Introduction: After receiving the "feedback" from the dealer, Yuanqi Forest launched an internal interview investigation and obtained written confessions and repentance from 8 of the people involved. With the continuous deepening of the work of the "public procuratorate and law", more details of the "anti-corruption" case of Yuanqi Forest have also surfaced.
On February 5, 2024, while the public across the country is busy putting the finishing touches on the work before the Spring Festival, the well-known beverage company Yuanqi Forest (Beijing) Food Technology Group Co., Ltd. (hereinafter referred to as "Yuanqi Forest") is busy "anti-corruption". It is understood that Yuanqi Forest issued an internal announcement on the same day, saying that Xie Danyang, the former head of the key customer department of the marketing center, was suspected of setting up affiliated dealers through relatives and friends during his tenure, seriously damaging the interests of dealers, and using his position to facilitate the embezzlement of the company's property. His actions are suspected of major corruption and other economic crimes, and he has been criminally detained and arrested by the judicial authorities.
To kick off the "prelude to the new year" of the enterprise with anti-corruption, Yuanqi Forest had it last year.
Ye, the former head of the Yuanqi Forest Marketing Center, was prosecuted on suspicion of huge fraud
On January 19, 2023, Yuanqi Forest reported internally that Ye Licheng, the head of the national marketing center, was suspected of major corruption and other economic crimes and had been criminally detained by the police. Yuanqi Forest decided to expel Ye Licheng and will fully cooperate with the follow-up work of the police. It is reported that 14 sales managers at all levels, including Ye Licheng, have been investigated by the Guancheng Branch of the Zhengzhou Municipal Public Security Bureau (hereinafter referred to as "Guancheng Public Security"), and many of them have been taken criminal coercive measures.
After the case entered the procuratorate for review and prosecution, the 14 sales managers were divided into two cases, and were prosecuted by the People's Procuratorate of Guancheng Hui District of Zhengzhou City (hereinafter referred to as the "Guancheng Procuratorate") to the People's Court of Guancheng Hui District of Zhengzhou City (hereinafter referred to as the "Guancheng Court") on suspicion of fraud. According to relevant reports, the indictment said that Ye had committed crimes such as "charging commission fees at an additional price and defrauding dealers to transfer money to his designated private account", which is "a particularly huge amount of fraud." Ye's defender raised jurisdictional objections on the grounds of the defendant's household registration and the "place where the crime occurred", arguing that the Guancheng Court had no jurisdiction over the two cases.
In this regard, the Guancheng prosecutor believes that the two cases are cross-regional cases and are related, and the dealers suspected of being deceived operate in Guancheng District and transfer money locally, and Zhengzhou Guancheng District is also an authorized business area of Yuanqi Forest, and according to relevant judicial interpretations, the place where the crime occurred can be used as the place of jurisdiction.
The report also mentioned that the case had a pre-trial conference on October 26, 2023. In January 2024, the Guancheng Court held a three-day trial of Ye and others in the first instance, and then adjourned the trial, and as of April 25, 2024, there has been no further trial. On the other hand, the defenders of Ye and other defendants claimed that there was no "additional mark-up fee" as prosecuted by the prosecution, and that their behavior was not fraud, but a normal business behavior, that is, the distributor issued sales commissions to the sales team members of the brand manufacturer according to the sales performance, which was considered to be a common "market co-construction" model in the FMCG industry.
The gray area of the "market co-construction" model is exploited, and the management demands are the red line of the industry
At present, many companies in the FMCG industry are adopting the model of "market co-construction". It is understood that some dealers are unable to be equipped with full-time sales personnel because of their small scale, so they adopt the model of co-construction with the brand, that is, the front-line sales staff of the brand side help the dealers complete the sales target, and the brand side independently confirms the standard and gives it distribution, aiming to jointly develop the market, improve terminal sales, and enhance brand influence. Looking back on the history of cooperation between Yuanqi Forest and dealers and other partners, it can be found that it has undergone two stages of upgrading and iteration, namely: the "full profit" period around 2018 and the "co-construction industry generation" period around 2023.
Some dealers revealed that around 2018, for every box of Yuanqi Forest sparkling water sold, dealers could earn a profit of 17 yuan, and terminal store owners could earn 27.5 yuan. "This [that] profit is very profitable," the dealer said. At this stage, Yuanqi Forest relied on full concessions and worked closely with dealers to quickly bring sparkling water to the market, and then occupied the market opportunity.
