This is a master, two masters, three disciples co-starring fraud version of the "Wolf of Wall Street", self-disclosure of the family scandal and added to the play "Infernal Affairs" plot; this is the three giants of the Divine and Ruixing three Musketeers in the process of chasing the capital and time The story of the race between the three giants of Shenzhou and the three swordsmen of Ruixing in the process of chasing capital.

After reading this article carefully, all the mysteries about Ruixing and China's capitalization routine will be solved in your mind.

In Beijing in 2004, there were three ambitious but bitter men: Lu Zhengyao, Liu Erhai, and Qian Zhiya, now the three directors of Ruixing.

Lu Zhengyao has been in business for 11 years, but has not made a name for himself. He made a little money as a communications agent, but that's about it. The company has no future, and he doesn't have his own brand. When he resigned from the civil service "golden bowl", "diverted" to do wedding money to start a business, aspire to do a career, the current high not low awkward situation, too far away from their original intention.

Liu Erhai just attended a venture capital forum in Shandong, a big brother said: venture capital in this line is not much accumulation, our company new a few young people have invested in a number of projects. Liu Erhai shocked; I turned from industry to finance, joined Legend Capital (the predecessor of Junlian Capital) has been a year, a project have not invested.

Qian Zhiya gave up her vice president position in Wuhan and went north to the capital. She is only a second degree, and no family background, empty ambition of her into the confusion: is it to return home?

At this point, the three did not know each other

In 2005, Lu Zhengyao sold his communications company, and with his own 5 million dollars, modeled on the U.S. AAA founded UAA (United Automobile Association of China), a vehicle insurance agency. Since then, the destinies of the three men have become intertwined.

In 2005, introduced by a mysterious figure, Qian Zhiya joined the United Automobile Club of China as the assistant to the president, doing some tea pouring and typing chores. But because of the close contact with the hand, Qian Zhiya's insights continue to grow, began to take charge of the company's operations, and gradually became Lu Zhengyao's most capable general.

" The key is to race against the clock and make the scale as soon as possible . If you make the market share very large, it is not easy for other market competitors to enter. "This is the idea of Lu Zhengyao, UAA chose to choose a low price strategy, UAA car insurance quotes cheaper than the average 4S store 100-200 yuan . It quickly accumulated 1.5 million members.

Lu Zhengyao did not expect that someone was watching UAA. Liu Erhai made a special unannounced visit to UAA, and found one of UAA's business departments in a shabby hotel on the second ring road of the southern part of Beijing, and after the research, he was very confident in UAA's business model, and insisted that UAA could become a leader in the automotive service industry.

Liu Erhai went to Wangjing headquarters to visit Lu Zhengyao, and his visit made Lu Zhengyao confused for a moment. He didn't quite believe that someone would come to his doorstep to invest in the company before it was founded, and at one point, he thought it was a fraud.

The two men's college majors are communication automation, both engaged in the communications industry, one after another after the familiar, the more the two men talk more and more opportunistic, the business philosophy is the same : as soon as possible to make the scale of the key to entrepreneurship . Liu Erhai became the first capitalist friend of Lu Zhengyao.

Liu Erhai, who is good at capital operation, met Lu Zhengyao, who is good at business operation, and they started to work together. 2006, Liu Erhai invested $8 million in UAA, which was not a small amount at that time.

From this time on, low price, expansion, financing , a trinity of strategic combinations, in the hearts of the three of them smashed the root, and later constantly replicated, including Ruixing.

However, the creation of the people, the scale has just begun to expand, the OCI's paper regulations, so that UAA's insurance agency business directly finished.

Qian Zhiya was crying, Lu Zhengyao was crying, Liu Erhai was bawling!

The three protagonists experienced the ups and downs of sadness and joy, and it seemed to end in tragedy. However, "Heaven will come down. Must first ......" and "the old man is not a blessing."

The 2 million members accumulated by UAA is their biggest asset, and the transformation still has to be centered around the car. In order to recoup their losses, Lu and Liu met every day to discuss what to continue to do, car repair, car wash, windshield wipers often appear in their discussions. Eventually the two decided to enter the field of rental cars.

