Fire all employees! The vitality of the old domestic product 28 has crossed the life and death calamity again, and the soul figure Li Jianfei has become the target of everyone's response: It has been gradually restored
Per reporter: Shu Dongni Per editor: Liang Qi
"Vitality 28, Sand Market Daily Chemical", the old domestic brand that once resounded throughout the country, is in a deep quagmire.
On June 12, Chairman and CEO Li Jianfei did not respond positively to the rumors of "arrears of wages and arrears of payment". But he told the Daily Economic News that Vitality 28 will soon "restart."
Many company employees will be skeptical of this statement. In the four months since they were owed wages, they reviewed the reasons for the company's decline and conservatively estimated the company's current liabilities: nearly 100 million yuan in bank loans, 120 million yuan in supplier arrears, and more than 30 million yuan in employee salaries.
For the figure source of 100 million yuan, some employees said that it came from Li Jianfei's mouth. In their view, the current situation of the company, Li Jianfei, who is at the helm, is to blame.
"The company has never measured profits." According to several employees, the company has always emphasized GMV (gross merchandise turnover), regardless of profit. "It was only at the end of last year that the profit was calculated, but it was not included in the salary assessment." This has to do with the company's strategy: first grab the market at a low price, and then strive to go public quickly.
However, Li Jianfei did not agree. "This data and statement are not very objective. Now that the company has gradually recovered, I hope you see the future. This is a period of transition, not a crisis, enterprises from high-speed growth to efficiency growth, looking at growth and profit. ”
Li Jianfei established Jingzhou Vitality 28 Jia Chemical Co., Ltd. in 2017, which was later renamed Hubei Vitality Group Co., Ltd., and restarted its business in 2019, with a revenue of 100 million yuan in 2020, 560 million yuan in 2020 and 2 billion yuan in 2021. Li Jianfei hopes that the company can re-list in 2025.
But what seemed to be a thriving situation came to an abrupt end. The update of Vitality 28's official WeChat video account stayed in March this year. A supplier who went to Jingzhou several times to ask for payment found that each time he went, the company had fewer employees.
A notice on the termination of the lease showed that Vitality 28's office in Jingzhou was suspended on June 12.
Signs of an accident have long appeared
"The company began to owe wages in February and social security arrears in January." Raleigh, a former employee who worked for a year at Vitality 28, told reporters that around the end of May, some employees began to "make trouble", and the direct reason was that Li Jianfei could not be contacted. Previously, he had been vocal in the employee group to explain.
In early June, news of arrears and arrears of payment of daily chemical veteran domestic products began to spread on social networks.
A number of netizens broke the news that Vitality 28 stopped paying wages from February, and some suppliers were owed money. Raleigh provided an "open letter to Vitality Group employees." The letter said: "Since March this year, the company has encountered unprecedented difficulties and challenges, although the company is still trying to find ways to resume normal operations to solve the practical problems of salaries, social security and other practical problems for all employees, but... Progress has not been as fast as expected. ”
Image source: Courtesy of interviewee
"Under the goal of achieving profitability through subsequent continuous operations, the company decided to make a large-scale adjustment to its business and organization, and from June 1, 2023, all colleagues suspended work without pay, terminated labor contracts, and the company issued a certificate of resignation and a notice of termination of the agreement."
But so far, Raleigh has not received the promised certificate of departure, which is the biggest headache for him at the moment. In the past month, he has found several new job opportunities, but all of them have not been able to join because he has no certificate of departure. "Social security is also in arrears, and unemployment benefits cannot be claimed," he was helpless.
Li Ping had just returned from Jingzhou. After staying for more than 50 days, the nearly 100,000 yuan in reimbursement and 40,000 yuan in salary paid in advance, not a penny was received. Joined in the second half of 2020, the employee number is in the double digits. Compared with the more than 1,000 new recruits later, Li Ping counted as an old employee.
