2003: Starting with Foreign Trade

Chapter 515 Returning to Yicheng

Since last year, small and medium-sized electric vehicle companies across the country have been going bankrupt one after another, and the pace of the industry reshuffle is accelerating.

"This year will be even more intense. We need to be prepared to face difficulties, and at the same time, we also need to try to eliminate another batch of manufacturers. You two have a heavy task ahead of you."

Tan Jincheng had a couple of drinks, and his desire to speak increased after drinking, and his manner of speaking became more arrogant.

Throughout 2007, the price war initiated by Flash Technology wiped out a large number of small and medium-sized electric vehicle companies. Mr. Tan lived almost every day being cursed behind his back by his competitors at the bottom.

Compared to 2006, the competition in the electric vehicle market was even fiercer in 2007. To dominate the market, a price war was the fastest and most effective means.

Today, the electric vehicle market has basically formed a three-way balance of power led by three major companies: Xinri, Shanchi, and Yadi. In any industry, the rise of large enterprises often marks the day when small and medium-sized enterprises perish.

Judging from what Mr. Tan said, he's not satisfied with the current market share. I wonder how many more manufacturers are going to suffer.

"Our electric vehicle strategy this year is to use rock-bottom prices to disrupt the break-even point of a group of companies, making them lose money on every car they sell. The more they sell, the more they lose. You must do a good job in cost control."

The room was filled with people listening quietly, while Tan Jinyue kept glancing around, her little head brimming with curiosity.

Why is it that only the older brother is speaking, while everyone else is silent, and his face is flushed?

"So this year is still not the time for us to pursue gross profit; seizing market share is still the first step."

Currently, electric vehicle companies in Jiangsu and Zhejiang provinces account for half of the national total. Benefiting from the advantages of the industrial chain, the gross profit margin of a single electric vehicle for small and medium-sized enterprises in China is generally between 100 and 200 yuan.

The manufacturer earns 100 yuan for every car sold. If they sell 10,000 cars a year, they can earn over a million yuan. A small family workshop can easily handle the production capacity of 10,000 cars.

There are even more electric vehicle manufacturers with an annual production capacity of around 100,000 to 200,000 units, generating annual gross profits of tens of millions of yuan, which is a very tempting figure.

This has led to a situation where even if major manufacturers squeeze out a batch of companies through price wars, a new batch will emerge, making it relatively difficult to expand market share.

However, 2008 was a great opportunity.

Financial crises can scare away some people and cause others to go bankrupt, but overall, the global financial crisis did not have a significant impact on China because of the government's massive bailout. Instead, it created a number of leading companies.

Flashpoint Technology must seize this opportunity this year to further expand its market share. It will not let the top spot be given to Chipstar this year; it must take it without hesitation. As for the gross profit margin, to hell with it.

Once I've captured most of the market, will I still be afraid of not making a profit?
Wang Xin must be very familiar with this tactic. The internet approach is actually just an evolution of the traditional industry. With the support of capital, it maximizes its advantages and defeats companies without capital in the shortest possible time.

To ensure that we can suppress competitors with rock-bottom prices, there are several things we must do. The first is to reduce procurement costs, and Flash has already established its own system for this.

The battery supplier for the three core components is its own strategic partner, the motor and controller are subsidiaries, and the exterior parts are also its own strategic partners. The procurement cost of these four components alone is incomparable to that of small and medium-sized enterprises.

The second point is management costs. The prices of electric vehicle parts fluctuate frequently, and sometimes the increases are quite significant. Manufacturers cannot pass on all the costs to dealers and consumers.

FlashCare does this better than its competitors. When the price of raw materials and components rises, FlashCare will proactively reduce its profit margins instead of passing the cost on to other manufacturers through price increases or other means.

Many people in the industry criticize Tan Jincheng, but in terms of the supply chain and the end consumer market, Tan Jincheng has a very good reputation. Unlike other large manufacturers, FlashCheer does not use its purchasing power to arbitrarily compress the profit margins of its suppliers, nor does it arbitrarily raise prices.

"Let's make money together" is a viewpoint that Flash's purchasing department often conveys to its suppliers. In their words, this is something their boss has always emphasized. As long as they don't mess with the quality of the parts, Flash will not arbitrarily lower prices or use the pass rate as an excuse.

With profit margins, suppliers naturally won't cut corners on product quality, which results in consistent quality across all batches of Flash Electric vehicles. Coupled with the fact that prices aren't raised arbitrarily, consumer reputation continues to rise.

Fighting a price war isn't about relentlessly slashing prices; that could lead to your own demise. If Flashlink wants to win the price war this year, expanding its market share while simultaneously weakening competitors, it needs to effectively control costs in these two key areas.

