Ruixing’s internal strife: Lu Zhengyao doesn’t want to let go?

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Author: Chai Jiayin
Within one day, Ruixing’s “inner fight drama” was staged one after another.
On January 6, 2021, a netizen disclosed on the social platform that seven vice presidents, general managers of all branches and core business directors of Ruixing signed a joint letter accusing Guo Jinyi of corruption, abuse of power to eradicate dissidents and low ability, and collectively demanded the removal of Guo Jinyi, the current director general.
Later, Guo Jingyi issued a letter to all the staff, saying that the letter was drafted by Lu Zhengyao, Qian Zhiya and other organizations on January 3, 2021, and some of the staff members were coerced into signing because they did not know the truth.
On the evening of January 6, 2021, for Guo Jinyi’s internal letter, Zhou Bin and Li Jun, vice presidents of Ruixing, issued a reply saying that almost all the middle and high-level business backbones signed the request letter to remove Guo Jinyi. However, the board of directors and major shareholders did not give any positive response and did not take any action.
After a year, Ruixing’s internal turmoil has gradually subsided with the implementation of relevant punishment policies. However, the internal storm will undoubtedly push this volatile enterprise to the top of the storm again.
Fight for power?
On January 6, 2021, a joint letter on the social platform pointed out that “due to the incompetence of Guo Jinyi, the current chairman and CEO, the company has come to the brink of survival.”.
As for the final appeal, the joint letter said, “in order to safeguard the interests of employees, consumers and investors, we solemnly request the board of directors and major shareholders to remove Guo Jinyi’s position as chairman and CEO immediately, and appoint a new company management as soon as possible.”
At the end of the joint letter, there are 24 signatures and fingerprints, including 7 vice presidents and directors, as well as the general managers of each branch.
Subsequently, Guo Jinyi quickly issued a letter to all members.
Guo Jinyi said in the letter that he had immediately requested the board of directors to set up an investigation team and would fully cooperate with the investigation.
“Since I took office, I have a clear conscience of what I have done, and I also ask the board of directors to investigate the organizer and motivation of this report.” He also revealed that “the company is now operating stably and its income is improving, which some people who cheat and get out absolutely don’t want to see.”
Guo Jinyi said, malicious poaching, constant rumors, trying to destroy the company, troublemaker team, please have a correct understanding of all lucky people, the company will continue to strengthen product quality, adhere to quality standards, and to the outside world announced our supplier list, let the majority of consumers rest assured.
In addition, corporate governance and reform must be resolutely promoted and thoroughly separated from the old forces. “The company is now operating stably and its income is getting better. It is something people who cheat and get out of the business never want to see.”
Soon, the contradiction began to ferment again.
On the evening of January 6, 2021, Zhou Bin and Li Jun successively issued statements to counterattack, saying that instead of introspecting, Guo Jinyi tried his best to sophistry and confuse the public in front of all the staff.
Zhou Bin said, “slander us for not knowing the truth, slander us for Ruixing, destroy the company, and even ask the board of directors to investigate us! What’s more ridiculous is that he still throws the pot to Lu Zonghe and Qian Zong? ”
According to public information, after the exposure of lucky financial fraud, Guo Jinyi, then a director and senior vice president of lucky, was appointed as the acting CEO in May 2020. Two months later, in July 2020, he was officially appointed as the chairman and CEO of lucky.
Previously, Guo Jinyi served as assistant to the chairman of the board of directors of Shenzhou Youche company from 2016 to 2017, senior vice president in charge of products and supply chain in Ruixing since October 2017, and director of Ruixing since June 2018.
In November, more than 60% of the stores were profitable, and Ruixing’s combat effectiveness remained unchanged?
In December 2020, the joint liquidators of lucky submitted their first report (hereinafter referred to as the report) to the Grand Court of the Cayman Islands, which disclosed the latest financial information of lucky without audit.
From the data point of view, lucky will maintain growth in the first three quarters of 2020, but the growth rate will slow down. As of November 30, 2020, the number of lucky stores has decreased to 3898, with revenue of 565 million yuan, 980 million yuan and 1145 million yuan in the first three quarters respectively.
Moreover, the report shows that more than 60% of Ruixing’s 3898 self operated stores have made profits in November 2020.
After reviewing the business plan, lucky joint liquidators are satisfied that the company’s revised expansion plan is realizable and reasonable, so they expect that the profitability of the store level will continue to improve.
At that time, “lucky has been gradually on the right track” was heard all over the world.
In terms of increasing the number of self operated stores and net revenue per month in 2020, Rui reported that “the company’s main trend is to increase the number of effective products and net revenue per month from now to November 2020”.
Under the epidemic situation, in May 2020, Ruixing once said that it planned to close nearly one-fifth of the stores in Beijing to correct the early overlapping location errors and stop the loss of existing loss making stores.
However, “open shop” is still the main topic of lucky in 2020.
According to the report, in the first three quarters of 2020, the number of new stores opened by lucky was 69, 134 and 133 respectively. Ruixing hopes to expand the number of Direct stores to 4800 to 6900 by 2023.
It is worth noting that in the past year, while lucky company has maintained its operation, a series of punishment measures caused by its fraud have been implemented one by one.
On October 12, 2020, the State Administration of Market Supervision announced that Ruixing (China) Co., Ltd. and Ruixing (Beijing) would be imposed an administrative penalty of RMB 2 million.
On December 16, 2020, the U.S. Securities and Exchange Commission said that in response to the fraud charges, lucky agreed to pay 180 million US dollars (about 1.175 billion yuan) to reach a settlement.
From April 2019 to January 2020, lucky forged more than $300 million in sales through fraudulent transactions with related parties, according to the sec. In the settlement, lucky neither admitted nor denied the accusations made by US regulators.

At that time, lucky official microblog issued a statement saying that the company and the securities and Exchange Commission (SEC) have reached a settlement on the suspected financial fraud of some former employees. At present, the company and stores are operating stably and normally.