The domestic communications market has never lacked stories. For more than twenty years, there are forerunners who have been lost in the big waves and sand, and there are also latecomers who have come to the top.
In the era of Nokia's dominance, tianyu mobile phones, known as the "king of cottage machines", shipped 17 million units in 2007. The following year, Rong Xiuli, the founder of Tianyu, known as the "godmother of cottage machine", also appeared on the Hurun IT rich list for the first time with a wealth of 4.2 billion yuan.
In the major wealth lists, Rong Xiuli has long disappeared. However, she is not far away from the mobile phone industry, but hidden in the upstream of the mobile phone industry, becoming a supplier of radio frequency devices for mobile phone brands such as Xiaomi, OPPO, and vivo.
Weijie Chuangxin (Tianjin) Electronic Technology Co., Ltd. (hereinafter referred to as "Weijie Chuangxin"), which is mainly engaged in the RF front-end chip business, has submitted for IPO registration on the Science and Technology Innovation Board. This means that Rong Xiuli, who is about to turn 60, is about to usher in her first IPO in A shares.
From mobile phones to chips, Rong Xiuli's life ups and downs can be seen as a microcosm of the development of China's communications industry.
01, selling "big brother", debt 1.6 million
Rong Xiuli was born in May 1963 to an ordinary family in Xinxiang City, Henan Province. Strong from an early age, she was admitted to Hunan University at the age of 16, majoring in internal combustion engines, and became one of the only 4 girls in her class.
After graduating from university, Rong Xiuli was assigned to the Luoyang Tractor Research Institute, a state-owned unit, as an engineer, responsible for various tests of tractors. She has been here for 10 years and has been promoted to Senior Engineer. According to this trajectory, Rong Xiuli will live in peace in the state-run unit until retirement.
The other side of stability is a life that can be seen at a glance. Rong Xiuli realized that she was only 29 years old, but her upside was already very limited. At that time, the leadership of the institute was very good, and he assumed the position of director at a young age. This also means that rong xiuli's career "ceiling" is likely to be the deputy director of the institute.
After several thoughts, entrepreneurship has become the first choice for Rong Xiuli to "seek change".
However, Rong Xiuli did not know where to start. "At that time, I was still very ignorant and dazed about the future world and the unknown business opportunities, and I didn't know where to start, so I chose a logic: Then I will learn it first."
In 1992, it coincided with the enrollment of China Europe International Business School in China and the generous scholarship of 150 yuan per month for students. Rong Xiuli chose to seize the opportunity to go to Beijing for further study and study communication terminal related majors that do not require a professional background.
After graduating with an MBA, his first job was as a salesman at a company in Beijing that ran a telephone exchange.
Here, Rong Xiuli became acquainted with the mobile phone industry and opened her second professional life.
In 1993, Finland's largest mobile phone agent, Bai Li Fung, intended to enter the Chinese market and found Rong Xiuli's company to conduct market research. At that time, the mainstream communication tool on the market was the BP machine (pager).
After about a year of research, Rong Xiuli believes that compared with BP machines, the instant messaging function of mobile phones is more prominent, and there is a large market space. Therefore, Rong Xiuli suggested that the boss take over the agency rights of Finnish Bailifeng in China.
However, mobile phone promotion is as easy as Rong Xiuli imagined.
At that time, the "mobile phone" was called "big brother" because of its large appearance, not only its own price was expensive, but the phone bill was also as high as three or four yuan a minute, exceeding the consumption capacity of ordinary consumers, and it was difficult to open the market in a short period of time.
By the beginning of 1995, the "big brother" inventory was seriously backlogged, and the company where Rong Xiuli worked lost 1.6 million yuan in this business.
The promotion of "Big Brother" is not smooth, and Rong Xiuli's boss wants to admit that he is out of the game. Out of responsibility and unwillingness, Rong Xiuli chose to bear the debt of 1.6 million yuan, while taking over the inventory of "Big Brother" and the mobile phone agency rights of BaiLifeng.