Looking back, Li Ping thought that the signs of an accident had already appeared. In June 2022, Vitality 28 began to stop offline reimbursement, and the company said at the time that it would "go online". But now nearly a year, the reimbursement has still not arrived, "obviously at the end of last year's 'online' was done, and the money has not come down." Li Ping speculated that maybe the company started to have problems last year.
Wu Min, a supplier of packaging materials, and Tian Qiang, who is in charge of connecting suppliers and factories, know more clearly that Vitality 28 did have problems last year.
Tian Qiang said that since the second half of last year, the company has begun to reduce production because it has no money to buy raw materials. By the end of last year, only two or three factories were still in production, suppliers and logistics providers were in arrears, and the company was in a semi-suspended state. After a few years, only one factory remained, and production ceased completely in April.
Previously, the company's capital flow was tight at the end of each year. Tian Qiang, who joined Vitality 28 in 2020, has to deal with bosses who ask for payment at the end of every year, but he can solve it quickly before, and he is also used to it. I didn't expect it to get to this point this year.
The company of supplier Wu Min was owed more than 2.7 million yuan for the goods, and Wu Min only received less than 100,000 yuan from the May 2022 cooperation.
Wu Min began to ask for accounts in December last year, and was told that "there is no for the time being, and I will pay again in February", and by the end of December 2022, Wu Min's factory was asked to stop production first, saying that "the company has difficulties." In March this year, she went to the Shanghai branch of Vitality 28 and found that "there was a problem with the company".
Before that, Wu Min was still delivering on time, docking bills and invoices as usual, "the company should inform the real situation as soon as possible", this is Wu Min's biggest dissatisfaction, if you know earlier, many things may be different, now in addition to the payment is not settled, Wu Min's warehouse also has a large number of "vitality 28" packaging materials.
In mid-March, Wu Min went to the headquarters of Vitality 28 Jingzhou. She has been to the Jingzhou office many times, and each time she goes to fewer and fewer employees. The in-house counsel who had been docked also left on May 15.
On the website of the Jingzhou Municipal Government, an article entitled "Vitality 28: Old Enterprises Rejuvenate" published on May 25, 2022 can be retrieved. The article reads: "The Vitality Group Industrial Park project located next to the Jingjian first-class highway in Jingzhou Development Zone is under intensive construction, the vitality R&D complex is about to be topped out, and there is also a laundry detergent production line with an annual output of 100,000 tons, a detergent production line with an annual output of 100,000 tons, a hand sanitizer and shower gel production line with an annual output of 50,000 tons and a disinfectant production line with an annual output of 50,000 tons. ”
Image source: Screenshot of web page
At that time, at the beginning of the cooperation between Wu Min and Vitality 28, standing on the streets of Jingzhou and seeing the office buildings and factory buildings under construction by Vitality 28, Wu Minmin was very relieved.
Grab the market before listing: "I have never assessed profits"
Now, Wu Min is only worried. A processing factory called Wu Min to buy the remaining packaging materials, "but without a brand authorization letter, we will not sell it." Wu Min was very helpless, she had noticed that the planned order volume in 2022 was several times that of 2021. Wu Min felt that the step of vitality 28 was too big, "Li Jianfei himself said this."
At the end of May, all employees began to ask the same question - "Where did the money go?" ”
Li Jianfei explained in the "Vitality Family" employee group: "All our money is spent on marketing sales, expense write-offs, personnel expenses..." But many employees do not agree with this statement. They believe that the fundamental reason why things have evolved so far is that Li Jianfei will not manage.
Li Jianfei Image source: video number screenshot
"In fact, the company has been losing money", Tian Qiang has not seen the financial data, but the work content he is responsible for gives him such an intuitive feeling.
"100 million in 2019 (revenue), 560 million in 2020, 2 billion in 2021", in Tian Qiang's view, achieving such achievements depends on burning money.
