The death of Royole

Interface News

2024-05-10 14:29Posted on the official account of Shanghai Jiemian News

Interface News Reporter | Lu Keyan Xu Shiqi

Interface News Editor | Wen Shuqi

The exquisitely designed Rouyu was once a landmark of Shenzhen Airport, just like Royole, a popular unicorn.

The 5-meter-tall tree, built by Royole Technology, integrates 500 flexible screens, each of which can realize human-computer interaction and display customized videos and images.

Roushu has been in Shenzhen Airport for four years, and the monthly maintenance fee is more than 100,000 yuan. Even when Royole was in high debt and owed tens of millions of yuan in wages, Royole did not give up burning money on this tree. It was not until November 2023 that Royole had almost no room for maneuver under the weight of debt, and Rouyu withdrew from Shenzhen Airport.

Rouyu is the epitome of Rouyu. Royole who appears in public has always been associated with some pretty words in the past.

Its founding team came from Tsinghua University and Stanford, and was called "China's best talent" by angel investor Xu Xiaoping; It is the world's first company to mass-produce flexible screens, and it claims to have more than 300 well-known corporate customers, "there is no shortage of industry giants such as LV, Airbus, and Apple"; It claims that its original "ultra-low temperature non-silicon process integration technology" can be compared to Samsung, but also lower cost and better results than the latter.

The exquisitely packaged Royole looks perfect, which makes it quickly become the darling of capital.

Founded in 2012, Royole received millions of yuan of investment from Shenzhen Capital Group, Pine Harvest Capital and other institutions in the angel round, and the amount of financing and valuation have skyrocketed since then. In 2020, it was valued at $6 billion, making it one of the fastest-growing unicorns in the world.

But 12 years later, Royole, which had been crazy about money, did not become a flexible screen giant as expected, but became the protagonist of bankruptcy news.

Photo: Xu Shiqi

On April 23, a hearing was held in the Shenzhen Intermediate People's Court for the bankruptcy review case of Royole Technology. According to a hearing document learned by Jiemian News, Royole Technology currently has a debt of more than 4.7 billion yuan, and the arrears of wages and salaries exceed 60 million yuan, plus the previously promised options, a total of 160 million yuan in arrears.

A number of former Royole employees told Jiemian News that Royole's biggest technological achievement is that it has achieved mass production of high-resolution OLED displays driven by IGZO (indium gallium zinc oxide, also known as metal oxide) technology route for the first time in the world.

This is advanced and unique in the global display industry, and it is also the most ideal technical direction for the OLED large generation line to do IT OLED screens in the near future.

This in itself is a promotion of IGZO's global industrial route, but it has been packaged by Liu Zihong (founder and CEO of Royole Technology) as a proprietary term for independent innovation "ultra-low temperature non-silicon process integration technology", and completely prohibits any technical employees from mentioning IGZO when they speak out.

In addition, a number of Royole resignations confirmed to Jiemian News that the cooperation between LV, Airbus, Apple, and CIIC Guardforce promoted by Royole to the outside world was not mass-produced and shipped for various reasons. Royole claims that "in short supply" of Royole mobile phones, the real sales are only tens of thousands of units, and the return rate is much higher than that of peers.

In the face of creditors, investors, the public, and even employees and executives, Liu Zihong chose to whitewash the truth.

Externally, Royole still claims that "business is running normally" after large-scale salary arrears. Internally, Royole hardly holds a real general meeting of shareholders and a board of directors, and only does the basic signing of various documents. When shareholders and directors asked to hold various communication meetings to communicate the core issues, Liu Zihong always replied that "product technology development is like boiling water, and you can't often open the lid of a pot". When asked about the company's situation at the company's internal management meeting, Liu Zihong's response was that "trade secrets should not be leaked".

Most employees were unclear about the company's situation when they found out that they were owed wages by Royole, and even some shareholders learned about Royole's true financial situation after the bankruptcy hearing.

Now, the verdict of Royole's bankruptcy hearing is about to be announced. More than 40 shareholders and more than 200 employees are waiting for the final ruling of the bankruptcy review. At the turn of fate, the company is about to take off the emperor's new clothes.

