Wang Donglei, chairman of Dehao Runda, pointed out at the press conference that he regretted paying too little attention to NVC affairs, and listed Wu Changjiang's many behaviors of privately licensing the company's brand, suspected of benefit transfer, embezzlement and misappropriation, and defrauding the company's funds.
"I believed in him too much at the beginning." Wang Donglei said that Wu Changjiang's departure was conducive to the development of NVC. He even broke the news that Wu Changjiang owed 400 million in gambling debts, with monthly interest exceeding 10 million, and was chased every day.
Wu Changjiang in Chongqing was also aggrieved. He said that the two parties signed a "gentleman's agreement" before Wang Donglei took over NVC, but Wang Donglei broke the rules and continued to exceed his authority, which aroused the dissatisfaction of the management. He said that he was gambling and Wang Donglei was spitting.
In Wu Changjiang’s view, it was the board of directors who didn’t know how to operate and hurt the managers by making unnecessary accusations. If bad behavior caused the management to resist, NVC would go downhill. He has been forbearing to this day, preferring to be a second shareholder for many years, and has been retreating.
This is the third major conflict between Wu Changjiang and his employer. It is also the most serious conflict that has occurred since Wu Changjiang personally introduced Dehao Runda for more than a year. The two once close comrades have now become enemies and even punched each other.
Behind the NVC crisis, it reflects the subtle relationship between Chinese private entrepreneurs and investors. Behind this is the awkward role positioning between founders and investors under the strange Chinese characteristics.
Although China’s business environment is becoming more and more formal, struggles between investors and founders, especially private enterprise tycoons, are not uncommon. From Bain and Gome, CDH and South Beauty to Yan Yan, Dehao and NVC, similar dramas have been staged again and again.
An investor said that Chinese private enterprises have studied Western corporate governance structures for many years, but the market economy is only 20 to 30 years old. Many private enterprises only imitate the form but not the core. Entrepreneurs have never accepted this set of rules in their hearts, which has laid hidden dangers for a series of disputes.
It may be a foregone conclusion that Wu Changjiang will be out again
NVC Lighting’s successive turmoils can even be made into a TV series. In early August this year, NVC Lighting’s board of directors passed a resolution to remove Wu Changjiang as CEO and executive director. NVC Lighting also dismissed vice presidents Wu Changyong, Mu Yu and Wang Minghua.
What’s even more dramatic is that a video that seems to have been deliberately circulated on the Internet shows that Wang Donglei, chairman of Dehao Runda, led a group of strong men to visit NVC Lighting’s office and went to various departments to seize official seals and take away documents. Two NVC Lighting employees were beaten up by the crowd, and even the female employee was so frightened that she hid in the toilet.
Wang Donglei was also full of grievances in an interview with the media yesterday, saying he regretted and was puzzled by the various problems encountered during the legal removal of President Wu Changjiang by the NVC board of directors.
Wang Donglei asked loudly, why is it so difficult to enforce a simple legal issue in a country with a legal system? Why is NVC's Wanzhou factory still unable to start operations? Why did Wu Changjiang dare not accept the board of directors' resolution? He set up a series of obstacles and continued to occupy the company and carry out personal attacks in the name of invalidating the board resolution. Who gave him the courage?
Wang Donglei believes that the NVC Lighting incident is not a dispute between the board of directors and Wu Changjiang for control of NVC, nor is it a replica of the Yan-Wu dispute in 2012, but that Wu was dismissed by the board of directors in accordance with the law due to abnormal related transactions and transfer of interests, but was violently obstructed.
Wang Donglei pointed out that the trigger for a series of events such as Wu Changjiang's dismissal as CEO was that Wu Changjiang privately awarded the NVC Lighting brand rights to three other companies that were deeply related to Wu Changjiang without informing the board members.
Brand rights are undoubtedly a very important asset of NVC Lighting. This series of trademark safety hazards, if not handled properly, will become a "landmine" on the development path of listed companies. For example, when Chen Xiao, a professional manager of Gome, introduced Bain Capital to fight against the founder Huang Guangyu's family, the acute problem Chen Xiao faced was that the registered trademark of Gome was controlled by Huang Guangyu, and the listed company only obtained the right to use the trademark.
Wang Donglei and Wu Changjiang are just business partners. They do not have the same firm control over the company's development direction as Huang Guangyu and Zhang Ruimin. Once the problem of privately granting brand rights is not resolved, there will be endless trouble for NVC Lighting in the future. This is also an important reason for Wang Donglei's heavy hand.
Wang Donglei has more advantages than Wu Changjiang in terms of means and legal principles. Qian Xuefeng, chairman of Hanli Capital, said that Wu Changjiang is only a small shareholder in NVC, and he is weak regardless of whether he serves as chairman or CEO.
Qian Xuefeng believes that when the company's board of directors has issued a resolution, it will be forcibly passed no matter how Wu Changjiang objects. If Wu Changjiang does not hand over his official seal and rights, he will be sued by the court and has a high chance of losing the case.