Burning money is because of low-price competition, but grabbing the market at low prices is the company's strategy. "The company has not assessed profits", many employees in charge of e-commerce, KA, suppliers and other work told reporters, the company has always emphasized GMV, regardless of profits. "It was only at the end of last year that profits began to be calculated, but it was not included in the salary assessment."
The low-price strategy has also become the main topic of controversy among the company's employees: is the 9.9 yuan 2kg item profitable?
The employee in charge of logistics said that with wear and tear and logistics costs, it was not profitable at all. "The promotion loses hundreds of millions of dollars a year, and the sales volume decreases as soon as the price increases." However, the employee in charge of e-commerce after-sales said, "9.9 cannot be said to lose money, but the profit is very small, and the loss may be other marketing expenses or supply chain (cost problems)." ”
In her opinion, promotion is a marketing strategy and marketing means, and the brand brings its own traffic in the later stage. The decrease in sales after the price increase in the second half of last year was due to lack of stock, not that the market was not in demand, but reflected that there were orders on the link.
In addition to online, offline also implements a low-price strategy. An implementation requirement shows that in the promotion plan of each schedule of each system, powder, essence, soap, liquid and other categories, the price promotion of each category shall not be less than 2 DM special prices/shocking prices, which are used for market competition and attracting customer flow.
However, the reporter saw the 2022 annual report of a supermarket system in a certain place, with a profit loss of 2.04 million yuan in 2022 and an expected loss of 2.25 million yuan in 2023. Even one province's supermarket system is losing money.
The employees in charge of the KA channel believe that for the vitality 28, which has been forgotten by the market, it is understandable to reoccupy the market and amplify the promotion methods, otherwise it will not be able to compete with the already strong brand. But to what extent the promotion is, only the company knows.
In addition to low prices, capturing the market also requires people and salespeople, but this also means cost. Li Ping, an old employee who has not been reimbursed for the 100,000 yuan advance payment, told reporters that the company only had more than 100 people in 2020, and expanded to more than 1,000 in 2022, plus more than 2,000 shopping guides recruited by external labor dispatch companies, with a total of more than 3,000 people.
"Shopping guides are dozens of times more, can revenue not rise?" But in Li Ping's view, this is false prosperity. "On a business line, a supermarket has tens of thousands of sales, but the salary has to be opened for 10,000 or 20,000, how much can you make (excluding other costs)? There are many people, but the market paving and channel development have not yet been completed, resulting in high expenses are an important reason for losses. Only by making the market can personnel costs fall, in order to reduce personnel costs, it is necessary to lay off people, people are not enough market can not do it, will only enter a vicious circle. ”
Image source: Vitality 28 official Weibo
Li Jianfei also said that when the company was established in 2017, there were only more than ten people, and later it grew to more than a thousand, an increase of 100 times. The structure of Vitality Group shows that it has five business units: Jiaqing, Mother and Baby, Cotton Paper, Chuangyan and Strategy.
Many employees of Vitality 28 believe that the company has many business departments, but the main source of revenue is still relying on Vitality 28 washing powder, laundry detergent, and detergent, and other brands have labor costs, but generate less revenue.
"Grab the market before listing" is the company's slogan all along. Before the thunder explosion this year, Tian Qiang thought that Li Jianfei was quite powerful, and things had indeed been going according to plan. Tian Qiang also saw the effect, "Libai opened the factory to do the OEM business of Vitality 28, but we didn't do it. We have more and more distributors. Tian Qiang had believed that the company would go public soon.
But nowadays, everything seems to have come to naught.
Success or failure: Li Jianfei
In the review of employees, the company has come to this point, and there are other reasons: unreasonable salary structure, salary inversion, and serious internal friction of sales personnel; The price system is chaotic, product prices are not consistent, the sales strategies of the four departments of KA, circulation, e-commerce and new retail are not uniform, the departments are involved, and the communication costs between various departments are extremely large; The unreasonable allocation of products in various warehouses has caused large transportation costs...
