Baofeng Group, which owns the popular movie player Baofeng, announced on July 28 that its CEO Feng Xin had been detained by police. The company didn’t give any details or reasons as to why he was detained.
The company has been in trouble for the past two years. Significant revenue loss, failure in investments and business mode have been strangling the company to death.
Baofeng lost 230 million yuan ($33.38 million) to 235 million yuan ($34.10 million) during the first half of 2019, according to a company report. In the first quarter of this year, revenues decreased 71.21 million yuan ($10.33 million), a 81.6 percent year-on-year drop.
Apart from revenue losses, Baofeng was sued in May by a subsidiary of China Everbright Group, a Chinese state-owned enterprise for a compensation of 750 million yuan ($108.84 million). The two companies started a merger and acquisition fund of 5.2 billion yuan ($750 million) for acquiring an international sports marketing and media rights firm MP&Silva in 2016. However, MP&Silva went bankrupt two years later.
That was not the only fund that Baofeng had started. The company established numerous funds which are valued over millions of dollars. As the company’s cash flow is not able to pay off these funds, Feng’s shares have been pledged or frozen due to his joint liability. The court has put Feng onto the List of Dishonest Judgment Debtors as open documents indicated.
Many people in the industry believed Baofeng is following the footsteps of Leshi Internet Information & Technology Corp, which is on the brink of being delisted from Shenzhen Stock Exchange.