Why did China’s “King of Refrigerators” fall?

Selling houses, land and equipment, China’s “King of Refrigerators” failed to escape the fourth calamity and collapsed!

“Due to the pressure of the capital chain, the company will cease production activities.”

In November 2017, a reorganization statement issued by the board of directors of Xinfei Electrical Appliances heralded that Xinfei Electrical Appliances will The third production suspension crisis has arrived, and it is urgent to apply for legal protection...

Previously, Xinfei also encountered production suspension crises in 2012 and 2013, but with the government's intervention and help Next, survive two calamities.

In February 2018, Xinfei once announced the resumption of work. Some media revealed that Hong Leong Asia, a shareholder from Singapore, had extended a helping hand and planned to inject 1 billion to 2 billion yuan into Xinfei Electric. Yuan will be used for the transformation of existing production lines, product research and development, marketing and promotion, etc.

Unfortunately, the good times did not last long. Hong Leong Asia issued an announcement two months later to clearly announce its divestment from Xinfei Company.

In June 2018, I saw Xinfei Electric’s bankruptcy auction information listed in Ali Judicial Auction. This also means that Xinfei, one of the "Four Golden Flowers" in my country's refrigerator industry, is facing its fourth crisis. Xinfei, a home appliance brand that was once very prosperous, defeated Samsung and Siemens, far better than Haier and Gree, and was once known as China's "King of Refrigerators", has collapsed.

And this time, will anyone save it?

Xinfei Company's bidding starts at 450 million

According to the Alibaba auction platform, all Xinfei brands - Xinfei Electrical Appliances, Xinfei Home Appliances, and Xinfei Refrigeration Appliances (hereinafter collectively (called Xinfei Company) will be held at a public auction on the Taobao judicial auction network platform of Xinxiang Intermediate People’s Court, Henan Province from 10:00 on June 28 to 10:00 on June 29, 2018 (excluding delays). The starting price is 450 million yuan.

At the same time, some land, real estate and buildings under the name of Xinfei Electric will also be auctioned on July 5, with a starting price of 115 million yuan. According to the liquidation of relevant departments, the total assets of all low-value consumables (office supplies), houses, land, machinery and equipment, electronic equipment and molds under the name of Xinfei Electric are 565 million yuan.

Subsequently, I contacted relevant people from the Beijing King & Wood Mallesons Law Firm, the auction manager. The other party said that the (specific auction) time has not yet been opened, and now there is only platform (auction) information. We will see if the lawyer can reply later. related questions.

In the "Ruling on Approving the Reorganization Plan of Xinfei Company" (hereinafter referred to as "Ruling") related to the auction information, Xinfei stated that "due to the break in the capital chain, it was unable to pay off the due Debts, and the assets were insufficient to pay off all debts, Xinfei Company applied to Xinxiang Intermediate Court for reorganization on October 30, 2017."

On January 4, 2018, the Xinxiang Intermediate People’s Court ruled that Xinfei Company should be merged and reorganized. At the same time, Xinfei Company will reorganize investor recruitment as one of its next priorities.

On February 3, 2018, Xinxiang Intermediate People’s Court hosted the second meeting of the Xinfei Company’s Reorganization Investor Recruitment Review Meeting. All review committee members at the meeting unanimously agreed to confirm that Hong Leong Asia Co., Ltd. was officially restructured. Whole investors.

On the other hand, it can be found from the "Reorganization Plan (Draft) of Xinfei Electrical Appliances, Xinfei Home Appliances, and Xinfei Refrigerators" that Xinfei Company is currently insolvent. According to the report issued by the audit agency According to the "Audit Report", as of the audit base date, Xinfei's net assets were -1.129 billion yuan. A total of 840 creditors have been reviewed and confirmed by the Xinxiang Intermediate People's Court, with the amount of claims as high as 2.295 billion yuan.

