NIO's move to dissolve a subsidiary brought back memories of its darkest moment in 2019 for many and became the No. 1 trending topic on Weibo.
NIO's cancellation of a subsidiary with no real business, despite being a routine business move, has unexpectedly made it briefly the most-discussed topic in China.
The company has written off NIO Technologies Limited, a subsidiary founded in July 2019 with a registered capital of RMB 7 billion ($1.1 billion), information from data provider Tianyancha showed.
This was reported by a large number of media yesterday and Ma Lin, senior director of corporate communications at NIO, said the subsidiary had not been actually operated and the move had no impact on the company's business.
Normally, concerns about such routine business operations are pretty much over at this point.
However, the topic continued to be discussed by Internet users in China and briefly ranked No. 1 on Weibo Resou (search trends), a Twitter Trends-like platform in China, ahead of several topics related to the Winter Olympics.
Yesterday evening, NIO's official Weibo account shared the information, expressing surprise about it and reiterating the company's product plans for the year:
The ES8, ES6 and EC6 will receive upgrades to the smart cockpit hardware.
ET7, the flagship sedan with autonomous driving capability, will be delivered on March 28. ES7, a mid-size SUV, will be announced in mid-April, and ET5, which has been heavily pre-ordered since its launch, will start delivery at the end of September.
The second production site in Xinqiao (the NeoPark plant) will start production in September.
NIO will be available in four additional European countries.
The topic was probably trending because the move to dissolve a subsidiary reminds many of NIO's tough times in 2019.
The company was facing huge funding woes at the time, when media reports said it was in talks with local governments, including Beijing's Yizhuang Economic Development Zone and Huzhou city in Zhejiang province, to bring in investment.
The recently canceled NIO Technologies Limited was established in Beijing Yizhuang Economic Development Zone in July 2019, and judging from the date and address, the company was perhaps set up in the first place with the aim of being used to obtain investment from Beijing.
Before the bailout money came in, many people expressed concerns about the company's future, and it was once said that "the collapse of NIO is inevitable, this year at the earliest and next year at the latest."
In early 2020, an RMB 7 billion investment from the Hefei municipal government saved NIO, and the "this year at the earliest, next year at the latest" judgment proved to be false.
Since then, NIO's deliveries have continued to rise throughout the year, and its share price has risen tenfold in 2020. The phrase "this year at the earliest, next year at the latest" has been sometimes used by NIO to make fun of itself.
In the Weibo post yesterday evening, NIO included an image of a "capsule" with the company's logo and the phrase "this year at the earliest, next year at the latest," reminding many people of its dark moment in 2019.
In the Chinese language, "capsule" (药丸) has the same pronunciation as "要完" (doomed).