Technical truth

Royole founder Liu Zihong was born in an ordinary family in Fuzhou, Jiangxi Province, and just turned 41 years old this year.

He has a typical academic background: at the age of 17, he became the top student in the Fuzhou Science College Entrance Examination and won the first prize in the National Olympiad in Physics and Chemistry; After being admitted to Tsinghua University to study electronic engineering, he continued to stay in the university for research; He then went on to Stanford and received his Ph.D. in just three years – the average length of time to graduate from one of the world's top universities is five years or more.

Liu Zihong never thought about the possibility of entrepreneurship. According to investors who have contacted Liu Zihong, although he entered IBM's New York headquarters after graduation and engaged in work unrelated to flexible screens, he has also been seeking funds for entrepreneurship during this period.

In 2012, 29-year-old Liu Zihong co-founded Royole Technology with Tsinghua University and Stanford alumni Wei Peng, Yu Xiaojun and Fa Xiaofan Junchao. Before even the product demo was released, Royole had quickly obtained two rounds of tens of millions of financing from IDG, Shenzhen Venture Capital, and Songhe Capital.

In 2014, a demo of a 0.01 mm flexible screen was developed, showing a video showing a small, thin screen that was blown up and curled up to look like paper, but displayed a colorful pattern. This video quickly attracted the attention of many investors, and Royole also embarked on its own highlight moment. From 2015 to 2019, Royole raised funds at a rapid pace, and by the time of its last Series F financing, its valuation had reached 41.9 billion yuan.

Drafting: He Miao

The money came too fast. Surrounded by a halo, Liu Zihong began to preach his dream of a "flexible planet" everywhere. He said loudly at the time of recruitment: "You missed Huawei, you missed Tencent, you missed DJI, you can't miss Royole." "Employees from many well-known panel manufacturers come here, and Royole has as many as 2,000 employees at its peak.

But the outside world's doubts about Royole also followed. Liu Zihong's proud "ultra-low temperature non-silicon process integration technology (ULT-NSSP)" is considered by industry insiders to be "old wine in new bottles". A technical person in charge of a domestic head panel manufacturer once bluntly said to Jiemian News: "What do you think of Royole? , no one in this industry will look at Royole. ”

At that time, the main flexible screen technology was divided into two categories, one was LPTS, which was dominated by Samsung and selected by mainstream manufacturers, and the other was IGZO. IGZO technology originated in Japan, and Sharp became the world's first manufacturer to adopt IGZO on LCD panels and mass produce them in March 2012.

Royole also uses IGZO. In order to distinguish it from this already existing technology, Liu Zihong insisted on using his own name - "ultra-low temperature non-silicon process integration technology". When deciding on the pitch, everyone on the technical team expressed strong opposition to it: "To people in the industry, this word is not positive publicity. ”

Liu Zihong said that although LTPS technology has entered a mature stage, the physical characteristics of silicon determine that it has inherent shortcomings in flexible bending reliability and manufacturing cost. The material stacking technology, production equipment, device design, manufacturing process, and route design of the Royole solution are completely different from the former, which can simplify the production process and reduce investment costs and production costs to a greater extent under the premise of ensuring yield.

Indeed, Royole is not without its innovations. It is not difficult for IGZO to drive LCD LCD panels, and Royole uses it to drive OLED panels, creating the world's first oxide-driven RGB OLED mass production line, and released the world's first folding screen mobile phone in 2018 before Samsung, BOE and other panel manufacturers.

People close to Royole recall that these technologies were indeed recognized at the time, and other manufacturers also referred to some of Royole's ideas from suppliers when they first developed folding screen phones.

However, the panel is a typical asset-heavy industry, and an OLED production line often involves tens of billions of investments. Royole's display base has been under construction since 2016, with an investment of only 6 billion yuan in the first phase.

This production line is called a "6th generation line" by the company, but in fact it is a 5.5th generation line. The larger the number, the larger the size of the glass substrate, the more "economical cutting" can be achieved, so as to improve efficiency and reduce costs. Correspondingly, the high-generation line requires more investment. In comparison, BOE Ordos 5.5 generation line investment of 22 billion yuan.

