2003: Starting with Foreign Trade

Chapter 586 Decisiveness in Formal Negotiations
"How do you say this?"

"The Shanghai Composite Index has fallen to 2340 points. How much is Changfeng worth if it doesn't stop trading?"

The earliest urban investment companies appeared in 1991, but today's urban investment companies are not the behemoths we knew in the past, all that was powerful and arrogant.

These days, urban investment companies are essentially public institutions with very limited actual power.

How much money one has depends on local finances. Xie Hongjun needs to think carefully before investing in Hangxin New Energy and Weilai Automobile, and he also needs to report to his superiors to advocate for it.

This is still a place with money; it goes without saying that it's even worse in poorer places. Take Chuzhou City Investment Group for example. Tan Jincheng might look down on his paltry sums, but for them, it's a considerable amount.

Zhou Kai thought that Tan Jincheng meant that if things dragged on, he would stop talking, and then Changfeng Group would definitely have to resume trading. Given the current environment, if the restructuring failed, the stock would inevitably fall.

If a company with a market capitalization of 20 billion yuan experiences another two consecutive limit-down days, there really won't be many left.

Finding another sucker won't be so easy.

"No problem. Everyone knows that President Tan likes to be efficient. The State-owned Assets Supervision and Administration Commission has already given its preliminary approval. I will assemble a new negotiation team as soon as possible to start negotiations."

Today was a bit embarrassing, and I even got a scolding. This time I must choose carefully.

However, it's also a good thing, as it allows us to take the opportunity to clean things up and install some trusted confidants along the way.

"Mr. Li probably has some objections to the acquisition. Remember to reassure him. If you can get his consent, that would be the best outcome."

Zhou Kai simply didn't believe that Tan Jincheng's advance visit to Li Jianxin today was not just to deliver an invitation. Despite his arrogant demeanor during the negotiations, he must have been persuading Li Jianxin to go in private.

I just don't know how he managed to persuade this stubborn old man.

Zhou Kai acted swiftly and decisively, taking advantage of this opportunity to thoroughly clean up his entourage and place his cronies in key departments. It was a shameful but also a rare opportunity.

In the past few days, Tan Jincheng has not been idle. Instead, he has been studying and analyzing the organizational structure and financial reports of Changfeng Group. Changfeng Group's most glorious period was in 2004, when it achieved a complete listing and moved its headquarters from Yongzhou to Xiangcheng.

The most glorious year was also the most extravagant year. In 2004 alone, Changfeng spent 28.69 billion yuan on investment and salary payments. It should be noted that their revenue that year was only 37.75 billion yuan and their net profit was only 1.37 million yuan.

"The industrial base in Xiangcheng is said to have invested 15 billion yuan. Look at that, it's laughable."

Tan Jincheng pointed to these data and showed them to Gu Qingqing.

ByteDance is now the fourth largest shareholder of Changfeng Group, and it has also proposed an acquisition plan. The Hunan Provincial State-owned Assets Supervision and Administration Commission has agreed in principle to make contact, so obtaining this data is not difficult.

It's impossible that they could produce such junk cars with only 15 billion yuan, and now they can't even produce junk cars anymore. There must be something fishy going on here.

Moreover, with an annual SUV production capacity of only 5 units, and the group's total SUV production of only 10 units, where did all that money go?

"The layout is quite impressive, but it's not very efficient." Gu Qingqing was also looking at these.

There are four parts manufacturing bases in Xiangcheng, Yongzhou, Hengyang, and Huizhou, and four complete vehicle production bases in Xiangcheng, Yongzhou, Chuzhou, and Jingmen. In addition, there is a research and development center in Xiangcheng. Li Jianxin also said that they intend to build a new research and development center in Beijing.

In addition, a headquarters building was also built in Xiangcheng.

"If it weren't for the National III emission standard, we could have really achieved the 4421 plan. What a pity."

To be honest, this is also a matter of Li Jianxin's personal ability. He is credited for building Changfeng Group into such a large scale, but a company is not necessarily better the bigger it is. If it is not managed well, it is better to be small and beautiful.

He truly made Li Jianxin, and he also ruined Li Jianxin.

After its IPO, FlashTech must avoid this inflated mentality and not spend money without restraint.
-
Monday, April 9th.

"Is it okay if you don't go to school to register?"

"It's okay, the school will take care of the procedures for me. I'm just a figurehead, and my advisor doesn't expect me to go to school every day."

Today is the first day of school. Gu Qingqing, who had nothing to do at home during the summer vacation, was taken on a business trip by Tan Jincheng on the first day of school. Ningbo University was somewhat disappointed.

However, Gu Qingqing had already promised them that she would attend the welcome party for new students at the start of the semester.

