2003: Starting with Foreign Trade

Chapter 633 The Way to Take Over the Yellow Sea

The Changzhou Huanghai Automobile Project was established in 2006 by Shuguang Automobile through fundraising in the secondary market.

The company raised 1.91 million yuan in the secondary market alone, but it hadn't been operating for long and hadn't made any money yet.

Now that Tan Jincheng is only prepared to acquire shares worth less than 1.5 million yuan, Li Xianjin is truly resentful.

This is just like picking peaches.

"Mr. Li, don't be in such a hurry. We can talk things over. Business is all about negotiation."

Tan Jincheng wasn't in a hurry. The Huanghai Automobile project had cost more than 2 million yuan. He was indeed reaping the benefits by using these shares to acquire it. When Yangzi Automobile was reaping the benefits, he still paid a premium to make Changfeng give its shareholders an explanation.

However, Tan Jincheng would definitely not agree to spend 2 million yuan to buy Huanghai Automobile.

With this 2 million yuan, why not spend a little more and directly become the largest shareholder? Then, with a change in management, you'll be in control.

Based on the current market value, acquiring 20% ​​of the shares would only be worth around 3.2 million, so why give him 2 million?
This is the consequence of dispersed shareholding and unreasonable company rules and regulations; no wonder Tan Jincheng became the barbarian.

After the market opened today, a number of stocks with small holdings by major shareholders saw unusual price movements, all driven by the trading activity of ByteDance's trading platform, Juxing Engine. If Shuguang Auto hadn't been suspended from trading today, even if trading through Juxing Engine wasn't possible, it would still have been actively traded.

"But we really have no intention of selling Huanghai Automobile."

Li Xianjin was also quite frustrated. Selling Huanghai Automobile was not part of their plan at all. Although this business was not the company's core business at present, the prospects were still good. They supplied buses for the Dandong area.

Tan Jincheng smiled and said, "Of course, if President Li and Shuguang really have no intention of selling, then we certainly won't force you."

The company has been established for decades and is well-established in the Dandong area. There is no reason to force a takeover. It is fine to do business and reap the rewards, but it is unnecessary to take them by force.

The absence of Huanghai Auto is not a strategic loss for Weilai Auto.

Of course, if the acquisition fails, Tan Jincheng won't simply hold onto his shares for appreciation; he'll definitely use them to his advantage.

Li Xianjin looked at the smiling young man sitting opposite him with surprise and doubt. He was a little unsure whether what he said was true or false. After making such a big fuss, he was just going to give up with a simple "I don't want to sell"?
Impossible, absolutely impossible!
"really?"

"Of course, there's no such thing as forcing someone to buy or sell, but Mr. Li, are you really not going to reconsider?"

Li Xianjin breathed a sigh of relief. That's more like it. How could someone spend over 1 million and then give up so easily just because they said they wouldn't sell? That's just not logical.

"Huanghai Motors can sell about 500 to 600 vehicles every year, and the output value is not low."

These figures can be found in the annual report. The annual output value is between 300 and 500 million yuan. The profit of minibuses is not low. The profit of a minibus is about 15,000 to 50,000 yuan, depending on the model.

Even at the current minimum standard, Huanghai Automobile's annual profit is 750 million yuan.

750 million yuan may not be a lot, but its stability is its strength. For a listed company, a stable business can be very profitable, and sales can still be increased.

Tan Jincheng subtly curled his lip. If Huanghai Auto were in his hands, he could definitely sell more than 1000 vehicles, or even 2000.

Bus groups are generally managed by the transportation bureau, not only because of car manufacturing reasons. In recent years, Flash Technology's electric vehicles have involved many traffic regulations in various places, and Tan Jincheng has a good relationship with the transportation bureau.

He donates money and cars whenever he has free time, and occasionally offers condolences and assistance. Over the years, he has accumulated a considerable network of connections.

In addition to the national standard, each province and city in China has its own electric vehicle standard. A large portion of Flash Motors' public relations expenses are spent on this every year. Tan Jincheng believes that resources can be secured not only in Beicang, but also in other cities and regions.

"How about I give all my shares to you? Your shareholding will increase to 24.49%, and then this situation won't be like this."