But in the end, they believe that Li Jianfei has a problem with management. There was a lot of protest in the "dynamic family" employee group of more than 500 people.
Li Jianfei is the soul of the fourth reboot of Vitality 28.
He resigned from FMCG giant Reckitt Benckiser in 2016 and has 16 years of experience in P&G and Reckitt Benckiser, including R&D, supply chain, and marketing. In April 2017, Li Jianfei established Jingzhou Vitality 28 Chemical Co., Ltd., and then spent two years doing "Vitality 28" intellectual property compliance combing.
Soon after its establishment in 2017, Vitality 28 received investment from Capital Capital of First Construction, and in 2019, it successively received financing from Challenger Capital, Xinghan Capital and Sequoia China, and began to restart its business.
In August 2022, Li Jianfei said in an interview with media groups including "Daily Economic News" that when he took over Vitality 28, he mortgaged his house and took out a loan from the bank. At that time, Vitality 28 had disappeared from the market for a while, including channel vendors, distributors, and everything was from scratch.
Li Jianfei once mentioned to the media that in 2019, Challenger Venture Capital, founded by Tang Binsen, found vitality 28, and the two sides only talked for ten minutes before they decided on their investment intentions, and even before the agreement was signed, Challenger Ventures had already paid money. "In fact, we didn't talk about Vitality 28 for those ten minutes, we talked about our views on China's future and track. Tang Binson and I are very similar in philosophy, we both want to challenge the giants in the big track. ”
"We have so many resources and so many supply chains, why should foreign companies take tens of billions from China every year?" In several exchanges between the reporter of "Daily Economic News" and Li Jianfei, he also mentioned his dream of reviving the national brand many times.
When it comes to how to achieve the goal, Li Jianfei also has his own ideas. He once explained to reporters in detail how to catch young consumers: "Even if you wash clothes, young people's decontamination needs may be different, young people's social occasions may be barbecue, hot pot, so it will be heavy oil, or red wine juice, this stain traditional detergent can not be washed off, so the function of special stains is very important... There are also advertising channels, young people basically do not visit supermarkets, how we form a better interaction with them, it depends on where the consumption scene of young people is..."
Vitality 28 promotional poster
Image source: Vitality 28 official Weibo
Li Jianfei's assistant once told the media that he only spends two days a year off - "Chinese New Year's Eve and New Year's Day".
On June 6, the "Daily Economic News" reporter contacted Li Jianfei, who was busy dealing with employees and government related matters. For the rumors that have been publicized, he believes that "there is still some malice, or for the sake of traffic to attract attention."
On June 12, Li Jianfei replied to reporters again: the company will pay more attention to the cost structure and operational efficiency, last year vitality 28 in liquid, powder, fine are the fastest growing brands in China's washing industry, the next company will consider how to maintain the current market share, while continuing to achieve benign growth (higher operational efficiency, more reasonable operating costs, more durable operating model).
"We will actively increase the proportion of benign businesses and (increase) businesses that improve the company's net cash flow. For some businesses with long cycles and large waste, we will resolutely divest. We will also focus more on our core business in the field of washing. ”
The latest update of Vitality 28's official WeChat video account is still stuck in March this year, the main body of the office R&D building of Jingzhou Industrial Park of Vitality Group was completed, and the pile foundation works of all units were completed. Earlier, in February, it signed a contract with the Hubei Jingzhou Shacheng District Government, and the live broadcast center and business center were officially settled and launched.
In the 3 months that the video number has not been updated, what exactly happened, Li Jianfei did not explain. But he said Vitality 28 would soon be "restarted." For the 618, "these large promotions will be faced more rationally."
Some employees said that in the second half of last year, after financial calculations, some channels had begun to make profits. If it can continue, can Dynamism 28 turn a profit in the near future?
"The channel is fully profitable." On June 18, Li Jianfei stressed to reporters.