"Alright, they called us over today to discuss the specific terms. It seems that President Zhou has already integrated his team. I just don't know what President Li's attitude is."

Tan Jincheng had heard about what Zhou Kai had been doing these past few days.

These people are too impatient. Even if it had been revealed a day or two later, it would have been fine. This is just making excuses for Zhou Kai.

As for Li Jianxin's attitude, Tan Jincheng couldn't grasp it either. He hadn't contacted him for the past few days, and it was said that he was also in daily board meetings. He had done everything he could, so he decided to leave it to fate.

If they really disagree, there's nothing we can do but take a tough stance and get rid of them.

"The stock market in the US seems to be about to collapse. The three major indices all fell quite badly last night, and our company's stock also dropped a lot. I really want to short it."

Orange Technology's stock price has fallen below $13. Like all newly listed internet companies, its stock price has formed an inverted V shape. However, compared to the stock prices of other small internet companies, Orange Technology's stock price is very resilient.

"Stop making a fuss. Not everything will fall if it's going to fall. Why short it and give yourself a pretext to be criticized?"

"Sigh, it's just that I can't sell the stocks I have for various reasons, which is a bit frustrating."

The reaction of the US stock market has shown that the risks are getting bigger and bigger. It is really frustrating to have hundreds of millions of dollars in market value but not be able to cash it out. If it were listed for a year, Tan Jincheng would have directly reduced his holdings by 10%.

However, Cheng Linfeng's team performed well. After a period of tentative short selling, the team's integration was almost complete.

Having spent 20 billion, Tan Jincheng wasn't too ambitious. He just wanted returns commensurate with the leverage ratio. For such a once-in-a-century opportunity, if it only doubled, it would be somewhat unacceptable for short selling with leverage.

At least this time, Changfeng Group's acquisition and subsequent investment were easy.

Tan Jincheng and Gu Qingqing walked easily into the office building of the City Investment Company. At this moment, Zhou Kai caught up with him from behind.

"Hey, how did you convince President Li?"

They're all shrewd people. Zhou Kai could tell from Li Jianxin's expression when he first entered the city investment company that it was completely different from the first day. In addition, Changfeng Group has been holding meetings these past few days to discuss the acquisition plan.

Li Jianxin even made several trips to the State-owned Assets Supervision and Administration Commission for this. Tan Jincheng smiled and said, "How do you know I convinced President Li?"

"Isn't it obvious? On the first day, Old Li was so angry he wanted to eat you alive, but today he's even taking the initiative to greet you. Tell me, how did you convince him?"

You'll find out soon enough.

"Hey, still keeping me in suspense." Zhou Kai chuckled.

Regardless, Li Jianxin's agreement is a good thing for him. The State-owned Assets Supervision and Administration Commission has no problem with it in principle, so it's a political achievement for him. But if Li Jianxin firmly disagrees, then this achievement will be in trouble.

"Our leaders will be attending today, so please be a little more considerate in your attitude. Although we all know what you're saying is true, it's best not to be as hurtful as you were on the first day. Just give me some face."

They don't have many opportunities to interact with young people, and young entrepreneurs like Tan Jincheng are even rarer. They are genuinely not used to this sharp and assertive negotiation style.

Tan Jincheng smiled and said, "I haven't said anything even worse yet."

Changfeng Group recently issued an announcement that all senior executives would take a 20% pay cut. They must be desperate for money to do this.

This is why state-owned enterprises dare not lay off employees easily. In private enterprises, the first to suffer are not senior executives, but ordinary employees.

Today's meeting was of a much higher level than the first day. Leaders from the State-owned Assets Supervision and Administration Commission attended in person, along with relevant personnel from Hunan Province and Xiangcheng. Zhou Kai could still show some influence on the first day, but today he was nothing.

Li Jianxin also brought several senior executives with him, and the atmosphere today was obviously much more formal than on the first day.

As for Tan Jincheng's side, there weren't that many people; it was just him, Gu Qingqing, Huang Ming, Zeng Jixiang, and a finance person.

Compared to the lineup from Hunan Province, it's simply unwatchable.

After a brief exchange of pleasantries, it was Tan Jincheng's turn to speak.

"Distinguished leaders, the main points of Flash Group's acquisition of Changfeng Group are as follows: First, we will acquire control of Changfeng Group through a combination of cash and share swap. As for the percentage, we will discuss that later."

"The target of the share swap is Flash Technology, a subsidiary of Flash Group. We expect to achieve a complete listing of Flash Technology through asset injection. During this process, Changfeng Group's business will be spun off from the listed company."

After the first point was made, there was no reaction from the audience. However, the second point was something that many people were unaware of, which attracted the attention of many attendees. Subsequently, some people discussed it in hushed tones.