Investors have also become a vulnerable group
Wang Donglei used words such as "regret" and "too much belief" many times in his communications with the media. In an interview with the media, Wang Donglei said that when they cooperated, they only considered the strong commercial complementarity of the two companies, and the strong alliance in the field of LED reform to make both listed companies bigger and stronger. In terms of business model design, Wang and Wu Changjiang had a high degree of interest binding.
"Under normal business logic, I think there will be no problem. In other words, Wu Changjiang is a person who is about to go bankrupt. I saved you and used my voting rights to send you to the board of directors and the CEO position. You should work well and agree not to have any related relationships. "Easy."
Wang Donglei said that it was unexpected that Wu Changjiang did not or never wanted to play by the rules of listed companies, constantly expanded related transactions, and hit the bottom line of listed companies again and again, which made the board of directors intolerable and made the decision to fire Wu.
When talking about the current relationship between Dehao Runda and Wu Changjiang, we have to mention the grievances between Wu Changjiang and Yan Yan in 2012. During the most intense period of the fight, there were violent actions such as employees stopping work, suppliers stopping supply, and dealers stopping placing orders.
Back then, Yan Yan, as a representative of investors, stepped onto the stage to confront Wu Changjiang and suffered many injustices. At that time, public opinion was overwhelmingly on Wu Changjiang's side, accusing Yan Yan of being profit-seeking. Liu Qiangdong even blasted Yan Yan for lying openly, and NVC Lighting would be destroyed by Yan Yan.
Many years later, Yan Yan remained silent during the NVC Lighting incident. He had left the NVC Lighting board of directors and no longer wanted to get involved with the NVC Lighting incident. Wu Changjiang's series of performances also allowed the outside world to see that Yan Yan had suffered many "unknown injustices."
China's private enterprise governance: only learn from Western appearance
Whether it is the "NVC incident" between Wu Changjiang and Yan Yan in 2012 or the current conflict between NVC Lighting and Dehao Runda, what it reflects is that although NVC Lighting is already a listed company, so far, it is still the kingdom of private entrepreneurs.
Among Chinese private enterprises, examples like the "NVC incident" are not isolated cases. At that time, South Beauty and CDH Ventures were considered a match made in heaven. However, it was later regarded by South Beauty's founder Zhang Lan as South Beauty's biggest mistake.
There is a "deep-rooted conflict" between CDH and Zhang Lan. Zhang Lan comes from an industrial background and would like to use every penny for two cents, while CDH is investing and requires multiple returns. The way of thinking and values are determined by each other, so they can only accommodate each other.
Another typical case is that Chen Xiao, the former "insider" and chairman of the board of directors of Gome, introduced Bain Capital and joined forces with Bain Capital to seize power from the Huang Guangyu family. In the end, Chen Xiao was eliminated. Bain Capital was squeezed out of Gome but received high returns, while Gome suffered heavy losses.
Nowadays, NVC Lighting has another conflict between its founder and capital in less than a year. It can be regarded as a classic case, reflecting the challenges of corporate governance in the development process of Chinese private enterprises.
Some analysts pointed out how to get rid of this abnormal competition for corporate power, and how to clarify the corporate governance structure and clarify who is the owner when investors enter a company. How did a story like NVC Lighting come about? How do investors restrain a company like JD.com that Liu Qiangdong has absolute control over? This is a problem for the development of Chinese private enterprises.
An investor said that in China, there are one type of financial investors and the other type of industrial capital. Financial investors are relatively weak. After giving money, the founder basically controls the company and has absolute say. Industrial investors have a relatively large proportion of the invested companies. The invested companies are controlled by industrial capital, and industrial capital can also send senior executives or even CEOs to the invested companies.
The above-mentioned people pointed out that many times there is an entrustment relationship between entrepreneurs and investors. Investors entrust the CEO to manage the company. Most of the time there is a direct relationship between shares and voice. This set of Western rules has been in operation for hundreds of years and is effective. However, during the introduction process, Chinese private enterprises often imitated the appearance but not the core. Entrepreneurs never accepted it from the bottom of their hearts.
The consequence of this is that China's private enterprises often pay more attention to the culture of gangs and lakes and rely on cliques. When investors face problems like NVC Lighting, it becomes difficult. If the CEO is replaced and the company is completely reshuffled, the company's vitality will be greatly damaged. Maintaining the status quo will condone violations or even illegal activities. Relatively speaking, Western governance regulations are weak and blunt in terms of human relationships, but they are more effective.
"Some private enterprises in China mainly rely on their own traditional experience for management." The investor said that to solve this problem, more entrepreneurs with better education and higher culture need to be inherited. To a certain extent, Internet entrepreneurs are more international.
Qian Xuefeng pointed out that Chinese companies still place too much emphasis on who owns the company, and rules are not strict in many aspects. For example, Huang Hongsheng, the founder of Skyworth, as the person in charge of a Hong Kong listed company and a major shareholder, was found to have violated relevant laws and was jailed in Hong Kong. Private companies like Wu Changjiang, as a small shareholder, may be more involved in legal issues in Hong Kong and mainland China.
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