The Trouble Of Yiwu

Recently, two rounds of announcements were issued by the company. The 3 million shares were lifted by the group in 2016, but after the lifting of the ban, the 3 million shares were sent to the Yiwu branch of Zhejiang Commercial Bank. Today, the group has pledged 77.12% of its holdings.

But another announcement is obviously more eye-catching. Sha Sha Holdings said that the media reported that the loss of lsha shares or benefit from suspected pyramid selling business, is not in line with the company's reality.

The "king of socks" is suspected of pyramid selling, which goes back to May this year.

In May, in an administrative ruling issued by the people's Court of Huangmei County of Hubei Province, Lun Sha knit was ordered to freeze the related funds account of financial institutions on suspicion of organizing pyramid schemes. According to China net finance and economics report, "the E+ living hall of the Sha Sha" clearly includes the "sharing Award" and the "counselling award, the consumer award, the place award (8 level 8 generation income 2%)" and so on hierarchical sales, the sales personnel's salary reward or the rebate also is linked with the development personnel quantity, the grade and so on.

It is only a microcosm of Yiwu's private enterprises that it will encounter changes.

Yiwu, the rich and the debt

In 1992, the wind of policy shifted Yiwu's small commodity market to the fourth generation, with 7100 new stalls, plus 14 thousand old stalls.

The riches of Yiwu can't get rid of the stall. This year, Lou Zhong Ping decided to end the long life of a traveling salesman. He rented a daily use booth in Yiwu market and began to engage in wholesale business of plastic products. In just two or three years, Lou Zhongping became the best seller in five or six hundred businesses.

Later, an accidental opportunity made him look at the humble straw. The double boy straw was born.

Zhou Xiaoguang and his wife set up stalls in Yiwu earlier than Lou Ping. They had planned to earn enough money to go home and farm. However, the business of trinkets was in full swing. In just two years, Zhou Xiaoguang made hundreds of thousands. After visiting Hongkong and returning to Yiwu, she opened the first jewelry store. Until 1995, Xinguang Co., Ltd. settled in Qingkou Industrial Park, Yiwu.

The Weng brothers of the SAM Sha socks industry began to turn around from the stall. Weng Guanrong, Weng Rongjin and Weng Rong Di spent ten years acting as a Guangdong socks brand. In 1995, they converted to the production end, and founded Yiwu Liu Sha Knitting Co., Ltd.

Yiwu's unique economic environment has created the first batch of large number of private enterprises, and these private enterprises from weak to large also become Yiwu's bright card to the whole country and the whole world. In March 2018, Zhou Xiaoguang ranked twenty-sixth place in the "Hu Run global self-made women rich list", the top of Zhejiang's richest woman. In August 2019, the sanding holding group also entered the list of "the top 500 private enterprises in China" and "2019 top 500 manufacturing enterprises in China" list in August 2019.

However, the two leading enterprises in Yiwu are now in sharp decline.

In August, Zhou Xiaoguang released a message in WeChat's circle of friends, saying that she would do her best to give creditors, partners to Xin Guang family, a sincere explanation to the higher authorities and the whole society's concern and support for our friends. It can sell luxury cars and luxury houses. The debt of up to ten billion yuan is like a big hole.

There are people familiar with the matter, "(Xinguang) loan interest every year billions of dollars, financial cost control has a fatal problem."

Zhou Xiaoguang has already made Yiwu a big loser. No one ever thought Ding Zhimin would follow suit. First, the defendant was sent to court because a sum of 1 million 165 thousand was not paid in time. Then, the holding of the 340 million yuan bond was triggered by sanding holding. In the face of a series of negative news, the Yiwu "second richest" plunged into a liquidity crisis, and when he was anxious to find new investors, he had been ordered to restrict consumption by the local court.

Now, it may also happen to La Sha.

After all, she sold socks.

In response to Lun Sha's alleged pyramid scheme, it is worth ponder that Lusa only clarified that the listed companies of LTHA did not participate in the activities of suspected pyramid schemes, but did not explain whether pyramid schemes were implemented. The implication is that the knitting of Lour Sha is the knitting of Lour Sha, and the control of the Sha Sha is the control of Lour Sha, even if it is pyramid selling, it is not what I do.

Such a clear attitude should be traced back to the time of the launch of the company. Before the listing, the main business entity of the Sha Sha stock company is Zhejiang Lingsha Underwear Co., Ltd. In a word, the main body of the listed company is underwear, not the core business of the whole group. However, there is another doubt that products that are suspected of pyramid selling, such as women's comfort and breathless palace underwear, men's magnetic power stone underwear and body bra, belong to underwear series.

There is a deep correlation between the business of Lingsha knitting and Sala holdings, and data show that in 2018, Sala shares 16 million 275 thousand and 400 of the body underwear sold to the Sala knitting sales hall, accounting for 4% of the total revenue.

In fact, whether it is the knitting company or the listed company, it is the brand of the "Sha Sha".

In an interview with "finance and economics" reporter, Weng Rongdi revealed that in 2018, the total revenue of the group was about 1 billion 100 million to 1 billion 200 million yuan, which removed 388 million yuan of revenue from the listed companies. Last year, some socks mainly accounted for 800 million yuan of revenue. Lour Sha knitting is still the core of the whole group, but why should it take the risk of making pyramid selling edge ball?

