About Baofeng

Baofeng

Overview

Baofeng was a Beijing-based online video company whose Baofeng Yingyin, known in English as Storm, media player and video service became one of China's most widely used video players of the personal-computer era. The company was founded in 2007, according to contemporary reporting of its founder's detention, and was listed on the ChiNext board of the Shenzhen Stock Exchange. At its height it was a household name in Chinese internet video; by the end of 2019 it had been reduced to around ten employees, most of its operations suspended, in one of the most dramatic collapses in the history of China's listed internet companies. This profile is written in the past tense because the company did not survive.

Baofeng's story combined two arcs. The first was genuine product success: a free media player that played almost any file format became essential software on Chinese PCs in the years before streaming dominated. The second was a stock-market and acquisitions bubble that destroyed the company within five years of its listing, ending in bankruptcy proceedings at its British acquisition, the detention of its founder and delisting proceedings in Shenzhen in 2020.

The Storm player era

Baofeng built its name on the Baofeng Yingyin player, software that solved a practical problem of the 2000s Chinese internet: video files circulated in many incompatible formats, and Storm played them. In an era of downloads rather than streams, a universal player was a gateway product, and Baofeng's player was installed on a vast number of Chinese computers. From that installed base the company expanded into online video services, and later into areas including virtual reality and esports, as its exchange filings and the reporting around its collapse described its businesses.

That breadth was characteristic of a generation of Chinese video companies that tried to become entertainment conglomerates. Baofeng's ambitions were explicitly modelled on rivals of the period: industry reporting noted that it aimed to compete with LeSports, the sports platform of Jia Yueting's LeEco empire, another company whose leveraged expansion ended in collapse. The parallel proved exact, down to the delisting that later befell both companies.

Listing and the 2015 share-price phenomenon

Baofeng listed on Shenzhen's ChiNext board in 2015 and became famous for a run of dozens of consecutive daily limit-up moves in its shares. Caixin reported that the stock, which peaked at 116.50 yuan in 2015, had fallen to 5.3 yuan by the time of its founder's detention in 2019, having lost nearly all of its value. At the height of the run its market value rose above RMB 40 billion, a valuation wildly disproportionate to the earnings of a video-player business, and a symbol of the 2015 Chinese equity bubble.

The inflated valuation mattered because it shaped what the company did next. A management holding a highly rated listed shell, in a market rewarding expansion stories, was under pressure to buy growth. Baofeng's chosen story was sports, then the most fashionable content category in Chinese media, where rights values were inflating and every major platform was bidding. The decision it took in 2016 to buy into a British sports-rights agency set the course for everything that followed.

The MP & Silva acquisition

In 2016 Baofeng joined a consortium that bought a 65 percent stake in MP & Silva Holding, the British-based sports media rights firm founded in 2004 by Riccardo Silva and Andrea Radrizzani, which held television rights for top-flight English, Italian and German football, Grand Slam tennis and motor racing. The deal was valued at about RMB 5.2 billion, roughly $750 million, and was structured through a layered leverage investment vehicle: Baofeng itself invested only RMB 200 million, while partners including Everbright Capital and China Merchants Bank contributed the remaining funding.

The structure contained the seeds of the disaster. Baofeng promised to buy out its partners by purchasing all of MP & Silva's shares from the investment vehicle within eighteen months of the deal's completion in May 2016. It never followed through, because the British company ran into trouble almost immediately after the acquisition. When MP & Silva failed, the losses did not stay in London; they travelled back through the leveraged vehicle to every participant, and the lawsuits began.

Bankruptcy in London, lawsuits in China

In October 2018 MP & Silva was declared bankrupt and liquidated by a British court. The bankruptcy resulted in several lawsuits among the consortium partners. Everbright Capital filed suit against Baofeng Group in a Beijing court demanding RMB 751.19 million in compensation, and although Everbright Capital's own minority investment was only RMB 60 million, it ended up owing about RMB 3.5 billion to two senior-tranche partners in the consortium, according to its parent brokerage's 2018 annual report.