But behind the rapid progress, it is often easy to expose problems. In 2022, the voices about "there is a problem with the offline channels of Yuanqi Forest" are becoming increasingly noisy. Some dealers began to complain and reflect in different ways, all expressing their pressure. "It was a special time because we (dealers) generally had a lot of inventory. Moreover, in 2022, Yuanqi Forest will still have its own business model, and all business personnel will be directly recruited by manufacturers. It was only changed in 2023. A regional dealer said in an interview, "Later, we did it together ("market co-construction" model), and the Yuanqi Forest business was directly recruited by the manufacturer, and the full-time sales of our dealers were recruited by ourselves." Let's take the pressure off our shoulders. ”
A senior practitioner in the FMCG industry said that although there is a certain consensus on "market co-construction" in the industry, the traditional offline sales channels of beverages are relatively scattered, and there are all kinds of supermarkets and husband-and-wife stores, which involve a variety of different fees or subsidies such as entry fees, display fees, and promotional fees, which can easily breed corruption and gray areas. For example, managers provide private accounts in the name of collecting commissions and product prices for front-line salespeople, which is a violation of the law.
So, how do you tell the difference between the two?
"Joint construction" is not necessarily a "win-win situation"? I am afraid that it will become a hotbed for corruption
According to an external source close to Yuanqi Forest, Yuanqi Forest has long had a clear requirement (the "Dealer Hierarchy System" issued in August 2021) that enterprise managers are not allowed to directly sell products for dealers, and their responsibilities are more to manage front-line business representatives, manage and review dealer market expenses, develop dealers to facilitate cooperation, and promote dealers to purchase Yuanqi Forest's products. The co-construction sales personnel and front-line business representatives in the sales system belong to the dealers to manage the business work, and the dealers formulate their own commission standards and then issue them. This kind of commission is familiar to many front-line sales employees, and it belongs to the incentive policy of merit and reward.
In this regard, a regional dealer also confirmed, "Generally, we send commissions directly to the sales staff, although there (Yuanqi Forest) will discuss with us, but it is still arranged by ourselves, you say an event promotion, sell more and sell less, we must know first, and they (sales) will also see who is the boss (who gives money), and listen to whom." ”
It can be seen that the management personnel of Yuanqi Forest can only "co-build and cooperate" with dealers, and do not have the pricing power of "sales commission", and cannot increase prices at will. According to public information, Ye joined Yuanqi Forest in November 2019 as the sales head of the Southwest Region, and was promoted to the head of the national marketing center in November 2021. The remaining 13 people involved in the case are also "managers" at the sales level.
Relevant reports also pointed out that the indictment of the Guancheng prosecutor mentioned that Ye Licheng and other defendants were suspected of concealing from the company, defrauding dealers of money in the name of product price increases, and requiring dealers to remit the money to private accounts. A regional dealer suspected of being deceived said: "I was still thinking at the beginning, why did I suddenly have to pay more, and what did I say about the maintenance fee of the outlet, the commission fee of the salesman, and the fee of this and that." Later, I asked (dealers) in other regions to find out that I had been deceived. How can this be? Even before I even started selling, the cost was already a cut higher than others!" The dealer said, "I will go to the public security bureau to report the case, and now the case has been accepted and filed."
The report also pointed out that Ye and others had put forward defense opinions, pointing out that Yuanqi Forest had issued the "Southwest Dealer Sales Commission Management System". According to a former employee of Yuanqi Forest, there is no such system in the company's system database over the years. According to the system management measures of Yuanqi Forest, the system should be released by the company's publicity platform, and no organization or individual has the right to release the system to the outside world, and the system must go through four stages: drafting/revising, soliciting opinions, publicizing, and approving the system, and finally be released by the human resources and other functional management departments.
The anti-corruption campaign continues, and eight "letters of repentance" from those involved in the case have been harvested
It is reported that in mid-2022, external dealers and partners will actively report the situation to Yuanqi Forest while reporting the case to the public security. This has also led to the continuous establishment of an iterative anti-corruption system for enterprises and a series of internal interviews and surveys.
According to public information, Yuanqi Forest has successively issued relevant rules and regulations such as the "Yuanqi Forest High Voltage Line", "Reward System for Reporting Corruption and Malfeasance", and "Regulations on the Management of Accepting Gifts", and expanded the intensity of inspections and audits at the beginning of 2022 to audit the work of employees during and after leaving the company. A year later, Ye Licheng and others were exposed on suspicion of major corruption and other economic crimes. Two years later, Xie Danyang's suspected major corruption and other economic crimes were also exposed. It can be seen that the "anti-corruption" campaign has achieved remarkable results.
