"China's silicon king" Luo Liguo suffered a wealth waterloo

Produced by Radar Finance and Economics, edited by Mo Enmeng, Deep Sea

With the single-handedly built Hesheng Silicon Industry, the 68-year-old Luo Liguo has successfully ascended to the throne of the richest man in Ningbo (his place of residence is Ningbo) in the "2024 Hurun Global Rich List".

According to the "2024 Hurun Global Rich List", Luo Liguo ranks 442nd on the list with a wealth of 48 billion yuan. Although Luo Liguo is the most prominent among the billionaires who live in Ningbo, his wealth has shrunk by 52 billion yuan compared to his peak in 2022, and his ranking has also fallen 322 places.

Now the behind-the-scenes hero who helped Luo Liguo realize the myth of wealth is mainly the Hesheng silicon industry he built in 2005, but in fact, the first pot of gold that Luo Liguo started his business came from the straw hat business, and in the process of many years of entrepreneurship, Luo Liguo also entered the real estate industry to pan for gold. Today, Luo Liguo has completed the transformation from the "Straw Hat King" to the "Chinese Silicon King".

However, Hesheng Silicon, which is helmed by Luo Liguo, is facing certain pressure on its current performance. According to the financial report released by Hesheng Silicon, in the first three quarters of last year, Hesheng Silicon's revenue increased by 8.81% year-on-year to 19.89 billion yuan, but the growth rate slowed down compared with the same period in 2021 and 2022, and the net profit index of Hesheng Silicon Industry decreased by 52.03% in the first three quarters of last year after a decrease of 37.39% in 2022.

At the same time, Hesheng Silicon Industry has also undergone certain tests in the capital market. According to Flush iFinD, in the past two years, the share price of Hesheng Silicon has fallen by 45.71%. During this period, the market value of Hesheng Silicon evaporated by 47.4 billion yuan. When the performance and stock price were not very optimistic, Hesheng Silicon Industry was also involved in a whistleblower turmoil in November last year.

At that time, Fang Hongcheng's wife, who had served as the general manager of the company, used a real-name report letter to target Luo Liguo, the helmsman of Hesheng Silicon Industry, and pointed out that he had coerced the Jiaxing Municipal Government of Zhejiang Province to interfere in the judiciary and put Fang Hongcheng in prison on the grounds of relocating the listed company. With the reports and responses of both sides, the contradictions in this dispute continue to escalate.

Ningbo billionaire Luo Liguo, whose wealth has shrunk by 52 billion in two years

Although many wealthy people have made it clear that they do not want their wealth to be included in the rich list, this does not prevent the "Hurun Global Rich List" released by the Hurun Research Institute every year from becoming the focus of attention from the outside world.

Not long ago, the Hurun Research Institute released the latest "2024 Hurun Global Rich List". In this year's list, four of the top 10 richest entrepreneurs in China are from Zhejiang: Zhong Xuxu of Nongfu Spring, Huang Zheng of Pinduoduo, Ding Lei of NetEase and Li Shufu of Geely Group.

As one of the regional representatives of Zhejiang businessmen, 46 Ningbo billionaires are listed on the "2024 Hurun Global Rich List" this year, of which 22 are living in Ningbo. With a large number of local billionaires, Ningbo continues to rank among the top 30 cities in the world where top entrepreneurs live, and even more on the list than Dubai.

Among all the richest people on the list this year whose headquarters are in Ningbo or who are from Ningbo, Ding Lei, the leader of NetEase, topped the list with a wealth of 210 billion yuan. However, since NetEase is headquartered in Hangzhou, Ding Lei's permanent residence is also marked as Hangzhou.

In terms of place of residence, 68-year-old Luo Liguo ranks first among the richest people living in Ningbo. This year, Luo Liguo ranked 442nd on the list with a wealth of 48 billion yuan, leaving behind rich people such as Tuopu Wu Jianshu, Shenzhou Knitting Ma Jianrong, Bull Ruan Liping, Ruan Xueping Brothers, and Fangtai Kitchenware Mao Lixiang, who also live in Ningbo.

However, compared with a year ago, Luo Liguo's wealth has actually declined year-on-year. In 2023, Luo Liguo's wealth will reach 75 billion yuan, ranking 187th. In contrast, Luo Liguo's wealth shrank by 27 billion yuan in one year, and his ranking fell 255 places.

Radar Finance and Economics found that in fact, as early as last year, Luo Liguo had embarked on a downhill path of shrinking wealth. Back in 2022, thanks to the outbreak of the semiconductor and photovoltaic industries, Luo Liguo ranked 120th on the "Hurun Global Rich List" with a wealth of 100 billion yuan, and his ranking jumped 648 places compared with the previous year.

