Li Chuntu was born in 1961 to a farming family in Linxiang, Hunan province. Despite training to become a teacher, his first job was in a state-owned restaurant, where he rose to become manager.
At the age of 30, with just Rmb300 in his pocket, Li moved to Shenzhen to try his luck in the private sector. In 1993, after a number of failed ventures, he was able to enlist the help of Mao Zedong. It was the hundredth anniversary of the great helmsman’s birth. Li borrowed Rmb100,000 from the bank and printed a batch of commemorative Mao calendars. They proved a hit – allowing Li to net his first million.
With the profits, Li founded Zhuzhou Prince Milk in 1996, a company making lactic acid drinks. This was a new product for China, so marketing was crucial. The next year, Li decided to pay a massive Rmb88.88 million to get prime-time advertising slots on CCTV. The ads were a success, allowing the company to bring in orders worth more than Rmb80 million by year end. In 2005 profits reached Rmb100 million compared with Rmb29 million in 2002. By 2007, the company was one of China’s largest dairy companies.
Li not only spent heavily on his core business, investing Rmb2 billion in five R&D centres between 2002 and 2004. But his finances were challenged after he branched out into other industries, but with little success.
Li started raising more capital. Preparations for an IPO started in 2006, when Prince Milk received $73 million of cash from a series of investors. The following year, it got a Rmb500 million low-interest loan. Li agreed to some tough terms – if profits failed to grow annually by 50% over the next three years, he would hand over his controlling stake of the company to the investors. It was a bold move, but it worked for a while. At the end of 2007, he was ready to list in the US.
Then the financial crisis occurred. His bank asked for its money back. To make things worse, the infamous poisoned milk scandal became public. Prince Milk’s sales slumped and Li was forced to hand over his stake to the investors. Prince Milk went bankrupt and Li was arrested under suspicion of illegal fundraising.
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Recently Li was released from prison due to insufficient evidence. Having lost both his health and his fortune, he told Security Daily that he failed because he was “too confident about himself especially when facing the big issues.”
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