Previously, Rong Xiuli's salary was only a few hundred yuan, and 1.6 million yuan was undoubtedly a huge amount.
For this choice, Rong Xiuli once explained: "This is mainly due to the fact that at that time, my MBA had just graduated, and there were very few MBAs (graduates) at that time, and the graduates were very self-inflated, and I thought I would definitely be able to earn it back." ”
02, Tianyu mobile phone brought 4.2 billion wealth
Rong Xiuli, who embarked on the road of mobile phone agency entrepreneurship with a lonely heart, established Beijing Bailifeng Communication Equipment Co., Ltd. The most urgent thing is to open up sales channels for Big Brother.
After some attempts, Rong Xiuli realized that mobile phones are slow to sell, and the problem is not only the high price and tariff.
In the process of returning to visit old customers, she found that "Big Brother" often had a situation where the phone could not be connected, but the previous salesman did not reflect upwards, but concealed it again and again.
In order to solve this problem, Rong Xiuli quickly summoned more than 50 channel providers of Bailifeng, jointly wrote a letter to the Finnish manufacturer, asking for after-sales loopholes to be filled, and promised customers that "every mobile phone purchased from Bailifeng can be replaced by old for new".
Since then, Beijing Bailifeng has ushered in an inflection point, and it is no longer a problem to pay off the debt of 1.6 million. By 1998, Rong Xiuli was already the agent of nortel, Samsung and Ericsson mobile phone brands in China, with an annual sales flow of more than 1 billion yuan.
The mobile phone agent let Rong Xiuli dig the first bucket of gold, but she was not satisfied.
In the mobile phone industry, agents are in the downstream of the industry, and the profit margin cannot be compared with the upstream R&D and manufacturers. After finding out the way, Rong Xiuli moved her mind to extend the business to the middle and upper reaches of the industrial chain.
In 2002, Tianyu Longtong Communication Equipment Co., Ltd. was registered and established, operating in the form of renting mobile phone production licenses and OEM production (ODM), which is commonly known as cottage business. As one of the first batch of domestic mobile phone entrepreneurs, Rong Xiuli's title of "godmother of cottage machines" came from this.
Rong Xiuli is not unwilling to build its own brand. In 2002, as a "supplement and extension of fixed telephones", PHS prevailed, and it was more difficult for private enterprises to obtain mobile phone production licenses. In this context, a large number of cottage machine manufacturers have been established, forming a grassy river.
An example is that in the same year that Tianyu Longtong was founded, another veteran domestic machine manufacturer, Gionee, was also registered. The two companies have been fighting for nearly 10 years, and many senior managers of Tianyu Longtong have also "collectively jumped ship" to Jin Li, including Lu Weibing (now a partner of Xiaomi Group), but this is a later story.
(Lu Weibing)
For Rong Xiuli, who wants to develop her own mobile phone, OEM and cottage are only expedient measures. Rong Xiuli's ideal mobile phone should be "cheap and good". To this end, from the beginning of the company's establishment, she invited Zhan Jun, a well-known chip program engineer with a doctorate in electronics and employed by Microsoft at the time, to sit in the seat.
At first, the road to self-development was not smooth. Large sums of money are invested in laboratory research, but test results in the laboratory do not equal good quality control in the factory.
Most of the cottage machine manufacturers adopt the "workshop-style" production mode, the production and technical indicators in the factory are not advanced, and no excellent product testing system has been established. In this context, the "big god" Zhan Jun can lead the team to make the "black technology" at that time in the laboratory, but the manufacturing technology of Tianyu Longtong cannot keep up, and the rate of mobile phone defects produced is extremely high.
For a time, there was a backlog of semi-finished mobile phones in tianyu longtong's factory. Rong Xiuli once wanted to give up.
