Chapter 164 Seizing food from the tiger’s mouth?

Author: A willow tree in the eternal blue sky

Chapter 164 Seizing food from the tiger’s mouth?

Scenes of farce and farce that go against common sense cannot conceal the profound reality that the ‘TOP Empire’ is falling.

"Born in despair, growing in half-belief, and ending in madness",

This is a famous saying in the investment community, and it is most appropriate to use it in TOP after the anniversary celebration in 2002.

What Song Ruhua didn't expect was that a pie he drew on a whim led to the collapse of TOP's entire empire.

In August 2002, just when Song Ruhua and TOP were immersed in the excitement brought about by the "10th Anniversary Celebration", a storm that TOP called a "media storm" quietly came.

A series of nakedly questioning reports pointed the finger at TOP’s carefully designed nationwide recruitment drive of “5,000 software engineers” for the “10th anniversary celebration”;

As misfortunes never come singly, an unexpected lawsuit broke out at that time.

The first thing to bear the brunt is bank credit, which is the foundation for survival.

The wrong external guarantee issued by the shell company 9 years ago was a complete scandal.

Song Ruhua was caught off guard by what happened nine years ago.

For Song Ruhua, a bank was nothing more than a money bag.

In the name of "building a software park and investing in the market", land is enclosed to convert land resources into land capital, and then the land capital is re-evaluated and taken to the bank to "cash out". In this way, the chicken lays the egg, and the egg lays the chicken.

TOP can continuously obtain cheap "high-tech" land from the government, which is not a perfect closed loop.

As for banks, firstly, whether it is related to the locality, and secondly, whether the value of the land is indeed there, land mortgage loans are the most popular loan method among banks.

There is a true joke:

During the process of applying for a loan from a bank, a certain president asked with a smile: "Topp's products are rarely seen in the market. Where does the sales revenue in our statements come from?"

The person in charge of handling this matter said half-jokingly and half-seriously: "They have a subsidiary company that specializes in smuggling!"

The person in charge of the bank laughed and stopped delving further.

Everyone tacitly accompanied Song Ruhua in playing 'cash out'.

Therefore, Song Ruhua never expected that the bank would stab him at a critical moment.

In fact, Song Ruhua didn't know as much about the guarantee as the media at the time.

Because, when acquiring the shell company, the local government promised that past matters would be resolved, and even if something went wrong, the local government would shoulder the responsibility and have nothing to do with the new company.

'Confucian businessman' Song Ruhua naively believed that the local government would come forward, just as he did not expect that the mighty TOP empire recruiting only 5,000 software engineers in China, a country with a population of 1.3 billion, would actually attract many TV, newspaper,

The same as the three-dimensional bombing of the Internet.

However, both TOP and him remained silent.

Commitments are naturally not verbal.

It's two different things than a written contract.

What does the promise made by the ex have to do with the current one?

What you say before you retire, you should ask someone to listen to you after you retire.

Everyone talks about the weather, but everyone is wrong that there is nothing we can do about the weather.

Since early July 2002, all the sweltering heat and restlessness in the city of Jincheng seemed to be converging towards TOP. Along with the celebrations and the sound of toasting, the stock prices of the three TOP companies on the market fell.

In the overwhelming media reports, the voices of doubt drowned out the voices of 'praise'.

One of the most eye-catching and courageous reports is called "TOP Bubble", which was jointly written by "21st Century Business Herald" reporter Yang Ruifa and "economist" Mao Yining in August 2002.

Of course, those two people are not good people who pursue justice, and the latter even cried behind bars for extorting Oak International.

Was the original intention of writing that report to extort TOP? Unexpectedly, Song Ruhua was too stubborn and didn't take them seriously at all.

The two reporters were furious and published the report directly in the newspaper.

The article comprehensively interrogated TOP in four paragraphs: "The mystery of 5,000 talents?", "Software park turned into a foot-washing city?", "Why did the magical subsidiary lose its glory?", "Where is TOP's core product?"

.

Those four questions revealed the tip of the iceberg of the TOP empire bubble.

First question, 5000 software engineers.

According to TOP's "plan", in the next three years, TOP will build 30 software parks across the country, with a staff size of 40,000 and a traffic population of 100,000.

What is the scale of 5,000 software engineers?

Regardless of whether it was abroad or abroad, software companies with more than a thousand employees at that time were considered large companies of considerable scale.

