From rich business to box office gold mining, Qi Jianhong, the leader of the Yao Lai Department

Qi Jianhong spent nearly 20 years creating today's "Yaolai" commercial landscape. Last year, he led Yaolai's film and television sector to the A-share market and became a rising star in the film and television industry.

The original title starts with Qi Jianhong, the leader of the Yaolai Department: From the rich business to the box office,

learn about the forefront of China's super-luxury car market in the exhibition hall on the first floor, admire the authentic works of the master of Chinese painting Bai Xueyushi while sipping tea in the upstairs office, and watch clips of Jackie Chan's new film in the private theater on the first floor... When visiting this excellent Chinese agent Yaolai Group, Rolls-Royce executives hardly had to leave the Yaolai Center located in the prosperous area of Sanlitun, Beijing. If he is lucky, Jackie Chan, who has a full schedule, will also find time to accompany foreign guests to make drinks.

Here, Qi Jianhong, a low-key millionaire with a net worth of 13 billion yuan, owns tens of thousands of square meters of real estate belonging to himself. He once worked hard to operate the super-luxury car business here, and also built his rich circle here, and used this to make the rich business and the "ecosystem" of the film and television "empire" flourish.

Qi Jianhong spent nearly 20 years creating today's "Yaolai" commercial landscape. Last year, he led Yaolai's film and television sector to the A-share market and became a rising star in the film and television industry. Qi Jianhong has unlimited scenery, but he always seems to "live in seclusion in the busy city". Since joining the Yaolai Group in Hong Kong's capital market in 2008, its ultra-luxury business has been ups and downs, but he is used to being behind the scenes, entrusting important tasks to professional managers, and rarely accepting media interviews.

Regarding issues related to Yaolai Group's business and strategy, every film and television reporter sends an interview letter to the group's marketing and media department at the end of October, but the other party said that it is not convenient to accept media interviews at present because the disclosure period of the interim results report is approaching. Qi Jianhong himself also declined interviews related to his personal assets.

Starting from super-luxury cars: Building a billionaire's circle business

Except for the photo taken by Jackie Chan attending events together, Qi Jianhong has almost never taken the initiative to appear in front of the public media. Similar to most low-key billionaires, there are many versions of his rise story, and the most widely circulated one is that Qi Jianhong was one of the first businessmen in mainland China to start acting as an agent for ultra-luxury goods.

Different from ordinary luxury goods, it is difficult for Qi Jianhong to attract more than five digits of customers in the ultra-luxury cars, top jewelry and watches businesses. In the most recent fiscal year, the sales volume of these items was only about 1000, but these products, which cost millions of customers per unit price, have become the cornerstone of Qi Jianhong's commercial landscape.

At the first Xingfu Square in Xingfu Second Village, Chaoyang District, Beijing City, the huge exhibition hall on the street and most of the area of several office buildings are Qi Jianhong's self-owned properties and the base camp of the entire Yaolai Department. At the end of October, every time a film and television reporter came to the Yolai Center, the signboards and exhibition halls of Rolls-Royce, Lamborghini, and Bentley made the Yolai Center particularly dazzling.

A white Lamborghini was carefully driven out of the Yolai Center on a trailer. In the past fiscal year 2016 (April 2015 to March 2016), the Yolai Group sold a total of 40 such super-luxury sports cars. This is also a highlight in the Yolai Group's ultra-luxury car business. In contrast, sales of Bentley and Rolls-Royce have declined to varying degrees compared with the previous fiscal year.

Qi Jianhong's business in the mainland did not start with the agency sales of ultra-luxury cars, but this business ultimately supported nearly 90% of Yaolai Group's performance. Incomplete statistics from the reporter's inquiry into the industrial and commercial registration system show that Qi Jianhong established a trading company in Beijing as early as 1996. Most of the companies registered in the 1990s involved jewelry, but most of them have now been cancelled.

"When I met him, he was still a yellow-haired boy. At that time, Hong Kong had not returned to China." According to Jackie Chan's description in the book "Jackie Chan: Getting Old Before He Grows Up", Qi Jianhong's business in the mainland dates back to 1997. At present, most of the operating entities of Qi Jianhong's super-luxury car business were registered in 2007 and 2008.

What is widely praised by the outside world is that Qi Jianhong became a Bentley agent around 2000. Without market visibility at that time, he sold 30 Bentleys, far exceeding the target of 6. A 2010 report from China Business News stated that Qi Jianhong relied on his original rich connections to sell various luxury goods, and quoted Tang Qili, the current chairman of the board of directors of Yaolai Group, as saying,"At that time, he was almost always in the circle of rich people."