A backdoor listing, huh? I originally thought that Flash Motors' acquisition of Changfeng Group was just to enrich Weilai Auto's product line, but I didn't expect them to have this plan as well. What a cunning scheme.

“Changfeng Group’s revenue last year was 45.61 billion yuan, but its net profit was only 1.84 million yuan. Our Shanchi Technology’s revenue last year was only 27.31 billion yuan, but its profit was 5.33 million yuan. Therefore, the asset swap is not an insult to Changfeng Group.”

Tan Jincheng ignored the whispers below the stage: "This is still last year's performance. From January to August this year, FlashTech has already sold 105.88 million electric vehicles. It's almost a certainty that we will surpass last year's performance."

Upon hearing this, Li Jianxin, who had already agreed, couldn't help but glare at Tan Jincheng, and Zhou Kai also felt embarrassed.

This kid, we've already reminded him to watch his words, and he still has to stab us in the back.

Fortunately, Tan Jincheng did not continue.

"Regarding the plan to divest Changfeng Group, Shanchi Group will provide Xiangcheng Group with certain compensation. The preliminary plan is that Changfeng Group's existing off-road vehicle business and Jingmen production base will belong to Changfeng Group. In addition, Changfeng Group can still use the Cheetah brand for off-road vehicles."

"Furthermore, as part of the compensation, FlashTech can establish an electric vehicle industrial park in Xiangcheng with an annual production capacity of 100 million vehicles, which is expected to start construction in the second half of 2009."

The peak season for electric vehicle sales this year is still about a month and a half away, and in the south, it's another two months.

Based on current sales figures, FlashCar is expected to sell around 180 million vehicles this year, and by the end of 2008, FlashCar Technology's annual production capacity will be around 250 million vehicles.

Given the annual growth rate of electric vehicles, FlashTech's production capacity will be saturated again in less than two years. FlashTech's eagerness to go public is also due to the need to expand its production capacity. As the company has developed to this point, it cannot continue to use its own money to expand its production capacity.

Tan Jincheng casually mentioned 100 million vehicles. I remember that more than ten years later, Yadi, which became the industry leader, could sell about 1500 million electric vehicles a year. A production capacity of 100 million vehicles was simply not enough.

However, Tan Jincheng is not particularly familiar with Hunan Province, and it is hard to say what the business environment is like. It is impossible for Tan Jincheng to give all the benefits to Hunan Province.

Not all places treat private enterprises the same way as the Yangtze River Delta and the Pearl River Delta.

Tan Jincheng from Hunan Province was particularly impressed by two pillar private enterprises that were destroyed: one was a dairy company that disappeared entirely, and the other was a machinery company that was forced to leave. Both of these companies are still around today.

Tan Jincheng will continue to implement Changfeng Group's 4421 plan, but it is clear that he does not intend to place it entirely in Hunan Province. In the future, it will be gradually transferred to other places.

But there's no rush, let's take it slow.

If the production capacity of 100 million vehicles is indeed compromised, Tan Jincheng won't care; he'll just consider it money spent on something else.

"Distinguished leaders, this is the preliminary plan of our Flash Group. We are approaching this cooperation with the utmost sincerity, and we hope that our sincerity will satisfy both Hunan Province and Changfeng."

"The basis of cooperation must be win-win. If you have any requests, please feel free to make them."

Money, business, employment, taxes—Tan Jincheng has truly shown the utmost sincerity. If even these cannot be satisfied, then so be it.

Zuoyouweilai Auto's first model won't be available until around 2010. Building its own factory and production line is entirely feasible; they can simply acquire a bankrupt company or buy a production line from abroad.

As for shell companies, there are plenty in the market, and shell companies aren't that expensive now. Acquiring 100% of them wouldn't cost much.

However, it's better to solve it all at once if possible. Buying a production line from a foreigner is definitely not cheap.

Zhou Kai, the host of the meeting, said: "Thank you, Mr. Tan. On behalf of Hunan Province, we welcome Mr. Tan. We, Xiangcheng City Investment, sincerely welcome Shanchi Investment in Xiangcheng, not just Changfeng Group."

"We have initially agreed to Mr. Tan's acquisition of Changfeng Group; please allow us some time to discuss the acquisition plan that Mr. Tan just mentioned. How about we take a half-hour break?"

"Okay, then see you in half an hour."

Tan Jincheng drew a line, then stood up, leaving the space to Xiangcheng. Gu Qingqing and the others also stood up.

The State-owned Assets Supervision and Administration Commission leaders present at the meeting couldn't help but smile upon seeing this. This young man is truly decisive.

(End of this chapter)