But in 2023, Luo Liguo's wealth will shrink by 25 billion yuan, and his ranking will also drop 68 places. Compared with the highlight moments in 2022, Luo Liguo's wealth has shrunk by 52 billion yuan this year, a drop of more than half, and his ranking has fallen by 322.

In fact, the reason why Luo Liguo's wealth can rank among the richest people in Ningbo is mainly related to the Hesheng silicon industry he founded. According to the financial report released by Hesheng Silicon Industry, as of the end of the third quarter of last year, Ningbo Hesheng Group Co., Ltd., Luo Yi, Luo Yedong and Luo Liguo held 547 million shares, 192 million shares, 179 million shares and 10.5588 million shares of the company respectively, and the corresponding shareholding ratios were 46.24%, 16.28%, 15.18% and 0.89% respectively.

Among them, Ningbo Hesheng Group Co., Ltd. is under the actual control of Luo Liguo, Luo Yi and Luo Yedong are Luo Liguo's daughter and son respectively, and Luo Liguo, Luo Yi and Luo Yedong are all shareholders of Ningbo Hesheng Group Co., Ltd., so Ningbo Hesheng Group Co., Ltd., Luo Liguo, Luo Yi and Luo Yedong are persons acting in concert.

From the perspective of the company's management structure, Halcyon Silicon has a strong family color. According to the data of Oriental Wealth, Luo Liguo himself currently holds the position of chairman of Hesheng Silicon Industry, Luo Liguo's son Luo Yedong is the general manager of Hesheng Silicon Industry, and Luo Liguo's daughter Luo Yi is the vice chairman of the company.

Since Luo Liguo's wealth mainly comes from Halcyon Silicon, his wealth has shrunk sharply in the past two years, which is also inseparable from the unsatisfactory performance of Halcyon Silicon in the capital market. According to Flush iFinD, the share price of Hesheng Silicon has fallen by 45.71% in the past two years, and its market value has evaporated by about 47.4 billion yuan.

From "Straw Hat King" to "Chinese Silicon King"

Luo Liguo, born in 1956, is a township entrepreneur from Ningbo, Zhejiang. In Cixi Changhe Town, where Luo Liguo grew up, there is a saying - "There are no idle girls on the ten-mile long street, and every family has a hat braider". And Luo Liguo's first pot of gold came from the straw hat business.

In 1989, Luo Liguo resigned from the enviable "iron rice bowl" job of the state-owned enterprise and went to the sea to establish Cixi Shenyi Arts and Crafts Factory, whose main business was to weave straw hats. With a seemingly inconspicuous straw hat, Luo Liguo gradually realized the fun of panning for gold in the commercial sea. In 1993, Luo Liguo and Hong Kong Yuzu Co., Ltd. co-founded Ningbo Hesheng Arts and Crafts Co., Ltd., and two years later established Ningbo Hesheng Hat Industry.

As the business grows bigger and bigger, Luo Liguo's straw hats are not only sold in China, but also exported to the United States, Japan and Britain and other countries. When the business was at its peak, Luo Liguo's daily sales of straw hats could reach tens of thousands, and the annual export earned tens of millions of dollars, so Luo Liguo was also given the title of "Straw Hat King" by the outside world.

At the end of the 90s of the last century, China launched the reform of the housing system. At that time, Luo Liguo, who had a keen sense of smell, decided to enter the real estate industry. By leveraging well-known real estate companies such as Greentown, Luo Liguo cooperated in the development of Qili Xiangxi Villa Park, Jimei Shore Blue Mountain High-end Apartment, Qiandao Lake Beverly Resort, Hangzhou Binjiang Entertainment and other projects around the millennium.

In addition to the aforementioned industry, Luo Liguo also has a strong interest in silicon materials. In November 2000, Luo Liguo established Ningbo Luoning Silicone Manufacturing Co., Ltd. (now renamed Ningbo Gezhi Plastic Products Co., Ltd.), which is mainly engaged in silicone rubber products.

Five years later, Hesheng Silicon Industry was officially established, and Luo Liguo opened the road of development of silicon-based new materials. Under the leadership of Luo Liguo, the scale of Hesheng Silicon Industry has continued to grow. In 2017, Halcyon Silicon was successfully listed on the main board of the Shanghai Stock Exchange, and Halcyon Silicon, which landed on the A-share market, has opened a new chapter of development since then.