In September 2007, Shenzhou Rent-A-Car was established. Liu Erhai injected $22 million, Lu Zhengyao as CEO and Qian Zhiya as COO. Liu Erhai is responsible for money, Lu Zhengyao is responsible for management, and Qian Zhiya is responsible for operations, with a clear division of labor and each of their respective roles.

The three were spirited, and from the beginning, aspired to be a national enterprise. In October of that year, it was announced that they were going to open simultaneously in 11 cities across the country, and by July '08 they had covered 30 cities.

But, again, the financial crisis exploded , financing difficulties, only a few hundred cars, the money bottomed out, the company can not even pay wages. Lu Zhengyao anxious with the hot pot like ants, it is difficult not to go down the drain again, from scratch?

He cried to Liu Erhai every day: no money can not work, not enough money, brothers hurry to come together. This is the first time I've ever seen a car that has been used for a long time, and I've never seen it used for a long time," he said.

At the time of the crisis, Liu Erhai once again, Lenovo made an additional investment in Shenzhou Rent-A-Car. Shenzhou Rent-A-Car came back from the dead, but also put 1000 cars, the scale of the second in the country.

In August 2010, Lenovo invested another 1.2 billion yuan . Using this huge capital, Shenzhou Rent-A-Car announced that the fleet will be expanded to 10,000 vehicles in three months, and within five years to reach 100,000 vehicles, and launched a crazy price war and advertising and marketing, to 30-50% price cuts to capture the market, shocking peers, Lu Zhengyao's "rent a car maniacs," "Price Butcher The title "Price Butcher" has been widely publicized.

The price cuts are made when there is money to be made, and I'll do it even if I lose money; the advertisements are all over the place, and the money is spent as if it were running water. Lu Zhengyao's "Seven Injuries Fist" method of fighting, making Shenzhou's market share rising, but the cash flow is stretched to the limit, at any time there is a risk of the wall collapsing.

At the time, Shenzhou Rent-A-Car's debt ratio reached 90% , which was precarious. Lu Zhengyao even sold his own suite to fill the hole, but a drop in the bucket.

Lu Zhengyao panicked, rushed to find Liu Erhai. In January 2012, Shenzhou Rent-A-Car, known as the "first stock of Shenzhou," decided to go public in the United States.

But Lu Zhengyao picked the wrong time.

In 2010, Chinese companies went to great lengths to falsify their finances in order to go public in the US, which y hurt the creditworthiness of Chinese companies. Until 2012, the SEC was accusing Chinese companies such as Puda Coal and Kaiyuan Automobile of falsification, and sniping at Xunlei's listing.

In April 2012, Shenzhou Rent-a-Car announced that it was suspending its IPO in the U.S.

Time has changed, and while Shenzhou Rent-a-Car was paying for the counterfeiting of Chinese-funded companies back then, it is now Chinese-funded companies that are paying for Ruihou's counterfeiting. The teenager who was victimized by the evil dragon back then has become a new evil dragon himself once he breaks into the dragon pool and slaughters the evil dragon.

Americans didn't fall for it, and Shenzhou Rent-A-Car went into extinction .

As things turned out, Lu Zhengyao met the second man in his life, Li Hui, who was the Asia-Pacific president of Warburg Pincus. Lai's wife is the famous Phoenix TV host Zeng Zimo.

Lu Zhengyao and Liu Erhai asked Lai Hui to dine, drink and sing every day. In July 2012, Shenzhou Rent-A-Car got $200 million from Warburg Pincus to "save the day".

Shenzhou "iron triangle" is officially formed!

As soon as the money arrived, Shenzhou Rent-A-Car once again put up the price war flag , launched the "50 yuan new car storm", to start a new round of market offensive.

Shenzhou car rental front or loss, a few rounds of money down, a lot of competitors have been killed or disabled, only the market share of Shenzhou sesame blossom higher and higher. 2014, Shenzhou car rental profit (at least the financial report is so written).

With the support of Legend Holdings and Warburg Pincus, Shenzhou Rent-A-Car went to Hong Kong for its IPO in September 2014, with a peak market capitalization of HK$46.6 billion.

A year later, Lai Hui's Warburg Pincus reduced its stake by 7.09%, cashing out $396 million, subtracting $200 million from the principal, and netting $196 million . It still holds a 10.11% stake.