Not only is it involved in pyramid schemes, but its business is also involved in microfinance, asset management, biotechnology, new materials, investment and Internet technology.

In the early 90s, Weng Rong Di was a traveling salesman, and after his two brothers had turned over toys, albums, socks and other small items, they found that selling socks was the most profitable. Since then, the brand has grown up in the market atmosphere of Yiwu. However, after more than 20 years, she did underwear, loans and biotechnology, and the outside world knew about the sale of socks.

In fact, since 2001, the company began to diversify from single product to diversified industrial layout.

Underwear was once a great business segment of the group, and now we are looking at the performance of listed companies. In the latest three quarterly reports, the shares of rift are still stuck in the strange circle of increasing profits but not increasing profits. In the first three quarters, the revenue increased by 1.72% in the same period last year, but the net profit from the parent company decreased by 22.07% compared with the same period last year. At this time, it is not known that it is a large number of listed companies that pledge to hold the shares of the listed companies.

But one thing can be confirmed that once the underwear business is unable to maintain, it will also announce that the transformation of the group nearly 20 years has failed.

Private expansion "trapped" in Yiwu?

In December 2017, Zhou Xiaoguang's eldest son Yu Jiangbo and Yu Qiaoxian, chairman of SunYu group, held the wedding ceremony of Qianjin Yu Tian. The wedding was selected in the landmark building of the Yiwu real estate company, the world trade center, which just opened in June. This is the tallest building in Zhejiang Province. In the wedding banquet, Ma Yun, Zhang Jindong, Wang Jianlin and other bigboys sat side by side.

The scenery of Zhou Xiaoguang and his wife came from a great deal of breath in recent years. In 2010, Xinguang Group beat Zhejiang green city, Shanghai east bank and American SiGe to win the CBD core plot at a price of 1 billion 96 million yuan. Zhou Xiaoguang gave the construction of the world trade center to her husband Yu Yun Xin. In 2017, the new Yiwu World Trade Center was completed on 2017, covering a total area of about 49 thousand and 500 square meters, with a total construction area of 480 thousand square meters and a total investment of 6 billion yuan.

But now this building, which once represents the glorious moment of Zhou Xiaoguang, has been taken over by Yiwu.

Speaking of Zhou Xiaoguang, her mother Huang Xianlan said, "my daughter walks too fast, and she wants to be big." In fact, since 2004, Yu Yun Xin Li Xinguang Group acquired Zhejiang Wan Xia real estate, and the rapid expansion of diversification has pushed them to the brink of crisis.

Coincidentally, Lun Sha is suspected of pyramid selling and sword going on the wrong side. Sanding holding is deeply involved in the bond crisis. It is also rooted in diversification. From the wholesale and retail business of the main commodities to the reckless cross-border transformation, it seems that it is an inevitable move for Yiwu private enterprises to move forward. In the final analysis, Yiwu's small commodity economy is facing a bottleneck.

Xinguang Group's 2016~2017 year report shows that the gross profit margin of main business has dropped from 26.36% in 2016 to 11.19% in two years. This situation is not uncommon in Yiwu. Data statistics show that in 2017, the 115 enterprises in Yiwu had more than 40 deficit enterprises, with a deficit of 34.8%. The increase of costs and expenses has squeezed the profit margins of enterprises. Therefore, the pressure of business operation has increased and business transformation has to be sought.

But unfortunately, most of the transformation of large private enterprises in Yiwu is mostly unsmooth, such as shinguang, sanding, Lusa and so on.

Is this accidental? Not necessarily.

For one thing, the private enterprises in Yiwu are mostly family management. The core members of Xin Guang group, whose core is Zhou and Yu's two surnames, are as many as more than 30 members, and they are holding or holding positions in shinguang group and affiliated companies.

Family businesses are not unstable, but under the influence of the rapidly changing Internet economy, their disadvantages are more and more exposed. Especially their diversified business expansion is much inferior to the expansion speed and strategy of the Internet giants.

In 2010, loung group announced that it had entered the photovoltaic industry. However, two years later, the investment failed to follow the high tech industry blindly. After the overcapacity of the ribbon industry, the three sides entered the real estate and high-end hotel business on a large scale, and started small loans. In 2015, they also developed a "future health and leisure" project. Not to mention the relationship between these projects and the main business, the key is that the company seems to have failed to build a foundation for liquor travel and finance.

Two, the crisis of shinguang and San Ding came from bonds. Wind shows that since 2019, the default events in the bond market are still frequent, the scale of the breach has reached 117 billion 900 million yuan, and the number of defaulted bonds is more than that of 2018. In the case of default, private enterprises are still hardest hit, especially in Jiangsu, Zhejiang, Shandong and other regions.

Taking sanding holdings as an example, sanding holdings, which involved the "mutual holding structured debt issuance" mode, led to huge losses and involved private equity investment chain. Some individual investors invested in the market through the two tier market and were involved in the incident.

In a public speech, Ding Zhimin once said, "my initial growth came from chicken feather and sugar. My original capital accumulation came from the small commodity market. My business roots in the Yiwu market", but now, like Zhou Xiaoguang, he has failed to live up to the city.

For decades, Yiwu's small commodity market has been enduring. Even if it is hit by the mobile Internet, its foundation in the electricity supplier industry and even the entire retail market is hard to shake. However, with the successive changes of Xinguang, sanding and Rosa, it is losing those once the most dazzling "stars".