On the flexible screen track, can Royole’s “technology + terminal” road go through?

In the just past third quarter of 2021, new models of major smartphone brands have appeared frequently, and the constant comparison of chip performance and camera technology has begun to make users a little tired. However, the “folding screen” whirlwind jointly set off by the Samsung Galaxy Z Fold 3 and other leading brands in the market will definitely surprise consumers.

After several years of dormancy, the breakthrough in flexible screen mobile phone technology has continuously pushed up the sales of mobile phones, and also made users’ expectations for new product experiences reach the highest level. The market outlook has gradually become clear.

In the midst of the hustle and bustle, we turned our attention to “Rouyu Technology”, a maverick domestic brand in the smartphone market. In October 2018, “Rouyu Technology” announced the launch of the world’s first marketable folding screen mobile phone “Roupai 1”. The flexible screen developed and produced by itself, the independent mobile phone brand created by itself, and the whole chain layout from core technology to terminal products, the once unknown “Rouyu” began to enter the public’s field of vision.

After a high-profile debut, multiple rounds of strong financing, and then the failure of the US stock market listing, it was withdrawn voluntarily after being transferred to the IPO of science and technology innovation. If the development of the Royole brand is like a record with A and B sides, then the two sides are definitely not the same tone. The starting whistle of the new track for folding screens is a national brand with high expectations; at the same time, it is caught in a passive situation of poor market performance and weak technological innovation. Different refractions of reality.

——It comes with the halo of “folding screen mobile phone pioneer”. Open the official website of Royole Technology, and the words “Pioneer of Folding Screen Mobile Phone, Leader of Folding Screen Mobile Phone and Full Flexible Technology” come into view. The birth of Royole is indeed with such a shining halo. In October 2018, Royole Technology held a product launch conference. CEO Liu Zihong introduced the first-generation full-screen folding mobile phone Flex Pai 1 to users. It is not Apple, Samsung, nor Huawei or Xiaomi. The crown of the world’s first commercialized folding screen mobile phone has just fallen to a newborn calf.

In terms of technology, the new ultra-thin color flexible Display developed by Royole has a thickness of only 0.01 mm and a curling radius of up to 1 mm. Behind it is the development of new Electronic materials, high-performance and high-stability micro-nano electronics Device structure design and process development, new display backplane process and production process optimization, flexible electronic integrated circuit design, software control system development and many other world-leading technologies are supported. At the 2017 International Consumer Electronics Show (CES), Royole won the CES 2017 Innovation Award, an international innovation technology award selected by the Consumer Technology Association.

For a time, Flex Pai mobile phone and CEO Liu Zihong were in the limelight, and various honors came one after another. Especially in the context of the Huawei Meng Wanzhou incident in 2018 and the monopoly of domestic mobile phones by foreign technology, Royole, which has core technology, is even known as the hope of the national industry. CEO Liu Zihong was identified by the Shenzhen Municipal Government as “Excellent” engineer”. Even in 2021, the flexible screens and solutions designed by Royole are still winning various awards.

——The huge commercial layout of “technology + terminal”. On June 6, 2018, Royole’s world’s first large-scale mass production line of fully flexible screens with independent intellectual property rights was officially put into operation in Shenzhen. This production line has an annual production capacity of more than one million flexible screens. With its technological advantages, Rouyu’s most secure business route is to attack major B-end users and become an upstream hardware supplier, which is enough to equalize with BOE, which has just gained government limelight in Hefei. However, Rouyu chose the full-chain model of “technology + terminal”, and opened up a larger business layout through the integration of upstream and downstream.

In the upstream field of technical hardware, Royole continues to invest huge funds to develop a full range of new-generation human-computer interaction products such as fully flexible displays and fully flexible sensors. In April 2021, Royole’s in-vehicle flexible display solution won the 2021 iF Design Award. At the same time, Royole released the industry’s first Micro-LED elastic flexible screen technology. In addition, Royole also provided ZTE mobile phones, China Mobile, traditional liquor industry, automotive Industry, etc., provide high-quality solutions such as intelligent mobile devices, intelligent transportation, entertainment media, sports fashion, smart home and office education.

In the field of commercialized products in terminals, Royole Technology not only has a folding screen mobile phone, but also released a new generation of 5G folding screen mobile phone Flex Pai 2 in January 2021. It also develops and produces smart handwriting notebooks RoWrite, 3DVR, The layout of new concept products such as cinema system and curved car main control panel, and user-oriented terminal products in the field of comprehensive flexible screen has been completed.

