Rekindle 2003

Chapter 164: Taking food from a tiger's mouth?

Scenes of farce and scandal that are contrary to common sense cannot conceal the profound reality that the 'TOP Empire' is falling.

"Born in despair, grown in dubiousness, and ended in madness",
This is a famous saying in the investment world, and it could not be more appropriate for TOP after its anniversary in 2002.

To Song Ruhua's surprise, a big pie he drew on a whim led to the collapse of TOP's entire empire.

In August 2002, when Song Ruhua and TOP were still immersed in the excitement brought about by the "8th Anniversary Celebration", a storm called "media storm" by TOP came quietly.

A series of blatant questioning reports pointed at TOP's nationwide recruitment of "5000 software engineers" carefully designed for the "[-]th anniversary celebration";

Misfortunes never come singly, just at this time another unexpected lawsuit broke out.

The first thing to bear the brunt is the foundation of the TOP system's survival - bank credit.

The shell company's external guarantee 9 years ago was completely thundered.

Song Ruhua was caught off guard by what happened nine years ago.

For Song Ruhua, the bank is just a money bag.

Enclose land in the name of "building a software park and exchanging investment for a market" to convert land resources into land capital, and then reassess this land capital and take it to the bank for "cash out". The energy is constantly obtaining cheap "high-tech" land from the government, which is a perfect closed loop.

For banks, firstly, there is a local relationship, and secondly, the value of the land is indeed placed there. Land mortgage loans, which are the most popular loan methods in banks.

There is a real joke:

During the process of applying for a loan from the bank, a certain president asked with a smile: "Top products are rarely seen in the market. Where does the sales revenue in your statement come from?"

The person in charge of handling the matter said half-jokingly and half-seriously: "We have a subsidiary company that specializes in smuggling!"

The person in charge of the bank laughed and gave up without further investigation.

Everyone tacitly accompanied Song Ruhua to play 'cash out'.

Therefore, Song Ruhua never expected that the bank would stab him at a critical moment.

Even Song Ruhua didn't know as much about the guarantee as the media at that time.

Because, when the shell company was acquired, the local government promised that the past affairs would be resolved, and even if something happened, the local government would fully assume that it had nothing to do with the new company.

'Confucian businessman' Song Ruhua naively thought that the local government would come forward, just as he might not have thought that the majestic TOP empire, recruiting only 13 software engineers in a country with a population of 5000 billion, would attract many TVs, newspapers, The three-dimensional one bombing of the network is the same.

So both TOP and he kept silent about it.

The promise, of course, is verbal.

A written contract is two different things.

What does the promise of the predecessor have to do with the present?

What is said before retirement, there must be someone who is willing to listen to it after retirement.

Everyone is talking about the weather, but no one can do anything about the weather.

Since late July 2002, all the sweltering heat and irritability in the city of Jincheng seemed to be converging towards TOP. With the sound of toasting and mingling during the celebration, the stock prices of the three listed companies in TOP fell accordingly.

In the overwhelming media reports, voices of doubt drowned out the voice of 'praise'.

One of the most eye-catching and courageous reports is called "TOP Bubble", which was jointly written by reporter Yang Ruifa of "21st Century Business Herald" and "economist" Mao Yining in August 2002.

Of course, these two people are not good guys who pursue justice, and the latter sang tears behind bars because of extorting Oak International afterwards.

The original intention of writing this report was also to blackmail TOP, but Song Ruhua was so stubborn that he didn't take them seriously at all.

In a rage, the two reporters directly let the report hit the newspaper.

This article comprehensively questioned TOP in four paragraphs: "The Mystery of 5000 Talents?", "Software Park Turned into a Footwashing City?" .

These four questions reveal the tip of the iceberg of the TOP empire bubble.

The first question, 5000 software engineers.

According to TOP's "plan", in the next three years, TOP will build 3 software parks across the country, with a staff size of 30 and a traffic population of 4.

What is the size of 5000 software engineers?

No matter at home or abroad, a software company with more than a thousand employees at that time was already a large company with a considerable scale.

TOP claims to build a software company with a scale of [-] people, which is really amazing, exciting and frightening.

