When did things change when BabyTree's pinnacle came out in 2018?
Zhang Wenjing, reporter of "Chinese Entrepreneur"
Editor|Mina
Source of header image | Visual China
After the CFO was suddenly dismissed, the "infighting incident" of BabyTree, a mother and baby community e-commerce platform, intensified.
On April 19, "executives broke into the office with a long sword after being exposed to be dismissed" appeared on the hot search. It is reported that after Xu Chong, CFO of BabyTree, was dismissed, he refused to hand over, forcibly entered his office with a long sword, and locked himself in the office for 3 days.
In fact, before this, the baby tree has been on the cusp. From the announcement of the dismissal of the company's CFO Xu Chong, to Xu Chong's real-name report that a number of Fosun listed companies, including BabyTree, used the "structure list" to expand the scale of IPO issuance, suspected of constituting a false listing, to BabyTree's "supplementary announcement" alleging that Xu Chong unreasonably suspended the payment of employee wages, BabyTree's "infighting" incident has continued to escalate in the past 10 days.
China Entrepreneur sought verification from Wang Huainan, founder and co-chairman of BabyTree, and relevant people from BabyTree on the above issues and the development of the incident, but as of press time, no response has been received. Wang Huainan said that the announcement of Babytree shall prevail.
In the face of public opinion, on the evening of April 20, BabyTree issued a statement on Weibo: "I noticed that some people made irresponsible remarks through the Internet. The company reserves the right to pursue legal responsibility for such distorted statements. The statement did not specify what kind of remarks were "distorted facts." On April 21 and 22, Wang Huainan forwarded the statement twice, with the text: "Luoyang's relatives and friends ask each other, a piece of ice heart in the jade kettle." ”
On April 19, there was silence at the entrance of the Baihuan Building in Beijing's East Third Ring Road - after this year, BabyTree moved its headquarters from the Borui Building in the East Third Ring Road, and BabyTree, which is at the center of public opinion, seems unaffected, and the company is busy with people coming and going, entering and exiting through the glass wall. However, there are two security guards at the door, and the floor is also patrolled. When they saw strange faces, they looked wary. China Entrepreneur went to other floors of the building, where no security guards were seen at the doors of other companies.
Downstairs of Baihuan Building. Photo by Zhang Wenjing
BabyTree insiders told China Entrepreneur that the company is operating normally and is recently holding a large-scale offline event in Shanghai.
Alleged to be suspected of false listing
On April 11, an announcement by Babytree without warning opened the curtain of this "infighting" incident.
The announcement said that Xu Chong was removed from his position as a director, no longer serving as an executive director, and no longer serving as chief financial officer, effective immediately. Also dismissed was Ma Lie, who is no longer the joint company secretary of BabyTree Group. The reason for the dismissal was, "The Company was not satisfied with Mr. Xu's performance. ”
On the day of the dismissal announcement, Xu Chong received a written notice that the payment date was April 11. Everything was so sudden, even Xu Chong himself didn't expect it.
According to public information, Xu Chong, 48 years old this year, graduated from Nanjing University, and has served as an executive director and CFO of BabyTree since 2014, during which BabyTree has received multiple rounds of financing and was listed on the Hong Kong Stock Exchange in 2018.
According to Caixin, Xu Chong learned that he had been dismissed very suddenly, so he locked himself in his office, refused to hand over the company's financial seal, cheque book, and refused to change the authority of the bank's authorized signatory, and did not carry out any handover.
After this incident, Xu Chong completely tore his face with Baby Tree and the shareholder side. After being dismissed, Xu Chong reported to the media that a number of listed companies in Fuxing, including BabyTree, had adopted the "structure list" method to expand the scale of IPO issuance, which was suspected of constituting a false listing. Causing an outcry in public opinion.
According to reports, as of noon on April 13, the board of directors of Babytree is still discussing and negotiating with Xu Chong.
Xu Chong said that during the listing of BabyTree in 2018, due to insufficient subscription of financing orders, Fosun appointed non-executive directors Chen Qiyu, Wang Changying, BabyTree Chairman Wang Huainan and other key directors to decide to adopt a "structure list" method to expand the scale of IPO issuance.