TOP claims to be building a software company with tens of thousands of people, which is really amazing, exciting and frightening.

"21st Century Business Herald" quoted the research results of the Huating National Accounting Institute's market company research team and directly slapped it in the face.

The research results point out that the management of software talents has always been a difficulty for global software companies.

Generally speaking, there are unwritten rules in the software industry. No matter how good the market prospects are or how mature the external management is, the number of software engineers recruited by a software company outside a year cannot exceed 20% of the company's original engineers.

As an example, Microsoft, which has 50,000 employees worldwide, has experienced good business development in the past year, but has only recruited thousands of employees, which is less than 15% of its original employee ratio.

Professor Yuan Meng, chief engineer of Zhongke Hongqi and known as the "Father of Linux in China," believes that foreign companies simply do not have the management and control capabilities to recruit 5,000 software engineers.

Currently, TOP has only 1,640 technical personnel in the entire group, and it is recruiting 5,000 software engineers at one time. Not to mention that in foreign countries where the software industry is still immature, even internationally renowned software industry giants cannot do this.

According to simple business logic, no matter how we expand, the two key questions we should initially face are ‘what can we do after expansion’ and ‘how can we survive after expansion’?

Not to mention anything else, from the cost side, based on the current annual salary of 100,000 foreign software engineers in 2002, TOP Group's annual expenditure on salary alone is 500 million, including social security and housing provident fund, which requires almost 700 million

about.

If you add office equipment, travel expenses, etc., it will be an astronomical figure.

From the income side, according to calculations by Microsoft and local Chinese companies, according to the current management situation of the foreign software industry, assuming that the sales department can successfully achieve 100% sales, a qualified foreign software engineer must at least contribute to the company.

Only by completing 20,000 yuan of business per month can the company maintain normal operations.

According to this indicator, if a team of 5,000 software engineers can create an output value of at least 100 million yuan for the company every month, then the annual output value will be 1.2 billion yuan.

In addition, coupled with the huge investment announced by TOP Group in the construction of 27 software parks across the country, outsiders estimate that TOP Software needs to achieve an output value of at least 10 billion yuan a year to break even.

But last year, China's annual software output value was only over 30 billion.

From the perspective of outsiders, this is completely incomprehensible.

Of course, that doesn't mean those outside the industry or those IT professionals wearing plaid shirts and jeans.

IT and venture capital are naturally linked, and venture capital and crazy investment are naturally equated.

Therefore, the estimates of IT professionals are usually unreliable. In fact, you can’t ask for that much.

But the rigid cost of salary cannot be covered by TOP's cash flow.

The first question, ‘Where are TOP’s core products?’ made TOP speechless and unable to respond.

Because they also refused to come.

Could it be said that TOP does not produce products, but only concepts?

The storm is about to come, and the confidence of the bank that had previously been favored by TOP began to waver following the report.

After the emperor's new clothes are revealed, banks can no longer act foolishly.

After all, they are not engaged in economics. If you pretend not to see it, it will be difficult to explain in the future.

The reporter’s four questions actually do not involve the real core issues of TOP at all.

Recruit 5,000 people and then lay them off if they are not suitable.

Whether an industrial park turns into a foot-washing city or whether a subsidiary's profitability is a minor problem is nothing to worry about. It is a problem in development.

There are many companies in the city whose main business is not outstanding.

However, 27 industrial parks are being built across the country, requiring tens of billions of funds. How can TOP, with an annual profit of less than 100 million, bear such a funding gap?

Is that the core and essential issue?

That's about the continued operation of a company.

Economists who could no longer continue to live without food had to stand up. It would be too anti-intellectual to say anything else at that time.

As a result, Song Ruhua's operations were exposed in the East of the Sun.

During the construction of the industrial park, TOP started the construction of real estate.

Did Song Ruhua want to use the piles of unfinished buildings to force him into the palace, and then convert part of the land into residential land and sell it for profit?

So, here comes the question.

Is TOP a software company or a real estate company?

In fact, that problem is not a problem. If the Confucian scholars of the Song Dynasty successfully transformed themselves, with the people's tonality of "discussing the original or not", the Confucian scholars of the Song Dynasty would be praised as a legend who judged the situation.

But no, at that time of exposure, the problem that was not a problem turned into a problem.
To be continued...