In just over two months, it will be the 10th anniversary of the collapse of Prince Milk's listing dream. Before preparing to go public, Prince Milk, which was founded for more than ten years, was in a brilliant moment of great prospects, and its chairman Li Tuchun made a bold statement to be a "millennium enterprise". Today, 10 years later, 977 years before the "millennium dream", Prince Milk has "fully interpreted" the ups and downs from nothing to overnight fame, from an annual income of 5 million to shouting "3 years to earn 100 billion", and quickly returned to the ordinary, and finally returned to the ups and downs of the third and fourth-tier cities to guard an acre and three points.
In these 23 years of spring and autumn, how did Prince Milk lose the honor of "China's Lactic Acid Bacteria Beverage Leader", and how did it lose Zhuzhou?
1
It used to be a business that was born at the right time. In 1996, Li Tuchun borrowed 100,000 yuan to sell wall calendars, and the business failed. Faced with a bank urging repayment, he was unwilling and left his hometown of Hunan to come to Shenzhen to seek the opportunity to make a comeback. It was also a coincidence that here he met Sheng Yanling, a scholar who held the Japanese lactic acid bacteria technology. At that time, Li Tuchun did not know what "lactic acid bacteria" and "fermented milk" were, but he understood sheng Yanling's subtext - this thing is available in foreign countries, but China does not have it!
Li Tuchun immediately agreed with Sheng Yanling to cooperate in building a factory, Li Tuchun contributed money, and Sheng Yanling Technology invested in shares. This agreement is of great significance to both: Li Tuchun carries a large bank loan, honestly works without knowing what year and month to repay, he wants to gamble, "barefoot is not afraid to wear shoes." At that time, the domestic lactic acid bacteria market was blank, but the attitude of large enterprises was conservative, and It was difficult to promote and monetize the technology of Sheng Yanling, so he wanted to cooperate with an entrepreneur who dared to fight and dare to break through.
So Li Tuchun returned to his hometown of Hunan, found the bank that borrowed money to start a business, threw out a feasibility report of lactic acid bacteria drinks, and directly told the other party, "Either continue to invest money to support my development, or wait until I have money later." "The bank was in a dilemma, looking at the feasibility report, and had to continue to invest. In this way, Li Tuchun used a loan from "threats" to build a prince milk factory in Zhuzhou, Hunan.
The factory was built, but there was no money to promote it. How do you sell your product? At first, Taizi Milk was just a local enterprise in Zhuzhou, Hunan Province, with new products and light reputation, and bank loans were only enough to build simple factories, and there was no money for advertising. Although he had no money, Li Tuchun still took a dangerous step: let Prince Milk become the advertising king of CCTV. After making up his mind, Li Tuchun entrusted people to get the admission ticket of the CCTV bidding. In 1998, Prince Milk became the standard king of CCTV with a high price of 88.88 million yuan. At that time, the annual sales of Prince Milk were only more than 5 million yuan.
Although Li Tuchun was arrogant when bidding, he knew very well that Prince Milk was just a start-up, with an annual output of only 1,000 tons, and he could not afford to pay the money anyway. So, from the very beginning, he started the idea of the Zhuzhou municipal government. After winning the bid, Li Tuchun returned to Zhuzhou and tied the municipal government to his ship with the role of prince milk as the driving role of the standard king on the local economy. At the same time, he also quickly recruited dealers in the name of "CCTV Biaowang", promising that as long as the payment is made in advance, the more goods are returned, the more refunds will be made, and the goods that cannot be sold will be refunded unconditionally. In this way, prince milk is supported by the local government and a large number of dealers, relying on CCTV advertising to a larger stage, and the slogan of "pre-dinner and post-dinner prince milk, replenishing lactic acid bacteria every day" has been remembered by countless TV viewers.