At the time of desperation, Rong Xiuli, who did not understand technology, decided to personally participate in the research and development work, and at the same time participate in the procurement and production chain, reshaping the whole process of laboratory research and development, supplier procurement, logistics, and factory production.
In this process, Rong Xiuli's thinking gradually changed, and began to promote Tianyu Langtong from a mobile phone manufacturer integrating "research, production and marketing" to a "light asset + integrator" model.
In 2005, Rong Xiuli met MediaTek, a chip vendor with a one-stop solution, and through the procurement of the latter's chips, the research and development progress of Tianyu Longtong mobile phones was greatly accelerated. Subsequently, Rong Xiuli has successively joined hands with BYD (battery supply), Foxconn (production OEM) and other enterprises. After some transformation, the quality of Tianyu Longtong's products began to gain market approval.
Around 2006, with the implementation of the new license review method of "mobile phone license approval system", Tianyu Longtong obtained the coveted mobile phone license, and the K-touch brand finally broke through the cocoon.
At the same time, Rong Xiuli creatively adopted the sales model of "buyout sales".
Unlike the previous "general agency system" priced by mobile phone manufacturers, "buyout sales" refers to selling mobile phones to agents at a fixed price, and agents have the final say on how much they want to sell. In this mode, the agent is more proactive, and the manufacturer can also save marketing costs.
With the accumulation of the early stage, tianyu mobile phone is like a bamboo. In 2007, shipments reached 17 million units.
(In 2007, Tianyu Mobile TV was broadcasting TV drama programs)
In 2008, The American Warburg Pincus Investment Group invested 530 million yuan in Tianyu Longtong, further elevating Tianyu's status. At that time, Rong Xiuli boldly said that Tianyu would do "China's Nokia", march into the high-end mobile phone market, and plan to go public.
In the same year, Tianyu Longtong became the only domestic mobile phone manufacturer to squeeze into the top five mobile phone sales in the Chinese market, second only to Nokia, Samsung and Motorola. With a net worth of 4.2 billion yuan, Rong Xiuli also ranked 11th in the 2008 Hurun IT Rich List.
However, no one expected that this glorious scene would come quickly and go faster.
03, smart machine business "stand on the wrong team"
In 2009, China entered the first year of 3G, and China Unicom took the lead in introducing two iPhones, kicking off the prelude to the development of the smartphone industry.
At the same time, operators' control over mobile phone sales channels has gradually emerged. As a service provider that provides mobile phone tariff packages, operators are like "regular troops", naturally have control over mobile phone sales, and can win the trust of consumers.
How to reshape the channel to launch operator customization machines and how to create smart phones have become the two major problems that Tianyu has to solve.
The advantage of mobile phone manufacturers doing customized machines is that they do not have to spend a lot of effort to do channel promotion, and the price is to lose pricing power. This is contrary to the principle of "buying out sales and store pricing" previously implemented by Tianyu, which has caused dissatisfaction among channel providers for a time.
In terms of promoting smart machines, Rong Xiuli accidentally "stood on the wrong team".
At the beginning of the intelligent transformation, Tianyu moved rapidly, through the formation of a research and development team of nearly 600 people, by May 2009 launched the first 3G smart phone. However, Tianyu 3G smartphones choose to be equipped with Microsoft operating system instead of Android.
Rong Xiuli's judgment is that Google itself is going to withdraw from the mainland market, so who will use the Android system developed by Google?
Compared with Android, the experience of Using Microsoft's operating system does not meet consumer expectations, and it has not formed a large-scale operation ecology in a short period of time, so the market response is flat.
Tianyu also briefly turned to the Android system and launched the corresponding model. However, this strategy failed to be implemented because around 2011, Internet manufacturers set off a boom in mobile phone systems, and Rong Xiuli mistakenly bet "treasure" on the short-lived Alibaba Cloud OS.
At the same time, the veteran mobile phone manufacturer "China Cool Union" is still running wild on the road to Android.