"21st Century Business Herald" quoted the research results of the listed company research group of Huating National Accounting Institute, and directly slapped the face.

The research results point out that the management of software talents has always been a difficult point for global software companies.

Generally speaking, there is an unwritten rule in the software industry. No matter how good the market prospect is and how mature the internal management is, the number of software engineers recruited by a software company within a year cannot exceed 20% of the company's original engineers.

An example is that Microsoft, which has 5 employees worldwide, has developed well in the past year, but it has only recruited thousands of employees, which is less than 15% of the original employee ratio.

Professor Yuan Meng, the chief engineer of Zhongke Hongqi and known as the "father of Linux in Huaguo", believes that domestic companies do not have the ability to manage and control 5000 software engineers.

Now the entire TOP Group has only 1640 technicians, and recruits 5000 software engineers at one time. Not to mention that in China, where the software industry is still immature, even internationally renowned software giants cannot do it.

Judging by simple business logic, no matter how you expand, the two key issues you have to face in the end are 'what can you do after expansion' and 'how can you survive after expansion'?
Not to mention, from the perspective of cost, based on the current annual salary of domestic software engineers of 2002 yuan in 10, TOP Group’s annual expenditure for salary alone would be 5 million yuan, and if social security and housing provident funds are included, it would cost almost 7 million yuan. about.

If you add office equipment, travel expenses, etc., it will be an astronomical figure.

From the perspective of income, according to Microsoft’s calculation of local enterprises in China, according to the current management status of the domestic software industry, assuming that the sales department can achieve 100% sales smoothly, a qualified domestic software engineer must be at least 2% for the company. Only by completing the business of [-] yuan per month can the company maintain normal operation.

According to this indicator, if a team of 5000 software engineers should create an output value of at least 1 million yuan for the company every month, then the annual output value will be 12 billion yuan.

In addition, coupled with the huge investment announced by TOP Group in the construction of 27 software parks across the country, industry insiders estimate that TOP Software needs to complete an output value of at least 100 billion yuan a year to break even.

But last year, Huaguo's annual software output value was only more than 300 billion yuan.

In the eyes of industry insiders, this is completely unsolvable.

Of course, these industry insiders are those IT guys who wear plaid and jeans.

IT and venture capital have a natural connection, and venture capital and crazy investment can also be equated by nature.

Therefore, the estimates of IT professionals can usually be blown to the sky, but in fact it is not that much.

However, the rigid cost of salary cannot be covered by TOP's cash flow.

The last question, 'Where are TOP's core products' directly left TOP speechless and unable to respond.

Because they can't answer.

Could it be that TOP does not produce products, but only concepts?
The rain is about to come, and the confidence of the banks that had previously "favored and trusted" TOP began to waver following this report.

After the emperor's new clothes were revealed, the bank could no longer play dumb as before.

After all, they are all engaged in economics. If you pretend not to see it, it will be difficult to explain it in the future.

The reporter's four questions actually didn't touch the real core issue of TOP at all.

5000 people are recruited, and if they are not suitable, they will be laid off.

What kind of industrial park turns into a foot-washing city and the profitability of subsidiaries are all small problems, and problems in development are not to be feared.

There are too many listed companies whose main business is not outstanding.

However, 27 industrial parks are being built across the country, requiring tens of billions of funds. How can TOP, whose annual profit is less than 1 million, bear such a funding gap?

This is the most fundamental question.

This is about the continued operation of a company.

Economists who can't continue their vegetarian meals have no choice but to stand up. It's too anti-intellectual to talk about other things at this time.

As a result, Song Ruhua's operations were exposed to the sun.

During the construction of the industrial park, TOP started the construction of the real estate.

Song Ruhua just wanted to use these piles of unfinished buildings to force the palace, and then convert part of the land into residential land for external sales for profit.

So, here comes the problem.

Is TOP a software company or a real estate company?

In fact, this problem is not a big problem. If Song Ruhua succeeds in this transformation, with the people's tone of "disputing right from wrong", Song Ruhua will be hailed as a legend of judging the situation.

However, the timing of the exposure turned this non-issue into a problem.