The rich circle built with ultra-luxury goods such as ultra-luxury cars has allowed Qi Jianhong's business to continue to expand its boundaries. The resulting "Yaolai Honor Club" has gathered more than 3000 billionaires, and the "Yaolai Luxury Brand Culture Expo" has also become a grand event gathering the world's top brands in China. Yaolai Online's official website shows that Yaolai Group has accumulated nearly 10,000 Honor Club members over the past 20 years. It is expected to achieve its annual turnover of more than 50 billion yuan by 2020 and gather more than 50,000 ultra-high-end customers.

In the exhibition hall on the first floor of the Yaolai Center, the signboards of Yaolai Aviation and Yaolai Pure Brewery are also displayed, and the offices of Yaolai Film and Television, Yaolai Commercial and other sectors are also located in the Yaolai Center. Every time a film and television reporter notices, Jackie Chan Moutai liquor owned by Yaolai is also piled on the first floor of Yaolai Center.

"The Yaolai Ecosystem is about to emerge." In the opening words of the June edition of the "Yaolai Honor Association" published by the reporter, Tang Qili said that through integration within the ecosystem, its value creation will be further amplified.

The rise and fall of ultra-luxury goods: Capital operations are started in the "cold winter"

. Even if a layer ecological model is built, Qi Jianhong's ultra-luxury goods business is not smooth sailing. In the past three years, China's ultra-luxury goods business has entered an industry turning point. In the fiscal years before fiscal year 2013 (April 2012 to March 2013), Yaolai Group's net revenue soared, but since then it has fallen into a downturn or even suffered losses.

"The business environment this fiscal year is full of challenges." In fiscal year 2013, Yaolai Group's business suffered a "Waterloo", and the ultra-luxury car agency business, which has long accounted for about 90% of revenue, turned sharply. At the beginning of the decline, Yaolai Group attributed the reason in its annual report to "the increase in the number of ultra-luxury car dealers in the China market has intensified competition."

The ultra-luxury car business, one of its core competencies, experienced its first decline in fiscal 2013 since its backdoor listing in 2008. In the subsequent fiscal year 2014, fiscal year 2015 and fiscal year 2016, Yolai Group's super-luxury car business generally showed a downward trend. In the most recent fiscal year 2016, its sales were: 322 Bentley vehicles, 40 Lamborghini vehicles, and 126 Rolls-Royce vehicles. The sales of Lamborghini, which performed the best growth rate, were less than the 47 vehicles in fiscal year 2013, and it was even more difficult to match the 79 vehicles in fiscal year 2012.

In recent years, the general luxury goods market has entered a "cold winter". Ultra-luxury goods are also unsatisfactory. The operations of other ultra-luxury goods in the Yaolai ecosystem are also not optimistic. In fiscal 2016, although the gross profit of Jolai Group's newly developed men's wear sales surged 11 times, this was offset by the decline in traditional businesses such as automobiles.

What is even more embarrassing is that the business strategies of many international luxury goods giants are changing. In August this year, British luxury brand Burberry acquired the remaining 15% stake held by its China agent, Yolai Group, for a total price of 54 million pounds (approximately 477 million yuan).

For Yaolai Group, the industry's winter is also reflected in changes in employee compensation. Its financial report showed that the number of employees in the 2016 fiscal year increased slightly to 485 compared with the 2015 fiscal year, but its total employee costs fell from HK$51.3 million in the 2015 fiscal year to HK$44.1 million.

According to Yaolai Group's latest disclosure in early November, it is expected that the company's interim results for the six months ended September 30, 2016 will turn around. This is also due to the sold well of Bentley's new luxury cars and the narrowing of losses in watch and jewelry businesses due to store closures.

Faced with changes in the industry, Yaolai Group launched Yaolai Online, a luxury e-commerce platform, in July this year, which was evaluated by Titanium Media as "luxury veterans compromising on the Internet." It was difficult for the Internet to quickly turn the situation around. At this time, Qi Jianhong's personal assets outside the listed company began to play a role.

Under the cold winter of luxury goods, Qi Jianhong started capital operations. On October 20, Yaolai Group announced a related transaction. The company plans to acquire approximately 15.09% equity in Danish listed company B&O and 49% equity in China joint venture company Henghuai Baosheng (Beijing) Trade Development Co., Ltd. from Yaolai Holdings, a subsidiary of major shareholder Qi Jianhong. After the transaction is completed, Yaolai Group will become the single major shareholder of B&O and wholly own the China joint venture company.