It was the golden age of the television industry, CCTV advertising had unprecedented exposure, the people gradually had a lot of money, the prince's milk became famous overnight, and the orders from the south and the north of the sky followed. In order to reduce the effort of personally doing promotion, Prince Milk follows the routine of "crowdfunding on CCTV", and encourages dealers to open sales channels with high rebates, as long as they pay the price, how dealers sell goods, Prince Milk does not care.
The "sharp taste" is still the same, and the "sunrise" is no more
With this seemingly labor-saving and efficient method, in the first few years, Prince Milk achieved a doubling of sales year after year, from the initial more than 5 million yuan, all the way to 2 billion yuan in 2008, and also developed more than 2,000 dealers covering more than 250 large and small cities across the country. Li Tuchun was satisfied with this and specially wrote an article saying that he wanted to be a "millennium enterprise".
Due to the good expectations of the market, from 2002 to 2004, Prince Milk expanded vigorously, first using a large number of operating funds to enclose the land, and then mortgaged to the bank to obtain loans, and then used the loan to continue to enclose the land, and built five major production bases in Zhuzhou, Hunan, Miyun, Beijing, Huanggang, Hubei, Kunshan, Jiangsu and Chengdu, Sichuan. In fact, at this time, only the production base in Chengdu can meet the national sales demand of Prince Milk.
In addition to the main "Sunrise Brand" fermented lactic acid bacteria beverage, Prince Milk has also expanded across industries, involved in children's clothing, cosmetics, tourism and leisure, catering, retail, media and other fields. On the occasion of the 10th anniversary of its establishment in 2006, Prince Milk has received a large basket of honors, including Well-known Trademarks in China, National Inspection-free Products, and High-tech Products of the National Torch Program... These honors held Prince Milk high, and when China's lactic acid bacteria beverage market soared at a rate of more than 40% per year, Prince Milk held the top position in sales with a market share of up to 76.2%. According to the 2005 CCTV Golden Bid King Authoritative Agency evaluation, the brand value of Prince Milk is as high as billions of yuan.
There is no doubt that such honors and achievements make everyone believe that Prince Milk is a promising enterprise, and its ten-year unchanged taste and packaging have become a symbol of lactic acid bacteria beverages.
2
Some people say, "Playing chess is to take one step and think about ten steps, and Prince Milk wants to take ten steps in one step." "Due to the burden of too many hard assets, when all peers are paying attention to "light assets, high turnover", Prince Milk step by step, putting all the pressure on the operating cash flow of "Sunrise Card" Prince Milk.
Overseas investment banks and private equity funds have heard the news, among which AB, Morgan Stanley and Goldman Sachs are the most active, taking turns to say that they want to invest in Prince Milk and help it become a truly national and even international company. In their eyes, the European and American lactic acid bacteria milk market has occupied 80% of the milk beverages, the Chinese market still has a lot of room for development, Prince Milk is the first enterprise in China's lactic acid bacteria beverage market, good packaging and listing, cash out will get doubled profits.
It looks like it's a win-win good thing. For AB, Morgan Stanley and Goldman Sachs, the Chinese market is alive and well, able to support such a high-quality company to quickly double its performance and meet their profit needs. For Prince Milk, the capital chain is too tight, and the investment of the three major investment banks can alleviate this pressure.
After 2 months of negotiations, prince milk's private equity cooperation was quickly finalized. After another 2 months, the $73 million promised by the three major investment banks has all arrived. Just when Prince Milk was happily spending money, Li Tuchun signed a cooperation agreement with the three major investment banks: the private equity fund jointly held 354 million shares of Prince Milk preferred shares, the company's founder held 779 million shares of Prince Milk's common stock, and the private equity fund had the right to convert the preferred shares held by it into common stock in the future in a 1:1 ratio, and the conversion ratio would be adjusted according to the actual profits of Prince Milk. At the same time, Prince Milk promised the three major investment banks a net profit annual growth rate of 50%, if the net profit growth is less than 50%, it will issue more preferred shares and increase the shareholding ratio of the three major investment banks; if the net profit growth is higher than 50%, it will issue additional common shares to the original shareholders, diluting the shareholding ratio of the three major investment banks. In addition, Prince Milk must be listed within 3 years.