Where did the earth come from?Where did the loan come from?Who gave it?
The most innocent thing here is the place. If they want to sell the land, they can just sell the real estate company. Why bother?
The current situation is like yellow mud falling into the crotch of the local government, which is either shit or shit.

Blindness increases Song Ruhua's courage and makes him unable to see danger, but his sense of smell is undoubtedly keen.

Just a week before the unexpected lawsuit, he told an enlarged meeting of the TOP Financial Group board of directors,
"Capital is different from product management. If you do something wrong in product management, you just lose a list, and the impact on the entire TOP business is partial and limited. Once there is a problem in the capital market, it will be 'a tiny bit of difference, absurd. Take thousands of miles'."

He was right in predicting that TOP grew stronger because of capital, but also collapsed because of capital.

Thinking of this past, Dai Lihui felt a little ironic.

When he came back to his senses, he said to Song Ruhua, "Old Song, don't do it anymore, the risk is too great."

Just now Song Ruhua proposed to start the troika of education, health care, and health products to fill the big hole in TOP at this time.

Facing Dai Lihui's remonstrance, Song Ruhua smiled wryly, "Dude, can I stop?"

Li Zhi and the others were also helpless. For them, there was only one way out now. While there was still money in the books and the bank loan had not yet reached the repayment period, they immediately transformed and broke out of the encirclement.

When Dai Lihui heard this, he also shook his head and smiled wryly, he could only bet his life.

There is no other way, not to gamble, but to go in and eat in prison.

……

After putting down the magnifying glass in his hand, and handing a letter to his "love student" Yang Zhiyuan, Zhi Liu took off his glasses and rubbed his nose.

When a person reaches the age, he has to obey the old age.

He was already highly myopic, and his presbyopia started again, which made Zhiliu feel that his quality of life had seriously declined.

Find a special secretary to help read the documents?
Zhi Liu sighed in his heart, maybe it's time to retreat.

Yang Zhiyuan, who took the letter paper, glanced at the sender of the envelope, and a playful smile hung on the corner of his mouth.

Having just experienced the "disastrous" extravagance in 2002, Song Ruhua's actions for the anniversary celebration this time seem much more ordinary. There was neither grand ostentation nor grand gestures. He just wrote a "thank you letter to all walks of life.

Reading ten lines at a glance, his smile gradually faded, and then a solemn look appeared on his face.

"Dear leaders and friends,
On the occasion of the [-]th anniversary of TOP Group, on behalf of all the staff of TOP Group, I would like to extend my most sincere wishes to you and your family!
……

After 11 years of development, TOP Group has developed into an information technology value-added service as the core, integrating application software development, system integration, technical consulting services, IT vocational education, IT training, third-party logistics and applied electronics, precision CNC machine tools It is a private high-tech enterprise group integrating the production of brand products.

TOP has three listed companies including TOP Software, Yanhuang Logistics and TOP Technology; TOP has entered the ranks of "Top 500 Huaguo Enterprises" and "Top [-] Huaguo Electronic Information Enterprises"; TOP is listed as the second among the top [-] domestic software companies TOP was awarded (granted) "Huaguo Famous Trademark", "Huaguo Logistics Experimental Base" and other honors.

……

In 2002, TOP Group achieved a total sales revenue of 55 billion yuan, profits and taxes of 6 million yuan, and total assets of the enterprise exceeded 100 billion yuan.

The above achievements are inseparable from leaders at all levels, customers, partners and friends from all walks of life who have cared, supported and helped TOP for many years. Especially when TOP encountered media turmoil last year, leaders at all levels and TOP's friends are still standing firmly on TOP's side, supporting and encouraging TOP in various ways, which deeply moved TOP people.

2003 is a year for TOP Group to carry on the past and usher in the future.Since 2003, TOP Group has fully transformed into an IT value-added service provider, and has expanded new businesses such as IT training services on the basis of the original business. The development goal of TOP Group is to become the number one in the country in IT value-added services. TOP people are working hard for this grand goal.

......"

Yang Zhiyuan didn't care about 6 million yuan in profits and taxes.

As the president of the fantasy group, he saw through the tricks in this sentence at a glance.

