2003: Starting with Foreign Trade

Chapter 406 Earning US dollars is the core of Flash Rider!
Flash's financial situation is actually capable of supporting the 33 billion investment in the three major projects, because this 33 billion does not need to be taken out all at once.

The Tianjin project is already under construction, and the 3 million yuan issue has already been resolved.

The Wangjiang Industrial Park project has a three-year construction period. The 10 billion yuan investment is only 3 million yuan per year on average. The first phase of the battery plant investment is 6 million yuan, of which FlashChe will bear less than 4 million yuan.

Based on this calculation, Flash Group needs to raise a maximum of 10 billion yuan in the short term, which refers to a period of one to two years.

Flash Group certainly doesn't have 10 billion in cash. There are only two ways to be short of money: either raise funds or take out a bank loan.

The debt-to-equity ratio is a common financial indicator and is usually an important indicator for measuring the risk level of a company. Generally speaking, a debt-to-equity ratio between 40% and 60% is usually considered appropriate for a company.

The industry with the highest debt ratio is usually the real estate industry, which typically exceeds 60%, and it is not uncommon for it to even reach 100%.

During periods of industry prosperity, a high debt ratio means more funds can be used for business expansion. If the funds generated from operations can cover the interest and repayment pressures of debt, it is actually a positive factor for the company's development.

This is like ordinary people using credit cards or taking out a mortgage. As long as you can afford to pay it back, it won't have a significant impact on your life, so it's fine.

Sometimes, high debt isn't necessarily a bad thing. For startups, a certain level of debt can be a catalyst for business development.

If everyone uses their own money to invest in building factories, then Tan Jincheng shouldn't bother with lithium batteries or car manufacturing; he should just stick to his current electric vehicles and clothing businesses.

Because you simply can't afford to play this game, not even with a wealth-creating company like the internet.

A company is a company. Your companies can have certain business connections, but you still need to ask the shareholders for their consent before using profits from companies belonging to different camps on other companies.

For a company to develop, both financing and increasing the debt ratio are essential.

If you only raise funds without taking out loans, your shareholding will decrease. If you only take out loans without raising funds, your debt ratio will increase. These two approaches are mutually reinforcing.

For this wave of preparations for the new era of navigation, Flash Group mainly adopted the method of loans and did not intend to raise funds, because it had the confidence to do so.

The core subsidiary, Flash Technology, expects to sell around 100 million vehicles this year, with annual sales between 15 and 20 billion yuan. The second largest core business, the apparel sector, has maintained good operations in addition to foreign trade.

This year, the GXG brand has also officially started promoting its sales, and the number of offline stores will continue to expand. Speaking of the 8 stores that opened at the beginning of the year, the sales volume in the past few months has already reached nearly 300 million.

The best month for a single store saw sales of nearly 30 yuan, which is a good start and shows that GXG's price positioning is acceptable to consumers.

The profit margin on clothing is truly incomparable to that of selling electric vehicles. The gross profit margin on clothing is incredibly high. Of course, this is only a good thing for the past few years. Once online shopping becomes truly popular, we won't be able to enjoy such a high gross profit margin anymore.

Jinpeng Industry does not have much need to expand production. After the Wangjiang Garment Factory went into production this year, along with the factories acquired by Beicang, it can basically meet its own needs. It is not afraid of having more orders.

The clothing industry mostly relies on OEM (Original Equipment Manufacturer) partnerships. In Ningbo, a city with a highly developed garment industry, unless you're a company like Shenzhou that focuses solely on OEM manufacturing, there's no need to have so many factories.

The annual sales of the new brand cannot be calculated, but the foreign trade businesses of Jinpeng and Jinyi Industry can be roughly estimated. The annual turnover of the foreign trade businesses of these two companies must be at least 3 million US dollars.

Converted to RMB, that's around 20 billion. In addition, Bafang Electric's annual revenue has maintained steady growth along with the increase in electric vehicle sales.

In addition to developing mobile phone batteries, Desheng Electronics has not cut its original business.

