Securities Times reporter Chen Lixiang Yu Shengliang Yan Cui

  As a former capital darling, Royole Technology, which has the world's leading flexible screen technology, has been successively increased by many venture capital institutions, and has accumulated nearly 10 billion yuan in multiple rounds of equity and debt financing. It was once a "unicorn" with a valuation of over 50 billion yuan Beast" enterprise.

  However, leading technology and capital blessings have not translated into market competitiveness.

After the continuous consumption of capital, Rouyu Technology has been in constant negative rumors recently, salary arrears, core staff resignation, and even rumors of "all staff on vacation".

The company's independent director and well-known scholar Liu Shuwei has published articles calling for "saving Royole" and asking the government to help introduce strategic investors to alleviate the urgent need for funds.

  What happened to Royole Technology?

Can Royole get out of the predicament?

  The reporter of Securities Times · e company recently visited the office area and production base of Royole Technology Shenzhen headquarters, and interviewed the investors, employees, peers and industry experts of Royole Technology.

From the scene, Rouyu Technology did not have all staff on vacation, and the production line was still running, but the workload was not saturated.

Investors in Royole are cautious and reluctant to make additional investments.

Colleagues believe that Royole's technical route is no problem, but it is not easy to mass-produce products and pass market inspections.

Some employees put the blame on the company's founders who are not good at management and the inefficiency of operation under the high concentration of power.

  A reporter from Securities Times e Company sent an interview outline to Liu Zihong, founder, chairman and CEO of Rouyu Technology, and got a reply.

Liu Zihong said, thank you for your concern and support. There are too many things going on recently and it is inconvenient to be interviewed, so I will find a suitable time to communicate later.

  In December last year, Liu Zihong once sighed in the circle of friends that he did not expect help in the darkest moments, "the only thing that can be done is to persevere to the end and never give up."

  What we saw at the scene: Not all staff are on vacation

  At the beginning of April, Rouyu Technology was placed on the cusp of public opinion due to rumors such as "all staff on vacation".

At that time, an employee of Royole Technology told reporters that the company verbally informed all employees to take a 3-month vacation.

After that, a person related to Royole Technology refuted the rumor, saying that the company still has employees at work, and not all employees are on vacation.

  A reporter from the Securities Times came to the Royole Technology headquarters in the United Headquarters Building in the High-tech Zone, Nanshan District, Shenzhen, on a working day in late April.

The company previously leased the 18th and 19th floors, but now the office area on the 18th floor has been closed, and the 19th floor remains in normal operation.

  Through the front desk on the 19th floor, the reporter saw that there are still a small number of employees working in the office.

The front desk administrative staff told reporters that the company did not issue a holiday notice for all employees, and he has been working in the company since the Qingming Festival.

  Afterwards, the reporter went to the Royole Technology Flexible Display Base in Longgang District, Shenzhen.

There are many vehicles parked in the park, and some workshops have lights on.

The park security said that the company did not issue a holiday notice, and declined the reporter's request to enter the base on the grounds that there was no reservation code.

  The reporter observed nearby for about two hours.

From time to time, the roar of the machine running is heard in the park, and at the same time, the pipes marked "acid exhaust" are also in normal working condition.

Occasionally employees enter and leave the park.

  At 5 o'clock in the afternoon, close to the closing time, about one-third of the floors of the main office building of the base were lit up one after another.

Just after 6:00, many employees came out of the park, and three buses drove to the door on time. At about 6:15, the lights of the main office building went out to only one floor.

  From this point of view, it is true that Royole Technology has not all employees on vacation, and the production base is still struggling to maintain operation.

  As can be seen from the article "Saving Royole" recently published by the company's independent director Liu Shuwei, Royole Technology is very poor right now.

Liu Shuwei said that when the company has not had time to develop the market and create sufficient operating cash flow, there has been a shortage of funds, resulting in the inability of the flexible screen production line to operate normally and continuous research and development work.

  Investor reflection: lack of excellent products

  From May 2012 to September 2021, Rouyu Technology conducted a total of 8 rounds of financing, obtained equity investment of about 6.197 billion yuan, debt financing of about 3.653 billion yuan, and its valuation once exceeded 50 billion yuan.

The main reason for the favor of capital is that Royole has technology and talents.

  Zhang Qiang is an investor in Royole Technology.

He said that from the perspective of research and development, Royole has indeed come out from 0 to 1, and it is a leader in the industry.

The founder Liu Zihong was born in a famous school and has a good resume. The folding screen is a relatively cutting-edge technology. These are the places that investors were attracted to at the beginning.