Royole obviously can't invest in the high-generation line at one time, which makes its products have a great lack of economics and cannot compete with large manufacturers. But this has become Liu Zihong's propaganda rhetoric at the staff meeting: "We used less than 10 billion to do what Samsung BOE took tens of billions to do." In the future, we are the leaders, and BOE and Huaxing Optoelectronics will be chicken feathers. ”

The most important thing is that since the Royole production line was lit up in 2018, it has never considered making a non-folding straight screen. The practice of the panel industry is to achieve full production and full sales within 5 years after the production line is lit, and then reduce costs through scale advantages. Relevant sources said, "If a production line only does folding, but no other product shipments occupy full capacity, this will lead to hundreds of millions of R&D and depreciation expenses for folding product shipments." If there is no capacity utilization in the panel, there is no advantage to speak of. ”

But Liu Zihong obviously doesn't think so, he has repeatedly explained inside and outside the company that Royole is an innovative company like Tesla, and it must only do folding screens and not other vertical screen markets.

People who know Liu Zihong recall that Liu Zihong is worried that the production of non-folding screens will reduce the company's valuation, and the market will use Royole to compare production capacity and valuation with other panel manufacturers - in the face of valuation, production capacity and market demand, Liu Zihong has always chosen valuation without hesitation.

It is precisely because of the small scale of investment and the fact that the technical route has not been verified by the market, and the outside world has never stopped questioning the yield rate of Royole. OLED is recognized as a "fragile" screen, with a short lifespan, fragility and fragility, and a complex production process that is difficult to control. When Apple first started to adopt OLED panels, there was a situation where the product time to market was delayed due to the low yield of the panel.

(At a press conference in 2020, Royole introduced its technical advantages to the outside world.) Photo: Interface News reporter)

Liu Shuwei, an independent director of Royole, once wrote in the article "Save Royole" that at the end of 2021, the yield rate of Royole's production line assessed by professional institutions was as high as 81.6%. However, according to the former employees who participated in the assessment, due to the company's lack of money to buy some materials, the products in this assessment are all semi-finished products, and this figure is not the yield rate of the final finished product. Compared with the industry's current yield rate of nearly 90%, Royole is far behind.

However, the key to Royole's technological backwardness is not the yield. A number of former Royole technicians believe that when it was first put into production in 2018, the company did have a first-mover advantage in technology, but due to ignoring a key technology iteration, Royole's technical level has always stagnated: the company missed the high-mobility oxide node that has been reserved for mass production.

Electron mobility affects the overall performance and lifetime of display devices, in fact, Royole has been developing high mobility oxide technology since 2015. "If mass production of high-mobility oxides is realized, then Royole can straighten up and say that this is our own original."

Around 2019, the technical team proposed to Liu Zihong that the mass production and development of high-mobility oxides required an investment of more than 100 million yuan. But Liu Zihong believes that rather than investing another amount of money in improving technology, it is more important for the company to "survive", because the existing migration rate can already ensure mass production, and it is more important to create products that can be quickly commercialized.

This may be a major turning point in Royole's fortunes. Due to the neglect of technology iteration, Royole's IGZO solution has gradually lagged behind in performance and product specifications compared with the LTPS solution advocated by Samsung and the LTPO solution developed later, and it is also facing higher costs. By the end of 2023, Royole's own production costs will even far exceed the unit price that customers can accept.

LTPO is a combination of LTPS and IGZO, which has the characteristics of high electron mobility and achieves a balance between display and power consumption, and has been widely adopted by mainstream manufacturers, while IGZO solutions have rarely been mentioned. In the rapidly iterating panel industry, Royole has completely lost its competitiveness.

Wang Dongsheng, the former chairman of BOE, once proposed a law for the development of the panel industry: every 36 months, the price of standard display products fell by about 50%, and if it wants to survive, product performance and effective technology must be more than doubled. In other words, the industry needs to iterate and upgrade quickly, otherwise it will not survive.

