text | Juchao wave, author | Xie Zefeng, editor | Yang Xuran
After the leadership change of the China Securities Regulatory Commission, the anti-counterfeiting storm in the capital market spread like thunder.
On the same day that the China Securities Regulatory Commission released the most stringent regulatory measures in history, st Aokang suffered another heavy blow. The actual controller and chairman of the company, Wang Zhentao, was put on file due to suspicion of illegal disclosure of information.
Aokang was once a well-known leather shoe manufacturer and retailer in China, and Wang Zhentao was also known as the "Wenzhou Shoe King". However, with the changes in the preferences of young consumer groups and the impact of online shopping on offline stores, the "shoe tycoons" have fallen off the altar one after another.
Before, Belle was privatized by Hillhouse and now wants to return to the Hong Kong stock market. Later, Guireniao just went bankrupt and delisted, and Fuguiniao failed and left the Hong Kong stock market. Its founder, Lin Heping, was in debt of 3 billion and was even willing to work as a wage earner in the same industry. ; Qianbaidu and Daphne have both fallen into penny stocks due to dismal performance.
Compared with sports shoes, leather shoes can be said to have entered a cold winter with no hope of recovery. They are difficult to match, not fashionable enough, uncomfortable to wear, and suitable for few occasions. People are abandoning leather shoes at an accelerated rate. The
market is shrinking rapidly, and few companies can survive alone.
was put under investigation this time, which made the "shoe king" who was already in the quagmire even worse. Wang Zhentao and other senior executives also received a warning letter from the Zhejiang Securities Regulatory Bureau, which exposed the company's internal control risks, financial management, capital occupation, imperfect disclosure and other issues.
A long time ago, Wang Zhentao began to plan cross-border transformation. Aokang invested in Lanting Jishi and became the latter's largest shareholder. Wang Zhentao's first domestic diploid rabies vaccine company Kanghua Biotech has also been listed on the GEM.
Wang Zhentao seems to be a big capital player with long sleeves and good dancing, but now Lanting Group has suffered losses for many years and is facing a delisting crisis. Kanghua Biotech is also facing challenges from many new entrants.
The generation of "Wenzhou Shoe King" has reached such a stage.
01 The King of Shoes Falls
The China Securities Regulatory Commission’s crackdown on counterfeiting has hit Aokang International.
On the evening of March 15 alone, three listed companies announced that the actual controllers were under investigation, including ST Aokang and Kanghua Biological. The big boss behind both companies is Wang Zhentao.
st Aokang also received a warning letter from the Zhejiang Securities Regulatory Bureau on the same day, which pointed out that the company did not disclose the fund occupation of related parties in its semi-annual reports for 2021, 2022 and 2023 as required; there are internal controls on fund payment and dealer management Flaw, there is confusion between the financial personnel of the related party Aokang Group and the company.
In view of the above behavior, the Zhejiang Securities Regulatory Bureau decided to issue warning letters to the actual controller, chairman, general manager, financial director, and board secretary, and record them in the securities market integrity file.
Wang Zhentao once again fell into the darkest moment. With the adjustment of the shoe industry market, Aokang International had already been in trouble. On April 25 last year, because the company reported a loss of 370 million yuan in its 2022 annual report and was issued a qualified audit report, the securities code was labeled "st".
is known as "China's No. 1 men's shoe stock". When Aokang was listed in 2012, its net profit reached a peak of 513 million yuan. However, after entering the capital market, the company entered a "downward channel."
Wang Zhentao was once an enviable business tycoon, in the early days of reform and opening up.
His business dream originated from a fire on August 8, 1987. On that day, angry citizens piled inferior Wenzhou shoes into a hill at Wulinmen in Hangzhou, and then used a fire to burn more than 5,000 pairs of Wenzhou shoes.
In order to avenge the shame of "Made in Wenzhou", the following year, 23-year-old Wang Zhentao pooled 30,000 yuan to establish Yongjia Aolin Shoe Factory (the predecessor of Aokang), and wrote "Quality is our life" in the factory.
With its excellent quality, by 1998, Aokang achieved an output value of 378 million yuan, becoming the king of genuine leather shoes in China.
Twelve years after the "Fire" of Wulin Gate, Wang Zhentao returned to Hangzhou Wulin Gate with the "King of Chinese Genuine Leather Shoes" that became popular all over the country, and used a fire to burn all the counterfeit Aokang shoes confiscated across the country. This fire brought Wenzhou shoes to nirvana and reborn it, reshaping the brand reputation of Made in Wenzhou.The mayor of Wenzhou City at the time even said: "This fire should be written into the history of Wenzhou."