Radar Finance learned from the official website of Hesheng Silicon Industry that Hesheng Silicon Industry focuses on silicon-based new materials and photovoltaic new energy as its main core business, and continues to carry out industrial extension and technology expansion, and its products are widely used in aerospace and military industry, electronic communications, medical health, automobile manufacturing and other fields.

After about 20 years of development, Hesheng Silicon has now become the world's most complete silicon-based company with the whole industry chain, and is also the only high-tech enterprise in the industry with the production capacity of industrial silicon, organic silicon, polysilicon, photovoltaic modules and so on. Relying on the synergistic advantages of the whole industry chain and scale, the industrial silicon and organic silicon production capacity of Hesheng Silicon Industry is the first in the world, and it is the main drafting unit of a number of national and industry standards.

However, in the leading position in the industry, Hesheng Silicon Industry, the latest financial answer sheet is hardly outstanding. According to the financial report previously released by Hesheng Silicon Industry, in the first three quarters of last year, the company recorded a total revenue of 19.89 billion yuan, an increase of 8.81% compared with the revenue of 18.28 billion yuan in the same period last year. However, during the reporting period, the revenue growth rate of 8.81% of Hesheng Silicon Industry was not as fast as the growth rate of 123.34% and 29.09% in the first three quarters of 2021 and 2022.

At the same time as the company's revenue growth slowed down, the net profit index of Hesheng Silicon also declined. According to the financial report, in the third quarter of last year, the net profit attributable to shareholders of listed companies in Hesheng Silicon Industry was 2.185 billion yuan, a decrease of 52.03% compared with the previous year.

Radar Finance further combed and found that in fact, as early as 2022, the net profit indicators of Hesheng Silicon Industry have shown signs of decline. In that year, the net profit attributable to shareholders of listed companies was 5.148 billion yuan, a decrease of 37.39% compared with the net profit scale of 8.222 billion yuan in the previous year. Compared with the growth rate of net profit attributable to the parent company of 485.52% in 2021, it forms a strong contrast.

At the performance briefing held in November last year, Hesheng Silicon explained the company's performance in the first three quarters of last year. During the reporting period, the year-on-year increase in the company's revenue was mainly due to the increase in the number of product sales, and the year-on-year decline in net profit attributable to shareholders of listed companies was mainly due to the decline in product sales prices.

According to the main operating data announcement released by Hesheng Silicon Industry, in the third quarter of last year, the company's main products, including industrial silicon, 110 raw rubber, 107 rubber, compound rubber, cyclic siloxane, and fumed silica, have declined to varying degrees from the perspective of both quarter-on-quarter and year-on-year.

was reported by the wife of a former executive with his real name, and Luo Liguo was accused of "unloading the mill and killing the donkey"

When the company's performance was at a low point, Hesheng Silicon was also involved in a whistleblower incident in the second half of last year. The parties involved in this issue of the whistleblower are Luo Liguo, the chairman of Hesheng Silicon, and Fang Hongcheng, the former general manager of the company.

On November 12 of that year, a report letter entitled "Real-name Report on Zhejiang Billionaire Luo Liguo: Using the Relocation of Listed Enterprises to Threaten City Leaders to Interfere in the Justice and Frame Zhongliang" opened the prelude to this whistleblowing storm. The writer of this whistleblower letter is Sun Lichen, the wife of Fang Hongcheng, the former general manager of Hesheng Silicon.

In this whistleblower letter, Sun Lichen pointed the finger at Luo Liguo, saying that Fang Hongcheng had worked hard to serve Hesheng Silicon for ten years, and helped Hesheng Silicon successfully go public in October 2017. In December 2018, after Fang Hongcheng resigned from Hesheng Silicon, Luo Liguo betrayed his promise and refused to pay the company's equity that had been signed before the listing and gave Fang Hongcheng the equity of the company that he was entitled to.

After Fang Hongcheng sued to defend his rights through a civil lawsuit, Luo Liguo also threatened the local party Hongcheng to retaliate on the grounds of moving the company out of Jiaxing, resulting in Fang Hongcheng and his younger brother Fang Hongxing being detained until now.

After the release of the report letter from Fang Hongcheng's family, it immediately attracted the attention of the Shanghai Stock Exchange, which issued a regulatory work letter to Hesheng Silicon on the next day, involving listed companies, directors, supervisors, senior managers, controlling shareholders and actual controllers.

On the same day, Hesheng Silicon Industry also issued an announcement to clarify the company's planned change of residence, the situation related to "hydrolyzed oil", and the equity dispute between the company's chairman Luo Liguo and the former general manager Fang Hongcheng.