Regardless of how much money was spent, based on the current market value, the shares of Shuguang Auto held by Tan Jincheng are worth 1.67 million yuan, which is not much different from the 1.91 million yuan that Huanghai Auto initially raised.

Add some more cash so they don't lose money on this fundraising, and that will allow them to pass the China Securities Regulatory Commission's review.

In Tan Jincheng's view, if he were Li Xianjin, he would definitely take advantage of this opportunity to resolve the loopholes in the company's equity and rules and regulations through this shareholding incident, so that the company would not have such problems again in the future.

As for a core business with an annual profit of several million yuan, although it has potential and can generate some financial gains, there is always a priority in everything.

What is a non-core business compared to losing the entire company, if the price is right?

"In addition, we can provide some cash subsidies. In short, we won't let you suffer any losses. Can we discuss this further?"

Tan Jincheng continued with a sincere expression: "Actually, Mr. Li, you should thank me for raising the sign this time, because I have no intention of taking control of your company. If there is someone watching your management and using several institutions to form a concerted action, you will lose control of the company in a short period of time."

Compared to Vanke's capabilities, Dawn is far inferior.

Both companies reacted similarly in the early stages, appearing completely bewildered. To be honest, most listed companies in China face similar situations. When Vanke made such a big fuss, other companies with similar shareholding structures didn't seem to react much.

The one who was supposed to be taken over by a bid was still taken over.

The fundamental reason is determined by the mechanism of the stock market. Most companies go public not for better development, but either as a task or because they hope the company will be bought by someone else.

Truly capable companies rarely have such an unusual equity structure as Vanke.

"You young upstart, you're stealing my business and I have to thank you?"

Li Xianjin was at a loss for words, both amused and exasperated.

Tan Jincheng shrugged: "That's actually true. Mr. Li may not know this, but when I went to Shandong for inspection, I was looking into the plan of using your company as a shell company."

There were only the two of them in the office. Once outside, Tan Jincheng would deny it, and therefore he wasn't afraid that Li Xianjin would tell others.

At the time, Zuo You did indeed follow Plan B.

Li Xianjin was taken aback: "You were targeting our company that time?" "Not really. FlashTech initially decided to go public using a backdoor listing plan. Your company was just one of the companies in the filing. Actually, we had investigated many companies."

Li Xianjin couldn't help but ask curiously, "Then why didn't you choose our company back then? Speaking of which, our company is half the price of Changfeng, right?"

"It's too troublesome. Your company's equity is too dispersed, and we'll have to make many bids. If we cooperate with others, it's easy for information to leak out."

Goodness, this young man is really something. He planned ahead for so long, just because it was too troublesome or because he was afraid of leaking information. It seems he really escaped a disaster.

Seeing Li Xianjin's surprised and doubtful look, Tan Jincheng smiled and said, "President Li, don't doubt me. What I said is true. If you know anything about the stock market, you should know that we at Flashgate have done a very good job of keeping this backdoor listing a secret."

At that time, almost all the institutions within Changfeng Group had been emptied out, leaving the company with virtually no assets.

"I've heard that. Rumor has it that the last batch of organizations that fled are furious."

Li Xianjin nodded. He was also in the automotive industry, so he was definitely paying attention to the changes in the shareholding of Changfeng Group.

"If a listed company wants to operate well, control is actually quite important. Your equity structure is actually unreasonable and too dispersed. Of course, if you only look at the issue from the perspective of cashing out, then equity is not that important."

Shuguang Auto's equity structure is rather unique. It started as a joint venture of ten people to establish an auto parts factory, and then acquired the Shandong Auto Factory through corporate restructuring.

Strictly speaking, they don't have a boss. Now that these ten people are all over sixty years old, whether they are still willing to continue has become a question.

Li Xianjin is full of energy, but Tan Jincheng is not entirely sure what the other co-founders are thinking. Maybe they don't want to continue and want to retire.

"President Tan, you don't need to worry about that. There are still a few of us old guys who want to continue working here, otherwise there would be no need to talk about it."

"Then, Mr. Li, could you please tell me your proposal?"

If we can negotiate, that's fine. Actually, based on an annual sales volume of 1000 vehicles, an acquisition of up to 2.5 million yuan wouldn't be a loss. Let's not worry about profits for now. The annual sales would be at least 5 million yuan, and we could also develop new energy buses along the way.