After a few years, Wenzhou leather shoes headed by Aokang even went abroad, creating a world with low price and high quality. In 2006, the European Union decided to launch an anti-dumping investigation into Chinese leather shoes, but Wang Zhentao refused to give in. Aokang was the only shoe company in China that persisted in resisting to the end. In the end, after six years of hard work, Aokang won the lawsuit, and the EU compensated Aokang for more than 5 million.
In 2012, Wang Zhentao led Aokang International to be listed on the Shanghai Stock Exchange, becoming the first shoe-making company in Wenzhou to be listed. The name "Wenzhou Shoe King" spread like wildfire.
However, with the rise of e-commerce after 2012, the consumption preferences of young people have changed rapidly. Shoe industry giants have turned their heads downwards. Fuguiniao delisted, leaving a huge debt of 3 billion yuan. Guirenniao went bankrupt and delisted, and changed its name to Yuanwang on Saturday. Technology, but after "taking off shoes and surfing the Internet", Yuanwang Technology has not yet emerged from the quagmire; Daphne and Qianbaidu have suffered losses for many years, and their stock prices have been below HK$1 for a long time...
The listing of Aokang became its peak, and neither revenue nor net profit reached its peak again. Exceeding the peak moment in 2012. The filing of this case is also a major stain in his life.
02 Transformation exploration
Try multiple modes to save yourself.
"How many young people today still wear leather shoes?" As early as 2017, Wang Zhentao, who was interviewed, had already openly expressed his bearishness on the leather shoe market.
From 2016 to 2021, my country's leather shoe production dropped sharply from 4.618 billion pairs to 3.524 billion pairs. The Qianzhan Industry Research Institute predicts that by 2026, the leather shoe industry will shrink to only 1.7 billion pairs.
also has data showing that the size of my country’s leather shoe market has declined year by year since peaking in 2019. Since 2015, the growth rate of the sports shoe market has been higher than that of the leather shoe market. By 2019, the sports shoe market will officially overtake leather shoes.
rises and falls, confirming Wang Zhentao's prediction.
At that time, recognized this change in market trends, and Wang Zhentao had already begun to "operate" on Aokang in advance. On the one hand, has diversified its business and expanded its business from men's leather shoes to leisure and sports products; on the other hand, it has joined hands with international brands to become their agent distributors.
In 2015, Aokang reached a cooperation agreement with Capgemini Commercial Co., Ltd. and successfully became the general distributor of the sports shoe brand Skechers in China; two years later, it cooperated with intersport and won the agency rights of the Puma brand. In addition, has also reached strategic cooperation with the Belgian shoe and clothing giant Cortina (Cortina Group) and the Indian outdoor clothing brand woodland.
However, the agency business is not easy to do. In the past, there were strong enemies such as Nike, Adidas, and Fila acquired by Anta. Later, domestic Anta and Li Ning emerged strongly. The market segments include Arc'teryx, lululemon, Angpa, etc., and new brands. There are endless ones, each with its own characteristics.
Moreover, many sportswear brands have fallen into a destocking crisis in recent years. Adidas has suffered its first loss in 30 years and has no choice but to cut prices and promote sales.
At the end of the first three quarters of 2023, Skechers contributed revenue of 241 million yuan, a year-on-year increase of 19%. However, the gross profit margin of 34% was not as good as its own brands Aokang and Kanglon, and the revenue ratio was only just over 10%.
Wang Zhentao’s previous plan was to open 1,000 Skechers stores within five years of the cooperation. However, as of the end of September 2023, there were only 133 Skechers direct-operated stores and franchised stores in total, which is far from the goal of 1,000 stores. . This means that the market's acceptance of the Skechers brand cannot be further improved.
In 2015, Aokang, eyeing the trend of cross-border e-commerce, did not hesitate to invest approximately 480 million yuan in Lanting Jishi, the "first cross-border e-commerce stock", becoming the latter's largest shareholder. Later, Zhuoer E-commerce participated in refinancing and was promoted to the largest shareholder again. Wang Zhentao is now the second largest shareholder.
originally wanted to use the momentum of Lanting Group to develop overseas markets and obtain investment income at the same time, but who would have thought that it would end up in vain.
Since 2018, the stock price of Lanting Jishi has been below $1 for a long time, and it was almost "delisted" from Nasdaq. In the current favorable period for going overseas, Lantingji got up early in the morning and rushed to the late market. Since going public in 2013, the company has only been profitable for two years, and the rest have been losses.
Aokang International originally bought it at a price of US$6.3 per share, but the closing stock price on March 15 was only US$0.78 per share, which means a direct loss of 90%, 420 million yuan wasted, and the dream of cross-border e-commerce was shattered. business.
