2003: Starting with Foreign Trade

Chapter 257 Cooperation Achieved (6K)

The development of peptides can be divided into several stages.

In the first stage, they should still seriously want to build cars. From Ying Jianren, Tan Jincheng learned about his previous experience of being turned away by a large state-owned enterprise with automobile production qualifications. He felt that they should follow Chery's path.

In terms of imitation, they are learning from Geely. The two private car manufacturers in Zhejiang Province actually followed similar paths in the early stages.

It's understandable that almost all domestic car models during this period showed signs of imitation. Developing a car's exterior design is not as simple as one might imagine. If you want to enter the market quickly, you have to copy a little bit from here and a little bit from there.

However, the two companies' approaches to copying differed. Zhongtai chose to copy everything, resulting in a lack of technological accumulation and an inability to make breakthroughs later on. Geely, on the other hand, reached a higher level through continuous mergers and acquisitions and integrated innovation.

There was a joke in the automotive industry in the past that referred to the research and development department of Zhongtai as the "Zhongtai measuring tape department".

Legend has it that employees in the "measuring tape department" can design cars that resemble brands like Volkswagen, Audi, and Porsche simply by using measuring tapes, thus mocking the pixel-perfect imitations of these brands.

In the first phase, Zhongtai had confidence in manufacturing cars, but it was clear that it lacked sufficient foundation.

The second stage should be when they have obtained automotive qualifications and their products are well received by the market. With increasing confidence, they start to exert their efforts, invest heavily in introducing various production lines, and cooperate with international brands.

Not only did it obtain the first new energy vehicle license in China, but it also introduced Tesla's electric vehicle technology. It's unclear whether Tan Jincheng was the first company in China to introduce it, but it was definitely among the earliest batch. At that time, new forces like Weixiaoli didn't even exist yet.

During this period, Zhongtai was still ambitious and its development momentum was indeed good, until the emergence of Baoshitai.

The Porsche Tai can be said to be a turning point for the company, because although this car was constantly criticized and its quality was very worrying, it sold very well. At that time, Porsche Tais could be seen everywhere on the street.

Tan Jincheng still remembers that when it was first launched, he couldn't distinguish between the Porsche and the Porsche, and wondered why there were suddenly so many rich people.

It's unclear whether it was due to the overwhelming success of Porsche or the cancellation of subsidies for new energy vehicles that led to a decline in sales of Zhongtai, which resulted in a "what's the use" mentality. Ultimately, the founder's family successfully extricated themselves after a backdoor listing through capital operations.

Thus, the dream of building cars was shattered.

During the morning visit, Tan Jincheng saw the model that still doesn't have a name. Leaving aside the quality, in terms of appearance, it wasn't as ugly as Tan Jincheng had imagined; on the contrary, he found it rather cute.

There's really no market for this type of small SUV in China right now. I have to say, Mr. Ying has a good eye for business. Once it's on the market, as long as the price is right, the sales shouldn't be too bad.

History has shown that this model was quite successful.

"May I ask about the price of Zhongtai 001?"

When the afternoon negotiations began, Tan Jincheng inquired about the price of the model they internally designated as model 001. Since everyone had signed a confidentiality agreement, there was no risk of the information being leaked.

"Divided into different tiers, we expect the price to be between 4.38 yuan and 6.38 yuan. What are your thoughts, Mr. Tan?" Wu Jianzhong replied with a smile.

"No, no, it's just out of curiosity. I thought this car model was quite cute when I visited it this morning."

Sure enough, they came out with a bombshell – an SUV under 8 yuan, that's really ruthless.

Even small SUVs are still SVUs. I remember there was a period when Chinese people were quite obsessed with SUV models.

"I wonder what Mr. Tan thinks about this pricing. The lowest price for your company's first model was 1999 yuan, and the market has proven that your pricing was very correct."

"It's great. I think this pricing will amaze the market. Buying an SUV for 4 yuan will surely tempt most people with car-buying needs."