Real and fake orders

During the company's development, Royole also indirectly ruined the future of the B-end (enterprise-side) business.

Royole previously announced that the company has more than 300 B-end large enterprise customers, and its products are sold to 20 countries and regions around the world, including overseas giants such as LV, Airbus, and Apple, and have already landed products.

However, a number of Royole people confirmed to Jiemian News that Royole only sent samples to the above-mentioned well-known customers, and has not entered the mass production process since then.

Drafting: He Miao

According to the prospectus released by Royole in 2020, Royole had a number of customers with a transaction volume of tens of millions in 2019. However, NetEase Qingliu Studio has reported that the transactions of many of its major customers are strange. A university teacher's company purchased 30 million products, but refused to respond to what kind of products were purchased from Royole and what they were used for; Some customers are suspected of being "one person playing two roles", which is not only a major customer of Royole Technology, but also its affiliates supply products to Royole America.

Former Royole salespeople told Jiemian News that there are indeed some customers in the prospectus who "haven't heard of", but Royole also has some real orders. For example, Shenzhen Boyi Media Co., Ltd., which is engaged in the advertising industry, purchased flexible screens for elevator advertising from Royole, with a transaction volume of more than 40 million yuan in 2019.

According to the prospectus, Hainan Story E-commerce Co., Ltd. is Royole's third largest customer in 2019, with a sales amount of 13.5 million yuan. According to the above-mentioned sales sources, the company has purchased tens of thousands of Rouji notebooks and mobile cinema Royole-X, but these products have not really been put into use, and its shareholder Hainan Qicheng Asset Management Co., Ltd. has been exposed to suspected online pyramid schemes.

Royole's best-selling product is electronic nameplates, with sales in the five-figure range. The price of a single electronic nameplate is two or three thousand yuan, but due to the limited sales volume, the contribution to the screen factory that continues to burn money is negligible.

Royole has always wanted to cut into the supply chain of large manufacturers, and has negotiated with Huawei, Xiaomi, OPPO, vivo, ZTE and other head mobile phone manufacturers very early, but because the flexible screen industry was not mature enough at that time, and Royole insisted on high quotations, these manufacturers did not consider Royole's plan in the end.

According to a former employee, a mobile phone brand once hoped to buy Royole's folding screen at a price of $150 a piece, but Liu Zihong offered $500, and the final price was not negotiated, and he also missed the opportunity window for large-scale volume.

"This could be a very valuable opportunity for Royole." The above-mentioned person commented: "In the case that no mobile phone manufacturer is willing to accept Royole, there is a company that is willing to endorse, and it stands to reason that there should be a very large space in price." But Liu Zihong insisted on refusing to give in, and even put forward a very arrogant price, which is not a strategic cooperation, but a strategic pitfall. ”

Royole, whose B-end customers are slow-moving, urgently needs a business that can be quickly commercialized, and customers also need Royole to come up with mass-produced terminal products to prove its technical capabilities, so Royole invested more resources in the C-end (individual consumer side) and decided to make its own mobile phone.

The cycle from project approval to mass production of a mobile phone is about 12-18 months, during which it has to go through many complex links such as concept review, product development, mass production review, reliability testing, small batch production, and mass production. People who have participated in the R&D and production of Royole told Jiemian News that Royole was eager to pursue sales at that time, and directly went to market after the completion of the mobile phone function test, skipping the small batch production link that can test the quality of the product.

Due to the excessive pursuit of speed to market, Royole's first-generation mobile phone, FlexPai, had a large number of product quality problems after its launch. A Royole person recalled that Royole FlexPai uses the third-generation Royole fully flexible screen, which is designed to be folded outward, and because the screen is exposed, many after-sales problems are that the outer screen is bumped, and problems occur one to two weeks after it is sold.

(Roupa FlexPai2 phone.) Source: Suning Tesco Mall)

Although the second-generation Roupai phone has improved, the return rate is also significantly higher than the industry. Liu Zihong also asked every Royole employee to purchase Royole mobile phones internally, and evaluated and ranked the total purchase volume of each department at the management meeting.

