2003: Starting with Foreign Trade

Chapter 634 Framework Defining
Saturday, October 4.

When Tan Jincheng and Li Xianjin appeared together at the Weilai Auto booth at the Shanghai Auto Show, it caused quite a stir among the media.

Just yesterday, Shuguang Auto, which had been suspended from trading for two days, made an announcement that stirred up the secondary market: ByteDance's Engine Investment Co., Ltd. had made its second takeover bid for Shuguang Auto!
Two funds under ByteDance's ByteDance Engine invested a total of RMB 1.53 million, at a cost of RMB 6.91 per share, to purchase 2213.72 million shares in the secondary market, holding 10.06% of the shares of Shuguang Auto.

Holding more than 10% of the shares meets the criteria for a second disclosure of shareholding.

For some insiders, this is nothing new, but for most participants in the secondary market, ByteDance's unexpected second takeover bid caught everyone off guard.

"No wonder those companies with small holdings by major shareholders have been making frequent unusual moves these past two days. It turns out it's all due to ByteDance's takeover bid."

"These bigwigs are definitely better informed than us. But why is Tan Jincheng reporting Shuguang Automotive for the second time?"

This is actually a question that everyone, including those who are more familiar with Tan Jincheng, has.

Shuguang Automotive has been established for many years, but neither its parts business nor its bus business is a well-known brand, so it is not particularly famous even in the A-share market.

If it were a market like the A-share market of later generations, with thousands of stocks, Shuguang Auto would be a company that no one would pay attention to except for local residents and those who had bought its stock.

Strategically, if Flash Group, or rather, Weilai Auto, wants to expand its supplier system, there is no need for a second round of share purchases. Holding a few percentage points of shares and having a basis for cooperation is sufficient.

In terms of secondary market investment, nothing special about this company was found. There are plenty of better automotive-related companies, so why choose a company located in a border city?

Furthermore, Flash Group's business is mainly located in the southern region, and it does not have a significant presence in the north.

If we're talking about financing platforms, Tan Jincheng already has two, so there's no need to create a third one in the short term.

For this reason, when the old man and the young man appeared at the auto show today, they were surrounded by many media reporters.

"Mr. Li, Mr. Tan, Mr. Tan's investment institution has made two bids for Shuguang Auto. Is there some major cooperation involved? Or does Mr. Tan intend to acquire Shuguang Auto?"

This reporter really didn't give Li Xianjin any face. The first half of the sentence was fine, but the last question about whether or not they were going to acquire Shuguang Automotive really made Li Xianjin lose face.

Even Tan Jincheng didn't know how to answer; the question put both of them in an awkward situation.

Tan Jincheng cleared his throat: "We're not talking about that today; we're here to see the exhibition."

"Why are those two appearing together? Or did they meet during the two days that Shuguang Auto was suspended from trading? Or was the suspension of Shuguang Auto's trading due to President Tan's shareholding increase?"

"As far as I know, Mr. Cheng of ByteDance has been in Shan Dong for quite some time. Does ByteDance's decision to make a second bid during this period mean that the previous negotiations have broken down?"

This wasn't a press conference; there were no prepared scripts. The reporters didn't care whether the two answered questions or not, and kept throwing out questions, making the scene incredibly noisy.

Tan Jincheng glanced at the scene and gave Li Xianjin a look.

Li Xianjin returned the look with a glance, signaling him to appease the reporters. This was Wei Lai's booth, Tan Jincheng's home turf, and besides, he really didn't want to deal with these reporters.

Having spent decades in the business world and given countless interviews, including some embarrassing ones, Li Xianjin had finally recovered.

I just want to see how Tan Jincheng will respond.

Tan Jincheng made two gesturing motions in the air with his hands and pointed to the reporter at the front: "Can I borrow your microphone?"

The reporter was stunned and before he could react, Tan Jincheng snatched the microphone away, and the scene fell into a brief silence.

"Alright, please maintain order here. This is an auto show, not a financial press conference. Don't disrupt everyone's experience. However, I will answer your questions one by one."

The Shanghai Auto Show is one of the four major auto shows in China and also one of the largest auto shows in the world.

In an era when entertainment options were limited, for many men who were not serious car buyers or media reporters, coming to a car show to see beautiful women was almost always their first choice.

There were a lot of people at the scene.

The Weilai booth received the same treatment as at the Guangzhou Auto Show, providing food and drinking water. In addition, there were supercars on display. Although the area was not large, it was already quite popular.

The cars rushed up in such a swarm that the already popular exhibition area quickly attracted a large crowd of onlookers.

"Holy crap, is this Wei Lai's boss? He's so young!"

