2003: Starting with Foreign Trade

Chapter 228 With Lithium, You Can Go Anywhere
What did impoverished counties look like in 2006?
Yicheng is a prefecture-level city with 3 districts, 1 city and 7 counties. There are as many as five national-level poverty-stricken counties in its jurisdiction, which shows how difficult the economy is.

Of the 11 counties and districts under its jurisdiction, five are national-level poverty-stricken counties, which is quite unusual.

Take Wangjiang County, Tan Jincheng's hometown, as an example. Its GDP in 2005 was 24.15 billion yuan, with a per capita GDP of just over 4000 yuan. Its fiscal revenue for the year was 0.52 million yuan, or 5200 million yuan.

Yes, you read that right. The total fiscal revenue for the year was only 5200 million yuan, which is less than what Jinpeng Trading earns.

However, the fiscal expenditure reached as high as 2.85 million yuan.

The secondary industry, which supports the local economy, only generated 5 million yuan of GDP throughout the year, and its total import and export volume was only equivalent to two months' worth of Jinpeng Trade's figures.

Even with subsidies from impoverished counties, life is still incredibly difficult.

What is it like to hear that an entrepreneur from the county wants to donate money to the county?
Especially after learning that this company achieved sales of over 6000 million yuan in just six months, and is aiming for 3 million yuan in sales this year!

Goodness, the sales revenue of this one company is equivalent to three-fifths of the county's secondary industry last year. What's even more surprising is that the owner of this company also owns two import and export trading companies!

Furthermore, the other party intends to set up a logistics transit center in Yicheng. So what are we waiting for? Let's grab it quickly! Although logistics is a tertiary industry, it's better than nothing. Besides, this is also an opportunity to build closer relations.

Even if we can't get them to set up factories in their hometowns, they have import and export channels. If we can entrust them with the export of some of our specialty products, we can still generate more foreign exchange income.

As for the prerequisite for the donation and the establishment of the logistics center, it is the acquisition of Andar's intangible assets; we will give it to him.

Anyway, it won't have much impact on the county, but it can bring benefits to the county. We must make this cooperation happen no matter what, since Wangjiang County was involved in the negotiations for this cooperation.

The story of Andar is complicated. As the first automobile company in Anhui Province, it had four models included in the national automobile product catalog in 1995. Its early development was smooth sailing, and it also carried the automobile dream of Yicheng people, with all aspects receiving the green light.

Andar, which predates Chery and JAC by a considerable margin, was the undisputed No.1 in the province in the late 90s, but unfortunately, it went bankrupt.

After gaining fame, Andar not only produced passenger cars, but also started producing semi-trailers, agricultural vehicles, and microcars. In particular, he did not have the capacity to produce microcars, but he still modified them regardless of cost. He changed the model several times, but stopped production after producing only a few hundred units.

After being required to rectify its operations in 97 due to the lack of passenger car production qualifications, although it eventually obtained passenger car production qualifications, it ultimately missed its best development opportunity, and its fortunes had already turned.

Chery had already been established in Wuhu at that time.

In addition, Andar's production line is not an advanced one, with only a hundred or so units produced each month. Its self-production capacity is severely lacking, but Andar still insists on its own production strategy.

Poor R&D capabilities, a focus solely on assembly, and excessive borrowing ultimately led to the company's collapse and bankruptcy.

In fact, Andar had been looking for buyers since 2000. Five state-owned enterprises, including FAW, came to inspect the business, but the final result was nothing more than a series of meals and drinks before nothing came of it.

In 2003, Yicheng Automobile Factory, whose capital chain had completely broken down, officially went bankrupt. This factory, which was known as one of the most profitable old state-owned enterprises in Yicheng, was once the place where countless people in Yicheng dreamed of working. After the 15-square-meter factory area was acquired by the leaf spring factory.

The employees also became employees of the leaf spring factory. Their glorious period lasted only 10 years, which is truly regrettable.

Even after holding on until now, the leaf spring factory can no longer survive. The factory, eager to transfer ownership, and the Wangjiang County government, which wants to develop the local economy, have been contacting potential buyers since last year. Currently, the only interested parties are Tan Jincheng's Shanchi Technology and Mr. Lin from Taizhou.

Both of these companies originated from the electric vehicle industry. Compared to the one in Taizhou, FlashTech is much more generous in its spending, except that it has no intention of building a factory to manufacture cars. In addition, it is also much stronger than the one in Taizhou.

The amount of the donation has not yet been disclosed, but since it has been mentioned, it must be a considerable sum. In addition, the logistics and transfer center can also solve some employment and tax revenue issues.

In addition, the acquisition fee of 500 million yuan given to the leaf spring factory is quite generous. With this 500 million yuan transfer fee, the leaf spring factory will be able to solve most of its occupational retirement pension problem.

From the county government's perspective, this is the best solution at present. Both the county government and the precarious leaf spring factory should promote this cooperation.