After learning the lessons of previous generations, Royole made a third-generation mobile phone plan, but it was too late. At that time, many manufacturers on the market had launched more mature mass-produced folding screen products on Samsung's LTPS solution, such as Huawei Mate X, Samsung Galaxy Fold, etc. Due to the missed major technological upgrade, the cost and price competitiveness of Royole mobile phones based on IGZO technology have been far inferior to those of their peers, and the Royole mobile phone project finally failed.

A number of Royole people interviewed believe that the root cause of the failure of Royole mobile phones is that they do not respect the objective laws of technology. "Although investors have also given some commercial pressure, they cannot but follow the basic logic of the industry. Decision-makers do not have industrialized thinking and experience, and any decision only asks for results, without considering the possibility of implementation. ”

Even under the premise that the first and second generations of mobile phones have overturned, Liu Zihong still insists on producing fragile folding screens, and refuses to launch a flip-up folding screen with higher market recognition, nor does he improve capacity utilization by producing straight screens, so as to reduce the BOM cost of folding screens.

Liu Zihong once set a sales volume of 200,000 units for the third generation of mobile phones, but the mobile phone team thought that this was an impossible number, and finally changed it to 100,000 units, and purchased a large number of chips from Qualcomm according to this plan. Later, due to the shortage of funds, the 3rd generation mobile phone was not available for mass production and sale. Today, all of these chips are being sold cheaply.

I can't get any money

Panels are a money-burning business. The investment of a production line includes various expenses such as equipment (depreciation), labor, materials, water and electricity, and Royole's monthly electricity bill is as high as more than 8 million yuan when the production line is fully operational. Because some equipment needs to be protected from damage under constant temperature and humidity conditions, even if production is stopped now, the monthly electricity cost for maintaining the equipment is as high as 3 million yuan.

When the business does not improve, the equipment will not stop running, and Royole is on the verge of breaking the capital chain several times. According to the prospectus submitted by Royole in 2020, the company's revenue in 2019 was only 227 million yuan, and the net loss was as high as 1.073 billion yuan.

According to insiders, the company's open source at that time was not effective, and there was already a lot of financial pressure, and it was also looking for financing in the market. However, due to the slow progress of commercialization and the high valuation, the financing did not go well.

An episode that occurred during this period also indirectly affected Royole's financing process. In 2019, Lin Bin, then president of Xiaomi, announced that Xiaomi had made "the world's first dual-folding screen mobile phone". Subsequently, Fan Junchao, vice president of Royole Technology, slammed Xiaomi on Weibo for hyping up the concept machine that could not be mass-produced, saying that "Xiaomi's executives are lying" and "the values of the entire company are problematic". Liu Zihong also quickly followed up on the matter, reposted Weibo and wrote, "If people don't offend me, I won't offend anyone." If anyone sins against me, he will be punished even if he is far away. ”

People close to Royole's management recalled that Royole had just released the second-generation Royole mobile phone at that time, and could have taken the opportunity to raise funds. However, many of the investors contacted at that time were in contact with Xiaomi, "This incident can be said to have greatly affected the investors' perception of Royole, and the negotiations were finally closed." ”

Royole, which failed to raise funds, could only seek other channels. In August 2019, Liu Zihong, Yu Xiaojun, Fan Junchao, Wei Peng, and other four members of the founding team of Royole invested a total of 2.16 million yuan into the company.

According to the prospectus, in November 2019, Royole completed the last F round of equity financing of 1.9 billion yuan. This is the Pre-IPO funds obtained by Royole Technology after it submitted the U.S. listing materials in 2019, and there are no other folding screen products on the market at this time. This injected new blood into Royole in a critical moment.

But this funding does not support Royole's long-term plans. At this time, investors expressed their expectations for listing, and Royole began to look for opportunities in the secondary market.

From 2019 to 2020, Royole successively sought IPOs on the NASDAQ and the Science and Technology Innovation Board, seeking to raise funds of US$1 billion and RMB14.4 billion respectively for projects such as the expansion of flexible display bases, but they all failed.

