. The first thing he did when he woke up every day was to consider where the bank's interest was today? How would he pay the employees' wages tomorrow? Would the payment to the manufacturer be in place on time the day after tomorrow? He was very tired, but he had to force himself to be motivated; he knew that the company's capital chain might break at any time, and he had to consider finding money for new projects; he gave up the time to spend with his family just for an unattainable dream. I believe he was sincere when he said he was free. The head of the national "double top 100" enterprise, who looked glamorous on the surface, was actually a "debtor" who might go to jail at any time. This was his misfortune, and it was also a question that all O2O companies that rely on burning money to maintain operations need to think about: should they expand their scale first, or solve the profit problem first? When the tide recedes, we will know who is swimming naked.

He is free, and the sooner this day comes, the sooner he will be free. More than 100 million yuan in interest every year is a heavy burden for any company, let alone an unprofitable private enterprise. He knew that this day would come sooner or later, and he was ready to pay for it all. As he said, I have to take responsibility for my mistakes, even if I have to "go to jail", it is better than having to support such a big business now. So, when creditors came to his door one after another, he tried his best to cooperate. It's just that the situation got out of control later, and for personal safety reasons, he had to "run away". Before running away, he reflected on three points: first, never borrow money from a bank; second, never borrow money from private individuals; third, do what you can. He said that if we keep these three points in mind in the future, we will definitely make a comeback.

He gained these three insights through the bankruptcy and reorganization of the entire group, and he may have to sacrifice a few years of freedom to gain another freedom. Although the price is heavy, he is paying for his mistakes. He has also taken the detour that many people have taken. This fall was a bit severe, so much so that it became a pain that such a large group could not bear. His failure today does not mean that his understanding of the development of the entire Internet is wrong. The direction is right, but the timing is wrong. The consequence is a mess. But I believe that he will come back. I believe that he will make a comeback. Fifteen years ago, Wu Jianrong, who had just graduated from university, had nothing and looked green, founded the Yiding Group. Today, Wu Jianrong, who has experience, connections, ability, and painful lessons, is there any reason not to make a comeback?

If you are not a boss, you don't know the hardship of being a boss. You only see his successful side, you only see his glamorous side, you only see his headline side, in fact, everyone has a difficult sutra in his heart. If Yiding goes bankrupt, you can go to Erding, and if Erding goes bankrupt, you can go to Sanding. It's nothing more than changing a job and a boss. After receiving the salary every month, you don't have to worry about food and drink. For you, it's just a job. For entrepreneurs, the company is his everything. Yes, although he exploits part of your labor income, he bears all the risks. He has to pay the price for his mistakes and even your mistakes. Sometimes, this price is even up to his life. A group friend said it well, entrepreneurs create products, create value, and create jobs with their own efforts, and they bear all the risks themselves. If he fails, you can say something sarcastic, but is it really necessary to add insult to injury and wish for chaos in the world?

Now let me talk about myself. I am very grateful for the concern of my friends. A friend in need is a friend indeed. Of course, it can also be seen that many people like gossip. They ridicule others' mistakes, exploit others' failures, and gossip about the true and false news on the Internet, which makes them appear more well-informed, wise, courageous and extraordinary. Many people do this, and I understand that just exploiting others' failures will not necessarily make you more successful.

Many friends are concerned about me. Since the incident, I have received one or two hundred calls and countless greetings on WeChat. Different people, same things, same content, I answered countless times, and the same sentence: I am fine, I am fine. Really, I am fine. Although the boss’s financial problems implicated several people, it did not involve me personally. Because I am not in charge of finance, supply chain, or the group and the boss’s self-owned properties. Simply put, I am in charge of the part of spending money, not the part of collecting money. So whether it is the bank or the “mafia”, it is useless to find me. So I am really fine.

I also feel relieved. I have been the group's vice president since June this year, in charge of the marketing division and Yiding Maker Coffee, and it has only been half a year. Soon after I arrived at the group, I felt that the boss's layout was too grand, and it was beyond our resources and capabilities. I mentioned it to my boss, but he just couldn't stop. So in the past one or two months, I actually wanted to leave, but I didn't leave for various reasons. Everyone knows what happened later. With such a situation in the group, we have to stick to the end. So yesterday was my last day at work, I explained to my colleagues, and then packed up and went home.

