Caught in the currents of time.

Investor Network by Han Yijia

Just after the turn of the year, news of a "collapse" spread through the intelligent driving sector.

According to reports, on February 8, just days after resuming work post-New Year, Zongmu Technology employees received an administrative notice: power would be cut off and the building sealed after 18:00 that day, and employees were required to retrieve their personal belongings or obtain resignation certificates beforehand. The latest news indicates that access to the entire Zongmu Technology building has been restricted.

Since late 2024, Zongmu Technology has been engulfed in a "collapse" scandal due to reports of salary stoppages and reduced social security contributions. After several months of turmoil, has Zongmu Technology indeed confirmed its "demise"?

Founder Missing, Executives 'Taking the Money and Running'

For every Zongmu Technology employee, the 10th of each month was originally payday, but since November 2024, the company's salary payments have been "delayed."

At that time, Zongmu Technology issued an internal company email stating that payday had been postponed to the 25th of each month. However, by November 25th, salary payments were reduced to only cover social security and provident fund contributions, with full salaries remaining unpaid. The email also mentioned that due to the company's operating performance targets not being met and the company being in a state of severe loss, the 2023 performance bonus was canceled, and the 13th-month salary stipulated in employee contracts was suspended.

The situation of "unpaid salaries" persisted until the end of last year. On December 24th of last year, Zongmu Technology sent a second email to all employees announcing the company's entry into low-power mode and the payment of November salaries. However, entering 2025, salaries were still difficult to pay, and social security and provident fund contributions for December 2024 were delayed. On January 24th of this year, Zongmu Technology CEO Tang Rui publicly suggested that employees pay their own social security contributions after submitting their resignations.

By January 26th, when employees should have received their year-end bonuses and salaries before heading home for the new year, Zongmu Technology held an all-employee meeting, announcing that it would no longer pay salaries or contribute to social security, effectively "stalling" further.

Ironically, company CEO Tang Rui was still "painting rosy pictures" for company employees before the Spring Festival. On January 16th of this year, at an offline all-employee meeting at the Shanghai headquarters, Tang Rui also stated that after being acquired, employee back pay would be repaid in installments. However, in a subsequent email to all employees on January 24th, Tang Rui noted that the company was actively seeking solutions, including business mergers and acquisitions with listed companies in Ningbo, but there would be no new financing before the festival.

Tang Rui, the CEO who appeared at the general meeting in mid-January, was found to be out of the country by the end of the month. Tang Rui made his last appearance at the employee meeting on February 4th. It is reported that since February 5th, Tang Rui's DingTalk messages have been read but not replied to. Recently, his personal WeChat video number IP address is displayed as Japan, but Tang Rui cannot be contacted through various channels.

The company's founder, Tang Rui, is now "missing," and to make matters worse, over 700 ordinary employees are unpaid, while several senior executives have collectively "taken the money and run."

Before the Spring Festival holiday, Zongmu Technology employees told the media that the company's senior executives had collectively resigned, and some employees revealed that a small group of eight senior executives from Zongmu Technology and its subsidiary companies, including legal, finance, HR, and EBU, transferred 880,000 yuan in guaranteed supply funds to personal bank accounts under the pretext of 3.5 months of unpaid salaries from the afternoon of January 26th to 5 am on January 27th, and took away the company's USB keys.

The "disappearance" of senior executives has also hindered Zongmu Technology's ordinary employees from smoothly completing the resignation process, as the remaining personnel "do not have sufficient authority."

An internal employee revealed that previously purchased stocks and equity incentive funds of employees are suspected to have also been misappropriated, involving a considerable amount of money.

Although Tang Rui is "missing," there have been recent changes to Zongmu Technology's business information. According to the Qichacha APP, business changes have occurred in Shanghai Cancong New Energy Technology Co., Ltd. and Shanghai Cancong Robotics Technology Co., Ltd., both subsidiaries of Zongmu Technology, with Zhou Wei stepping down as legal representative and manager of the two companies, and being succeeded by Zongmu Technology founder Rui Tang (Tang Rui).

Currently, Zongmu Technology (Shanghai) Co., Ltd. has invested in over 90 enterprises through direct and indirect means, with companies located in Guangdong, Shanghai, Shaanxi, and other places, involving various industries such as scientific research and technical services, information transmission, software, and information technology services.

According to the 21st Century Business Herald, on February 7th, relevant departments in Shanghai organized a special seminar on Zongmu Technology and its subsidiary Cancong Technology. Currently, there are three main action plans known: First, the Zhangjiang Town Government will set up a site as soon as possible to announce and answer various handling measures, including unpaid salaries, compensation, and special circumstances; second, the property preservation of companies related to Zongmu Technology has been led by the court, with the participation of Sunqiao Police Station; third, the labor union will quickly assign legal aid lawyers.

Three Failed IPO Attempts

Once upon a time, Zongmu Technology was adorned with a "star" aura.