Such a betting agreement, when the profits of the prince milk doubled for several consecutive years, were just a small bet between the two sides. However, no one expected that the prince's milk would become the biggest loser in this gamble.
Before deciding to go public, there was a big debate within Prince Milk. The debate is whether to list in Shanghai, Hong Kong or New York. At that time, many people in Prince Milk believed that listing in Shanghai and Hong Kong was the most secure, and the three major investment banks were more supportive of Prince Milk's listing in Hong Kong. However, after Li Tuchun learned in 2006 that Wuxi Suntech had become the first private enterprise in China to be listed on the New York Stock Exchange, he firmly believed that it must become the first share of a Chinese FMCG company listed on the New York Stock Exchange.
However, becoming this first stock is not so simple. After the bankruptcy of Enron in 2001, the United States introduced the Sarbanes-Oxley Act, which strictly reviewed the financial statements of listed companies, and if they cheated, both the CEO and CFO of the company would face at least 10 years in prison and a fine of up to $500. The internal personnel of Prince Milk were worried about this, but Li Tuchun was not worried. The reason why he was not worried was largely because the CEO of the New York Stock Exchange personally called and encouraged Prince Milk to go public in New York, expressing confidence that Prince Milk would never have any problems.
In this way, under the operation of the three major investment banks, Prince Milk has transformed from "Hunan Prince Milk Group" to a subsidiary of "China Prince Milk (Cayman) Holdings Co., Ltd.", eager to try and prepare for listing.
3
By 2007, no one expected that dairy raw materials would rise so fast this year, and the price of raw materials would nearly double in just a few months. Prince Milk has never worked channel marketing for many years, completely relying on dealers to solve themselves, both unable to control the high cost, but also have to accept high rebates, bribe dealers to help shop goods, one after another, Prince Milk's capital chain is tighter and tighter, and the net profit attributable to the 'parent company' fell sharply that year.
The disaster is not alone, and before the prince milk can solve the problem of cost and high rebates, 2008 came. First of all, the "Sanlu Incident" broke out, and the domestic dairy giants were exposed to contain melamine, even if the quality inspection of Prince Milk was fully up to standard, sales would inevitably be affected.
The financial crisis ensued, after Li Tuchun lent 500 million yuan in his personal name at low interest rate and unsecured, which became an important part of making up for Citibank's losses and bad debts, so Citibank was determined to recover the loan in advance. But where is the money at this time? According to section 404 of the Sarbanes-Oxley Act, $4.6 million is needed for the first year alone, and the final financing cost is more than 10% of the financing amount. The decline in net profit in the previous year made Taizi Milk reluctant to give up becoming the "first stock listed on the New York Stock Exchange of Chinese FMCG enterprises" and listed in Hong Kong instead, but due diligence had problems again, so it had to be restructured in the middle of the way, and 3 of the 7 subsidiaries that had been transferred overseas were reorganized and listed first. After several twists and turns, in order to go public according to the agreement, Prince Milk first raised funds from dealers and employees, promised high profit returns, and then asked for help from the three major investment banks to inject capital, even so, Prince Milk still failed to really go public.
In this case, Citibank, which does not have money, will certainly not give the prince's milk the opportunity to delay. In March 2009, Citibank formally applied to the Cayman Grand Court for bankruptcy liquidation of Prince Milk. A month later, the court ruled that Prince Milk was bankrupt, "China Prince Milk (Cayman) Holdings Limited" was over, and Prince Milk's dream of overseas listing was finally shattered.