A relevant person familiar with the matter said that at that time, nearly a thousand creditors should have participated in the meeting and voted online. The court had made relevant rulings (to prove legality and validity), and the auction process would only proceed after the ruling. .

The "Ruling" also shows that Xinfei Company has currently spent 158 ??million yuan to repay employees' wages, and there is no situation in which employees' wages or social insurance are owed. In addition, if Xinfei Company goes bankrupt, the most likely ordinary debt repayment ratio is only 1.51.

According to Global Network, regarding Xinfei’s equity auction, a registered lawyer from a law firm believes that Xinfei’s brand, factories, land, etc. are the most valuable parts. For new takers, they will pay more attention to Chongfei’s brand. From the perspective of Xinfei's long-term development, industrial capital is most likely to take over, such as large-scale enterprises of the same type. As strategic investors, this type of investor may give a relatively high price because they are interested in Xinfei's brand. price.

Why did it end up being auctioned

How did Xinfei reach such an embarrassing step? This has a lot to do with Hong Leong Asia.

The "Ruling and Reorganization Plan Approving the Reorganization Plan of Xinfei Company" stated that Hong Leong Asia was originally an investor in Xinfei's reorganization, but failed to fulfill its commitments after paying a deposit of 50 million. , it announced on the Singapore Stock Exchange on April 13 that it would divest from Xinfei.

The announcement stated that Xinfei has suffered continuous losses since 2011. With China’s overall overcapacity and intensified competition, Xinfei’s performance has further deteriorated in recent years. As a result, Xinfei's financial condition was adversely affected. In the past two years, Xinfei suffered after-tax net losses of 120 million Singapore dollars (approximately RMB 575 million) and 128 million Singapore dollars (approximately RMB 613 million) in 2016 and 2017 respectively.

Hong Leong Asia stated that due to the long-term losses of Xinfei, the divestment from Xinfei is expected to have a positive impact on the financial performance of Hong Leong Group.

As for the reasons for the withdrawal of reorganization investors, Zhou Bing, general manager of Sichuan Haocheng Enterprise Liquidation Affairs Co., Ltd., said that the withdrawal of reorganization investors generally results from two situations: First, the investors themselves The agreement cannot be implemented due to cash flow problems and funding problems; secondly, because the target has certain operating risks or there are changes in relevant preferential policies, investors will withdraw their investment even if they lose their deposits.

In addition, Zhou Bing also said that this reorganization plan is relatively rare. The method of finding new investors through auctions is considered uncertain in the industry, and this will also give creditors Earnings bring greater uncertainty. Under this uncertain reorganization plan, creditors were still able to pass resolutions, indicating that creditors expect Xinfei to return through reorganization. Generally speaking, for creditors, a reorganization plan will result in a higher compensation ratio than a bankruptcy liquidation proceeding. ?

Hong Leong Asia failed to fulfill its promise, causing Xinfei Company's resumed production process to stall again. In addition, Xinfei's asset condition continued to deteriorate due to previous expenses such as raw material procurement and ongoing operations for the resumption of production, and its working capital was on the verge of drying up. As a result, Xinfei Company failed to carry out annual sales activities during the peak marketing season for refrigerators, freezers and other products, resulting in a large loss of distribution channels, a serious shrinkage in market share, and a sharp decline in the value of Xinfei's trademark.

At the same time, long-term production suspensions also cause aging and damage to production equipment, further causing the depreciation of this type of fixed assets.

In addition, as of November 9, 2017, Xinfei Company still had 207 million in accounts receivable that had not been recovered. After auditing, the audit agency found that there were original vouchers for these receivable assets. The deficiencies are serious and the response rate for audit confirmation is zero. Furthermore, Xinfei was urged to collect evidence for claims worth more than 1 million yuan, but no more than 10 claims met the standards for filing a lawsuit, and there was a risk of losing the case due to insufficient evidence.