It was already 2006. Although per capita income had not increased much, there were more job opportunities and fewer restrictions on working away from home. In the end, some people were able to make money, and the minimum price of 4 yuan was still affordable.

Even with the high-end model priced at 6 yuan, it shouldn't be a big problem to take out a loan for a year or two.

The positioning of the Zhongtai is similar to that of the Shanchi, aiming to meet the car purchase needs of lower-income groups, especially urban workers.

Imagine this: after working away from home for a year or two, you can drive your car back to your rural hometown. This solves the problem of not being able to buy tickets during the Spring Festival travel rush, and you can also show off when you get home. When you're not busy at work, you can also drive an unlicensed taxi to earn some extra money.

In the early 2000s, very few families in rural areas across the country could afford a car. No matter how many tens of thousands of yuan it cost, if you drove one back home, it would be a remarkable thing in the eyes of your fellow villagers and your parents.

Such pricing is a major weapon in the current market where there is a shortage of small SVUs. Tan Jincheng would certainly not lie and say that you can't sell them, as that would seem rather low-class.

You can talk nonsense when discussing cooperation, but you can't actually talk nonsense.

"Mr. Tan has successful experience with pricing. Your words give me even more confidence, and also give me more confidence in our cooperation," Ying Jianren replied with a smile.

"Of course, we all came with sincerity," a leader from Beicang replied.

"I wonder what kind of cooperation you intend to pursue?" Wu Jianzhong asked.

In terms of factory construction and branch office establishment, Beicang District naturally takes the lead. Tan Jincheng, with his birth certificate, is unlikely to get many shares. So, when it comes to formal cooperation, Tan Jincheng is temporarily out of the picture.

"We hope that your company can establish a car manufacturing plant in Beicang District, and at the same time participate in the automotive industry chain together with the auto parts companies in Beicang District, so as to help the auto parts companies in Beicang District develop together with you."

During the factory construction process, Beicang District can provide all policy assistance, including land resources, cash investment, loans, and automobile production qualifications. We can also offer certain tax incentives.

They were very sincere, immediately laying out their needs and the kind of help they could provide. That's how efficient they were.

Tan Jincheng had already experienced this before. In previous negotiations and meetings with FlashTech, these leaders always put forward their needs first to see if they were on the same page in terms of general direction.

If we agree on the general direction, things are fine. If there are disagreements, we can resolve them one by one. It's okay if we can't finish in one day; we can continue the next day. We don't need to be picky about meals during the negotiation process; boxed lunches or KFC are fine too.

In this regard, FlashTech has prepared KFC the most. There's no other reason than that, regardless of whether it tastes good or not, at least it's safe. Very few people get diarrhea after eating KFC, and it can also take into account people who are allergic to certain foods.

For a time, these people felt uneasy whenever they saw KFC, and they even teased Tan Jincheng about it.

Of course, this is just how it is during work hours. At other times, FlashTech will also entertain you without fail. You all know what I mean.

This straightforward approach clearly surprised Wu Jianzhong and Ying Jianren, who were somewhat unaccustomed to it, especially Ying Jianren, who had recently encountered setbacks and was greatly shocked.

This is the proper attitude for discussing cooperation! Everyone should state their needs first, and then gradually resolve the details. What's with dragging things out every day without responding and making me wait and wait?
"No problem. We welcome cooperation with you and are very grateful for your timely assistance when we encountered difficulties. There is no problem in setting up a branch factory in Beicang District, and there is no problem in using parts produced by parts companies in Beicang District. As long as the parts pass the inspection, we will give priority to using parts produced in Beicang District at the same price."

Seeing that the other party's attitude was so clear, Wu Jianzhong could not be ambiguous. First of all, the two sides reached a consensus on the cooperation approach.

This attitude satisfied Beicang District. A car has a huge number of parts, and the fact that parts produced by auto parts companies within Beicang District are given priority under the same conditions can bring huge benefits.

The preferential policies offered to Zhongtai and the money invested can be earned back through other parts manufacturers, while also creating more parts companies.

