Success splitting China’s startups
February 27, 2014 Leave a comment
Success splitting China’s startups
Staff Reporter
2014-02-23
Kungfu Catering Management founder Cai Dabiao. (Photo/CFP)
Even if startups can make down the long road to riches, the test is not over. The increasing number of ligitations in China point to the conflict between partners in their now-profitable ventures, where solidarity meets conflicting interests and concepts.
Tsai Dabiao, founder of Chinese fast-food chain Zhenkungfu, recently sued his partners Pan Yuhai and Pan Minfeng, also Tsai’s ex-wife, for illegally convening a provisional meeting of the board of directors on Dec. 9 last year, which appointed Pan Yuhai as the chairman, replacing Tsai.
Previously, Tsai was convicted of fund embezzlement by a people’s court in the Tianhe district of Guangzhou, which sentenced him to a 14-year imprisonment and a fine of 1 million yuan (US$165,000). The plaintiffs were his ex-wife Pan Minfeng and Pan Yuhai, his ex-brother-in-law.
He Yang, director of Beijing Enterprise Research Institute, said that the strife facing Zhenkungfu started with the lack of distinct shareholding allocations at the beginning. The Chinese-language Enterprise Observation said that partner splits is actually a daily occurrence in the business circle in China.
In the wake of its share listing in late 2013, Change Light, a LED maker, for instance, plunged into anarchy as the three founding partners broke up in conflict over the company’s development direction.
In the same vein, last December Cloudary, a literary website, witnessed the breakup of its three founding partners. Two partners, Wu Wenhui and Ho Xiaoqiang, departed the company entirely, leaving only Chen Tianqiao on the management team.
During the fledgling stages, partners of a startup tend to unite under the same corporate objective but their differences over management styles and personalities boil up after the companies gain a solid foothold, often resulting in a breakup.
Observers remarked that partnership is often an ultimate test of humanity. Shi Yuzhu, a veteran entrepreneur, noted that “Partnership is a test of democracy.”
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