The group-buying market presented a rather amusing situation.
Lashou, Wowotuan, 24quan, and Nuomi were locked in a fierce battle, while Meituan and Renren.gou were also having a blast fighting each other.
Renren's Iron Army was highly aggressive.
Their wolf-like culture, cultivated over a long period, showed no fear whatsoever when faced with provocations from their rivals.
Especially after Chen Pingjiang showed his attitude of being willing to back them up.
These two companies had big fights every three days and small skirmishes every two days.
What frustrated Gan Jiawei was that he even suspected Renren.gou's ground team had undergone special training, otherwise why did they always lose unless they had an absolute numerical advantage?
In the end, for minor skirmishes, no one bothered to call the police anymore.
Because no matter who hit whom, as long as they fought back, both would be taken away.
"Damn it, I've never encountered such a despicable company in the sales industry,"
Gan Jiawei cursed furiously.
To be honest, his newly formed team was indeed no match for Renren.gou.
Renren.gou's ground team could be outrageously obnoxious.
Next to every small stall set up by Meituan's ground team, there was always a small stall set up by Renren.gou's ground team.
Meituan's side would say,
"If we can't afford to offend you, can't we at least avoid you?"
"Sorry, once we stick to you, you can't get away."
Renren.gou's side wouldn't even do ground promotion anymore; wherever you went, they would follow.
Finally, Meituan's ground team got so angry they rolled up their sleeves, ready to fight, but Renren.gou's side, seeing the situation was not good, immediately called for backup.
...
After Chen Pingjiang handed over the group-buying matters to Gao Songbin, he returned to the company and convened this year's Renren.com board meeting.
The meeting was held to a high standard, with the Asia-Pacific regional heads of three investment institutions—Sequoia China, IDG, and Singapore sovereign wealth fund Temasek—all rushing to attend.
Inside the conference room, as soon as Shen Nanpeng and Xiong Xiaoge met, their expressions changed slightly, sensing an unusual scent.
Before Chen Pingjiang arrived at the conference room, Shen Nanpeng leaned over and said,
"I didn't expect Chen Pingjiang to summon all of us here; it seems like a big deal."
Xiong Xiaoge nodded,
"I guess it's time to prepare for the IPO."
"I think so too, otherwise, why would he make such a big fuss to call us here?"
In the past two years, Renren.com has developed rapidly and has long met Nasdaq's listing requirements.
Renren.com boasts 175 million registered users, Weibo also performs well, and social games and online games generate substantial revenue.
The outside world has long been calling for Renren.com's IPO.
At various levels, Renren.com has also met Nasdaq's listing requirements.
When Temasek's Asia-Pacific chairman arrived, it further confirmed the thoughts of Shen Nanpeng and Xiong Xiaoge.
Soon after, Chen Pingjiang, accompanied by Guan Yifeng, hurried into the conference room.
Everyone hadn't seen each other for a long time, and after some small talk, Chen Pingjiang finally spoke.
"Everyone here is an old acquaintance, so I won't beat around the bush any longer. It's time for Renren.com to go public."
As soon as these words were uttered, not only the investors beamed with joy, but the other directors present were also quite excited.
A feast of wealth was about to begin.
"Actually, I had intended to list on the A-share market and Hong Kong stock market, but considering the actual interests of all shareholders, I decided yesterday to list on Nasdaq."
Capital is profit-driven, and objectively speaking, the money raised from a Nasdaq listing is indeed much more than from A-shares and Hong Kong stocks, which is why those China concept stocks flock there.
Chen Pingjiang continued,
"Due to Nasdaq regulatory restrictions, Renren.com cannot directly list there. Before listing, we need to design a big red-chip structure. I have already arranged for people to set up a company in the Cayman Islands, and also registered several in BVI (British Virgin Islands). The reason I called everyone here this time is to invite all of you to join the same BVI company."
As soon as Chen Pingjiang finished speaking, the expressions of the heads of the three major investment institutions present changed, with Shen Nanpeng's changing the most dramatically, as Sequoia China was actually Renren.com's second-largest shareholder.
Temasek's chairman Li Shuhao frowned,
"Mr. Chen, this is practically holding us hostage. If you want to stabilize control, our side can cooperate by signing a Concerted Action Agreement; there's no need for such trouble, is there?"
Chen Pingjiang smiled and shook his head,
"We'll all be in the same BVI company. In the future, equity transactions can just be done within this company; won't that be less troublesome?"
Xiong Xiaoge and Li Shuhao both turned their gaze to Shen Nanpeng, wanting to hear his opinion, after all, he was the leader among the investment institutions present.
However, to everyone's surprise, Shen Nanpeng actually gave a straightforward smile,
"Facts have proven that Renren.com has made rapid progress under Chairman Chen's leadership. You are the only suitable captain, and Sequoia China is willing to join your BVI company."
Well, Xiong Xiaoge and Li Shuhao finally understood.
It turned out these two had actually discussed it privately; otherwise, why would Shen Nanpeng agree so readily?
With the 'big brother' taking the lead in 'defecting', Xiong Xiaoge and Li Shuhao no longer had any leverage and could only nod in agreement.
Due to Nasdaq's regulations, domestic companies listing in the US stock market must adopt either a large or small red-chip structure.
The method is to first establish a Cayman company in the tax haven of the Cayman Islands, which is, in the traditional sense, an offshore company.