Wang Zhentao also tried to follow the example of Antarctic e-commerce to "sell tags" - that is, he does not produce the products himself, but authorizes the brand to a third party, and anyone can use the brand as long as they sign a cooperation agreement with them.
In addition, Wang Zhentao has also issued a global elite seeking talent order with "a million annual salary, a billion yuan incentive", and cross-border cooperation with IPs such as Marvel, Pokémon, and the Forbidden City, inviting Junzhi to make suggestions and promote the youthfulness of the brand. Transformation into fashion, entering the high-end market segment of golf shoes, empowering stores with smart technology, etc.
Wang Zhentao tried his best, which can be regarded as a considerable effort, but still failed to save O'Connell who was in trouble. In 2023, its performance forecast is still a loss of 95 million yuan, and a loss of 162 million yuan after non-exclusion, which has been deducting non-losses for five consecutive years.
03 Cross-border vaccine
Giving up shoemaking and entering medicine seems to be a very wise and pragmatic choice made by the "Wenzhou Shoe King".
Compared with other shoe tycoons who fell into the abyss, Wang Zhentao stepped into the river of biological vaccines ahead of time, which made the Wang family's career less gloomy.
As early as 2004, during the golden period of rapid development of Aokang leather shoe industry, by chance, he met several scholars from a biological research institute in Chengdu. Later, Wang Zhentao and his wife invested 10 million yuan to establish Kanghua Co., Ltd., the predecessor of Kanghua Biology.
Vaccine is a technology-intensive industry and requires a large amount of capital investment in the early stage. At that time, Wang Zhentao was able to repay the company through profits from the shoe industry.
has persisted for 10 years, In 2014, Kanghua Biological's freeze-dried human rabies vaccine (human diploid cells) was approved for marketing. It was the first domestic company to sell related products, filling a domestic gap.
Relying on the first-mover dividend, Kanghua Biological's revenue increased approximately five times from 2016 to 2019, and its net profit attributable to the parent increased sharply from 6.66 million to 187 million yuan. Its gross profit margin exceeded 94%, even higher than Kweichow Moutai .
In 2020, Kanghua Biology was successfully listed on the GEM, and its stock price soared by more than 10 times.
However, the crisis of Kanghua Biotech is also emerging. The company is overly dependent on a single product. Rabies vaccine revenue accounts for as high as 99.72%, and the profit ratio is almost 100%. It can be said that one product conquers the world.
On September 15 last year, Kangtai Biotech’s freeze-dried human rabies vaccine (human diploid cell) marketing application was approved, breaking Kanghua Biotech’s exclusive advantage. Companies such as Zhifei Biotechnology and Chengda Biotechnology are also struggling to catch up.
In addition, in the more mainstream field of rabies vero cell vaccine, six companies including Chengdu Biotech and Zhuoyi Biotech are participating, and Kanghua Biotech's existing competitiveness is constantly being diluted.
In the first three quarters of 2023, Kanghua Biological's revenue and profits both dropped. Net profit fell by 24% to 369 million yuan. Its stock price plummeted 84% from its highest point, and its market value shrank to 9 billion yuan.
Currently, the company is an agent for Hillis’ veterinary vaccine products and is developing a recombinant hexavalent norovirus vaccine. Currently, there is no norovirus vaccine on the market in the world. Kanghua Biological's recombinant hexavalent norovirus vaccine has obtained clinical trial approval in Australia and the United States.
Although Kanghua Biological’s existing products have been comprehensively attacked by pursuers, its new R&D pipeline is making good progress. In the Wang family's asset plate, this is the most high-quality piece of fat that cannot be discarded, and it is also its hope in the business world.
04 Written at the end
used a fire to revive the Wenzhou shoe industry. He is agile, brave and decisive, with forward-looking strategic vision and no lack of emotion. It is undeniable that Wang Zhentao is a very representative private entrepreneur after the reform and opening up.
But in the tide of the times, the world and the earth are working together, and the heroes are not free. Those who do not believe in fate and go against the trend, or hope to use their own efforts to fight against the entire trend, will only do so reluctantly most of the time, and the probability of success is very low.
Fortunately, Wang Zhentao also has the high-quality asset of biomedicine. It is a good strategy to change the track at the right time. The successful bet allows him to maintain his identity and role as a successful businessman. At this point, Aokang has some similarities with Shanshan Co., Ltd., which is also a Zhejiang company. But compared to Zheng and his son, Wang Zhentao's road to transformation and disruption was much more bumpy.
