How Abstract Logos Once Ruled: The Fall of a Generation-Defining Company

Do you remember Beijing Xinwei Telecom Technology Co., Ltd (北信源)?

Many from the 80s and 90s generations might recall the company, or at least its distinctive logo:

The image combines a human figure with a screw, featuring a flattened and cracked head atop a screw-threaded lower body. Regardless of the era, it’s a visually striking design.

Reportedly, the design aimed to convey the spirit of dedication and perseverance, like a “screw.”

Whether it successfully conveyed that spirit is debatable, but it recently resurfaced in an online discussion thread titled “The Ugliest Design Disasters Ever Encountered…”

While fewer internet users may recognize Beijing Xinwei Telecom today, it has recently reappeared in the public eye, seemingly because of its current struggles.

According to reports, Beijing Xinwei Telecom has repeatedly delayed salary payments, with July’s salaries postponed until late September, and those for April and May potentially delayed until the end of the year.

Driven by both nostalgia and curiosity, a deeper dive reveals that the story of this company is more complex than its logo suggests.

Founded in 1996, Beijing Xinwei Telecom was among the first specialized antivirus software companies in China.

The rise of early Chinese internet companies often followed a similar pattern: a technically skilled founder entering a rapidly evolving industry.

In 1988, computer viruses began spreading in China via floppy disks. The first virus in mainland China is believed to have been the PingPong virus, also known as the “Bouncing Ball,” which, while not harmful, displayed a small ball bouncing across the screen.

However, more malicious viruses soon emerged.

In March 1992, two major viruses, Michelangelo (triggered on March 6th) and Friday the 13th (triggered on the 13th of any month falling on a Friday), both activated within the same week, triggering widespread media coverage and popularizing the concept of computer viruses.

Where there is attention, there is opportunity, and the tides of change often deliver those opportunities to those who are prepared.

Lin Hao, after graduating, joined the Nanjing Fourteenth Research Institute of the former Ministry of Electronics Industry, conducting research on high-tech military products.

This institute is a key player in the national defense electronics information industry, undertaking critical tasks in many key national projects.

Standing at the forefront of technology, he recognized the potential of antivirus solutions early on.

In August 1992, less than six months after the initial virus scare, Lin Hao’s antivirus system was released, successfully capitalizing on the opportunity.

He founded Xinwei, where the initial “screw” logo featured a foreign face. Later, due to a divorce and separation, Beijing Xinwei Telecom was established.

Amidst intense competition from established players like Jiangmin and Rising, who were household names in antivirus software, success required more than just entering the market early.

Firstly, the product performed well in its early stages, with competitive detection rates and the ability to identify and remove new viruses quickly.

Secondly, in an era of relatively rudimentary user interfaces, VRV (Xinwei’s antivirus product) offered a user-friendly graphical interface.

It even featured an animation at the start.

Moreover, securing contracts with government agencies, military, financial institutions, and energy companies offered stable profits but also posed higher barriers to entry. These were relationships difficult for average firms to cultivate.

Lin Hao not only had relevant work experience but also served as a network security expert for public security departments starting in 1996.

This gave him a head start in understanding the technical requirements, procurement processes, and trust-building needed to work with these institutions.

Their product documentation even had a section called “Important Contracts,” which listed major clients such as the Chinese Academy of Sciences, military command headquarters, and the State Environmental Protection Administration.

In some regions, even elementary school computer labs displayed Beijing Xinwei Telecom’s logo on startup screens.

Leveraging its advantages, Beijing Xinwei Telecom entered the field of internal network security around 2000.

It provided terminal security services to military, government, and financial institutions with high security and confidentiality requirements.

For a long time, Beijing Xinwei Telecom became a compulsory “undeletable” fixture on countless organizational computers.

Due to internal information security policies, typical users were only able to obtain uninstall passwords from the IT department, hindering the ability to remove it.

Providing in-depth network information security services to national organizations became a key endorsement for Beijing Xinwei Telecom.

Fueled by favorable winds, Beijing Xinwei Telecom was listed on the Shenzhen Stock Exchange’s ChiNext board on September 12, 2012.

Under the halo of being the “first terminal security stock” and serving national organizations, the stock soared 27.84% on its first day of trading, enjoying a moment of glory.

However, since its listing, things haven’t been as smooth. No one’s journey remains effortless forever.

Existing markets faced increased competition, leading to modest growth in performance, while new products delivered only mixed reactions, consuming significant cash and eroding profits.

In 2016, Beijing Xinwei Telecom launched “Xinwei DouDou,” positioned as an instant messaging and collaborative office platform, akin to a Chinese version of WeChat and DingTalk. However, this venture never gained widespread traction.

Concurrently, development costs surged by 708%, from 3.4883 million at the end of 2015 to 28.2171 million at the end of 2016.

Amidst this, their activity within the capital markets has also become bewildering.

From 2012 to 2020, Beijing Xinwei Telecom executed seven dividend distributions, four of which involved “high stock splits and transfers,” earning them the nickname “Split-and-Transfer Maniac.”

What is a “high stock split and transfer?”

Imagine owning 100 shares, each worth 200, totaling 20,000. If the company performs a 10-for-10 split and transfer, your holdings would increase to 200 shares, seemingly doubling your assets.

However, after the split, you’d find that each share is now worth only 100, maintaining the total value of your assets at 20,000.

This is “high stock split and transfer”: increasing the total share capital of the company, reducing the face value of each share but increasing the number of shares.

For shareholders, it’s akin to splitting a 100 bill into two 50s.

The maneuver doesn’t create value, but it can ignite excitement.

Shares priced at 300 each require an investment of 30,000 for a single lot. Halving the price makes shares more accessible, naturally increasing liquidity.

Furthermore, a lower share price can create the illusion of being “cheap, with limited downside risk and high upside potential,” attracting irrational investors to drive up prices.

Some companies use “high stock splits and transfers” to inflate stock prices, then seize the opportunity to reduce their holdings, transferring benefits.

Around 2015, “high stock splits and transfers” became extremely popular.

Internationally, a 10-for-5 split and transfer is considered “high.” Beijing Xinwei Telecom repeatedly performed 10-for-10 splits and transfers, even attempting a 10-for-20 split and transfer in 2016, triggering regulatory attention from the Shenzhen Stock Exchange.

Combined with frequent shareholder reductions in holdings in recent years and recurring financial reporting issues, the focus of the company’s competency diverted from product to capital management, the outcome might have been preordained.

Its fate is now more of academic study.

Nearly 30 years later, the industry landscape has changed dramatically.

Former players in antivirus software now struggle more than most.

The market for terminal security and government-enterprise solutions is equally crowded, with rising tech capabilities between multiple market participants.

For example, Qi An Xin offers integrated terminal security product solutions for government and enterprise clients. Deepinfo provides many targeted solutions for various verticals, including specific offerings for government sectors like procuratorates, taxation, natural resources, and fire control.

Furthermore, over the years, many organizations have largely completed their cybersecurity infrastructure buildouts; they bought the equipment needed for operational efficiency.

Fewer projects and slower capital return becoming trends in the market cycle.

Beijing Xinwei Telecom is not alone; the entire industry is undergoing growing pains, reflected in recent financial reports.

It is in moments of rapid evolution, some emerge stronger, while others fade away.

Beijing Xinwei Telecom was undoubtedly a darling of its time, rising to prominence during a tech frontier era.

It thrived in an era of technological upheaval and nascent regulations. Yet, as the times have changed.

Beijing Xinwei Telecom’s foundational map has become obsolete, unsure as to where that future can lead. The surfer once propelled to the crest of the wave by a passing era, is now washed on the shores of the present.