The fall of a generation of giants

The predecessor of Xinfei was a small local military enterprise founded in 1958 - Xinxiang Radio Equipment Factory. However, the company's financial situation was poor due to reasons such as a single product and aging equipment. Some old employees recalled that some offices were so poor that they couldn't even afford ballpoint pens, and the entire company was on the verge of collapse.

In 1983, Liu Bingyin, who took over as the director of this small factory, accidentally discovered that every household in the south began to buy refrigerators. In order to reverse the predicament, he chose white household appliances as the company's transformation choice.

In 1984, the Xinfei refrigerator project was officially approved by the Ministry of Light Industry; in 1985, the company introduced a modern refrigerator production line from Philips of the Netherlands; in 1986, Xinfei's refrigerator production line with an annual production capacity of 100,000 units was put into production , the "Xinxiang-Philips" brand refrigerator was officially put on sale, which is also the source of the Xinfei brand name.

In 1990, Liu Bingyin imitated Haier and smashed 400 substandard refrigerators in public. The "refrigerator smashing incident" enhanced customer confidence and improved Xinfeiren's quality awareness. In less than two years, the high-quality Xinfei refrigerator in 1992 became a national gift and was taken abroad by national leaders, becoming an international business card of China's home appliance manufacturing industry.

Soon, Xinfei Refrigerator ushered in rapid development. According to previous reports, after the refrigerator was put into production, some users even blocked the door of the factory and asked to buy it. In the end, even the refrigerator coupons used by Liu Bingyin to distribute welfare to employees were bought.

In 1996, the average monthly salary of people in Xinxiang City was only two to three hundred yuan, while the average salary of Xinfei Electric employees exceeded one thousand yuan. Some media reported that working in Xinfei at that time was an honor. Wearing Xinfei uniforms was more effective than suits and ties when finding a wife or going on a blind date.

Since 1996, Xinfei's production and sales of refrigerators have exceeded one million units for eight consecutive years, and all major economic indicators have ranked at the forefront of China's refrigerator industry; in 1997, Xinfei's brand value has reached 3.184 billion; In September 2002, Xinfei refrigerators and Xinfei freezers were recognized as "Chinese famous brand products", becoming one of the few home appliance companies in the country and the only one in the Central Plains to have two "Chinese famous brand products". In 2002, the total production and sales volume of Xinfei refrigerators jumped to the top two in China's refrigerator industry. Excluding export factors, the domestic market share alone was as high as 18.88% or more.

Some netizens said: "I don’t know anything else. I only know that the Xinfei large refrigerator that my grandma’s family retired a few years ago has been used for 20 years! I remember the eagle logo very clearly!"

Since 1994, Xinfei Refrigerator has become a pilot project of Henan Province’s strategy of “introducing foreign capital to graft and transform state-owned large and medium-sized enterprises”. With the help of the Xinxiang Municipal Government, Xinfei Refrigerator successfully introduced foreign investment. Among them, Xinfei Group Holdings, the largest shareholder representing the Xinxiang Municipal Government, holds 49 shares, Singapore's largest real estate and hotel investment developer Hong Leong Group holds 45 shares, and the remaining 6 shares are held by Singapore Yuxin Electric Co., Ltd. founded by the Henan Provincial Office in Singapore. . Since then, Xinfei Refrigerator has become a Sino-foreign joint venture, Xinfei Electrical Appliances. Later, a series of equity transfers were carried out. Singapore's Hong Leong Group achieved absolute control in Xinfei Electric, accounting for 90% of the equity. The Chinese side's management rights were completely lost, and "Xinfei" has since become a Singaporean brand.

In the few years since Hong Leong took over, Xinfei’s performance has declined sharply. It was found that from 2005, the market share of Xinfei refrigerators began to decline sharply. As of 2012, the market share of Xinfei refrigerators had dropped to 6. In the following four years, the market share of Xinfei refrigerators was even higher. It dropped to 3.2, and it has already been thrown out of the first and second tiers of the refrigerator industry.

Source: Phoenix News