The official explanation given by Royole to employees is that the failure of the Nasdaq IPO was affected by the epidemic. However, a person close to Royole's management told Jiemian News that the epidemic is not the whole factor, and another factor is that the actual controller does not accept the market-oriented low-valuation issuance and listing.

Royole first hit the Nasdaq in 2019, when it was valued at $6 billion. In the process of communicating with the brokerage, the latter gave an estimated valuation of $3 billion. According to people familiar with the matter, the company did not hold a board of directors or shareholders' meeting to make decisions at that time, and Liu Zihong directly vetoed the proposal and blocked the news of the low-valuation issuance, blaming the poor listing on the epidemic, so the U.S. stock listing plan was stranded. Another company, Ping An Good Doctor, which hit the NASDAQ at the same time as Royole, chose to reduce its valuation and finally went public.

According to industry estimates, if Royole accepts a valuation of $3 billion, it only needs the founding team to compensate the E and F round investors with single-digit share points to get the listing opportunity. However, the actual controller chose the latter between the compensation of shares with listing funds and the shortage of cash. "Liu Zihong is afraid of share compensation." The person analyzed.

According to people familiar with the matter, Royole and its intermediaries have completed all the substantive preparations before listing, and if they relax their excessively high expectations for valuation, they will be able to successfully list the U.S. stock market. If the listing is successful, employee options will be cashed out, and funds will be invested in the development of technology and product upgrades, including the launch of the third generation of folding screen mobile phones, "There is no guarantee that it will be able to catch up with the industry's leading level, but at least you can give it a try." ”

(Royole International Flexible Display Base, source: Visual China)

After the failure of the U.S. stock listing, Royole changed its listing location to the Science and Technology Innovation Board, but received "the most problematic inquiries ever". Coupled with the quality of Royole's information disclosure and the three types of shareholder issues, relevant people speculated that the company could not deal with these problems before the capital was consumed. Royole eventually chose to withdraw its listing application, and the IPO also failed.

After the withdrawal from the Science and Technology Innovation Board, the Shenzhen Municipal Government hired a number of professional institutions to conduct on-site assessments of Royole's fully flexible screen projection production line to discuss the way out of Royole. A person close to Royole said that at that time, an investor had thrown an olive branch, but in the end Liu Zihong refused, believing that this was a robbery while the fire was fired, not a charcoal in the snow, "This is the most likely opportunity for Royole to get money in the later stage." ”

The above-mentioned person also revealed that the main reason for the many financing failures of Royole in the later period was that Liu Zihong was unwilling to dilute his shares and take the initiative to reduce his valuation. Even after withdrawing his application for listing on the Science and Technology Innovation Board, Liu Zihong still insisted on a high valuation and did not compromise on the conditions of many investors.

Soon, Royole fell into a lack of money again. As of April 2024, Royole has been in arrears for more than 17 months. When the employee inquired about Liu Zihong's specific situation, he only received a response that "the company's financing is advancing". A person close to Royole's management said that the so-called "investors" who are currently interested in Royole are almost all intermediaries, and "real investors will only turn around and leave when they see the current situation of Royole." ”

Smart man Liu Zihong

After multiple rounds of financing, Royole's shareholding structure has undergone several changes, but the largest shareholder has never changed. Tianyancha APP shows that Liu Zihong holds 38.6085% of the shares of Shenzhen Royole Technology Co., Ltd., which is the largest shareholder, and the second largest shareholder, CITIC Capital (Shenzhen) Asset Management Company, only holds 6.0491% of the shares.

Liu Zihong has the decision-making power in all matters. At the time of the collapse of the building, Liu Zihong's decision-making and style were also regarded by Royole employees as the core reason for the company's bankruptcy.

A person who left the company commented: "In Royole's decision-making system, others do not have any power to say NO, and everything is decided by Liu Zihong." ”

But in the eyes of some old Royole employees, Liu Zihong's decision-making style is not decisive, but full of hesitation. In addition to the misjudgment of technological upgrades and the mobile phone market, in 2014, Foxconn founder Terry Gou had intended to invest in Royole, but Liu Zihong thought that the price was too low and did not accept it, and the negotiations broke up unhappily. After that, Liu Zihong wanted to agree to this condition, but Foxconn did not reply, and instead acquired Sharp.

