Reflection: The truth behind the raid on Nanshan High-Tech

Author: Zhao Qi
Publisher:
Publish Date: 2006-09-01
Features: This is a heavy and thought-provoking textbook that first publicly discloses the landmark journey of China Mobile Communications' history—Nanfang Gaoke—from its inception, brand creation, success, peak to collapse. Nanfang Gaoke, once a renowned domestic mobile phone brand and a state-owned enterprise established with modern systems, rose to become one of the top 50 Chinese electronic information enterprises, the top four domestic mobile phone companies, and a brand valued at 3.899 billion yuan within just a couple of years. The speed was astonishing—how did Nanfang Gaoke achieve this? However, a domestic mobile phone dominant brand enterprise with annual sales exceeding 4 billion yuan was sealed by the court with a simple 20 million yuan acceptance draft. Behind the seizure, the massive debts of Nanfang Gaoke began to surface. Why did Nanfang Gaoke end up like this? This book is a definitive case study analyzing the survival rules and dilemmas of domestic mobile phone companies under the state-owned enterprise system, as well as an excellent read on corporate management, marketing, R&D, manufacturing, and strategy. It is also a textbook that comprehensively examines the life cycle of a company. It prompts us to re-examine globalization from the perspective of national interests: should there be an alliance between domestic and foreign brands, or should a new mechanism be established for mutual benefit between local brands and foreign brands? And what exactly have we gained from the strategy of "market exchange for technology"? Can Chinese enterprises unite?
Changsha Intermediate People's Court Angrily Seals Factory
On the morning of June 23, Nanfang Gaoke in Guangzhou was holding an emergency board meeting at the Guangzhou Economic and Technological Development Zone to discuss the restructuring plan. At this time, Nanfang Gaoke was like the Balkans before World War I—any minor mistake could trigger an explosion like a powder keg. At this moment, two female judges from the Civil Second Tribunal of Changsha Intermediate People's Court—Zhan Zhiliang, Chen Jia, clerk Lu Qing—as well as an employee and lawyer from Changsha Commercial Bank, totaling five people, sealed Nanfang Gaoke's warehouse storing finished mobile phones. This sudden seizure occurred because Changsha Commercial Bank's Ruichang Branch, after failing to collect payments multiple times, had applied for a preservation order with the Changsha Intermediate People's Court. According to legal procedures, the court seized Nanfang Gaoke's factory, production equipment, and other fixed assets worth 25.5 million yuan, equivalent to the value of overdue payments.
After affixing the seals to the warehouse, the execution judges from Changsha Intermediate People's Court communicated with Nanfang Gaoke's leadership. The court agreed to give Nanfang Gaoke 24 hours to arrange the funds, and if the money was repaid within that time, they would lift the seizure. After the communication, the judges returned to their hotel. At this point, Nanfang Gaoke fully realized the impact of the seizure. Paying back the 20 million yuan was now impossible, as there were already over a dozen economic lawsuits filed, judged, and awaiting execution against Nanfang Gaoke at the Guangzhou Development Zone Court. To prevent further seizures by courts in other regions, the Guangzhou Development Zone Court had already implemented a protective seizure on Nanfang Gaoke. That same evening, the Guangzhou Development Zone Court sealed Nanfang Gaoke's production workshop, equipment, raw material warehouse, and finance office. Meanwhile, some employees at Nanfang Gaoke's headquarters were transferring part of the company's assets outside. However, during the transfer, around 10:00 PM, employees from Changsha Commercial Bank who had accompanied the judges from Changsha Intermediate People's Court to execute the seizure arrived at Nanfang Gaoke and reported the ongoing large-scale asset transfer to the judges.
The next morning, when the judges from Changsha Intermediate People's Court returned to Nanfang Gaoke, they found that the production workshop and equipment had already been sealed by the Guangzhou Development Zone Court. Tensions arose at that moment. Although Nanfang Gaoke's management explained to the execution judges from Changsha Intermediate People's Court that the involved amount was only around 20 million yuan and should not lead to the seizure of the entire multi-billion yuan factory area, the execution judges replied, "I don't know how much you are worth!" The judges from Changsha Intermediate People's Court believed that Nanfang Gaoke was deliberately evading them, so in anger, they affixed seals from Changsha Intermediate People's Court to all areas that the Guangzhou Development Zone Court had not seized, including the elevator, all offices, and even the finance office and Chen Zhen's office. As a result, no one from Nanfang Gaoke headquarters could enter the office building. The entire company, including senior leadership, watched the seals from the Changsha court firmly attached to their office doors, yet they were powerless to do anything. This included some places where seals from the Changsha Intermediate People's Court were simultaneously affixed.