The total sales revenue of 55 billion yuan and the value-added tax reduction are 10 billion yuan, which means a loss of 4 million yuan.

Ordinary people may not be able to see it, but those who run enterprises and are leaders basically know what is going on.

Profits and taxes are originally a local statistical caliber.

In Song Ruhua's letter of thanks, he specifically mentions 'profit and tax', obviously trying to send a signal:
'I have three listed companies, all of which are as glorious as they are. If you have the ability to bank, you will blow me up!Now I'm dying, I want to transform, save it or not, it's up to you! '

"Teacher, Song Ruhua is looking forward to the appearance of a white knight." Yang Zhiyuan flicked the letter paper, "But why did he want to transform into our field?"

Fantasy Corp. is not just about computers.

The so-called division of the five young marshals is the five subsidiaries managed by five people including Yang Zhiyuan.

One of its subsidiaries is called 'Shenzhou Digital', which provides IT value-added services and is the largest IT value-added service provider in China.

Song Ruhua still dares to clamor that TOP wants to be the number one in this field in the country, taking food from the tiger's mouth?
Yang Zhiyuan didn't think that Song Ruhua wanted to grab food in the fantasy land, "Could it be that he wants us to be taken advantage of?"

Otherwise, Yang Zhiyuan would not be able to figure out why Song Ruhua would send this letter to Zhiliu.

Although the name is TOP Software, in the IT industry, TOP is basically a real estate company, there is no competition, and the two have no intersection at all.

Zhi Liu calmly pushed a folder on the table to him.

Yang Zhiyuan opened the folder and started to read, then frowned tightly.

"TOP Group's Feasible Plan on Building 'Digital Cixi'"

"Proposal Report on Jointly Developing Special Computers for Tax Control of the Golden Tax Phase II"

"Request for Instructions from TOP Group and Chinese Academy of Sciences to Jointly Develop Linux Domestic Operating System"

"Framework Agreement between TOP Group and Pengshan County on Cooperative Development of Pengzushan Health Care Project"

There is also an industrial and commercial transfer file of Jincheng Haisikai Overseas Chinese Health Industry Co., Ltd.

After reading it carefully, Yang Zhiyuan hissed, and instead of saying anything in a hurry, he closed his eyes and thought about it.

Zhi Liu was too lazy to wait for him to ponder.

After all, the guy in front of him has never been known for his quick wit. When he figured it out, it would be dawn.

"Song Ruhua is trying to save himself, TOP's biggest problem right now is actually cash flow.

But now he has no credit in the capital market, and the bank loan will be withdrawn as soon as it comes due.

He can't afford to repay the money. Without considering foreign aid, he can only consider breaching the contract and forcing the bank to extend the loan, delaying the release of the pressure on repaying the principal. "

Yang Zhiyuan became confused, "Teacher, I guess he can't even pay the interest now? Will the bank agree to the extension?"

The status quo of TOP is to borrow money and repay the interest. Now it is not allowed to borrow money, and the interest is still repaid.

Moreover, not to mention the non-compliance issue of raising funds, TOP is obviously involved in fraudulent loans, and the bank cannot bear this responsibility.

"So he is now going to create a new cash flow project to continue the blood transfusion.

He has caught up with the limelight of the industrialization of education, so this is a cash cow.

Peng Zushan can be regarded as a tourism real estate with the concept of health and wellness. Real estate has real estate gameplay, which can bring a certain amount of cash flow.

Health care products, look at the industrial and commercial information, he is also ready to play, and if he plays well, he will have sufficient cash flow. Isn't that what Shi Yuzhu is like?
If it works well, he will not only be able to cover the interest of several hundred million per year, but after rebuilding the capital credit, he can also find a way to activate those 27 industrial parks. At that time, there is indeed a possibility of turning around. "

Yang Zhiyuan frowned, "Teacher, it's not enough. Before the end of the year, TOP's rigid payment funds exceeded 20 billion, and now there are still more than 20 billion guarantees to be fulfilled. The time for these projects to take effect is not so fast."

In his opinion, the more TOP struggles, the faster he dies.

(End of this chapter)