On the outlet of smart phones, new "fresh forces" are also arriving in a hurry. Typical representatives such as Xiaomi, which was founded in 2010, released its first smartphone Xiaomi 1 in June 2011, shipped 300,000 units that year. In the years that followed, the growth was even more rapid.
On the other hand, Tianyu repeatedly stepped on the wrong rhythm and could not find out the famous hall of intelligence for a long time.
The last highlight of Tianyu Mobile was the release of the "Hornet II Smartphone" in 2012. At that time, Lei Jun also sent a Microblog to celebrate that "the domestic mobile phone industry should impact high-end smart phones together."
(Lei Jun Weibo, August 8, 2012, source network)
The former domestic machine faucet has disappeared into the sight of everyone.
The data shows that the top five domestic mobile phone shipments in 2015 were Xiaomi, Huawei, ZTE, OPPO and vivo. In the same year, Tianyu spread out that "employees are on holiday, wages are suspended, and the company lays off employees in disguise." Although Rong Xiuli personally refuted the rumors, the decline of Tianyu was already a fact.
In some sales channels, Tianyu mobile phones are still on sale, but the main model has become an elderly machine. The city boundary found that in the official flagship store of Tianyu Mobile Phone Jingdong, the 27 elderly machine products on sale are priced below 300 yuan.
In addition, in 2015, Tianyu Longtong's subsidiary, Weitai Chuangke (Tianyu Longtong has been deregistered), was listed in Hong Kong. He is mainly engaged in the supply of ODM mobile phone business in overseas markets, with Rong Xiuli as the chairman and 56.54% of the shares jointly held with her husband Ni Gang. As of February 22, the total market value of Vitilva was only HK$212 million (about 172 million yuan).
Nowadays, when Lei Jun shouted out that "in three years to win the first domestic high-end mobile phone market share", Rong Xiuli's focus is no longer in the mobile phone market. Lei Jun is still active on Weibo, and Rong Xiuli's Weibo has been stopped for 7 years.
04, changed the battlefield, but lost money year after year
Tianyu was defeated, and the listing that Rong Xiuli had promised to Warburg Pincus investment was also gone. But another IPO is coming.
In 2010, when Tianyu Mobile phone was repeatedly struggling in the smartphone market, Rong Xiuli founded Weijie Chuangxin.
On the main board of a mobile phone, 1/3 of the space is used for the RF circuit, and the RF circuit works together to complete the process of receiving and sending information to the mobile phone.
Mobile phone RF front-end chips require integrated power amplifier (PA), filter (Filter), radio frequency switch (Switch), low noise amplifier (LNA) and other components.
Weijie Chuangxin is mainly engaged in the power amplifier (PA) module in the RF, and the revenue of related products in the first half of 2021 accounted for 97.27%. According to the "China Chip Design Enterprise List 2020" released by CBInsights, the company's shipments of 4G RF power amplifier products rank first among domestic manufacturers.
The world's major PA module suppliers are American companies SUCH ASMD and Skyworks, and the choice space is limited. The cyclical market of the mobile phone and chip industry determines that the SUPPLY of PA modules is often insufficient.
When Weijie Chuangxin started, some of the R&D personnel were from rf old rf factory RFMD, mainly developing 2G RF PA products. From this point of view, Rong Xiuli chose to enter the RF market, partly because of meeting the needs of Tianyu.
However, unlike Tianyu's missed smartphone market opportunities, Weijie Chuangxin, which was established in 2010, stepped on the RF chip outlet and even "defeated" the former Tianyu "old cross" MediaTek in the RF market.
In 2017, MediaTek acquired Rhoda Technologies under its umbrella in the form of a public acquisition. Founded in 2001, Luoda Technology has a wide range of product lines, including mobile phone power amplifiers, RF switches, low-noise power amplifiers, Bluetooth chips, etc.
In order to grab the market, Rong Xiuli and her former "old friend" MediaTek started a price war, which finally ended with MediaTek's concession.