Liu Erhai's Legend Capital cashed out $200 million and is still a major shareholder in Shenzhou Rent-A-Car.

Lu Zhengyao has the brand of Shenzhou Rent-A-Car, a large acquisition, the launch of capital operation, to create their own business empire.

Everyone made a fortune. Experienced the blood and fire tempered men's friendship, and then money to witness, as the saying goes, together with the gun, together with the window, together with the stolen goods, such a friendship is no longer solid.

Lu Zhengyao started from scratch, to the listing of Shenzhou Rent-A-Car in the past eight years, Qian Zhiya personally experienced all this, she saw the capital to help Lu Zhengyao to pull out the strongholds, to kill out of the enclosure and thus establish the status of the whole process of the jianghu in one fell swoop. This has accumulated a wealth of experience for her to do Rexall. As it turns out, Chan Chia's founding of Rexall is basically a copycat of Shenzhou Rent-A-Car.

Looking back at Lu Zhengyao's Shenzhou Rent-A-Car, we can basically say it was a gamble. If it wasn't for Liu Erhai's repeated efforts and Lai Hui's rescue, the 90% debt ratio of Shenzhou Rent-A-Car would have been unable to recover, and it would have been liquidated.

If these investments hadn't lasted until the IPO, Shenzhou Rent-A-Car would have been just like Dai Wei's OFO, blocked at the company's door by rights defenders, and users wouldn't have been able to return even their deposits.

From the case of Shenzhou Rent-A-Car, we can also see Lu Zhengyao's method of play: price war + scale expansion + financing to burn money, rapid expansion, listing to circle money . Throughout the process, the listing is his only purpose and the only straw that saves his life, and if he does not go public, he will be killed.

Doing big business, why not spell quality to spell price? Because improving service quality is too slow, high input costs, and difficult to quantify, far worse than the price war to short and fast. The price war and the need for capital with the capital is profit-seeking, kidnapped by the capital of the enterprise has no right to independent choice, the loss of the right to slow down , it can only be like a beast to the end of the line, unless halfway exhaustion, or else will not stop running.

Ironically, after the listing of the cash, Shenzhou Rent-A-Car to complete the historical mission, there is no motivation to go further to improve the quality of service. Performance began to fall off a cliff, with revenue of 7.7 billion in 2019, but net profit of only 30 million, a year-on-year decline of 90%, leaving only crumbs. The Shenzhou car rental deposit refund is difficult, slow and harsh conditions, and users are complaining.

The Iron Triangle has no intention of improving the taste of Shenzhou Rent-A-Car, no intention of making a century-old store with brand value, they have no sentiment, all they want is to make money, make money, make money again , and set their sights on the next business model.

After the listing of Shenzhou Rent-a-Car, Lu Zhengyao did not idle. in January 2015, optimistic about the online car industry, founded the Shenzhou Special Car, later renamed Shenzhou YouCar.

Then the journey of Shenzhou Rent-A-Car was repeated. Only this time, they didn't have the patience to wait seven years before going public. Shenzhou Car has been fed huge amounts of money constantly since its birth, and has been hyped up straight away.

Three rounds of financing have been completed in just 11 months, totaling more than $11 billion , of which China Ping Capital and Legend Capital were the earliest investors. a, B two rounds of **** to complete the financing of $800 million, created the highest record of the first two rounds of financing for a domestic Internet company.

In July 2016, Shenzhou Youcheng landed on the New Third Board, valued at $36.9 billion, ranking the second oldest in the entire New Third Board, just a year and a half from the establishment of the enterprise.

The Iron Triangle has already succeeded in cashing out at the highest point of the stock price, and then the performance began to change . 2018 revenue waisted, revenue in the first half of 2019 continued to waist, the company's market capitalization has shrunk to less than 15 billion.

By now, Shenzhou Youcheng's market share is only in fourth place, and it's shrinking. It is gradually reducing the proportion of its specialized car business and gradually increasing its online loan finance business.

With declining performance and no business, Shenzhou Youcheng's downward spiral has just begun .

When Shenzhou Youchuan went public, Qian Zhiya had been following Lu Zhengyao for 12 years, and his career progression from odd-job man to second-in-command of the company has been a smooth one, staging a real-life version of the "Duraray's promotion". She has memorized all the moves of Lu Zhengyao in her heart, and she has even learned Lu Zhengyao's thunderous business style.