A document obtained by the reporter on June 12 for the "Hubei Vitality Group 2023 Special Transitional Period Marketing Policy" shows that it contains policies such as products, fees and distribution, and the solution of dealer arrears. The reporter learned that Li Jianfei is still negotiating with dealers to restart the plan. In addition, the Jingzhou State-owned Assets Supervision and Administration Commission has set up a special working group to lead all parties in the hope of solving the problem.
The reporter of "Daily Economic News" noted that the official flagship stores of the vitality 28 of several major e-commerce platforms have not yet been put on the shelves. However, on June 18, the reporter opened the Jingdong APP to search and found that a number of products have been re-launched in the Vitality 28 Jingdong self-operated flagship store.
Attachment: Li Jianfei replied in writing to the reporter of "Daily Economic News"
NBD: Sorting out the company's actions in the past two years, the acquisition of Xi'an Kaimi Company, which has debts of 1.5 billion yuan, and the establishment of Shanghai Kaimi Technology Co., Ltd., what were the starting points and considerations for these decisions? The former is seen as a big cause of problems with Vitality 28, but now in your opinion, this is the wrong decision?
Li Jianfei: The acquisition of Kaimi brand is a collective decision-making process of the company, from the perspective of the company's long-term development, (require) the combination of brand and high end, providing different value products for different consumer groups, Kaimi is one of the earliest and currently best green formula tableware fruit and vegetable washing products in China.
At present, the company mainly makes a series of adjustment plans for the current channel structure and consumer market changes, eliminating waste in the operation process, improving efficiency, and also to better survive the cycle and make the brand and the company better, more benign and longer-term development.
NBD: I saw that the company's WeChat Channels account was recently updated in March this year, when the main body of the office R&D building in Jingzhou Industrial Park was completed. When did the company start having problems? What happened to the company in the 3 months that WeChat Channels was not updated?
Li Jianfei: The company will continue to attach importance to R&D and supply chain building, in order to better and faster development, after the company's shareholders' meeting decided, we have made some adjustments to the investment mode and mode of fixed assets, which has been strongly supported by the Jingzhou Municipal Government and Development Zone, I believe that soon you will see positive progress.
NBD: How is the company doing right now? How many employees are there? How is payroll going? What about the latest financial data, revenue, sales and profit? How much debt does the company have? How much money does the company have on its books?
Li Jianfei: The company will pay more attention to its own cost structure and operational efficiency, last year Vitality 28 was the fastest growing brand in China's washing industry in liquid, powder and fine, and the company will consider how to maintain its current market share while continuing to achieve healthy growth. (Higher operational efficiency, more reasonable operating costs, more durable operating model)
NBD: How are you going to solve the current problem? What is being done in both external funding and internal blood supply?
Li Jianfei: We will actively increase the proportion of benign business, improve the company's net cash flow business, for some long cycle and large waste of business we will resolutely divest, we will also focus more on our core business in the washing field.
NBD: What have you been mostly up to lately, and what is your daily work schedule?
Li Jianfei: Enterprise transformation and upgrading, mainly to deal with the organization, supply chain, channel end of the comprehensive optimization and re-construction work, I believe that everyone will soon see our positive changes, faster, more efficient, closer to the market.
NBD: Is the company preparing for 618?
Li Jianfei: We will face these large-scale promotional activities more rationally, make good use of the traffic during these activities, and achieve a win-win situation of sales increase, consumer satisfaction, and brand exposure, rather than simply pursuing brand sales and platform ranking during the promotion period.
NBD: Are there any other additions?
Li Jianfei: Thank you for your attention to the vitality 28 brand and company, the development of a brand and company will definitely go through many problems and stages, at each stage we will face different problems, I hope you give more support and patience to Chinese consumer brands, the company will also actively face problems and crises, assume their corporate responsibility and social responsibility.
(The names of employees in this article are pseudonyms)
Daily economic news