Following the spin-off of its R&D company, Chia Feng Group underwent equity restructuring by Schroder Group, abolishing the board of directors and replacing it with a board of trustees. The group then held a round of negotiations with United Capital and Sun Hung Kai Properties, but the two sides failed to reach an agreement.
The non-dilution equity agreement signed with Lu Feng had expired. Goodley was appointed as the CEO of Jiafeng Group, bringing with him a brand-new senior management team. In order to stabilize the middle management, four managers were promoted to senior management positions. At the same time, Goldman Sachs capital was brought in to carry out sweeping reforms to internal management, systems, and subsidiaries.
Nokia was marginalized, Siemens was brought in, investment in distributors and retail outlets was increased, R&D was completely halted, sales department salaries were reduced, piece-rate wages for general factory workers were lowered, all expansionary assets were cleared out and packaged for sale, and the overall front was contracted.
At the management meeting, Goodley sent several senior executives to target middle management, claiming that the board reform had diluted equity and damaged everyone's rights. He then temporarily froze the management's equity and converted it into dividend rights, thus turning Su Yourong and Feng Zhiyao into minority shareholders.
However, the two still voted against introducing shareholders. Three months later, Goldman Sachs increased its share again. According to the board rules, once the red line of dilution of equity is crossed, if minority shareholders object, the equity cannot be diluted further in order to protect the interests of minority shareholders.
In order to enter the market, companies such as Goldman Sachs and Siemens negotiated with the two men. The two men sold their shares and withdrew. Three months later, Goldman Sachs held more than 40% of the shares. The income of factory employees dropped again, causing a large number of workers to leave. Goodley was summoned by the municipal government.
Two months later, Jiafeng Group's land reserves were sold off in a package, its Suzhou factory was sold to Skyworth, and the market share of Jiafeng TVs and VCDs continued to decline. The terminal electronics city it built mainly featured overseas brands.
By the end of 1997, most of the middle-level managers had been dismissed, and many of them joined together to demand equity compensation. The vice president of Jiafeng Group stated that the equity was backed by performance requirements, and that they were dismissed because these individuals did not meet the process requirements at the execution level and had violated regulations.
The lawsuit lasted for several months, and Jiafeng Group ultimately lost the case, paying a token amount of money. Those who received the money were all cursing the several domestic executives who had been promoted.
In early 1998, Goldman Sachs acquired a 78% stake in Jiafeng Group, while Schroders withdrew completely. Goldman Sachs sold many of Jiafeng's patents to Silicon Valley companies, sold its Dongguan factory, its Tianjin factory, and its headquarters building. All that remained of Jiafeng were 27 electronics stores, a dozen brands, and hundreds of distributors.
In April 1998, Jiafeng Group changed its name to Meida Commercial, becoming a small company that sold brand leasing, channel sales, terminal sales, and patent licensing.
Jiafeng's various brands can still be found on the market, but the quality varies greatly and their reputation has plummeted!
With this series of moves, Schroders Group recovered its funds but didn't make much money. Goldman Sachs, through a series of maneuvers, made a small profit. The massive Jiafeng Group was dismantled and no longer posed any threat. With the help of its vast sales channels, Motorola was thriving in China, and its cooperation with local governments to build networks back then became a mess.
On the seventeenth day of the first lunar month in 1997, Lu Feng packed his luggage and headed to Hong Kong.
The villa, spanning over 800 square meters, felt somewhat empty with only Lu Feng living there. He employed over a dozen servants, primarily for cleaning and lawn maintenance. Unlike typical villas in Shenzhen, this place was several hundred meters from the sea, surrounded by lush greenery, ensuring top-notch privacy.
At the end of February, the scorching sun seemed to linger. On the second-floor pavilion, Lu Feng and Su Yourong enjoyed the cool shade under the parasols, their gazes fixed on the shadowy figures on the distant beach.
"Your coffee!" A maid in her thirties placed the coffee on the table.
"I really regret buying this house. It's so big, I wouldn't even know if another family lived here," Lu Feng said, taking a sip of coffee. "And the maids you hired are all young women in their thirties. You really know how to arrange things!"
“These are Filipino maids; they’ve all been trained for many years. If we hired a few older women, they probably wouldn’t even be able to take care of themselves,” Su Yourong said, sipping her coffee. “Aren’t you a research and development company? Why are you hiring so many employees?”
“I’ve placed all the shares of Minsheng Bank and Jiaming Foods under Hurricane Capital. This requires people to frequently travel to the mainland, and it will also strengthen the management of these two companies, all to increase their valuation,” Lu Feng said to her. “Can you give me a higher valuation this time?”
Su Yourong put down her coffee cup, sighed, and said, "It's not that I don't want to give you an estimate, it's just that no one is willing to buy it. You shouldn't just stay at home all the time, you should participate in some activities. You need to get acquainted with the capital world. There's a banquet the day after tomorrow that I'm organizing, you should go too."
“Okay!” Lu Feng nodded in agreement.
In the evening, Lu Feng had his first meal with everyone since arriving in Hong Kong. Wei Yandan was still in charge of corporate management, while Zhu Lidong was in charge of market development. Products like chips needed to be sold, and he was also in charge of supply chain cooperation.
Du Guoying assisted Zhu Lidong in his work and also did some financing-related tasks.
Compared to Jiafeng Group, everyone's workload has decreased, but it has also become more difficult. Zhu Lidong no longer needs to travel all over the country to open up sales channels. Instead, he needs to focus on Japan, and even in the domestic market, it is mainly Shenzhen.
With only two or three hundred employees, compared to her previous management scale of tens of thousands, Wei Yandan is quite adept at handling this small-scale operation.
"We've been through thick and thin together for so many years, and I'm especially grateful for your companionship. We're not trying to make the company smaller and smaller, but rather to make it deeper and deeper. Anyone can sell clothes or food. What we want to do is do what others can't, and now we're going further and further down that path!"
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