"It was emphasized many times during meetings and trainings. There have been people who have been fired for this (collecting money from dealers in the name of price increases and collecting commissions for the industry, reporter's note). The outsider, close to the Yuanqi Forest, revealed. Yuanqi Forest's employee handbook has strict requirements, not in any name, any means to charge any fees to dealers, let alone change the price without authorization, Ye Licheng himself as the head of national sales, also because of the subordinate management personnel to charge commissions to make a decision to fire him. "I didn't expect Ye Licheng to have an accident because of this. During that time, a lot of internal interviews and investigations were carried out, and many problems were identified."
According to relevant sources, Yuanqi Forest Enterprise has conducted interviews and investigations with several management personnel such as Cai and Wu among the people involved, and 8 of them admitted their mistakes, took the initiative to tell the truth, and wrote a letter of repentance. "It is worth mentioning that in the name of price increases, industry agents and other commissions, the use of private accounts to collect dealer payments and other issues occurred in Henan, Sichuan and Chongqing and other provinces, these areas are Ye and Zhang were in charge of the area, and Zhang was personally promoted and appointed by Ye," the person revealed, "This also makes it very difficult for us to complain." ”
"At that time, [they] all wrote a letter of repentance and (admitted) violating the company's system. Ye's direct subordinates were provincial manager Cai, provincial and district manager Jin, and city manager Hu actively returned stolen goods (partial). The person revealed that the 8 people clearly expressed their recognition of the mistake and seriousness of the problem in the letter of repentance, and repented that they were not at the beginning, and jointly identified that they were instructed by Ye Licheng, and emphasized that more than 50% of the money collected was handed over to Ye.
So far, the case is still in the trial stage and no verdict has been pronounced.
Enterprises have a long way to go in the fight against corruption, and they must not only exercise self-discipline but also discipline themselves
Anti-corruption in private enterprises has always been a key area of focus for corporate management and legal circles. In particular, the FMCG industry has experienced decades of rapid expansion, embezzlement, corruption and other chaos have abounded, causing FMCG giants to have a "headache" In March 2020, Cai Xiaogang, the former director of the logistics department of Nongfu Spring, was sentenced to eight months in prison on suspicion of taking advantage of his position to accept bribes of 115,000 yuan from suppliers; In August 2020, JDB issued an anti-corruption announcement, at least four executives were suspected of offering and accepting bribes, and offered a reward of 5 million yuan to encourage insiders to make real-name reports; In December 2020, Mead Johnson was exposed to be a senior executive who had been corrupt for at least 4 years, and the amount involved was as high as about 33 million yuan...
In this regard, FMCG companies have also raised "anti-corrosion alarms", built "anti-corrosion walls", and strengthened anti-corruption efforts through measures such as setting up audit and inspection centers, compliance and process of bidding and procurement, and opening reporting channels. Among them, the "anti-corruption start to the year" action has been launched for two consecutive years in Yuanqi Forest, which is particularly eye-catching for the industry.
On July 14, 2023, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Promoting the Development and Growth of the Private Economy", which clearly pointed out that the legal guarantee for the development of the private economy should be strengthened, among which, "build an institutional mechanism for preventing and controlling corruption at the source of private enterprises." Judicial interpretations have been issued to increase the degree of punishment for corrupt acts such as embezzlement, misappropriation of funds, and bribery by the staff of private enterprises in accordance with the law. Complete mechanisms for the recovery and disposal of assets involved in the case".
So, how should the anti-corruption of private enterprises be carried out? The legal scholars have given corresponding suggestions.
Private enterprises should actively realize the combination of "self-discipline" and "other discipline" through compliance construction. In terms of "self-discipline": enterprises should continue to issue relevant institutional documents to establish rules and regulations to provide a basis for enterprise corruption governance, and in practice, based on the division of responsibilities and different business scenarios, corresponding codes of conduct can be formulated for internal supervision, auditing, risk control and other departments. In terms of "other laws", enterprises should cooperate internally and externally, such as actively cooperating with partners in the entire business ecosystem, and convey the concept of integrity and strengthen collaborative governance by signing integrity pledges and visiting partners.
Source: China.com Food