This year, FlashDrive has many things to do: continue to expand GXG stores, establish online sales channels, manufacture cars, and acquire Changfeng Group. But the most important thing is to maintain FlashDrive's development trend.

Jin Yi Industrial's electronics products and Jin Peng Industrial's garment exports will inevitably be impacted by the financial crisis this year, and their profits will certainly be much lower than last year. Therefore, the electric vehicle business becomes particularly important. To be honest, in the context of a major bear market like 2008, although backdoor listings were cheap, actually represented a huge undervaluation for Flashway Technology. Everyone was short of cash, so the valuation they could offer was naturally lower.

However, there's no other way. If we want to take advantage of this year's great opportunities to grow and expand the company, we must make certain sacrifices. With the foreign trade export business suffering losses, listing and raising funds is the best way.

Zhongtai is a good example of this. If its parent company had not gone public, Mr. Ying would not have had the courage to start manufacturing cars without knowing anything about them.

It should be noted that although he himself works in the auto parts industry, his knowledge of complete vehicles is even less than that of Tan Jincheng. As for his brother-in-law, although he has experience leading state-owned enterprises, he is not a professional automaker either.

As a family business, Zhongtai has been acquiring various bankrupt car factories, but its technological strength has never improved. This is probably largely due to the fact that neither of its two core figures understands technology.

Flash Motors also learned from the lessons of Zhongtai, which is why they approached Zhang Yong to lead the car factory with a professional, hoping to make up for Tan Jincheng's shortcomings in the automotive sector through Zhang Yong's expertise.

Tan Jincheng's alcohol tolerance is indeed not good. He only drank a little bit and he was already a little dizzy. The cunning Zhang Xupeng knew this and would occasionally join in the fun by toasting him. After chatting for a while, Tan Jincheng started to feel sleepy.

As her husband, Gu Qingqing quickly noticed this. To avoid embarrassment, she ended the farewell banquet by saying it was too late. Lin Yumin and Wu Zhenping also realized that their boss had drunk a bit too much and it would be impolite to stay any longer.

The three families got up to say goodbye, but Zhang Xupeng looked like he was still reluctant to leave.
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"Are you going back to Yicheng too?"

The next morning, Mr. Tan, who had slept very well the night before, said that he would also go back with his father and Wu Zhenping's group.

"Yes, it's kind of like I'm standing up for Lao Wu. He didn't have much of a reputation in the group before, and he's not as daring and aggressive as Sun Yuming. I'm worried that he might be a bit hesitant to take charge of things when he goes back."

The advantage of having middle-aged people as leaders is that they are very experienced in both work and interpersonal skills. However, the disadvantage is also the same: the more they know, the more hesitant they become.

The social circles in small counties are actually quite complex. In addition, because there are not many opportunities to make money, some people don't care too much about the rules. Even a top leader like Tao Qinian sometimes has to give way to some unspoken rules.

In Tan Jincheng's view, a hothead like Sun Yuming, who was also an absolute loyalist and whose interests were centered on Tan Jincheng's, was actually more suitable to develop the market in a small county.

Anyway, the main thing that I'm relying on is having a powerful backer. If something goes wrong, I'll just be transferred. So what if I don't give you face?

Just like what he did in Tianjin, he offended many stakeholders, but because his backer was strong and Tan Jincheng supported him, some people dared not speak out against him.

It's a pity, if only there were one more person like that.

“That’s true. You haven’t been back to your hometown for two years. It’s time to go back and visit.” Gu Qingqing thought for a moment and nodded.

The two years she mentioned were actually two Spring Festivals. During those two Spring Festivals, people from Yicheng and her hometown came to pay their respects. Even this year was no exception; as soon as the snow stopped, people from Yicheng came to pay their respects.

These people are still staying in the hotel that was arranged for them. For Yicheng, it is a very bad sign that Boss Tan brought his whole family to Beicang. Although there are special reasons this year, we can tell by looking at when Tan Lihua arrived in Beicang.

If Boss Tan doesn't go back, how will we continue to take advantage of him?

This snow disaster has severely affected all counties and cities in Yicheng. The reconstruction work requires a lot of funds, and at this time, we need these big bosses to show their love and care. Yicheng's finances are limited, and they risked danger to send people to pay New Year's visits, hoping to get some money out of them.

Tan Jincheng was well aware of this. On the one hand, he was supporting Wu Zhenping, and on the other hand, he also wanted to give Yicheng some response.

Yicheng was located in the heart of the disaster-stricken central region during this snowstorm. I had heard my father say before that the snow in the town was so thick that it cost 100 yuan for migrant workers to take a tricycle home from the town.

Normally it's 5 yuan, but these guys are really asking for more.

That's just how society is these days. Whenever there's a major disaster, all the big companies donate money. It's unavoidable that FlashDrive doesn't want to be criticized.

(End of this chapter)