In April 2019, MediaTek, through its 100% stake in Gaintech, strategically invested in Weijie Chuangxin and became its largest shareholder, and dissolved the PA department of Luoda, announcing the position of Weijie Chuangxin in the domestic PA market.
In 2020, Hubble Investment, OPPO Mobile, Vivo Mobile, Xiaomi Fund, etc. also invested in Weijie Chuangxin. The actual controllers of Weijie Chuangxin are Rong Xiuli, chairman of the company, and Sun Yijun, director and general manager, who held a total of 38.29% of the shares before the issuance.
Weijie Chuangxin mentioned in the prospectus that the company's downstream customers mainly include mainstream mobile phone brand manufacturers such as Xiaomi, OPPO and Vivo, as well as ODM manufacturers of mobile terminal equipment such as Huaqin Communications, Longqi Technology and Wingtech Technology.
From 2018 to 2020, weijie Chuangxin's operating income has grown rapidly, but it is heavily dependent on large customers - the revenue of the top five customers accounts for about 99%. Moreover, the net profit attributable to the mother is in continuous losses, mainly because the company's gross profit margin is low, and the expenses during the period such as large share payment expenses and high research and development expenses are large.
From 2018 to 2020, the gross profit margin of Weijie Chuangxin's main business hovered between 17% and 22%, and in the first half of 2021, it increased to 26.61%. In contrast, the average gross profit margin of comparable companies in the same industry in China was 39.10% in the same period, while Skyworks in the United States was as high as 49.69%.
In addition to the American and Japanese RF front-end companies that dominate the global market, the competition among domestic PA manufacturers is also very fierce. The core product of Weijie Chuangxin is the 4G PA module with low gross profit margin, and the revenue in 2020 still accounts for nearly 89%.
According to the prospectus, in 2020, the sales unit price of the 4G model PA module of Weijie Chuangxin was 2.93 yuan / piece, and the gross profit margin was 16.53%, far less than the unit price of 5.11 yuan / piece of 5G model and the gross profit margin of 31.17%.
Weijie Chuangxin also mentioned that the company does not yet have the complete capability of 5G high-integration RF front-end architecture solutions, and faces the risk of higher technical challenges in the process of 4G to 5G iteration.
In 2018 and 2020, Weijie Chuangxin implemented 3 equity incentives and 1 stock option incentive. Among them, in 2020, the company recognized share payment expenses of 174 million yuan, which affected the net profit attributable to the mother in the current period of -78 million yuan.
Due to the implementation of the equity and stock option incentive plan, Weijie Chuangxin will recognize large share payment expenses year by year from 2021 to 2024, and it is expected that the recognition of share payment expenses will be about 640 million yuan in 2021, and the net profit attributable to the mother is expected to remain negative.
The commercial market has some implications that the East is not bright in the West. Tianyu mobile phone retreated, Rong Xiuli turned around and stood in the upstream of the mobile phone industry, and became a partner with a former competitor. However, this time, the road ahead is still full of challenges.
Resources:
1. "Tianyu Langtong: The Road to Cottageization", Chinese entrepreneur, Liu Jianqiang, Qin Shan
2. "From part-time work to being a boss Strong woman from debt of 80 million to income of 8 billion" CCTV Wealth Story Meeting
3. "Tianyu Langtong: Open Secrets", Sohu IT, Ding Xiaolei, Shen Yin
4. "The Decline of the "Domestic Machine King" Tianyu: Shoulder to Shoulder with Huawei 10 Years Ago, Now Surviving with the Elderly Machine", 21st Century Business Review, Ye Ying orange
5. "Half Moon Talk (Large-scale Series of Interview Activities to Build the Chinese Dream Together)", Half Moon Talk Network
6. "Coolpad smart phone relies on operator customization: saving channel costs and losing pricing power", investor report
(Except for the separately marked source, the above picture is from Visual China)
(Author 丨 Dong Wenshu Editor 丨 Lei Yanpeng)