According to Hesheng Silicon, the company's registered address is located in Jiaxing City, Zhejiang Province, and the Jiaxing production base is mainly based on chemical production facilities with limited office conditions. With the increasing expansion of the company's production and operation scale, the original office space can no longer meet the company's management needs. To this end, the company purchased the "Hengyuan Plaza-Block A" building in Cixi City, Zhejiang Province as the management headquarters, and moved the office address to Cixi City, Zhejiang Province.

In order to unify the office address and registered address, the company held a board meeting to change the company's address to Cixi City, which still needs to be submitted to the company's general meeting of shareholders for deliberation. Subsequently, in order to maintain the relevant qualification registration, the company terminated the execution of the change of company domicile and cancelled the general meeting of shareholders to consider the matter.

As for the equity dispute between Luo Liguo and Fang Hongcheng, Hesheng Silicon explained in the announcement that in order to encourage Fang Hongcheng to serve the company for a long time, Luo Liguo agreed with him that after satisfying the conditions of full-time and diligent service to the company for five years, not harming the interests of the company, and not competing with the company's peers, Fang Hongcheng will not enjoy any rights and interests. The two parties formally signed an equity transfer agreement, but Fang Hongcheng did not actually pay the consideration, and the relevant equity was not transferred.

Afterwards, Fang Hongcheng resigned from the company less than two years ago, and the company found that he was suspected of breach of trust and harmed the interests of the listed company and reported it to the public security organ. Therefore, Luo Liguo believes that Fang Hongcheng does not meet the reward conditions. The parties disagreed on this, and Fang Hongcheng filed an arbitration application with the Hangzhou Arbitration Commission in April 2021.

In February 2022, the Hangzhou Arbitration Commission issued an award not supporting Fang Hongcheng's request to confirm the ownership of the shares, and ruling to terminate the agreement between the two parties because Fang Hongcheng's breach of contract could not achieve the purpose of the contract, and to award Fang Hongcheng 40% of the equity according to the actual service time: requiring Luo Liguo to pay Fang Hongcheng after deducting tax for reducing his holdings of the company's shares in a centralized bidding transaction, and compensating Fang Hongcheng with the corresponding amount if he did not reduce his holdings.

However, Hesheng Silicon said that the above-mentioned award is currently in the enforcement stage, and Luo Liguo has applied to the court for non-enforcement of the arbitral award, and the court is still under review.

Regarding the case of Fang Hongcheng's suspected crime of accepting bribes and embezzlement by non-state employees, Hesheng Silicon also said that in November 2022, the company learned from the public security organ that Fang Hongcheng had been investigated by the public security organ and transferred to the procuratorate for review and prosecution due to suspected embezzlement, and the criminal acts involved occurred during his tenure in the company.

Hesheng Silicon said that the company recently received a notice from the Pinghu Municipal People's Court that Fang Hongcheng's case of suspected bribery and embezzlement by non-state employees will be tried in the Pinghu Municipal People's Court on November 13, 2023.

After the clarification announcement of Hesheng Silicon Industry was released, Sun Lichen once again issued a response saying that after Luo Liguo lost the equity lawsuit one after another, he issued an announcement on May 28, 2022, announcing matters such as "changing the company's domicile". On June 8, 2022, Hesheng Silicon issued another announcement to cancel the shareholders' meeting on "change of company domicile" scheduled for June 13. On June 13, Fang Hongcheng was summoned and detained, and on June 14, he was illegally placed under "residential surveillance".

Sun Lichen believes that for such a major event as the relocation of the company's residence, it has undergone changes in just 11 days because "Luo Liguo's goal of coercing the city leaders to arrest Fang Hongcheng through the announcement of relocation has been achieved." ”

Radar Finance noticed that in December last year, January this year, and March this year, the official account named "Fang Hongcheng's family of the unjust case" successively published a number of articles about the dispute between Hesheng Silicon Industry and Chairman Luo Liguo and Fang Hongcheng.

Although the dispute between Fang Hongcheng and Luo Liguo is still inconclusive, looking back on Luo Liguo's entrepreneurial history, there have been many people who have parted ways with Luo Liguo. According to the Science and Technology Innovation Board Daily, Cao Huajun, who joined the company in 2010 and served as the deputy director of the R&D center when the company went public, as well as Zhao Xiaohui, Luo Li, Liu Kai and many other employees who have left Hesheng Silicon, all filed a lawsuit to seek equity and won the case in the first instance.

What will be the final outcome of the dispute drama between the company's top leaders and former executives of Hesheng Silicon Industry?