——It is deeply favored by the market and capital. The investors of Rouyu Technology include IDG Capital, CITIC Capital, Shenzhen Innovation Investment Group, Cornerstone Capital, Songhe Capital, Yuanzheng Investment, Fuhui Ventures, AlphaWealth, Shanghai Pudong Development Bank, Jack and Fischer Investment, KIG Capital, etc. – this The lineup can be described in one sentence. In the 8 years since Royole Technology was established, from the United States to China, as long as the investment institutions that can be named have invested in it. The A round to the F round has won more than 10 billion records, making it known as the “Golden Unicorn”. In particular, Rouyu has obtained four rounds of venture capital from well-known domestic and foreign venture capital institutions in the first two years of its establishment; in the fourth quarter of 2019, it has completed a $300 million F round of financing, and its brand valuation exceeded $6 billion. US dollars, people have to look at it.

However, for Rouyu, behind the halo is actually the unsatisfactory market reaction. In the folding screen mobile phone market, the situation of “getting up early and catching a late episode” is irreversible. But the real weakness is the general doubts brought about by the failure of its two hits to go public.

In 2020, Royole Technologies failed to seek a listing on the U.S. stock market. At the end of 2020, it turned to the Shanghai Stock Exchange for an IPO on the Science and Technology Innovation Board, and then voluntarily withdrew it due to shareholder qualification issues. The market’s distrust also exposed Royole’s own problems.

– “Second Curve” development without reserve support. Charles Hansen, a master of British management thought, put forward the concept of “Second Curve” development, which has become the golden rule for enterprises to use multi-brand strategies. It roughly means that the company relies on the funds and resources accumulated by the first development project to cultivate the second growth point through huge investment before the first development curve reaches the peak, so as to maintain the continuous development of the company.

In the development path of Royole, since its establishment in 2012, it has been continuously expanding new projects and products. The problem of other companies is that they have not cultivated the second development curve when the first curve has entered recession. The problem of Royole is that they are eager to develop the second curve to seize the market when the first growth curve is not yet mature. This has led to a fundamental problem. It is entirely dependent on the blood transfusion in the capital market, and it has no hematopoietic ability and cannot support the increasing investment in research and development in the flexible screen market.

Data shows that Rouyu Technology has invested nearly 400 million yuan in research and development every year, but the sales market has only tens of millions of yuan in revenue, which is simply a drop in the bucket. Unsustainable high R&D investment and high expansion rate have formed the second, third and fourth development curves without reserve support, and there is a great risk of collapse.

——The two ends of “B+C” entered the Red Sea to fight in advance. In terms of product management layout, Royole takes both the B-side and the C-side into consideration, which is the key and characteristic for Royole to give full play to its own technical advantages and realize the whole chain operation. It is also the most valued trait by the market and capital, because it indicates the development space and profit prospects without barriers.

But Royole ignores a market environment. Folding screen phones are just a new track, not a new market. The macro smartphone field is not a blue ocean for a long time. In the fiercely competitive Red Ocean market, the necessary conditions for the success of smartphones, such as production capacity, channels, marketing, and user groups, are not achieved overnight, and major brands have accumulated over a long period of time. The high market operating threshold of smartphone brands has blocked Royole’s folding screen phones from the moat.

Looking at the B-end market, BOE’s strategy of only operating upstream hardware has enabled it to catch up on the rapid development of mobile intelligent hardware. On the other hand, Rouyu attacked on all sides of the C-end, and finally classified all the brands that could have become B-end customers as competitors. The advent of the Rouyu mobile phone has stinged mobile phone brands such as Xiaomi and Huawei, blocked the space for the development of B-end marketing, and made Rouyu enter an unexpected competition. The layout of the whole chain, regardless of the priority and the secondary, can only leave no space for the whole chain to accommodate new brands, make good time difference and product difference, unite the majority, and strive for living space. Perhaps Royole needs to learn tactical skills now.

——The disadvantages of rapid capital absorption began to appear. Royole is good at telling the stories most familiar to capital, which is why it can quickly conduct multiple rounds of financing. But since we are based on building a technology-led technology company, we must know how to stop at the right time, accumulate technology, polish products, and operate the market. On the contrary, Royole Technology is involved in round after round of capital, and investment needs to be reported, which is understandable. However, in the actual immature situation, two rounds of impact listing failed, which greatly overdrafted the brand’s credit. It can be said that Rouyu’s success is inseparable from capital, but Rouyu’s current predicament is largely caused by the eagerness of capital to cash out.

The realization of the value of commodities lies in the “thrilling leap” during exchange. What Marx said about the commodity economy also applies to technology and brands. Leading technology, to become a mature brand, must pass the thrilling leap of “market recognition”. Rouyu has both praise and doubts in the process of moving from technology to brand because of its folding screen mobile phone. The only certainty is that this process will not be easy. More than 8 years of development of Royole Technology has given us more inspiration. With advanced independent technology and huge ambition, the market will definitely give it the opportunity to give full play to it; but in terms of brand strategy, operation details and handling of capital relations , you must proceed with caution.

The good news is that Royole is still developing and releasing new flexible screen technologies and product solutions. Is the whole chain of “technology + terminal” smooth? Let’s wait and see.

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