Prince Milk Group Headquarters
However, at that time, the prince's milk did not have time to dream again. At the end of 2008, the three major investment banks that were also tight on funds asked Prince Milk to perform the contract in advance, and Prince Milk naturally did not meet the requirements of the agreement. The three major investment banks falsely promised to inject capital, and wanted 61.6% of the equity in Li Tuchun's hands, becoming the actual controlling party of Prince Milk, with the intention of seeking to cash out the takeover man. However, they did not expect that the prince milk in the hands of Li Tuchun has become a "fund-raising machine", the funds obtained from thousands of dealers and tens of thousands of employees have been used to make up for the loss of prince milk, and the three major investment banks have not taken over the prince milk, but "prince Lei". Investment banks are naturally reluctant to invest any more money to appease dealers and employees, so thousands of local Prince Milk employees in Zhuzhou marched and blocked roads and bridges in order to chase down the funds and wages.
After ten years, the Zhuzhou Municipal Government once again came to the aid. In January 2009, the Zhuzhou Municipal Government not only injected 100 million yuan, but also tailored the "Gaoke Dairy" for Prince Milk, and returned 61.6% of the equity of Prince Milk from the three major investment banks to Li Tuchun, and mortgaged it to Gaoke Dairy to exercise the rights on its behalf. At this time, the actual manager of Prince Milk has changed from Li Tuchun to Wen Dibo, who is the chairman of Gaoke Dairy and also serves in the Zhuzhou Municipal Party Committee.
It seems that this is the story of a government that kindly hosts a business and helps it get out of the predicament. However, the dilemma of Prince Milk is far more than the "VAM agreement" with investment banks, after a year of attempts by Gaoke Dairy, the performance of Prince Milk has not risen but declined, forming a strange pattern of total assets of 2.6 billion yuan and liabilities of up to 2.54 billion yuan. Also this year, the friction between Gaoke Dairy and the founder team of Prince Milk is increasing, the former is a step-by-step management thinking, believing that insolvency should be liquidated, and the latter attempts to use distributors to produce self-help, believing that Prince Milk is not yet in bankruptcy. Not accustomed to each other, the founder team of Prince Milk left Beijing to set up "Xianshan Dairy" alone, and Li Tuchun expressed his support for the latter.
A good end of a prince milk, in this year even normal production can not be guaranteed, let alone market share. The domestic lactic acid bacteria market that Prince Milk has already played out has quickly been seized by large enterprises such as Yili, Mengniu, and Guangming, with sales plummeting and debt remaining high. After weighing the weight, Gaoke Dairy decided to apply for bankruptcy liquidation for Prince Milk, protect the interests of local employees, and strive to reduce losses, li Tuchun, like everyone in the founder's team, resolutely opposed.
At this time, Li Tuchun was arrested for "illegally absorbing deposits from the public", and by the time he was found not guilty in 2012, Prince Milk had already gone bankrupt and was jointly acquired by Xinhualian and Sanyuan. It is worth mentioning that the actual management of Gaoke Dairy, who advocated the bankruptcy of Prince Milk at that time, was shuanggui in 2011 for the "Prince Milk Case" and was sentenced to 9 years in prison.
After becoming a subsidiary of Sanyuan Holdings, Prince Milk changed the high profile of Li Tuchun's tenure, no longer invested in large advertising and marketing expenses, nor promised high rebates and returns, shut down a large number of factories around the world, guarded the remaining sales points, and gradually shrank into a regional small brand.
The data shows that since 2011, Prince Milk has only applied for a patent in 2016 called a lactic acid bacteria drink that can be chewed and eaten and its preparation method, but the actual product is almost not in the market. The "CCTV Biaowang" who spent thousands of dollars in that year now has a negative net profit attributable to the parent company every year, and in 2013, it also set a record of net profit of -92.67 million yuan, which is regarded by the outside world as a "big burden that cannot be shaken off" by the outside world.