With mature technology and expanded production capacity, after supplying Zhongtai, we can also develop new domestic and foreign automotive brand customers. If development goes smoothly, tax revenue and employment can see a qualitative leap.

More jobs and industries will attract more people from other places. The income generated from daily consumption and the fact that some people will stay to buy houses and settle down will also drive other industries.

This is the most direct change that a major automobile manufacturer has brought to local development.

Once an agreement was reached, the two sides entered the wrangling phase. Tax incentives were not mentioned for the time being, nor was it necessary to. Since they had been brought up, Zhongtai would naturally receive the treatment it was entitled to.

"Shall we start with the valuation of the production qualifications?" Ying Jianren said, glancing at Tan Jincheng at the same time.

Although Mr. Tan sat on the sidelines looking indifferent, and the focus of the negotiations was indeed not on him, the automobile production qualification he possessed was the key to the entire negotiation.

If he's not satisfied with the offer, then there's really no room for negotiation.

At this moment, Ying Jianren realized why Tan Jincheng had been so open and detailed that morning, telling him how much it had cost to obtain the automobile production qualification.

Holy crap! This kid was waiting for me here.

Leaving aside the investment in opening a factory, I spent 3000 million to buy the car production license. You can't just ask me to transfer it to you for only 3000 million, right? You have to add some price, don't you?

Although he was extremely likely certain that the 3000 million figure was fabricated by the excessively young and handsome man opposite him, he couldn't refute it directly. After all, official figures weren't accurate; it wouldn't be wrong for him to say he spent the money privately, would it?
"As for the valuation of the production qualification, Mr. Ying, you can decide for yourself," Tan Jincheng replied with a smile.

"Cunning!" Ying Jianren muttered to himself. "I'll give you whatever I think is fair. Would you agree to give it to me for free?"
This is the same tactic I use; they just say they'll give whatever they see, without saying they'll agree, waiting for the other party to name their price.

Forget it, it's just a small amount of money. Let's just agree to this and negotiate a better deal so we can cooperate better in the future.

If production qualifications are leased, based on the selling price of Zhongtai 001, a 1% fee must be paid to the leasing company for each vehicle sold. This fee accumulates over the years and is often exaggerated.

The first car was sold at a loss to get into the market. The more cars sold, the more money was lost. Renting a car production license was just a last resort.

Ying Jianren and Wu Jianzhong exchanged a glance, and Wu Jianzhong nodded.

The two had already discussed it at noon. If the other party did not budge, they would have to pay a premium of 3000 million yuan to obtain the production qualification. Zhongtai is not short of money now, and problems that can be solved with money are not problems.

Moreover, Geely spent 2400 million yuan to purchase the production license back then. Now, so many years have passed, and although the market has changed and the price of production licenses has not been increasing all the time, overall, Mr. Tan's asking price is not particularly outrageous.

In Ying Jianren's opinion, Geely's acquisition price of 2400 million yuan was too high. However, there was nothing he could do, as he was the first to try something new and had no say in the matter. It was already good enough that he was able to make the purchase.

However, there's no way around it, because Geely's offer has already set a benchmark for automotive qualifications, and the price can't be lower than that unless there are other conditions.

Tan Jincheng was able to acquire Andar's qualification at an extremely low price not just by luck. Although it seems that he only spent 500 million yuan in cash, the actual effort was no less than 2400 million yuan. Not to mention the donations, which were voluntary after all.

The investment in the two factories was the key to success. For local governments, large factories bring far more benefits than cash, especially garment factories.

To a certain extent, the reason why things went so smoothly is largely due to Jinpeng Trading's garment factory.

This can be considered as Zhang Xupeng helping Tan Jincheng.

"4000 million, what do you think, Mr. Tan?" Ying Jianren asked through gritted teeth.

This is cash! No matter how much this kid bought it for, he's certain he made a killing on the 4000 million yuan price tag, at least double the initial investment.