Qian Zhiya's voice is soft, long hair shoulder-length, originally intellectual calm, and "strong woman" is not related. But after a lot of training, the style is harsh, the rule is very strict, colleagues sent her " Iron Lady " title. The executives of Shenzhou YouChe used two words to describe her: bodhisattva face, thunderous means.

In the process of doing Shenzhou Youchuan, Lu Zhengyao tapped two new faces.

The first was Yang Fei, who in March 2015 became CMO (marketing director) of Shenzhou Youchuan. In a shocking turn of events, Yang Fei was fresh out of jail, having been sentenced to a year and a half in prison by the Chaoyang court in 2015 for "deleting posts for pay".

But it turns out, Lu Zhengyao eyesight unique: Yang Fei is a marketing genius . He went around giving speeches, doing live broadcasts, and bringing his marketing talent into full play. The marketing cases he planned on Tmall and Taobao won many championships, and the "Traffic Pool" written by Yang Fei became a must-read business book for Internet operations. He later became CMO of Ruixing.

Then there is Liu Jian, the head of revenue management. Liu Jian is also a veteran of Shenzhou , in 2008, he joined the founding of only 1 year of Shenzhou Rent-A-Car, as the deputy director of the vehicle management center and the head of revenue management, a job for 7 years. 2015, transferred to the Shenzhou YouCar as the head of revenue management, a job for another 3 years. Liu Jian, who is an unknown, later became the COO of Ruixing.

Since then, Ruixing's "Three Musketeers" have been formally assembled in Shenzhou Youchuan! Lu Zhengyao is the **** same as the uncle of each of them.

I have to say, Lu Zhengyao's vision of people is really poisonous.

In this process, Liu Erhai and Li Hui did not idle. 2015, Liu Erhai founded his own Pleasure Capital ; 2017. Lai Hui founded Dane Capital . These two investment institutions are the gold masters of Ruixing.

Among them, Dagane Capital does not have any investment cases, specifically for Ruixing.

In November 2017, Qian Zhiya "resigned" from Shenzhou, founded Ruixing, served as CEO. "Crazy" Yang Fei resigned at the same time, served as CMO.In May 2018, "honest" Liu Jian served as COO. "Samsung returned to the position, a grassroots "strong woman", a redo, a nobody, they want to capital winter adversity assault, leading Ruixing realize 18 months listed entrepreneurial myth, to create the world from the company's establishment to the fastest IPO of the company.

The Three Musketeers operate behind the scenes, Lu Zhengyao, Liu Erhai, Lai Hui, composed of the three giants of Shenzhou, behind the scenes to give support to young people, to give money to money, to give people. According to Ruixing employees, even the interview location is in the Shenzhou Rent-a-Car office building.

Said to do, the set remains the same: low price + expansion + burning money .

The average price of a single cup of Ruixing coffee is 11 yuan, only 1/3 of Starbucks, which is actually a loss of one cup. Coupled with a large number of coupons, discounts and subsidies, Ruixing has reached a sell a cup and lose two cups horrible rhythm.

Relying on this low-priced strategy, Ruixing attracts a large number of middle-class people who do not have high requirements for the quality of coffee and are sensitive to price. This loser economy and long-tail effect is the basis for Ruixing's scale expansion.

Only five months after its establishment, Ruixing reached 525 stores. 1,500 new stores were opened in 2018. 2,500 more new stores were announced in 2019, and the total number of stores had reached 2,500 before the May 2019 IPO. How dramatic is this expansion?

Starbucks entered China in 1999, and now there are only 3,600, an average of 0.5 per day, Ruixing is 10 times its ; Costa entered China in 2006, and now there are only 450, the establishment of five months of Ruixing Coffee to catch up with rivals more than 10 years of the road of expansion. This speed, so that countless peers envy and stagger!

Ruixing dare to be so aggressive, because the iron triangle in the back to provide money ammunition.

In July 2018, the Series A round of financing of $200 million, the investors are Ri Hui's Dagong Capital, Liu Erhai's Pleasure Capital, "old acquaintances" Junlian Capital (Lenovo Investment), and the Government of Singapore Investment Corporation (GIC) (which is the LP of Dagong Capital, and puts up money for Dagong Capital)

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In December 2018, the Series B financing of $200 million, the investor is simply to replace the GIC of the A round with CIC Capital, and other investors remain unchanged.