People close to Royole's top management mentioned that although Royole advocates "collective decision-making" internally, Royole's board of directors and shareholders' meetings are almost non-existent, and all decisions revolve around Liu Zihong.

A number of people close to Royole's management confirmed to Jiemian News that Royole's early team, including Yu Xiaojun, Wei Peng, Fan Junchao, Zou Xiang, Yuan Ze and others, had already been kicked out of the management by Liu Zihong, and Zhao Hong, the COO who was poached from Lenovo with a lot of money, also had disagreements with Liu Zihong and resigned because he was dissatisfied with Liu Zihong's undeliverable contract.

Liu Zihong Photo: Oriental IC

In fact, Liu Zihong is an absolutely smart person and a genius in speech and packaging. This is a common assessment of those who have dealt with him.

One story is that Royole and LV were initially approached by a Sino-French company promotion conference, and when it was Liu Zihong's turn to speak, the computer happened to break, Liu Zihong did not panic at all, and the off-script student spoke for 50 minutes, and finally got LV's executives to agree to cooperate in the production of samples. An investor also mentioned that even if there was a technical error in the PPT explained by Liu Zihong, he could give a mellow explanation without hurrying.

Many employees believe that Liu Zihong is good at creating concepts and knows the best way to promote them. In order to encourage a culture of overtime, Liu Zihong promoted a basic formula for physics within the company - W=PT. W stands for "total work", "P" refers to efficiency, and "T" refers to time. The longer the time, the more total merit and the greater the harvest. But due to the scarcity of business, the vast majority of employees "don't know what they're up to."

Employees who have visited Liu Zihong's chairman's office on the top floor of the company have vivid memories of the furnishings inside. This is a huge room of more than 300 square meters, with multiple functions such as office, barbecue, karaoke, wine tasting, and accommodation. In 2023, when the company was already very difficult, the purchasing department found that the company's expenditure table had an extra water heater expense, and finally found that Liu Zihong installed a water heater for his office.

After frequent setbacks in the company, employees found that Liu Zihong began to believe in feng shui. Many employees remember that Liu invited a feng shui master to visit Royole and knocked out the completed works to rebuild, such as the orientation of the gate of the complex and the height of the staircase steps, and placed ritual tools in the green belt of the headquarters display base. Even when the electricity bill is not paid, the fountain at the gate of Royole International Display Base has not stopped.

Employees who participated in the bankruptcy hearing recalled that when a large number of employees were forced to live in debt because of 17 months of unpaid wages, Liu Zihong did not apologize for the unpaid wages, but asked employees to thank the company for the high salaries, and said that the employees were "instigated" to ask for wages. He said at the hearing that the company was only experiencing temporary difficulties, and as long as there was money, it would solve the wage problem as soon as possible.

But Mr. Liu's claim was quickly denied. A number of employees told Jiemian News that employees went to the company many times to ask for salaries, but Liu Zihong chose to avoid them and slipped into the office building through the back door. The maternity allowance issued by the government to employees has also been used by the company for other purposes, and has not been distributed to employees.

"We knew the company didn't have the money, but we wanted an explanation other than a salary." Some employees who are owed wages say that apart from the lack of hopeless financing, Liu Zihong has never clarified his plans for the company. When will wages be paid, and if there is no money, whether there is a minimum plan, these employees' most concerned questions have never been answered.

At a time when Royole has completely lost its hematopoietic ability, bankruptcy reorganization has become a common demand of employees and investors. This is a system that may enable enterprises to be reborn by adjusting the rights and interests of creditors and investors, restoring the debtor's own hematopoietic function, or introducing external investors to transfuse blood to the debtor.

However, Liu Zihong himself refused to reorganize, and stressed at the hearing that the company is still operating normally and has good development prospects.

Only this time, Liu Zihong has lost everyone's trust.

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