Judging from the information he revealed, it's only been two months since the acquisition began, right? He made 2000 million in less than two months.

But I can't refuse.

Beicang was also a bit surprised. Although they didn't know the specific acquisition price of Tan Jincheng, no matter what, the figure of 4000 million yuan would definitely make Tan Jincheng a fortune.

Looking at the young man who remained calm, everyone felt a bit conflicted. They were talking about deals worth tens of millions of yuan, and 40 million yuan was something most people wouldn't even dare to dream of, yet he, in his early twenties, could remain so composed.

With just a nod, the 40 million yuan would be his. None of the people present are naive, but honestly, even at their early twenties, it would be difficult to remain indifferent to 40 million yuan.

"Sure, no problem, we'll go with the 4000 million yuan you mentioned, Mr. Ying. But I have a small request, I wonder if Mr. Ying can agree to it."

"Please speak, Mr. Tan." Although Ying Jianren didn't understand what the request was, since he had already agreed to the offer, there was no problem.

“4000 million yuan is a considerable sum. Although your company is financially strong, it must be a bit of a burden to come up with so much cash at once. So I was thinking of converting this 4000 million yuan into shares in the Beicang factory, with the specific shares depending on the investment amount.”

Furthermore, since we've agreed to support Beicang's development of the automotive industry chain, it seems a bit unethical for me to simply take the money and run. Also, I'd like to have some new businesses to supplement our company's business structure. I wonder if Mr. Ying would be willing to agree?

Ying Jianren was stunned. It wasn't that he valued equity too much. Tie Niu Group was already listed on the stock exchange, and he wouldn't hold onto equity like a traditional entrepreneur. He didn't mind giving up equity if it brought benefits.

The problem is that 4000 million yuan won't get you any shares, not even in a branch company. If the upper limit of the total investment is raised, Tan Jincheng's 4000 million yuan will be diluted to almost nothing.

Doing this would not benefit him at all. It would be much better to get cash directly than to hold a small share. With cash, what business can't he do?
4000 million yuan in cash can be leveraged to a great extent.

"Mr. Tan, are you sure? First of all, you won't get much of a share with this 4000 million yuan in cash, so you'll have absolutely no say in the company's operations. Secondly, you're in the real economy yourself, so you must know the investment cycle for real businesses. If you convert 4000 million yuan into shares, you might end up losing it all."

It is almost impossible for the newly built car factory to be profitable within a few years, and there is a very high probability that the 4000 million yuan will be lost if converted into shares.

What's the point of doing this? Surely they're not genuinely dedicated to helping Beicang District develop its industries? Or is this just a pawn in the local government's game? That's a possibility.

Ying Jianren couldn't help but glance at the others on the Beicang side. Seeing that no one else had made any statement, it was clear that they had communicated beforehand.

Tan Jincheng smiled and said, "Of course I'm sure. Let me give you a few reasons. First of all, although this license plate cost a lot of money, there was definitely an element of luck in getting it."

"Secondly, everyone says that the ultimate dream of all entrepreneurs is to build cars, and I am no exception. Since I have this opportunity to experience the charm of building cars, I naturally don't want to miss it. Even if I lose money, I can still learn some experience, right?"

"If one day I have the capability to build cars like Mr. Ying, maybe I'll build cars myself. Getting involved then would be a great opportunity to gain experience. Mr. Ying probably wouldn't mind having another competitor, would he?"

Ying Jianren couldn't help but laugh. It seemed that this young man had great ambitions. There was no such thing as a monopoly in the automotive industry. He couldn't decide whether there would be one more or one less competitor. Even if there was no Tan Jincheng, there would be Wang Jincheng or Li Jincheng.

"Although I don't have Mr. Ying's wealth, I can still afford to lose 4000 million yuan, and it won't have any substantial impact on Flash Technology. So I think it's worth trying to invest."

In acquiring Andar's production qualification, FlashTech's actual investment was only 400 million yuan and the construction of a warehousing center, with little expenditure on cash flow.