What is the relationship between CIC and the "Iron Triangle of China"?

Ding Wei, president of CICC, is an independent director of Shenzhou Rent-A-Car, and Chen Liang Yun, CFO of CICC, is the secretary of Shenzhou Rent-A-Car.

It goes without saying that the funders are all their own.

The whole process is a setup by the Shenzhou system itself, which consists of the Shenzhou Iron Triangle and the Ruixing Three Musketeers.

By April 2019, Ruixing was 18 months old, and the bubble bureau saved with money was big enough to launch an IPO. Just to make sure, Lu played a trick.

On April 18, five days before the IPO application, Starbucks' largest shareholder BlackRock swooped in and invested $150 million. This financing is quite critical, it is telling American investors, Starbucks' largest shareholder has invested in me, what are you still unsure about?

Of course, BlackRock also got a good return, after Rexall listed, BlackRock all liquidated, making a lot of money.

All things being equal, the east wind is not lacking, on May 17, 2019, Ruixing was successfully listed on NASDAQ in the United States.

Before Ruixing, the fastest time for a Chinese company to go public was 2 years and 2 months for Air.com, and Ruixing refreshed to one and a half years!

At the listing ceremony, the Shenzhou Iron Triangle and the Ruixing Three Musketeers were all present, with Lu Zhengyao standing in the C position.

In terms of equity ratio, Lu Zhengyao and his sister hold a combined 42.93%, Qian Zhiya holds 19.68%, Lai Hui's Dane Capital holds 11.9%, and Liu Erhai's Pleasure Capital holds 6.75%.

Ruixing went public and made a splash, but it's not a slam dunk.

First of all, stocks have a lockup period and Rexall is six months, which means it has until November 2019 to sell its shares.

Secondly, the stock price is not high enough , the stock price of $17 on the first day of listing, Ruixing's market capitalization of 4.2 billion is not much higher than the pre-listing valuation of 2.9 billion, and cashing out can not be maximized.

So, in the second half of 2019, Ruixing has only one task: pull up the stock price . That's what led to the shocking conspiracy of $2.2 billion in financial fraud.

Because after the listing, you can not just draw a cake, you must make the revenue, so that investors can see the prospect of profitability, so as to increase the share price. For example, Jingdong, year after year large losses, listed in 2014, just three years to achieve full profitability, profitability of the year the share price reached the highest point in history.

Let's run through Rexall's earnings.

Before going public, in 2018, revenue was 841 million yuan, and the loss was as high as 1.619 billion yuan, almost twice the revenue; in the first quarter of 2019, revenue was 480 million yuan, and the loss was 550 million yuan.

After the listing, in the second quarter of 2019, revenue was 910 million yuan, and the loss was 610 million yuan, compared with the first quarter, the revenue increased by nearly one times, and the loss increased slightly, profitability improved significantly ; the third quarter realized revenue of 1.54 billion yuan, compared with the second quarter, an increase of 70%, and a loss of 532 million yuan, but also down

Profitability further improved .

So when did Rexall's stock start climbing? It was November!

Prior to November, the stock was hovering around $20. After announcing its Q3 statement on November 7, the stock went through the roof, quoting at $44 on January 7, with a market capitalization of over $10 billion, and peaking at $50 on January 13th.

November coincided with the expiration of the stock's lockup period!

To say that this is not a long-planned conspiracy is to apologize for the word "conspiracy".

By the end of 2019, Bellard will have liquidated its position.

In January, with the stock at a high, Lai Fai's Dagon Capital cut its stake by 38.4 million shares, cashing out $230 million to recoup its principal. Then it went on to reduce its stake by 44.16 million shares, cashing out more than $1 billion and making a tidy profit.

Lu Zhengyao and Qian Zhiya did not reduce their holdings, because the major shareholders and founders to reduce the stock is a more obvious shortcomings, but have pledged 30% and 47% of their shares of Rexchip, respectively, the total value of the pledge of $ 2.5 billion , in the form of equity pledges to successfully cash out.

