Quarrels don’t affect making money: Luo Yonghao, the “first person to pay off debts through live streaming”, reveals commercial moves outside of the AR project
2024-08-27
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Luo Yonghao, who has been "silently paying off his huge debts", has spoken out continuously, allowing people to see clearly his business self-rescue strategy.
On August 26, Luo Yonghao, the former founder of Smartisan Technology, published two blog posts: "The Second Season of "True Repayment Story" - From 600 million to 1.3 billion" and "Clarifying the Truth about the Long-term Rumors and Defamation Spread by Zheng Gang, an Investor of Smartisan Technology." He disclosed the total amount of debt owed and the progress of repayment, as well as the conflicts and disputes between him and investor Zheng Gang.
Luo Yonghao emphasized in the article: "My team and I will simply go all out and stir up trouble, using all legal, compliant and business ethical means to 'hype' the company, and use all means to increase cash income and pay off the remaining 500 million yuan of debt as soon as possible."
These commercial actions include but are not limited to fully resuming the update and operation of social media accounts, partially resuming the recording of variety shows, fully resuming commercial advertising and endorsements, and fully resuming inviting cultural celebrities and film and television stars to the live broadcast room to communicate and bring goods, etc. However, Luo Yonghao's AR entrepreneurial project "Xihongxian Technology" has not disclosed the progress for a long time.
How did the 600 million yuan debt increase to 1.3 billion yuan?
Luo Yonghao said that the total amount of debt has increased from the previously disclosed 600 million yuan to 1.3 billion yuan. The main reason is that in the process of repaying the debt, due to additional compensation caused by various lawsuits and disputes, as well as various fines caused by late payment, the total debt has increased by nearly 100 million yuan. In addition, some situations that occurred at the end of 2022 also generated new debts.
Luo Yonghao said that when Smartisan Technology was raising funds, it had received 300 million yuan in investment and 300 million yuan in loans from state-owned capital, totaling 600 million yuan. When the first season of "True Return" was launched in 2018, the team did not include this part of the funds because the contract for the 300 million yuan loan was not due until the end of 2022, which means that there were still four years before the debt was incurred. The time period is very long and there are many variables that may occur in the middle. In addition, the team considered using capitalization to repay this part of the debt, that is, after the live e-commerce business went public, it would use public market securities to repay the debt, so this part of the debt was not included in the original task of repaying the debt in cash.
Later, due to various reasons, as "China's leading e-commerce live broadcast and new media marketing agency", Jiaogepengyou eventually became a Hong Kong-listed company. On the evening of May 10, 2023, Century Sage Scientific (01450.HK) issued an announcement, announcing that it plans to change its name to "Jiaogepengyou Holdings Limited", and its corresponding English name will also be changed to "Be Friends Holding Limited" accordingly. Jiaogepengyou completed its curve listing.
Luo Yonghao said that since the company's creditors are state-owned capital, it is not convenient to hold shares outside the mainland. In addition, the trading volume of Hong Kong stocks has been sluggish in recent years. If a large number of shares are sold after listing to repay debts, it may cause a sharp drop in stock prices, seriously damaging the interests of the investors and entrepreneurial team of "Jiao Ge Pengyou".
Therefore, after careful consideration, Luo Yonghao decided to transfer his personal equity interests to his partners and the founding team before the live streaming e-commerce was incorporated into the listed company, and then continue the live streaming cooperation with Jiao Ge Pengyou through other interest exchanges (i.e. obtaining more cash income), and finally repay this part of the debt directly with the cash earned.
In addition to the 300 million yuan in state-owned capital loans, there was also an investment of 300 million yuan from state-owned capital. Luo Yonghao's team once again gave up debt restructuring negotiations (generally speaking, the principal repayment rate of debt restructuring when Chinese companies go bankrupt is about 10% to 30%), and directly promised the state-owned capital creditors: in addition to the 300 million yuan in loans, the 300 million yuan in investment losses will also be treated as debts, and the 600 million yuan principal will be repaid 100% in cash.
Luo Yonghao said that he has repaid 824 million yuan so far, including: 548 million yuan in cash after tax for the live streaming e-commerce company he started in April 2020; 180 million yuan from the transfer of the mobile phone team and intellectual property rights to ByteDance in 2018; after the funding chain of Smartisan Technology was cut off and the production line was shut down in 2018, Luo Yonghao signed a personal unlimited guarantee to enable the factory to resume work, and used the remaining materials to make complete machines to pay off the debt of 66 million yuan; from 2018 to the end of 2019, Smartisan Technology's debt settlement team sold Smartisan Technology's remaining assets in various ways to repay nearly 30 million yuan in debts.