With five profitable subsidiaries and an expected annual turnover of around 5 billion yuan, Flash Group is already a truly large conglomerate. An investment of 33 billion yuan is really not much for Flash Group.

Aside from those with ulterior motives, other media outlets that blindly follow suit and question Flash Group are essentially completely ignorant of the company.

Their mindset was still that of a small company selling electric vehicles, less than three years old. In reality, after two years of rapid development, Flash Group had become a behemoth. Misunderstandings stemming from information asymmetry and lack of financial transparency certainly existed, but the more significant issue was Flash Group's excessively rapid growth, so fast that it was impossible for others to keep up.

From the perspective of a real business, this company's growth rate is somewhat outrageous; no other company has grown so quickly in its early stages, but it's not entirely incomprehensible.

Flash Group's two core businesses are consumer goods, including its third largest business, the export of electronic products, which also falls under the consumer goods category.

This is a group whose main business is consumer goods. With the rapid development of the domestic economy, the rapid expansion of the industry, and the booming foreign trade, it is quite reasonable for them to grow rapidly through continuous expansion.

Since joining the WTO, although there have been occasional frictions in foreign trade with the US and some European countries, overall we are still in a honeymoon period.

During this period, the global economy was growing, the concept of a global village was everywhere, the cooperative tone was very stable, and this provided ample room for the development of Flash's foreign trade.

Currently, in addition to domestic sales, Flash's clothing, electric vehicles, and electronic products also have a significant export share, reaching more than a dozen countries and regions in Europe, America, Southeast Asia, and East Asia.

Besides Africa, the Middle East and South America are the regions with relatively weak trade foundations.

The 2008 financial crisis will inevitably have some impact on Flash's foreign trade, but overall there is still a market for these low-end consumer goods. In addition, the plan for next year is to develop the South American market.

In the past two years, Flash has been making waves in the domestic marketing arena, hiring several spokespeople, all of whom are popular celebrities, and sparing no effort in promotion. For a time, it was unparalleled in popularity, almost overshadowing all its competitors in the electric vehicle industry.

But don't forget that Flash's core "technology" is foreign trade. The two founders, Tan Jincheng and Zhang Xupeng, started their business in foreign trade. Flash Group has never given up on foreign trade.

Even regarding future lithium battery and automotive development plans, Flash Group will not overlook foreign trade and will strive to export more overseas.

Making money from ordinary people in China is nowhere near as fulfilling as making money from US dollars!

In the words of the older generation, this is export earnings. At the beginning of the opening up in the last century, this term could almost supersede most businesses and even policies.

You told an export-oriented company that it was having cash flow problems?
It doesn't exist at all.

In addition to responding to the doubts in an exclusive interview with Anhui TV, Flash Group also officially released its 2006 financial report and 2007 sales forecast. Only real data can truly answer the questions raised by the outside world.

This choice is somewhat passive and does not align with Tan Jincheng's operating principle of high-profile publicity and low-profile wealth accumulation.

However, there's no way around it. After analyzing so many articles questioning the issue, the conclusion is mostly that the public's thinking can't keep up with the pace of Flash's development. Some articles even bring up the fact that Tan Jincheng is still driving an A6 to stir up trouble, suggesting that he's poor.

Damn it, I was just being low-key, okay? Driving an A6 means I'm broke? You're just like those comments on TikTok from later generations, saying anything below the Cullinan isn't a car anymore.

After I got back, I changed the car.

But thinking about it, it's time to change it. Most of the time, a car only has two functions: transportation and social interaction. Given Tan Jincheng's current status, driving an A6 is indeed a bit inappropriate.

If a rich second-generation heir drives a 15 yuan car to a bar to pick up girls, the girls will definitely not even give him a second glance. But if he drives a Porsche or Ferrari, they might just get in the car right away.

This is the function of a luxury car, not that it's particularly easy to drive.

Tan Jincheng had never bought a sports car in his previous life, but he had the good fortune to drive a McLaren for half an hour. The feeling was like having a herniated disc, but that didn't stop it from being able to sell for such a high price.

Through this questioning, Tan Jincheng also realized that sometimes a little high profile is necessary.

(End of this chapter)