LeEco Holdings chief executive Jia Yueting told his employees recently the company has expanded too fast and now faces a cash crunch.
Fortunately, Jia is said to have successfully raised US$600 million in fresh funding from his post-graduate school classmates.
Jia was a CEO class student at Beijing-based Cheung Kong Graduate School of Business.
Wong Man-li, chairman of Man Wah Holdings (01999.HK), was one of his classmates who chipped in the new capital.
Cheung Kong Graduate School of Business was established in November 2002 through the financial support of the Li Ka Shing Foundation. It’s now considered one of the best post-graduate business schools in China.
The school runs a number of programs, including MBA, EMBA and CEO programs.
An MBA program usually attracts middle-level managers. The average class is bigger, usually exceeding 100 students.
By contrast, a CEO class, which Jia attended, is limited to 30 people. Students admitted are all CEOs or big bosses.
Jia’s fund-raising success points to a key value of business school programs, which is the chance to build connections with top-level executives, senior government officials and leading entrepreneurs.
Of course, choosing the right school matters a lot.
Sixteen graduates of Cheung Kong’s CEO program have made it to the Top 100 of Hurun’s China Rich List this year, including Jack Ma, Guo Guagnchang, Shi Yuzhu and Wu Cajun.
Meanwhile, Wong said he will be using his personal money to invest in LeEco, adding that his listed firm has nothing to do with the transaction.
I myself is a loyal fan of Cheers couch, a product of Man Wah Holdings. Cheers is one of the few global brands originating from Hong Kong.
Currently, Man Wah generates more than half of its revenue from the US market, where it holds a 10.9 percent share of high-end sofa market. It’s the sixth largest furniture supplier in the US.
Man Wah ventured into China 15 years ago. The business was plagued by knockoffs for over a decade.
At the same time, most consumers didn’t appreciate the value of the firm’s expensive sofas; they cost a few hundred US dollars each.
In recent years, Man Wah’s China sales surged along with the rise of the country’s middle class. China now accounts for a quarter of the company’s business.
There were 1,361 Cheers sofa franchise stores across the country as of September.
Man Wah now has a market value of HK$20.4 billion (US$2.63 billion) and Wong ranks 38th on Hong Kong’s billionaire list with an estimated fortune of US$1.65 billion.
This article appeared in the Hong Kong Economic Journal on Nov. 17.
Translation by Julie Zhu with additional reporting
[Chinese version 中文版]
– Contact us at [email protected]