SpatCommercialization
Simultaneously with the disclosure of the progress of the arrears, Luo Yonghao also released a "Clarification of the Truth about the Long-term Rumors and Defamation by Zheng Gang, an Investor of Smartisan Technology". As an investor of Smartisan Technology, the verbal dispute between Zheng Gang and Luo Yonghao began in January 2023.
On November 23, 2022, Luo Yonghao's AR startup company Xihongxian Technology announced the completion of an angel round of financing of approximately US$50 million, with a post-investment valuation of approximately US$200 million. As the original investor of Hammer Technology, Zheng Gang, an investor of Zihui Venture Capital, expressed dissatisfaction with Luo Yonghao's approach in January 2023. He said that Luo Yonghao's newly founded VR company was valued at US$190 million, and Luo Yonghao proposed to the original Hammer Technology investors to use 3.5% of the shares to compensate the investors who invested 1.5 billion yuan, but he (Zheng Gang) thought the proposed agreement was not authentic.
Strictly speaking, apart from the meaningless verbal disputes between Luo Yonghao and Zheng Gang, the whole context continues Luo Yonghao's entrepreneurial journey: in 2018, Luo Yonghao was saddled with 600 million yuan in debt. In 2020, Luo Yonghao joined hands with Douyin to embark on the road of live streaming. In 2022, in response to the "True Return" news of paying off 600 million yuan in debt, Luo Yonghao's team came forward to say, "The news that Luo Yonghao paid off his debt is untrue. Mr. Luo is still working hard and will pay off his debt as soon as possible." On June 7, 2022, Luo Yonghao announced his withdrawal from the management of "Make Friends" and shifted his work focus to the AR entrepreneurial project Thin Red Line.
Li Guoqing, former CEO and co-founder of Dangdang.com, once gave a high evaluation of "Make Friends" when talking about the live streaming sales model in a live broadcast, saying that "it is the most successful and it no longer relies on Luo Yonghao."
Previously, the Jiaogepengyou live broadcast room did gradually reduce the number of Luo Yonghao's live broadcasts and dilute the influence of the top anchors. At the same time, it tried to create a vertical account matrix with the "Jiaogepengyou" all-category top live broadcast room as the core, radiating downward to subdivide each category. Public information shows that the name format of each account under Jiaogepengyou is "Jiaogepengyou + industry". On the one hand, it relies on popularity and focuses more on strengthening brand IP, and on the other hand, it improves recognition and facilitates users to divert and settle to vertical accounts.
Data from the third-party platform Chanmama shows that since the beginning of this year, the average sales (daily) of the Jiao Ge Pengyou live broadcast room is 5 million to 7.5 million yuan, the average sales of Dongfang Zhenxuan is 7.5 million to 10 million yuan, and the average sales of Yuhui Tongxing is 10 million to 25 million yuan.
The 2024 interim financial report of Jiaogepengyou Holdings Co., Ltd. shows that during the interim period, Jiaogepengyou Holdings recorded revenue of approximately RMB 622 million, a year-on-year increase of approximately 43.8%; net profit of approximately RMB 83.8 million, a year-on-year increase of approximately 93.8%; non-Hong Kong Financial Reporting Standards adjusted net profit of approximately RMB 111 million, an increase of approximately 17.0% over the same period last year. During the interim period, the company completed a total merchandise volume (GMV) of approximately RMB 5.96 billion on the new media platform, an increase of approximately 18.2% over the same period last year.
However, the company's gross profit margin decreased from about 56.5% in the same period last year to about 51.5% in the interim period. Specifically, the gross profit margin of the new media service business decreased from about 58.1% in the same period last year to 53.8%, which is within the reasonable range of daily operations. The gross profit margin of the radio and television business segment decreased from about 41.0% in the same period last year to 29.8%. Mainly affected by the market, exchange rate, technology, and labor, the cost increase was higher than the revenue growth, resulting in a decline in gross profit margin.
This time, Luo Yonghao fully disclosed the debt situation and the next commercialization preparations, and resumed some of the businesses that were suspended in the past, showing the attitude of "talking is talking, making money is making money". However, all the commercialization actions disclosed did not include his AR startup project.
(This article comes from China Business Network)