Baofeng was placed on a court dishonesty blacklist, and by the end of 2018 all of founder Feng Xin's 21.34 percent stake in the company had been pledged or frozen. Caixin's reporting on the affair concluded that the deal shone a light on Baofeng's lax risk controls, and on those of many Chinese corporations of the period that had bought overseas assets with borrowed money at the peak of the market.

Detention of Feng Xin

In July 2019 Baofeng announced that its president and founder Feng Xin had been taken into police custody. The company first cited "suspected crimes" without elaboration; it then confirmed that Feng was detained on suspicion of bribing non-state functionaries, an offence carrying three to ten years in prison, and sources told Caixin the investigation was related to the MP & Silva acquisition. Yicai reported that eight people including Feng were under investigation on suspicion of bribery during the acquisition, and Xiang Tong, the former Everbright capital executive who had managed the takeover project, had been arrested earlier on suspicion of accepting bribes.

Feng held the roles of chairman, president and board secretary, so his detention removed the company's entire leadership at a stroke. Baofeng said it was devising an emergency plan and that its businesses were operating normally, and it took measures to cut costs. Within months those claims were overtaken by the company's own filings, which described a business in its final stages.

The final months of 2019

In December 2019 Baofeng disclosed in an exchange filing that all of its senior executives had resigned except Feng Xin, who remained its legal representative while in detention. The company said it presently had only around ten employees, owed some staff unpaid wages because of tight funding, and had been exposed to greater-than-normal risk as it struggled for revenue with most of its operations suspended. It warned that it was unlikely to publish its annual report on time because it had neither a chief financial officer nor an auditing agency.

Contemporary reporting added that the company's website and app malfunctioned after its hosting partner stopped service over unpaid bills. For a company whose product had once sat on hundreds of millions of computers, the image of its own website going dark for non-payment marked the completeness of the collapse. The player era had already passed with the shift to streaming; the corporate shell now followed it.

Delisting in 2020

In May 2020 the Shenzhen Stock Exchange gave notice of an investigation into suspected violations of information-disclosure rules by Baofeng, and the company faced the same delisting path as its old rival Leshi. Under the exchange's rules, if Baofeng failed to file its 2019 annual report by 30 June 2020 its stock would be suspended and could be delisted a month later if the report still had not been filed. Baofeng entered Shenzhen delisting proceedings in 2020, closing the five-year arc from the most celebrated ChiNext debut of 2015 to removal from the board.

The delisting ended Baofeng as a listed company. Its trajectory was widely treated in Chinese financial reporting as a cautionary case: of a real but modest product business destroyed not by its product but by leverage, an overseas acquisition it could not control, and the legal consequences that followed its founder into detention.

What Baofeng represented

Baofeng represented the first generation of Chinese internet video, in which a utility program could become a national brand before the streaming platforms consolidated the market. Its player belonged to the download era, and its early success showed how distribution on the PC desktop could be converted, briefly, into a listed entertainment group with interests from online video to virtual reality.

It also represented the excesses of 2015-2016, when Chinese listed companies bought overseas sports and entertainment assets at peak prices through leveraged structures. The MP & Silva deal became one of the standard examples in reporting on that wave, precisely because its mechanics were so stark: RMB 200 million of the buyer's own money inside a RMB 5.2 billion acquisition, a buy-out promise it could not keep, and losses that consumed institutions far larger than Baofeng itself.

Legacy

Little of Baofeng survives as a living service. Its legacy is in the record: the Storm player's place in the history of Chinese PC software, the share-price run that made it a byword for the ChiNext bubble, and a collapse documented in unusual detail by exchange filings and financial journalism. The lawsuits among its former partners over MP & Silva outlasted the company's own operations.

For the directory record, Baofeng is therefore classified as a historical, defunct outlet: a Beijing online video company founded in 2007, listed in 2015, broken by the 2016 MP & Silva acquisition and its aftermath, emptied of staff by December 2019 and in delisting proceedings in 2020. Its rise and fall, compressed into thirteen years, remains one of the clearest case studies of how China's internet video industry moved from the player era to the age of the platforms, and of what happened to the companies that tried to leap that gap with borrowed money.