Yang Fei does not have a stake, but he has become a co-founder of the new third board company Hydrogen Interactive, which is an affiliate of Lu Zhengyao, and according to Ruixing's prospectus, Ruixing paid Hydrogen Interactive 42.9 million yuan in advertising costs.

Jian Liu also has no equity, but has options on 47,000 shares, which are valued at $7.41 million at a $25 share price.

The Iron Triangle and the Three Musketeers, the only "victim" is Liu Erhai's Pleasure Capital, which didn't sell a single share and lost at least $80 million. As Lu Zhengyao's benefactor and benefactor, we can't understand the logic of Liu Erhai's malfunctioning operation, assuming he wasn't pitted by Lu Zhengyao, it can only be a miscalculation of the investment , and always walk by the riverside, and this time his shoes got wet.

A lot of people do not understand is, play well, how suddenly to self-detect financial fraud? Is this not suicide?

In fact, false increase in revenue is the industry's unspoken rules, is not at all new , grasp the degree of on the line, but Ruihou played too much. Ruixing January-September revenue of 2.93 billion yuan, fake a four or five hundred million can also be put off, but Ruixing all of a sudden fake 2.2 billion! This is too horrible.

Ernst & Young, as an auditor, would not dare to sign in any case, because signing would smash the signboard, or even close down the business. 2001, Enron financial fraud, the world's number one, Arthur Andersen, as an auditor, collapsed directly.

The SEC regulations, if you can not submit the annual report, is to be delisted, Rexall billions of dollars of market value will hit the water. If it admits to financial fraud, the company can pay up to $25 million in damages, plus the possibility of a 10-25 year prison sentence.

It is clear which is the lesser of the two. The key is who bears the penalty, and COO Liu Jian becomes the backstabber.

The 10-25 year sentence is possible to avoid, no doubt, the Shenzhou iron triangle and Ruixing three Musketeers are staying up late and working overtime to study how to avoid the penalty. At the same time, Lu Zhengyao must have already negotiated the price of imprisonment with Liu Jian, and once the sentence is passed, he will use money to solve Liu Jian's worries.

When we use the words of indignation to Ruixing mouth and mouth, in fact, all the startups, are this set:

1, the founders invested $100 million, enterprise valuation of $100 million, 100% shareholding;

2, Investor A into the investment of $100 million, enterprise valuation of $ 1 billion, shareholding of 10%;

3, Investor B into the investment of 200 million, the enterprise valuation of 2 billion, 10% stake;

4, investor C into the investment of 500 million, the enterprise valuation of 5 billion, 10% stake;

5, the founder and investors total **** invested 900 million after the enterprise IPO, valuation of 20 billion;

6, the founder and investors cumulative cash out of 10 billion, to achieve dozens of times of earnings;

7, once the enterprise is in trouble, the stock plummeted, and the existing stockholders became the receiver.

The difference is simply that there is no listing success, there is no accident after listing.

Wang Sicong could not find an investor, dusty; drip taxi failed to realize the listing, anxious; Richard Li has a milk daddy cover, has been smooth sailing. The end is different, but are their means and ends different?

UAA-Shenzhou Rent-A-Car-Shenzhou Youcheng-Ruixing, the same team, the same routine, behind the tried-and-true is the capital's complete victory over human nature, and behind the more and more radical is the human nature's greed for capital. It's hard for you to say, is it the people who control the capital, or is it the capital that controls the people?

Regardless of the outcome of the penalty for financial fraud, whether or not Ruixiang will be delisted, whether or not it will go out of business, there will be no intrinsic impact on the bigwigs, much less lead them to self-destruction, whether or not they have gone ashore. There's only one kind of victim: the weak around Rexall. Moral criticism can't change that harsh truth.

Looking at it today, a year later, the instigator, Lu Zhengyao, was punished by the China Securities Regulatory Commission (CSRC) with a hefty $300,000, Chinese investors' lawsuit in the Xiamen Intermediate People's Court ended in vain, and a search for Ruixing-related information on Baidu's web page news mostly stays in April-May 2020, and even The "backstabber" Liu Jian, also do not know where to go, disappeared like, but certainly not to serve a prison sentence.

And the public, has long since forgotten this matter, continue to chase other hotspots.

It was business as usual.

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