"Call the driver and come with me to the petrochemical plant in the city," the second boss said decisively after listening to the reports from the negotiation team and the head of the finance bureau. "To the petrochemical plant?" The secretary was taken aback.

"Yes, go to the petrochemical plant and find Comrade Tan Lihua, an employee of the plant."

"Okay, I'll arrange it right away." The secretary, realizing what was happening, quickly replied and then went out to make the arrangements.

The head of the Finance Bureau laughed and said, "Boss, that's a brilliant move. Going directly to his father might get us more donations. But isn't it a bit inappropriate for you to go in person? What if the other party doesn't understand? That would seem unreasonable. How about I go in for you? That way, we'll have some room to maneuver."

The leader shook his head and said, "No need. You should be able to tell from the report that this young man is quite decisive. Whether it succeeds or not is another matter. Finding his father first is also to put in a good word for us and try to get as much as possible."

"Besides, the people he can meet in Beicang are of a much higher rank than you. His company earns more money in a year than our fiscal revenue. What do we have to compete with him? When you ask for help, you have to act like you're asking for help."

"But since you've put it that way, you should come along too. You're definitely more suitable than me to discuss donations."

"Okay, I'll go back and prepare right away, and pack the materials to take with me."

"Yes, let's hurry up and pick up Comrade Tan Lihua. Then we'll head straight to Ningbo. Don't delay. Young people don't have much patience. I'm afraid something might happen if we drag this out too long."
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"With lithium, you can go anywhere? Mr. Tan's statement is quite novel, but it is indeed true. If we want to develop lithium battery technology, we need to have lithium mines to minimize costs."

In the capital, Lu Ruifeng, who was discussing the future development trend of Hangxin Energy with Tan Jincheng behind closed doors, said with a glint in his eyes.

Now that the research institute and Flash Technology have officially reached a cooperation agreement, and my small team has also signed a formal contract with Hangxin Energy, we can be considered to be in the same boat. Considering the future of Hangxin, it is only right for both parties to talk about the future development trend of the company.

To be honest, Xiao Tan is really generous. She originally thought that renting an office building with an area of ​​two or three hundred square meters would be enough, but she just bought an office with a total value of 1200 million yuan and an area of ​​nearly 800 square meters.

They're certainly loaded with money; no wonder they dared to get involved in lithium battery projects. It's not surprising that they're now eyeing lithium mines.

"Currently, the price of lithium ore is around 2 yuan per ton, and it has remained at that level for quite some time."

After organizing his thoughts and pausing for a moment, Lü Ruifeng continued, "The increase in mobile phone shipments will drive up the demand for lithium, and the price of lithium will inevitably rise. Therefore, it is indeed a sure-fire way for us to make money by acquiring a lithium mine at this time."

"President Tan's idea is good. Compared to making products, controlling upstream resources is more beneficial to the company. However, it requires a larger investment and takes longer. If it is not handled well, the company's cash flow may be cut off."

"That's true. Our biggest problem right now is in this area," Tan Jincheng nodded.

In the end, it all comes down to a lack of money. If we had money, we wouldn't mind launching a car project directly, like Zotye did, and making a few models that resemble gasoline cars first. Zotye hasn't even appeared yet. If I had the money, I would make one for them first. How awesome would that be?
"But what if we were to invest in one or more companies that own lithium mineral resources? Do you think this plan is feasible?"

The commonly used lithium extraction technologies are mainly lithium extraction from salt lakes and lithium extraction from ore. Due to the immaturity of the technology, the quality of lithium extracted from salt lakes is relatively low, and a large amount of brine needs to be mined, which also results in relatively high construction costs, thus limiting its development prospects.

Compared to lithium extraction from salt lakes, lithium extraction from ore is currently the mainstream method, and salt lake lithium accounts for 70% of the existing proven lithium deposits in my country.

In 2004, the world's lithium production was 20200 tons, of which we mined 2630 tons, accounting for about 13% of the world's total production. However, there was still a lot of unmined lithium, most of which was controlled by lithium mining companies.

Although resources are abundant, lithium resources are still mainly held by foreign companies, especially in South America. Domestic companies do not currently have any intention of making large-scale overseas acquisitions of lithium mines and lithium production companies.

Currently, the mobile phone market is still dominated by Nokia and Motorola, and the application of lithium batteries is not very widespread, let alone the concept of new energy vehicles. Therefore, lithium ore is not a very popular metal raw material at present.

Therefore, it is feasible to control lithium mines by acquiring or investing in domestic lithium mining companies.

Perhaps the other party can see the development opportunities of lithium batteries in the era of smartphones, but they certainly cannot imagine what the future landscape of new energy vehicles will be like, otherwise they would not have started large-scale global mergers and acquisitions around 2017.

In an era when lithium mines were undervalued, how could one acquire a controlling stake in a lithium mining company and use capital operations to gain control of the upstream supply chain?

Tan Jincheng's words reminded Lü Ruifeng of a phrase: "a snake swallowing an elephant!"
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(End of this chapter)