Tan Jincheng remembered that Beicang and even the entire Ningbo city would be replaced by new energy vehicles in the future. If Huanghai Automobile were in his hands, this car replacement alone would make Weilai Automobile a fortune.

What is the current progress of Weilai Auto's own-brand products?

Li Xianjin did not mention Shuguang's negotiation demands, but instead inquired about the progress of Yuechi.

"The research and development phase has ended, and we are now in the procurement phase."

Traditional gasoline-powered vehicles have approximately 3 parts, of which engine-related components account for about 22%. Tan Jincheng only realized after getting involved in the process that the procurement of parts is a crucial part of car manufacturing.

It's no wonder that in the past, some car manufacturers had procurement costs that were 20 to 30 percent higher than their peers. Electric cars only have one-third of the parts of traditional fuel cars. If there were problems in the procurement process, they would lose money on every car sold.

The models for the Yuechi A1 have been officially finalized, and they will be available in both gasoline and diesel versions. The gasoline engine will be supplied by Mitsubishi, while the diesel engine will be supplied by Isuzu.

The diesel engine solution for Yangzi pickup trucks is also provided by Isuzu. A fixed supplier is more stable in the early stages of cooperation. As for whether to switch in the future, it depends on one's own capabilities.

Changfeng Motor and Dongfeng Motor were developed in the same period, and Changfeng was one of the first companies to cooperate with Mitsubishi. Now, it can't even develop a diesel engine. It can only be said that its decline is not due to the times, but more to its own internal factors.

Having to go through suppliers for every component means you can't make much money from a single vehicle. Besides controlling procurement costs, the captain doesn't have any better options right now.

Of course, Tan Jincheng also holds shares in many auto parts suppliers in Ningbo and the surrounding areas of Jiangsu, Zhejiang and Shanghai.

Since the procurement costs of Weilai remain high, the only option is to find ways to compensate from other aspects, which is the same approach used to address the procurement costs of electric vehicles in the past.

The methods are all the same, but they work.

"Can we use some of our axle products? Shuguang's axles are quite well-known throughout the country, and Mr. Tan can rest assured about their quality."

Li Xianjin revealed his purpose: if the sale of Huanghai Automobile was inevitable, then simply taking the money didn't seem to offer much benefit; it would be better to develop a new customer.

Although Weilai Auto's own products have not yet been launched, and no one knows what they look like, let alone how well they will sell, this does not prevent Shuguang Auto from entering its supplier system.

They have pickup trucks and large and medium-sized buses for sale. In addition, the other party maintains a good cooperative relationship with Mitsubishi Motors. Through Weilai Motors, Shuguang can get a lot of orders.

"Is this your own decision, Mr. Li, or the decision of your company's board of directors?"

Tan Jincheng was not surprised by Li Xianjin's proposal. As a parts supplier whose revenue accounted for more than 90% of the company's revenue, it was perfectly normal for them to exchange non-core business for core business.

Axles are their main component products, but Shuguang also has many other components. In addition, Shuguang also has the business of distributing other automobiles and has a certain sales channel in the three northeastern provinces.

As things stand, Shuguang is actually a decent parts supplier. Even though the automotive industry in Northeast China has declined, it's still a force to be reckoned with.

Li Xianjin smiled: "Of course it's a decision made by the board of directors. I wonder if President Tan has any ideas about cooperation?"

After a moment's thought, Tan Jincheng said decisively, "Yes, that's fine. In the future, Weilai's own brand and Yangzi Pickup can include your company in the supplier system. As for the specific share, we can discuss it further."

Li Xianjin was taken aback by Tan Jincheng's quick agreement and asked, "Then the shares?"

“If we cooperate in this way, we will have to retain a portion of the shares, and the remaining portion will be made up with cash. However, we can sign a concerted action agreement with your company’s management.”

Holding a certain stake in major suppliers has always been Tan Jincheng's practice, and if Shuguang Automotive enters the supplier system, it will naturally be no exception.

"That's negotiable. If Mr. Tan agrees to this cooperation method, then please lend me an office. I'll contact the company to hold a meeting right away."

"No rush, let's eat first, I'll have someone arrange it."

Tan Jincheng relaxed as well. The two had been chatting for almost an entire noon and had already missed lunchtime.

(End of this chapter)