Specifically, the company agreed with an investment institution named AMTD Global Markets Co., Ltd. that the latter subscribed for the company's listing and issuance order for US$70 million, and the company promised to "return" all US$70 million of the raised funds to the latter in the form of entrusted wealth management on the day of the listing and issuance.
On 27 November 2018, BabyTree Group (01761.HK), an online community platform for mothers and babies in the mainland, was listed on the main board of the Hong Kong Stock Exchange. The picture shows Wang Huainan, Chairman and Executive Director of the Group, and Xu Chong (right), Executive Director attending the inauguration ceremony. Source: Tan Tat-ming (Hong Kong Bureau)/China News Agency/Visual China
In addition to BabyTree, Xu Chong believes that Fosun's Fosun Tourism and Henlius also use the "structure list" to expand the scale of IPO issuance, and said that there is sufficient and conclusive evidence, hoping to attract the attention of the Hong Kong Securities and Futures Commission, the Stock Exchange and other institutions.
On April 17, BabyTree issued another announcement explaining the reasons for its dissatisfaction with Xu Chong's performance, "(Xu Chong) unreasonably suspended the payment of employees' wages when the company had sufficient funds, and refused to approve the payable payments of multiple suppliers in a timely manner during the current year." "In early April, some users reported on social platforms that BabyTree owed employees wages in March.
According to the "Daily Economic News", at present, BabyTree and Xu Chong have been handed over normally, and some contract seals and other work cannot be carried out normally, and all processes have been carried out normally since this week. BabyTree also stressed in the statement that at present, everything is normal and all business activities are carried out in an orderly manner.
The founder started a business to sell shoes after fading out
Xu Chong's real-name report was directed at Fosun Group. After Xu Chong and Ma Lie were dismissed, they were replaced by Gao Xiaoguang and Tang Yimin, both of whom are considered shareholders "Fuxing" executives.
Since September 2020, Gao Xiaoguang has served as the financial director of Shede Liquor; Since October 2021, he has served as the deputy chief financial officer and co-general manager of the financial control center of industrial operation of Yuyuan Co., Ltd.; From January 2023 to March 2023, he served as the chief financial officer and general manager of the financial fund center of Hanchen Watch Group. All three companies are subsidiaries of Fosun.
Tang Yimin joined Fosun in November 2020 and successively served as the Executive General Manager of Compliance of the Board Secretary Office of Fosun Tourism Culture Group and Fosun International, responsible for corporate governance, information disclosure and regulatory compliance of listed companies.
In fact, the top management of Babytree has been surging undercurrent, and the relationship with the major shareholder Fogalaxy is delicate.
In 2016, BabyTree completed a RMB3 billion financing led by Fosun International Group, and announced the integration of resources with Fosun International's medical and health care, finance and insurance to build a family ecological territory.
Guo Guangchang, chairman of Fosun International, said of this investment, although it felt that its valuation was not low at that time, as an important part of Fosun's construction of a happy ecology for young families, after we discussed it for a long time, we gritted our teeth and invested.
In November 2018, BabyTree was listed on the Hong Kong Stock Exchange. Guo Guangchang specially issued a congratulatory article and praised the BabyTree team, saying that Wang Huainan and the BabyTree team gave Fosun surprises, and the role of BabyTree in Fosun's ecology has become more and more significant. Wang Huainan repaid this recognition by referring to him as a "confidant".
When did things change? Less than a year after listing, the market value of Babytree evaporated by 70%, and Jumei and Binjiang Group withdrew from the list of shareholders one after another. In September 2019, BabyTree successively reported a large-scale layoff of 30%, and founder Wang Huainan cashed out the news. According to interface news reports, Fosun International "parachuted" a group of executives to Babytree, and although it has not been disclosed, Wang Huainan has actually faded out of the management team.
What can be seen from the outside world is that Fosun International is still blessing the baby tree. In October 2019, Shao Yibo, co-founder of BabyTree, transferred 20 million shares of BabyTree Group to Fosun International, thereby surpassing Wang Huainan with a shareholding ratio of 24.67% and becoming the largest shareholder of BabyTree.
By March 2020, almost all of the senior management team of BabyTree's original business had left. But Wang Huainan refuted the rumor several times, "I will not leave the baby tree when it still needs me." ”
Today, Wang Huainan is still the co-chairman of BabyTree Group, but except for the latest statement forwarded by the circle of friends, there is no trace of BabyTree. Since last year, he has promoted the rice tea commune and the Xiangwu brand in a high-profile manner, saying that he has laid out the silver economy and launched elderly shoe products. He is now fully committed to his second venture.
