Many people are familiar with the brand Yuneec since Intel had invested 60 million US dollars to the company in 2015, followed by the successful ‘Black Technology Show’ - Obstacle Avoidance System at 2016 CES. As for Intel who had an urge to set foot on the smart device, was not satisfied with Yuneec’s performance being no progress in R&D.
Yuneec, a leading aerial drone manufacturer from China, relied on former CEO Tian Yu – one of the leading product managers who won and came back from ‘Google Venture’ - happened to meet "old acquaintance" from Intel. Instead, Yuneec was actually intensified to take advantage of its personal relationship with the Intel CEO Brian Krzanich, as well as the attention brought by the lawsuit and DJI, the heat rub a wave after another wave.
According to incomplete statistics, Yuneec has more than 1,000 suppliers. However, Yuneec‘s procurement team is keeping complaining. Without sufficient money to support, procurement departments only could spend time-fighting for few more months for the debts, promising supplier with "grand blueprint", and how to find the next supplier in due course. The stretched cash flow makes everyone in the team exhausted.
According to some reports, Yuneec did not make payment on time since the second quarter of last year. A battery supplier from Foshan also said, "Every month we are chasing payment, even chase in person. They owed us more than 10 million dollars up to date. Person-in-charge of Yuneec side come out with "long-term cooperation" or "Big order with a new product released’to prevaricate. HoweverYuneec's purchase orders have been significantly reduced. ‘Committed to an order of 100,000 dollars, finally, comes less than 2%’this supplier says.
More than 1,000 suppliers, nearly half of these suppliers cannot get the money back for more than one year. Yuneec did not make payment on time since the second quarter of last year. A battery supplier from Foshan also said, "Every month we are chasing payment, even chase in person. They owed us more than 10 million RMB up to date. “
Sunex, the only exclusive lens supplier for Yuneec located in Kunshan also surrendered to DJI and warmed Yuneec that ‘everything must be advance payment before production’. The reason is nothing more than Yuneec is unable to carry anything they promised. Manufacturers suffered in the early development of lens due to low progress in R&D and product escalates for decades.
A copy of Debit Note indicating the money owed to these five suppliers hit over 4.1 million dollars and it is only "tip of the iceberg." It is obvious that Yuneec's financial crisis is not just alarmist.
Another supplier said, "Yuneec’s poor integrity and credibility are known in the industry. For those small company with one to two million turnovers cannot get back the money for a year means they will not be able to pay for salary. Even getting back hundreds of thousands out of one million is good for them temporally. We all have to live."
Information also provided by Yuneec’s hardware support suppliers that the feed flow rate of fuselage for ‘Typhoon H’being Yuneec’s fist product is no less than 50,000pcs. On top of that, various supporting materials costs need to be counted.
Last year, Yuneec was only able to maintain operation by cutting down employees. Staffs from Kunshan R & D, production and other departments even cannot get their pay on time. Yuneec’s sales even less than 5% of DJI in 2016.
A market analyst said, “Yuneec is just not that company could raise voice by its product. Now it has left nothing except fanciful dream of flight without sales performance or extremely ambitious with messy way of business management. Yuneec touched rebuffs everywhere of major investment institutions.”
Yuneec’s capital chain problem, on the one hand, comes from lavish spending, on the other hand, due to the shrinking of aeromodelling channel. Yuneec successfully started with model aircraft however it remained niche products.
When advanced technology is no longer an issue, Yuneec as the identity of the Horizon foundry is also crumbling. After all, Aeromodelling OEM is not a problem since factories in the southern are able to early release new products equivalent to Iphone8.
Yuneec’s model aircraft R&D and production team was cut by half size. Such cuts mean there were not enough orders to go around. Their testing field used to be crowded but now occasionally can see orange 520 flying alone. According to reliable sources, Yuneec has recently created its own model aircraft brand, and in the middle of last year "poaching" product director from ‘Horzion’with high salary. It seems just a setup by Yuneec from an outsider's point of view.
Seen from Yuneec sales performance via Tmall flagship store, only 5 units sold out of full range within one month. Not to mention DJI, this kind of sales even cannot catch the peers such as Dobby, Ehang, and Hovercamera.
Information also provided by Yuneec’s hardware support suppliers that the feed flow rate of the fuselage for ‘Typhoon H’ being Yuneec’s first product is no less than 50,000pcs. On top of that, various supporting materials costs need to be counted. Yuneec is having a difficult time facing high production cost. It is too late to do prevent it even by replacing new suppliers frequently. Yuneec has to deal with cash flow pressure which is nearly exploded priority to product quality.
On the other side, a series of layoffs action happened in the Yuneec regional business department. If you think that layoffs are just for company transition, I can only say that you are too young too naive. Last year, Yuneec is only able to maintain operation by cutting down employees. Staffs from Kunshan R & D, production, and other departments even cannot get their pay on time. In order to keep the brand image fresh, dismantling the wall to make up the wall seems to be the only way.
Presently, Yuneec top management is struggling to convince various major investment institutions and trying to get re-financing support. Perhaps it happened once, now Intel is trying to stay far away from Yuneec.