The cycle of electric scooters is different from that of cars. FlashTech has perfect payment terms. It might be a bit of a challenge to come up with 4000 million yuan directly in 2006, but with Tan Jincheng's other personal asset investments and Jinyi Industrial's cash reserves, it won't be unable to hold on.

Moreover, 4000 million yuan is not needed at all.

After taking a sip of water to moisten his throat, Tan Jincheng continued, "On the other hand, I am also optimistic about your company's model. I believe it will sell very well. The future of Zhongtai is not limited to this. Perhaps in a few years, my 4000 million will become 4 million. I just don't know if President Ying would be willing to let me ride on his coattails."

"Alright, you young people are indeed generous. In that case, I'll accept it. I also want to thank President Tan for relieving some of our financial pressure. As for the specific share ratio, we'll have to discuss it with all of you before we can determine it."

Ying Jianren was also very decisive. Since Tan Jincheng had thought it through and was willing to gamble the future of Zhongtai with a birth certificate, what did I have to be afraid of?

On the contrary, Ying Jianren greatly admired Tan Jincheng's short-sightedness and courage to take risks. Giving away a few percent of the shares in the branch company was no big deal and would not affect his control over Zhongtai at all.

"No problem, I won't participate anymore. I just hope that you, Mr. Ying, won't be so rich as to inject hundreds of billions at once, leaving me with nothing."

"Haha, Mr. Tan is joking. Everyone says I have a net worth of 10 billion, but it's absolutely impossible for me to come up with 10 billion."

“Okay, let’s settle on the production qualification for now. Next, let’s talk about the investment in the new factory,” Wu Jianzhong said with a smile.

First, naturally, three parties, or perhaps four parties (from Yongkang), will establish a new company. Based on the registered capital, each party will hold a certain share. This is where professional accountants will make calculations.

After listening for a while, Tan Jincheng couldn't help but chuckle.

As for the valuation of the peptides that I was concerned about, Ying Jianren didn't care at all. No wonder he is a big shot who has already entered the capital market. He doesn't talk about this with you when the product has not been tested by the market.

The two sides discussed the actual investment of the Beicang branch, that is, the amount of registered capital. With Tan Jincheng's quota of 4000 million yuan, the registered capital will not be low.

Zhongtai did want to raise more registered capital, but if the registered capital was too large, they couldn't afford it. After the vehicles were launched into the market, huge investments were needed to build factories, purchase production equipment, and hire staff, all of which required a lot of funds.

There's no need to push yourself to the brink just to reduce Tan Jincheng's shareholding; besides, shareholders also have their obligations.

After two days of negotiations, Zhongtai Auto, the shadow company in Beicang District, and Xinchi Intelligent Manufacturing signed a final cooperation agreement.

Zhongtai (Yongkang) Automobile Co., Ltd., located in Beicang District, and Xinchi Intelligent jointly established Zhongtai (Yongcheng) Co., Ltd., with a registered capital of 4 million yuan. Zhongtai Co., Ltd. contributed technology, management expertise, and 6000 million yuan in cash, holding a 49% stake.

Beicang District invested a total of 3 million yuan, using land of equivalent value plus cash, to hold a 41% stake in Zhongtai (Yongcheng), while Xinchi Intelligent contributed its complete set of automobile production qualifications, valued at 4000 million yuan, to hold a 10% stake in the new company.

Both Beicang District and Xinchi Intelligent have a board seat in the new company, but they will not directly participate in the operation. The operation will be handled by the largest shareholder, Zhongtai Group, and the operation strategy will be consistent with the parent company.

Xinchi Intelligent, also known as Tan Jincheng, acquired a 10% stake in the new company without spending a single penny!
We have to thank Beicang for this; they lowered the registered capital. Originally, Zhongtai wanted to raise the registered capital to 6 million, which would have meant that Tan Jincheng would only get a single-digit percentage of shares.

This is a combined chapter; the reason I have more points is because it's longer. This is the only chapter for today.

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(End of this chapter)