In an interview with the media, Wang Huainan vaguely revealed the experience of BabyTree after its launch. In 2019, not long after the babytree went on the market, Wang Huainan's father suffered from cancer, and he spent a lot of time with his father. After fading out of the baby tree for a while, Wang Huainan decided to start a second business.
He installed the new company in the Borui Building, where BabyTree's original headquarters are located, on the fourth floor, with a small office area. Starting a business again, he went from managing a large company to a small startup. He spent half a year adjusting the gap in mentality and getting used to the new rhythm.
Now on behalf of BabyTree, he has become Gao Min, a global partner of Fosun International and co-chairman of the board of directors of BabyTree, who is the "old man" of Fosun International.
From capital darling to storm center
As the "first Internet mother and baby stock", BabyTree was once a star enterprise, receiving 9 rounds of financing before listing, and successively received 4.7 billion yuan of financing from investors such as Jingwei China, Hao Future, and Jumei. After receiving strategic investment from Alibaba in 2018, BabyTree's valuation once reached 14 billion yuan.
Its peak was fixed in the year it went on sale. In 2018, BabyTree achieved revenue of 760 million yuan and net profit of 526 million yuan. At the beginning of the following year, BabyTree's performance "changed dramatically", and then lost money for years.
According to the financial report, from 2019 to 2022, the revenue of BabyTree will be 357 million yuan, 212 million yuan, 282 million yuan and 315 million yuan, and the net profit attributable to the parent will be -494 million yuan, -470 million yuan, -387 million yuan and -468 million yuan, respectively. In the four years of listing, BabyTree lost 1.8 billion yuan.
BabyTree's share price also plummeted. On the first day of listing in 2018, BabyTree's share price closed at HK$6.87 per share. As of the close of trading on April 21, 2023, BabyTree's share price has fallen to HK$0.3 per share, with a market value of less than HK$500 million.
According to reports, previously, a "long reflection article" suspected of being written for Xu Chong circulated on social platforms. The article said that after entering the "era of Fosun Group's delegated management", BabyTree suffered an average annual loss of 460 million yuan, with a cumulative loss of nearly 2 billion yuan. He believes that BabyTree's situation today is related to the incompetence of the management delegated by "Fogalaxy". However, the news was not confirmed by BabyTree.
In the eyes of industry insiders, on the one hand, the birth rate is declining, the industry competition is fierce, and the monetization of content communities is a common problem; On the other hand, the internal turmoil within BabyTree does pose operational challenges.
BabyTree explored the community model of e-commerce in the early days, but achieved little success, and then relied on advertising revenue support. In 2022, the revenue of BabyTree's advertising business will be 234 million yuan, accounting for 74.5% of the total revenue, and the proportion in the same period last year will be as high as 90.7%.
But advertisers are all about big traffic. With the rise of platforms such as Xiaohongshu and Douyin, it is becoming more and more difficult for BabyTree to support advertising business. According to the financial report, from 2016 to 2022, the average monthly active users of BabyTree dropped from 165 million to 77.8 million.
In addition, many industry insiders pointed out that BabyTree is a platform layout that requires team coordination and efficient operation, but internal turmoil is bound to greatly reduce operations.
Wang Huainan, who has faded out, is still optimistic about baby trees and the mother and baby industry. "I don't think mother and baby have little future. Today, BabyTree and the entire mother and baby industry are in a period of transition. At such a stage, the founder is actually indispensable. If there is a soul figure, it can open up many situations. In a recent interview, Wang Huainan said.
Resources:
"Baby Tree King Huainan Re-Entrepreneurship: Loud Voice, Scorching Sun", Daily People, Xie Chan
"From a net profit of 200 million to a huge loss of 500 million, what happened to the baby tree whose performance has changed greatly? , Ran Caijing, Tang Yahua
"Baby Tree Infighting Escalates and Pulls Out Suspicions of Listing Fraud", Southern Metropolis Daily, Fang Shiqi
"Dialogue with Baby Tree King Huainan: Being the Second Half of Life, ChatGPT Excites Me", Business and Life, Zhu Xiaopei