Several BVI companies are established above the Cayman company, with each BVI company holding a small portion of shares to act as risk isolation, and then these BVI companies control the Cayman Islands company.
A more sophisticated approach is to set up family trusts and charitable foundations above the BVI companies, but Chen Pingjiang doesn't need that for now.
This offshore company established in the Cayman Islands will in turn control a Hong Kong company, and then the Hong Kong company will control the mainland domestic company.
The benefits of this setup are, firstly, it meets Nasdaq's listing requirements; secondly, it's for tax avoidance.
The domestic tax rate for foreign investment is 10%, but for Hong Kong companies, it's 5%.
Simply having a Hong Kong company act as an intermediary saves 5% in taxes.
This entire equity structure is called a big red-chip structure.
However, for Renren.com, it's not that simple, because Renren.com operates in the social media and new media industry, involving large amounts of user data and personal privacy.
According to regulatory requirements, a Hong Kong company cannot directly hold Renren.com's equity.
Therefore, a separate VIE structure must be arranged.
The specific method is that the Hong Kong company does not directly hold Renren.com's equity, but instead establishes a Wholly Foreign-Owned Enterprise (WFOE) in mainland China, and then this WFOE signs a series of agreements with Renren.com, such as equity pledges, exclusive service agreements, and equity incentive agreements, to effectively control Renren.com.
This WFOE located in China can receive all of Renren.com's profits and also has control over Renren.com.
Finally, the equity structure is roughly:
BVI (multiple) — Cayman Islands Company — Hong Kong Company — Domestic Wholly Foreign-Owned Enterprise — Renren.com.
After completing this structure, Renren.com will preliminarily meet the requirements for listing on Nasdaq, while maximizing legitimate tax avoidance.
If founders of listed companies want to reduce their holdings and cash out on A-shares, they must issue an announcement and adhere to strict deadlines.
This is also why many companies issue special dividends before their shares are listed, because after the dividend distribution, it becomes a debt, which can then be repaid after financing.
But in the United States, it's different; as long as the reduction in holdings does not exceed 5%, no announcement is required.
In addition, Chen Pingjiang further divided the shares into Class A and Class B shares.
Class A shares have a 1:1 ratio, meaning one Class A share has one vote.
Class B shares have a 1:10 ratio.
If Chen Pingjiang holds 10% of the Class B shares, he would enjoy 100% of Renren.com's voting rights, and others would have no possibility of controlling Renren.com.
Founding shareholders hold the company's Class B shares, while investors receive Class A shares when external financing dilutes equity.
Although the equity is diluted, control remains firmly in their hands.
After the meeting, Shen Nanpeng found Chen Pingjiang and voiced his doubts.
"Your move to implement dual-class shares and list a year earlier than I expected makes me somewhat doubtful. Are you trying to cash out?"
Chen Pingjiang smiled and said, "Is it that obvious?"
"Of course. Given Renren.com's development momentum, especially now with Weibo dominating and gaming revenue steadily increasing, things will only get better. There's really no need to be in such a hurry."
Chen Pingjiang thought for a moment, took out his phone from his pocket, and waved it in front of Shen Nanpeng.
"This is an HTC smartphone, but I think it's poorly made; it's quite far from the smartphone I envision. If that's the case, why can't I make one? If I control the market terminal and pre-install Renren.com, Weibo, Renren.gou, and all of those onto my own phone, how can other companies compete with me, especially since this also concerns the future of mobile internet?"
"You must know Lei Jun, right?"
Shen Nanpeng nodded,
"Who in China doesn't know Mr. Lei?"
"He brokered the deal for UC Browser to be built into Meizu phones, and I even heard that Lei Jun is recently seeking to invest in Meizu."
This timing is the best moment to enter the mobile phone market.
Smartphones are gradually spreading, Xiaomi doesn't exist yet in this world, and Meizu has a lot of talent.
As long as Chen Pingjiang acts fast enough, he can poach them all.
Get all of them into my bowl!
In fact, Lei Jun did want to invest in Meizu, but the cooperation ultimately failed, so he started anew and created Xiaomi.
In the stories everyone has heard, Lei Jun and Meizu's Huang Zhang share a long history of love-hate entanglement.
Lei Jun became a disloyal villain, stealing secrets and playing both sides.
Huang Zhang became a petty, narrow-minded villain, full of foul language.
There seemed to be no beneficiaries.
If he had the chance, Chen Pingjiang really wanted to tell Lei Jun,
"Mr. Lei, don't bother making phones anymore. I've already poached the talent for you, and I can even build your future SU-7s for you."
After hearing Chen Pingjiang's words, Shen Nanpeng was so surprised that he didn't speak for a long time.
This young man was only 21 years old, but his ambition was far beyond Shen Nanpeng's imagination.
At such a young age, he had already become the "guru" of domestic social media, commanding a fortune of tens of billions.
A normal person would already be thinking about retirement and enjoying the glamorous world.
He didn't expect Chen Pingjiang to actually want to cross industries and make phones?
This wasn't just a leap from Renren.com to Weibo or group-buying; it was a leap from an internet company directly into physical industries and high-tech industries!
But Shen Nanpeng had to admit it was a good move.
Once he had his own terminals, as market share grew higher and higher, other internet manufacturers truly wouldn't be able to compete.
And Chen Pingjiang's move was not on a whim.
Because even powerful companies like Alibaba, Tencent, and Baidu had all tried making phones; it was just that everyone had bad luck and none of them succeeded.
(End of chapter)