On November 18, 2024, Royole Technology was officially declared bankrupt by the court. The pioneer of foldable phones officially takes its bow!
As the founder leisurely ran abroad with his female secretary, he left behind over 100 million losses for 300 employees and 'a mess'.
A tech company once valued at 50 billion saw its founder Liu Zihong once declare he would 'bend the world'. However, the company ultimately faced wage arrears, production stoppages, layoffs, and bankruptcy, which is truly infuriating.
As a tech 'unicorn', Royole Technology was co-founded in 2012 with an investment of 100,000 RMB by Tsinghua University 'genius' Liu Zihong and his two Tsinghua alumni Wei Peng and Fan Junhao. Liu Zihong was 29 years old that year.
Born in 1983, Liu Zihong won national championships in physics and chemistry at just 17 years old. That same year, he entered Tsinghua University. In 2003, he won the personal special prize and national championship in the national 'Challenge Cup' college student technology works competition finals. After completing his undergraduate studies, he was exempted from the entrance exam to pursue a master's degree in electronic engineering at Tsinghua University.
After graduating with a master's degree in 2006, he declined the offer from the University of Cambridge for a PhD and went to Stanford University in the United States to pursue a doctorate. After graduating in 2009, he entered IBM's New York Global R&D Center, starting his research in semiconductors.
Three years later, he and two classmates established Shenzhen Royole Technology Co., Ltd., engaging in the manufacturing of computers, communications, and other electronic devices. Offices were also set up in Shenzhen, Beijing, Hong Kong, Silicon Valley in the United States, the Netherlands, and Tokyo in Japan.
Shortly after its establishment, the company received investments from investment institutions and support from Shenzhen's 'Peacock Plan'. After securing investment, Liu Zihong immediately devoted himself to day-and-night research.
Hard work pays off; in 2014, Royole Technology released the world's thinnest color flexible display, enabling them to successfully complete nearly 1.1 billion RMB in Series C financing in March 2015.
In 2018, Royole Technology built the world's first mass production line for fully flexible displays and released the world's first foldable phone priced at over 10,000 RMB, FlexPai.
This product made Royole Technology famous in the global tech circle. It quickly became a tech giant with a valuation exceeding several billion dollars. The company's future can be said to be bright.
As an emerging force in the tech field, Royole Technology has become one of the fastest-growing unicorn tech startups globally. Naturally, it has attracted capital's favor. Since its founding in 2012, Royole Technology has gone through 9 rounds of equity financing totaling 6.197 billion RMB and 3.653 billion RMB in debt financing.
The frenzied influx of capital, including financial institutions like IDG, Shenzhen Capital Group, and CITIC Capital 'competing to send money', caused Royole Technology's market value to soar. By 2020, Royole Technology's valuation skyrocketed to 6 billion USD, roughly equivalent to 50 billion RMB.
As an emerging tech company, it was time for the company to go public. But for some unknown reason, in 2021, Royole Technology suddenly withdrew its IPO application, ultimately missing the capital market.
After the failed IPO, Royole Technology experienced a chain reaction. It began to owe wages and stop paying social security, and even the headquarters building in Shenzhen was returned. After these events, many started to doubt whether Royole's cash flow had encountered problems.
In fact, as early as 2020, Royole Technology had already encountered funding shortages. Over more than three years, it has accumulated losses of 3.2 billion. The burn rate of R&D funds is three times that of revenue, leaving this tech upstart heavily in debt.
The launched foldable phone FlexPai not only has a high price of 8,999 RMB, but also has no stock available. To buy one, you need to make a reservation first, and it will take at least 2-3 months to get the phone. This has sharply reduced FlexPai's sales.
At the same time, the development of smart notebooks, head-mounted cinemas, and other products not only consumes a large amount of R&D funds but also cannot be monetized in the short term. This has posed unprecedented challenges to Royole Technology's cash flow.
The root of all this actually comes from Liu Zihong's obstinacy. According to his company's employees, as early as 2020, Royole Technology had already shut down many production lines, and the capital chain had actually broken long ago.
By 2021, Royole Technology began to experience wage arrears and disruptions in social security payments, with some employees waiting for wages as long as 17 months.
Relying on an investment of 10 billion RMB over three years to achieve what others need to spend hundreds of billions and take a decade to complete. Liu Zihong has paid the price for his arrogance.
Originally, relying on the production line, selling curved screens could also make money. However, the stubborn Liu Zihong refused to supply screens to mobile phone manufacturers after developing ultra-thin curved screens, insisting on self-research and production.
His actions completely exceeded his capabilities, and capital also misjudged his abilities. In just one year, the company was led to decline. The company could only struggle to survive on the remaining 800 million in its account. Liu Zihong also paid the price for his absurd 'product logic'.
After the debt crisis exploded, the road for employees to claim their wages was long. Yet, Liu Zihong insisted in front of the employees demanding pay: 'They came for high salaries, but now they want to ruin Shenzhen's entrepreneurial image.' This statement is simply absurd.
As of June 2024, Royole Technology has had 32 pieces of enforcement information, with a total enforcement amount reaching 2.9 billion RMB.
On April 23, 2024, the Shenzhen Intermediate People's Court held a hearing for the bankruptcy review of Royole Technology, and Liu Zihong also attended the hearing.
But soon, an unexpected event occurred. When everyone saw his figure again, he was already sitting in the audience at the US Open with his female secretary.
Yes, you guessed it right! Liu Zihong 'ran away', taking his beautiful female secretary to the United States, the 'holy land' for Chinese business tycoons on the run.
On November 18, 2024, Royole Technology was officially declared bankrupt. Since its establishment, Royole Technology has always been 'haloed', leading everyone to misjudge this tech company.
While Liu Zihong and his female secretary are enjoying themselves, how can the losses of over 100 million for 300 employees be recovered?
This inevitably reminds us of Lin Qiang, the founder of 'Hehe System', who, after amassing wealth through a 'Ponzi scheme', also ran abroad to enjoy life as a 'young genius'.
Coincidentally, the same year Liu Zihong 'ran away', Lin Qiang was arrested in Indonesia and sent back to the country, facing legal sanctions.
Although Liu Zihong 'ran away', it is believed that he will soon be hunted down and sent back to the country like Lin Qiang, facing the punishment he deserves.
Currently, Guangdong Huashang Law Firm has already been appointed as the fund manager for Royole Technology, handling some patent transfers and debt restructuring work. It is believed that in the near future, there will definitely be an explanation for the loss of over 100 million by 300 employees!
Reference Materials:
2024-11-19 19:33 · Securities Times Breaking News! Royole Technology, declared bankrupt by the Shenzhen Intermediate Court!
2024-06-10 15:36 · Xinwanbao Once valued at 50 billion, the 'unicorn' is now in bankruptcy liquidation; the founder is a Tsinghua master's, Stanford PhD.
2024-08-31 22:42 · Securities Times Breaking News! Royole Technology Chairman Liu Zihong has resigned and was recently spotted in the US watching a tennis match.
2023-12-05. Media reports. Royole Technology.
2023-12-26. People's Daily. The era of foldable phones priced under 10,000 RMB has arrived.
2023-12-26. Sina.com. Royole Technology has owed wages for up to a year, with dozens of employees staging on-site strikes for pay.