Summary of Key Points
Zhuimi Technology once aimed for "borderless expansion," establishing over 200 independent business units (BUs) within a year, entering almost every popular market segment such as vacuum cleaners, automobiles, milk tea, and trendy gadgets, with more than 20,000 employees. Its growth relied on a partnership model with local state-owned capital funds—using industrial funds to connect with government resources to support the development of each BU. However, since May this year, due to external doubts about the compliance of its capital structure, tightened regulatory policies, and a shortage of financing, Zhuimi has been forced to carry out large-scale layoffs and mergers of BUs, focusing on four core areas: smart homes, outdoor spaces, intelligent transportation, and embodied intelligence. The company's founder, Yu Hao, has had his Weibo account suspended, facing a dual challenge of trust crisis and business adjustment.
Detailed Analysis
1. The Once "Borderless" Expansion: Over 200 "Small Companies" Blooming Everywhere
Zhuimi's expansion strategy was akin to "net-sweeping entrepreneurship"—the company was divided into over 200 independent BUs, each operating as a separate legal entity responsible for its own profits and losses. Initially, the group provided some start-up funding, but eventually, these BUs were expected to secure external financing to sustain themselves. For example, while vacuum cleaners were the main business, the company also dabbled in smartphones, trendy gadgets, milk tea, and even hot pot—entering any market segment that was trending.
To accelerate growth, Zhuimi adopted a "high-goal-driven" approach: each BU was required to recruit 1,000 employees, prioritizing top-tier talents from companies like Midea and Haier (referred to as "first-quadrant talents"), with the requirement that one top talent could bring in one regular employee. The PR department was tasked with free media coverage at the municipal level and above to help with fundraising. BU leaders had to set ambitious targets, such as achieving a monthly revenue of 10 million yuan; failure to meet these targets meant elimination. This approach seemed to stimulate vitality but also laid the groundwork for subsequent chaos.
2. The "Cooperation Game" with Local Governments: Expanding with Government Funds—No Longer Feasible
Where did Zhuimi's expansion funds come from? A significant portion came from local state-owned capital. The company collaborated with local governments through its subsidiary, Skyspace Factory, where the government provided 80% of the funding and Zhuimi contributed 20% to establish industrial funds that were then invested in the BUs. Why were local governments willing to cooperate? Because Zhuimi offered benefits such as job creation and tax contributions. However, this model collapsed in May: self-media articles questioned the legality of these partnerships, and the State Council issued policies prohibiting the establishment of new government funds at the county level, prompting existing funds to be consolidated. As a result, Zhuimi's access to funding was restricted, and its BUs faced difficulties in securing capital.
3. A Two-Month Decline: A Triple Blow from Public Opinion, Regulation, and Financing Cuts
In mid-May, a self-media article exposed issues with Zhuimi's BU ownership structure and fund partnerships, drawing market attention. This led to layoffs and business adjustments: some BUs were directly shut down, employees were left to fend for themselves in their offices, and founder Yu Hao's Weibo account was suspended. A region in the Yangtze River Delta demanded a review of Zhuimi's cooperation projects, causing the stock price of its associated company, Jiamei Packaging, to plummet.
More critically, financing dried up: the group notified the BUs in March that loans would be halved in April, reduced to a quarter in May, and completely stopped in June. Each BU was required to raise 1 billion yuan by June and 3 billion yuan per month in the third quarter—almost no one could meet these targets. The primary market now avoids projects associated with Zhuimi; investment institutions refuse to consider them, even those with hidden connections.
4. Internal Management Chaos: Redundant Construction and Data Falsification
Zhuimi's internal structure was highly competitive, with different incubators and BUs within the same incubator competing against each other. For example, multiple BUs in the same industry (such as air conditioning) operated simultaneously, leading to waste of resources. To meet targets, some BUs resorted to data falsification—trendy gadget BUs exaggerated their performance figures, and new BUs set unrealistic revenue goals that were never met. Offline stores opened but were closed immediately, with positive reports still being released to the public. Employees suffered; some were laid off shortly after starting, and others found that their BU's legal representatives had also been dismissed, making it difficult to seek compensation.
5. The Challenge of Contraction: Can It Regain Trust Through Core Business?
Zhuimi has now focused on four core areas and consolidated or eliminated non-core BUs. Founder Yu Hao described this as a "test of endurance," but the market is skeptical—previous claims of becoming a "trillion-dollar company" and the world's richest person seemed overly ambitious. The real test lies in demonstrating actual performance that can attract investors. For instance, although Zhuimi led the global vacuum cleaner market, its financial reports are inconsistent (annual reports claimed net profits of 5.5 billion yuan, later revised to 2 billion yuan). The company needs to rebuild trust with accurate data and address lingering issues with local state-owned capital to avoid compliance risks.
Conclusion
Zhuimi's story is a cautionary tale about an expansion bubble: rapid growth using local funds and ambitious goals without considering business logic and compliance. While contraction is inevitable, whether it can return to focusing on core businesses and build trust will determine its future success. For all companies, this serves as a reminder that growth cannot rely solely on hype; ultimately, products and profits are what matter.