  However, Royole's products have not been truly recognized by the market, and the two FlexPai folding phones launched have not sold well.

Many friends around Zhang Qiang have used it, and they report a lot of flaws.

The quality is not too hard and the user experience is not ideal. Naturally, other mobile phone manufacturers will not purchase on a large scale.

  Zhang Qiang said that the application of flexible screen technology has considerable commercial prospects, but whether the prospects can be realized depends on the product and the market-oriented sales performance.

Rouyu Technology has never come up with excellent products, and sales have not brought healthy operating cash flow.

  During the nearly ten years from its establishment in May 2012 to September 2021, in addition to obtaining nearly 10 billion yuan in equity and debt financing, Rouyu Technology’s operating activities received a total of 1.717 billion yuan in cash inflows.

  In June 2018, Royole Technology built and put into operation the world's first foldable and fully flexible display mass production line in Longgang District, Shenzhen, with an investment of 6.5 billion yuan, which is only 1/1 of the traditional display panel production line of the same production scale. 7.

The investment in the traditional panel production line is 46.5 billion yuan.

  With a relatively low investment amount, is it too harsh for Royole to make the world's leading products?

Should shareholders continue to support it?

Zhang Qiang believes that the vision can be expressed in the early stage, and the production line has not been built, and no phased results have been achieved, which means that there is a bottleneck in the technological maturity.

  After the review, Rouyu might not be a good choice to make a mobile phone. It was originally a to B company, and the mobile phone is facing C-end users, and the challenges are completely different.

In order to make mobile phones, Royole has recruited a lot of extra people, which is also one of the reasons for the rapid consumption of funds.

  Still, even the 2,000-plus employees at its peak are too small compared to a full-fledged cell phone team.

It is difficult for Royole to compete with mainstream mobile phone manufacturers, let alone to make panels.

Zhang Qiang believes that at that time, Royole had a special situation in making mobile phones, downstream manufacturers did not have supporting procurement, and the output was small. As the first company in the industry to eat crabs, it was not easy to come out.

Sun Yanbiao, chairman of Rising Sun Big Data, also holds a similar view.

Royole wants to take into account the to B and to C markets, in fact, it acts as both a supply chain manufacturer and a terminal enterprise.

This road has proven to be difficult.

  Yuan Bo, a communications engineer and strategic planning expert, told reporters that in the past development of Royole Technology, it has attached great importance to technology and neglected commercial implementation, which has led it to rely on financing rather than commercial sales to support it, which is not a benign development.

  Employee feelings: Although the technology is excellent, the management is not good

  There are two main technical routes for flexible screens. One is the polysilicon (LTPS) technology developed by BOE, TCL Technology, Samsung and other companies. Almost all major folding screen mobile phones and other products on the market are supplied by these companies.

The other is the ultra-low temperature non-silicon process integration technology (ULT-NSSP) independently developed by Royole.

  According to Liu Zihong's previous introduction, ULT-NSSP technology is better than LTPS in terms of mass production capacity. The reason is that the use of different material systems and different manufacturing processes greatly simplifies the overall production process, greatly reduces equipment investment costs, significantly improves yield, and reduces product bending. Folding reliability is very strong.

  An executive from China Star Optoelectronics, a leading panel manufacturer in China, said that Royole is not an isolated case in terms of technology. South Korean LG and Japanese companies are also doing it, and LG is making faster progress.

"The core key of this product is not how thin the screen is. Samsung can also make it very thin. This is not a plus point. As for the production temperature, it does not make much sense." He said, "The technical route of Royole is no problem. It’s just that this road is too long, and it takes a long way to go from technology to mass production, and it is difficult for academics who only rely on a few laboratories to do it.”

  Chen Ming, who has worked in Royole for more than two years, commented that Royole's technology is really good, the founder's background is impeccable, and the development of the flexible screen industry has been booming in recent years.

Rouyu's troubles have a lot to do with Liu Zihong's personal feelings and management shortcomings.

Liu Zihong's goal is too lofty, making Rouyu's path narrower and narrower.

  "The boss's vision is very grand, and he wants to be a pioneer in creating a flexible planet. This is too ideal, and it may be fatal to a startup company." Chen Ming said.

  He believes that Royole's flexible technology can indeed play a role in many fields, but the first two years are still in the stage of technology popularization. Under the circumstance of limited production capacity of Royole, it must be fully rolled out in various fields such as aviation and consumer electronics. This kind of "better but not specialized" style of play has made it impossible to continue to penetrate in any industry, posing a very big challenge to the company's cash flow.