According to the official website, Zongmu Technology was established in 2013 and is a domestic ADAS solution provider, offering solutions encompassing comprehensive autonomous driving functions. The founder, Tang Rui, holds a master's degree in electronic engineering from Tsinghua University and has a 20-year background in automotive electronics research and development in Silicon Valley.

After its establishment, Zongmu Technology's business spanned multiple levels in the field of autonomous driving, including software, hardware, system design, and component integration. In the heyday of autonomous driving, Zongmu Technology, as a renowned company in the industry, received a total of 10 rounds of financing, with a cumulative financing amount of 2.247 billion yuan.

Zongmu Technology was invested in by well-known investment giants such as Lenovo, Xiaomi, and Legend Capital, with a valuation once exceeding 9 billion yuan, making it a "star enterprise" in the autonomous driving field.

According to data from Synergy Research, in terms of sales revenue in 2022, Zongmu Technology ranked fifth in the domestic ADAS market with a market share of 1.0%; second in the automatic parking solution market with a market share of 4.9%; and first in the APA parking solution market with a market share of 5.6%.

According to the prospectus, as of December 31, 2023, Zongmu Technology had successfully provided intelligent driving solutions for 50 models. From 2021 to 2023, Zongmu Technology established business cooperation relationships with China's top 10 OEM manufacturers in terms of sales volume in 2022 and multiple major new energy vehicle brands, obtaining 22, 12, and 17 project appointments, respectively, and was once regarded as the local Tier 1 with the "strongest mass production capabilities." Among them, Zongmu Technology's top five customers in 2023 were Lixiang, Thalys, Changan, Lunar, and FAW, accounting for 93% of Zongmu Technology's total revenue.

The ambitious Zongmu Technology has also been striving to go public in recent years. In 2017, Zongmu Technology was first listed on the New Third Board market but announced its delisting after a few months; in November 2022, Zongmu Technology shifted to the STAR Market but withdrew its IPO application in September 2023; in March 2024, Zongmu Technology submitted a prospectus to the Hong Kong Stock Exchange, but it expired after 6 months, bringing an end to Zongmu Technology's three unsuccessful IPO attempts.

The three failed attempts to go public have also left Zongmu Technology "severely injured."

First, the "loss hole" created by rapid development is difficult to fill. According to prospectus data, from 2021 to 2023, Zongmu Technology's revenue increased from 225 million to 498 million yuan, but the net loss was 434 million yuan in 2021, 588 million yuan in 2022, and 564 million yuan in 2023, with annual losses exceeding revenue. The cumulative net loss for three years reached 1.586 billion yuan, and the gross profit margin barely turned positive to 3.5% in 2023.

Although Zongmu Technology entered the autonomous driving field very early, multiple transformations have caused Zongmu Technology to lose both technological and business advantages.

Today, the competitive landscape of the autonomous driving industry is becoming increasingly diversified, with not only "big factories" such as Baidu and Huawei entering the market but also emerging car manufacturing enterprises and traditional car companies actively laying out their strategies. This diversified competitive ecology has also led to a "roll-up" in industry technology, and the industry's development has entered a "decisive stage." Kaiyuan Securities stated that the core stage of autonomous driving in 2025 is the function and experience of L4-level Robotaxi. The current technical gap between China and overseas is within one year, which also means that true L4-level autonomous driving has arrived in China, and the investment timing has come.

However, according to internal employees of Zongmu Technology, Zongmu's parking technology stack remains at the 2022 level, with "high-level intelligent driving proposals rejected by Tang Rui," and the company has lost its technological edge.

During the period of rapid industry development, Zongmu Technology failed to keep up in time and "lost" multiple major customers. In 2023, the automatic parking solutions for Thalys Wenjie M5 and M7 were originally provided by Zongmu Technology, but with the deepening of Huawei's Smart Selection model, Thalys switched entirely to Huawei's solutions, and Zongmu Technology was also "intercepted." Since then, Zongmu Technology's main business has continued to shrink.

With its main business shrinking, Zongmu Technology began to transform and make charging robots. Previously, Zongmu Technology stated that it was undergoing organizational restructuring and advancing the two business lines of intelligent driving and Cancong Robotics in parallel. In January 2024, Zongmu Technology officially announced its subsidiary Cancong Robotics and launched the L4-level unmanned driving energy robot "FlashBot," which can provide intelligent charging services for new energy vehicles in parks, parking lots, and other scenarios.

However, the business path of charging robots has not yet been cleared, and the business transformation has further hindered the development of the main business, making it difficult for Zongmu Technology to "stand alone."

The emergence of AI tools has further empowered the development of the industry. It is foreseeable that with the empowerment of AI tools, future industry competition will only become more and more "brutal." After the industry's "great reshuffle," those who cannot keep up have already been swept away by the tide. (Produced by Sifinance) ■

Source: Investor Network