Then I made an appointment with my friends to go sing. During this period, the phone kept ringing. Later, I stopped answering because the answer was the same. That's all I know. I am very grateful to my friends in the media. Since I started working at Yiding Group, you have always cared about me, an old comrade in the same industry. Many friends came uninvited and made a lot of positive reports about our Yiding Group and Yiding Maker Coffee. I am also very sorry to my friends in the media. Many friends with business tasks came to me to talk about advertising. I could only invite them for coffee and respond with "haha". Now you know that we really don't have money to invest in advertising, but we can't tell you that we don't have money, so this is the only way. And yesterday, many reporters called me and asked me what to talk about? You know everything I know, and you helped me find the data on the group's debts that I don't know from the Internet. So I can only say sorry.

I also want to apologize to some friends in the advertising design industry. They shot videos and made materials for us, but because the payment was not settled in time, they still cannot get paid. They can only wait for bankruptcy liquidation. Although it is not a lot, they are all small businesses. I feel uneasy about this. So what I want to say is that I will try my best to help everyone see if they can get priority liquidation. If it is really impossible, I can only pay it back slowly by myself.

If there is still one group to say sorry to, it is the colleagues in the Marketing Division and Yiding Maker Coffee. They are not completely unaware of the situation of the group, but they have persisted to the end. All the colleagues in the Marketing Division were here yesterday afternoon. A young girl who has just been here for a month has known that her only salary this month may be delayed for a long time, but she still insisted on reporting the topic of self-media this morning. My assistant Xiao Xu was still discussing what he had promised to Sunshine College while singing in the evening, that is, to bring the Maker Lecture Hall to colleges and universities in December. The handsome and beautiful baristas of Yiding Maker Coffee have been operating as usual until 10 o'clock in the evening! We are like Don Quixote fighting windmills, and like Sisyphus pushing a boulder up the mountain. We know that it is useless to do it, but we still try to do it and persist until the last moment. This is our professionalism and professional ethics! I can proudly say that our team is great. As long as this professionalism and professionalism are there, no matter which city or company we are in, we will not lose. If the heart is there, the dream is there, and everything is just starting over.

So although I am fine, if I have any concerns, it is the safety of my boss and the future of my colleagues. I don’t think I can control the safety of my boss, but I still have to think of a way out for my employees. After all, it’s the end of the year and some people have families and children. So I am especially grateful to some friends. Since the news came out, more than a dozen bosses are willing to accept our team members, and those who are interested have basically been arranged now. I can only say that you have a good vision. After all, the Yiding team has been tempered by the market and grown up in the battle of blood and fire. Believe me, they will not let you down.

What moved me was that many friends expressed deep sympathy for this disaster and gave many good suggestions. Especially Yiding Maker Cafe, which has received keen attention from all walks of life since its establishment. Many people are really sad to see it closed down. Some friends hope that Yiding Maker Lecture Hall can be held in another place, and many friends have expressed the idea of ​​continuing to operate Yiding Maker Cafe through crowdfunding. Many friends also hope that I will go to work or cooperate with my team in some way. Here, I would like to thank you all. Believe me, even if Yiding is gone, after a short rest, our dream will continue to take root and sprout.
This is my personal response and opinion on the Yiding bankruptcy incident, and it does not represent anyone else. Friends from the media, if you want to drink coffee, I will treat you somewhere else. If you want an interview, I can only say sorry, this is indeed all I know, and it may not be completely correct.

Also, please allow me, a former literary youth, to show off a little bit of outdated flirtation:

Pain makes you so beautiful

You can see yourself more clearly

No more fear on the road ahead

Even facing

No matter how much wind and rain

Pain makes you so beautiful

Let you understand that the world is like chess

Be careful with every step you take

Wrong once

You're going to lose the whole game

Pain makes you so beautiful

Let you understand what people expect

As long as we still have breath

Temporary separation

We will definitely wait for a better reunion

Pain makes you so beautiful

Let you know that there will be a turning point if you are alive

Our business will continue

After the Storm

Waiting for you to make a comeback

Finally, to paraphrase a line from the movie Terminator: I'll be back!

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.