At the same time, the above acquisition consideration will be paid through the issuance of 1.161 billion shares to Yaolai Holdings. As a result, the equity held by Yaolai Holdings, Qi Jianhong and those acting in concert will increase from approximately 29.06% to approximately 48.95%, which may trigger a conditional mandatory cash tender offer with an offer price of HK$0.45 per share. On the day the news was announced, its share price surged 18.75% to close at HK$0.76.

Choosing to inject assets when performance is sluggish may even trigger a tender offer. Qi Jianhong's capital chess game at this time is unpredictable.

Wealth map: As the asset allocation of 13 billion yuan

continues to expand, Qi Jianhong's personal wealth is also growing rapidly, especially in the past four years. On the 2016 Country Garden Forest City Hurun Report, Qi Jianhong ranked 213th, with a wealth of 13 billion yuan. On the Hurun Report in 2012, Qi Jianhong's wealth was only 5.5 billion yuan.

As the actual controller of Hong Kong-listed companies, Qi Jianhong has devoted more and more energy to the film and television sector in recent years. At the end of last year, Qi Jianhong and Zhao Xiaodong, executive director of Yaolai Group, resigned from their respective positions and only served as consultants to receive salary. As Qi Jianhong's old team, Zhao Xiaodong became an executive of Yaolai Film and Television, and Qi Jianhong served as the general manager of A-share listed company Cultural Investment Holdings, the parent company of Yaolai Studios.

After injecting Yaolai Studios, film and television investment and production, artist and model brokerage and other sectors into Cultural Investment Holdings last year, Yaolai Culture, controlled by Qi Jianhong, holds 17.11% equity of Cultural Investment Holdings, becoming its second largest shareholder. In addition to the securitized assets of Yaolai Group and Cultural Investment Holdings, Qi Jianhong's asset landscape goes far beyond that.

According to incomplete statistics from industrial and commercial information, the reporter found that Qi Jianhong has directly invested in more than 10 companies as a natural person, and more than 100 companies have served as legal representatives or executives. Among them, Beijing Yaolai Investment Co., Ltd.(hereinafter referred to as Yaolai Investment), which is wholly owned by Qi Jianhong, has shares or controls more than 20 companies, making it an important platform for its unlisted assets. Public trust financing information shows that as of September 2015, Yaolai Investment's total assets were RMB 3.447 billion, and in 2014, it achieved operating income of 1.275 billion yuan.

Under Jolai Investment, the aviation business operated by Jolai Airlines, which was established in 2013, is an important segment of the Jolai system. According to public reports, Yolai Airlines once carried an aircraft known as the "Air Ferrari" to the air show. In addition, the wine companies jointly established by Yaolai Investment with Maotai and Wuliangye are also important components of its high-end customized wine sector.

It is worth noting that in 2012, Qi Jianhong also wanted to inject 90% of the equity interest in Beijing Alemani Catering Management Co., Ltd. held by Yaolai Investment into Yaolai Group through a stock exchange price of HK$84 million, but was ultimately terminated due to difficulties in meeting the acquisition compliance requirements in a timely manner. The target business is to operate a restaurant in Beijing of the Michelin three-star Japanese food brand "NOBU".

In addition, Yaolai Investment has also participated in several equity investment funds, as well as shareholding leasing companies and a number of technology companies. There is another important part of Qi Jianhong's wealth, which is real estate.

The related transaction between Yaolai Group and Cultural Investment Holdings also disclosed that Qi Jianhong owns multiple properties in Beijing, Tianjin and other places. The rent paid by Yaolai Group to Qi Jianhong in fiscal year 2016 reached HK$70.246 million, with the lease area exceeding 10,000 square meters. The annual rent paid by Cultural Investment Holdings also exceeded 8 million yuan.

In a trust financing plan issued by Sichuan Trust for Yaolai Investment, Qi Jianhong used its property with a total construction area of 15,737.7 square meters in Building 40, Xingfu Second Village, Chaoyang District, Beijing City, as trust collateral, and the two properties A and B there were valued at more than 1.8 billion yuan.

Looking at Qi Jianhong's more than 20 years of business, his business growth path seems to have begun to emerge: it continues to expand its circle in the rich market of ultra-luxury goods. Using real estate investment to preserve value, rental income and dividends from joint-stock companies bring sufficient cash flow, and expand the film and television entertainment business. From rich business to box office gold mining, we accurately step on the node of industrial change and explore circle resources.

Editor: Nancy