4
In the fifth year after the bankruptcy of Prince Milk, Li Tuchun once said that "all the time is used to feed tens of thousands of workers in the enterprise, indirectly feeding millions of salesmen of Prince Milk across the country", but from the beginning of the factory, Prince Milk is not just a role of the enterprise. In Li Tuchun's eyes, Prince Milk is the most successful work of his many ventures, and it is also an experimental field for him to practice his "independent economist" ideas. With the help of this FMCG company, he not only successfully solved all the previous bank debts, but also used the title of chairman of the "CCTV Biaowang" company to make his name.
In the expansion process of the five major bases of Prince Milk, in addition to meeting the production capacity, it is more the embodiment of Li Tuchun's personal hobbies - the wide square, lined with buildings imitating Tiananmen Square and the White House, which are completely different from the factories in ordinary people's impressions. In addition, Li Tuchun's establishment is completely a "Lee's enterprise", the younger brother is the vice president of the group, the ex-wife manages the tourism business, the current wife is responsible for cosmetics, children's clothing and advertising business, the son is the default heir, and the brothers who have followed him several times to start a business are also in important positions. In the fastest growing decade of Prince Milk, a management structure similar to the "division of princes" existed for a long time. Prince Milk has not introduced management talents with high academic qualifications such as masters and doctors, but she has always been left out in the cold because of factional struggles within the group.
If Prince Milk had never wanted to go public, then this primitive family business management might have been upgraded and not failed so quickly. However, at that time, due to the sustained and rapid growth of China's economy, foreign investment banks rushed to China and encouraged companies to go public. After the investment bank representatives said several times that they would become the loyal partners of Prince Milk and do their best to grow together with Prince Milk in the future, Li Tuchun was moved, and Prince Milk had to walk into the whirlpool of listing.
In fact, the role played by the three major investment banks in the matter of prince milk is only bait, luring prince milk to go public, detonating the thunder laid by the expansion of high debt in advance, seeing that the momentum is not right, and immediately choosing to abandon prince milk under the fundamental principle of timely stop loss.
When Prince Milk's scenery is unlimited and Citibank's wealth is huge, 500 million yuan is just the icing on the cake, a loan that Li Tuchun can pull with only personal connections. But when Citibank was also in turmoil in the financial crisis, this kind of human sentiment dispersed, and in the blink of an eye, the prince's milk was sued in court, which also triggered a joint squeeze of the domestic bank on the prince's milk.
Gaoke Dairy, a state-owned enterprise that was supposed to be born to save the prince's milk, became a private enterprise that joined two unknown private enterprises under the management of Wen Dibo. While shouting that the prince's milk was insolvent, Wen Dibo declared a debt of 188 million yuan to the prince's milk administrator, which completely pushed the prince's milk into the abyss of bankruptcy. In the end, the three yuan took over, spending several years on paying off debts, and the trend of princely milk was gone. Ren Sanyuan has repeatedly expressed great hope in the financial report, but the comeback of the prince's milk is almost impossible.
It is undeniable that the prince's milk was born at the right time. At the beginning of the new century, China's dairy market pattern is changing dramatically, the consumption of ordinary liquid milk is gradually declining, and the consumption of processed milk drinks has risen sharply, but this is also the era of the most testing managers, a lot of hot money influx, how to slow down, from playing Jiangshan thinking to guarding Jiangshan thinking, is more difficult than the original 'dare to gamble, leave no back road'.
To this day, Li Tuchun can still be flaunted as the formulator of the national industry standard for lactic acid bacteria, and is currently the pioneer of the hundreds of billions of yuan of lactic acid bacteria market in China every year, but Taizi Milk, which was once the most vigorous lactic acid bacteria milk enterprise, has declined. In this entrepreneurial gamble, the investment bank is just a follower, Wen Dibo is just a gold miner, Li Tuchun ended his entrepreneurial experiment and heroic dream, turned around and went to dietary health care. The prince's milk is the saddest loser.
(Editor-in-charge: Zhang Qianrong)