  Liu Zihong is an excellent scientist, but he is not good at business management, which is one of the important reasons for Royole's "high opening and low walking".

"In the past two years, I feel that the company's management is too chaotic, the internal friction is too serious, and the efficiency of work is extremely low." Chen Ming said, "Every matter needs Liu Zihong's approval, the power is highly concentrated, and the subordinates have no authority and dare not dare. Clapboard."

  For example, Royole pays attention to technical confidentiality, which is understandable.

However, even if an employee wants to install an input method on their computer, they must seek approval from the IT department.

When the approval result is delayed, it is necessary to urge through the internal communication software link by link, or even to find someone in person to solve it.

  Zhang Hua is a technical employee of Royole and speaks highly of Liu Zihong.

He believes that Liu Zihong's "perfectionism" is detrimental to a startup like Rouyu.

  "Liu Bo is really good. His flexible technology does not copy Samsung's in commercial transformation, nor does the design of large-scale production lines copy foreign practices. He has really achieved independent intellectual property rights, and the cost is much lower than the industry. Zhang Hua said that if this achievement is placed on companies with a certain customer base, such as TCL and BOE, it may promote the development of the domestic flexible screen industry in one fell swoop. To do N, the step is too big.

  Zhang Hua said that Liu Zihong's technology is very good, but he lacks planning to spend money.

"This industry has a high demand for money. The total funds raised by Royole may be less than 10 billion yuan, but 11 billion yuan has been invested in the Guangjian production line. What about the follow-up product promotion, employee wages, and technology upgrades? ?"He said.

  Tian asked: Where is the road?

  Whether Royole can overcome this difficulty is the focus of attention from all walks of life.

  An investor told the Securities Times reporter that he was working hard to help and support Royole Technology to tide over the difficulties, and hoped that the outside world would be more tolerant and caring.

He said that Royole Technology does have the world's leading original technology, and venture capital institutions and venture capital institutions are also willing to invest in such companies.

It is normal for an enterprise to encounter setbacks and difficulties in the process of development. From the very beginning, a venture capital institution will have a team to track the invested projects, help enterprises find problems and try their best to solve them.

  "Most venture capital institutions' investments are based on long-term value concepts, but funds usually have an operating period, so the outside world will see institutions withdrawing from some projects in the middle. There are many reasons. Exiting does not mean that they are not optimistic about related projects." people said.

  According to the company’s investigation, the largest shareholder of Royole Technology is Liu Zihong, holding 38.6% of the shares, and CITIC Capital, Shenzhen Venture Capital, Shenzhen Huigang Investment, Songhe Capital, and Tibet Xiangsheng Venture Capital respectively hold 6.05%, 4.64%, and 4.06% of the shares. %, 3.6%, 2.53%.

Rouyu Technology has set up a special voting rights structure, and Liu Zihong accounts for 71.56% of the company's voting rights.

  In the future, if Royole Technology can introduce new strategic investors, Liu Zihong's shareholding ratio and voting rights ratio should decrease. It remains to be seen whether the new investors will allow him to continue to maintain absolute control.

  Another Royole investor told reporters that the investor is a minority shareholder of the company after all. The root cause of Royole's current predicament is that the company's technology and product commercialization are not as expected, and shareholders can provide limited help in these areas.

If it's just a lack of capital, investors may be able to lend a helping hand temporarily.

However, many investors have invested for many years and have not seen a return. It is difficult to make up their minds to continue to invest money.

  Zhang Qiang also believes that the founder's promise has not been fulfilled, and the shareholders' decision not to make additional investment is a matter of course.

This also means that it is currently difficult for Royole Technology to obtain funds through the continuous investment of existing shareholders, and financing needs to find another way.

  Bai Wenxi, chief economist of IPG China, bluntly stated that the founder of Royole Technology was addicted to technology, did not pay enough attention to product application and market development, and was overconfident, which led to the current predicament of Royole.

"If the governance structure of Royole can't be fundamentally adjusted, although the concept of this folding screen technology is good, the company cannot predict the future." He said.

  Wang Peng, associate professor of Renmin University of China, believes that the future way out for Royole is nothing more than changes in the ownership structure, changes in the management team, or the involvement of relevant upstream and downstream industry chains and financial institutions to help Royole find large-scale users and accelerate commercialization.

  Looking forward to Royole getting out of the predicament as soon as possible.

  (The pseudonyms of Zhang Qiang, Chen Ming and Zhang Hua in the text)