"I don't think so. Isn't there that old man next to him? That should be him, right? How could someone so young be the owner of a car company? He's probably a manager or a site supervisor. But it's pretty impressive that someone so young can be a manager."

Many people don't use the internet, and quite a few don't know Tan Jincheng. Some came to the exhibition with their families, and not everyone knew Tan Jincheng's identity. "He is indeed the boss of Weilai Auto, as well as the boss of Shanchi Group and Orange Technology. Don't let his young age fool you, he's worth billions. A billionaire, that's not common."

Someone who recognized Tan Jincheng helped explain.

Tan Jincheng patted the microphone: "The questions from the reporters just now can be summarized as concerns about Weilai Auto and Shuguang Auto. Since some questions involve trade secrets, it is not convenient to answer them here."

"However, I can still satisfy everyone's curiosity. I will answer some of the questions I can, but as I said before, please maintain order and do not affect everyone's exhibition experience."

"Thank you very much, Mr. Tan."

As long as they could answer the questions, the noise in the room immediately quieted down.

Li Xianjin nodded. "Not bad, not bad. This young man's emergency response in the face of the sudden situation is really good. He brought the scene under control with just a few actions and a few words."

Don't underestimate these few small actions. Not to mention ordinary people, many entrepreneurs don't know how to deal with unexpected situations.

"First of all, we should talk about ByteDance's second bid for Shuguang Auto. This definitely shows that they are optimistic about Shuguang Auto's development. ByteDance is an investment company, and everything they do is for the purpose of investment."

"Secondly, the suspension of Shuguang Auto's trading is indeed based on some cooperation between the two parties, but we cannot say for the time being. Please refer to Shuguang Auto's announcement for the most accurate information."

This is something that really can't be discussed. Right now, he and Li Xianjin have only discussed a framework. Whether they can reach an agreement or get approval from the China Securities Regulatory Commission is still unknown.

When it comes to efficiency, Li Xianjin is no less capable than Tan Jincheng. After their first meeting, he asked Tan Jincheng to prepare an office for him so he could work on-site and hold meetings with the board of directors and management.

Whether they want to retire or continue working, having another important customer is a good thing. As for Huanghai Auto's forced sale, there's nothing that can be done about it.

To gain something, you always have to give something in return.

In addition, the conditions offered by Tan Jincheng were not bad either: to transfer his 5.07% stake plus 8000 million yuan in cash to acquire the trademark rights of Huanghai Automobile and the Changzhou Huanghai Automobile manufacturing base.

ByteDance Automotive maintains a 4.99% stake, remaining the second-largest shareholder of Shuguang Automotive.

Along with this, a series of parts procurement contracts, including axles, were signed with Shuguang Automotive, successfully bringing Shuguang Automotive into the supplier system of Weilai Automotive's complete vehicle production process.

"With 5.07% of the shares and 8000 million in cash, although we haven't fully recovered our raised funds, we're close. Plus, with the profits from a series of orders, we're still making a profit."

"Yes, although we don't know how many new cars they need, judging from the first year's purchase volume, they've already made a profit. This young man is quite honest."

With 5.07% of the shares plus 8000 million in cash, the current valuation is roughly 1.7 million yuan. In addition, the company has gained a powerful second shareholder and more orders, so the market value of the shares will definitely increase.

The overall value is already worth the 1.91 million yuan raised in the secondary market. Although there was no premium, being able to recover the investment in full after last year's financial crisis is already considered a premium.

Most importantly, the 1.91 yuan raised was provided by the secondary market, while the transferred shares and cash belonged to the company, which was profitable for the company's shareholders, especially their management.

As for the retail investors in the secondary market? Do they even matter?
"Indeed, he's quite good. In the two days we've been in contact, although Tan is rather assertive, he's quite generous when it comes to matters of interest during the negotiations."

Li Xianjin also largely agreed with his old buddies' views. Tan Jincheng held the upper hand in the current negotiations, and regardless of whether they talked or not, he had already gained something from this hype.

If the deal falls through, he can reduce his holdings or transfer his shares to others, even competitors of Shuguang Auto, after six months, without needing their management's consent.

If others are eyeing the Dawn, they can take advantage of this period to acquire shares on the secondary market.

As Mr. Tan said, who knows how many competitors are lurking in the secondary market? What if one or two more suddenly appear?

Then the company would really be gone.

Tan Jincheng truthfully explained all the potential risks and did not use them to suppress them. He gave them everything he could and was very sincere during the negotiation process.

No wonder his secretary told him not to worry.

Domineering, deep, and assertive, yet attentive to progress – this is the impression Li Xianjin has formed of Tan Jincheng over the past few days. Cooperating with such a person seems like a good idea; at least there's no need to worry about him not paying for the goods.

As the supplier, what they fear most is delayed payments or failure to fulfill contractual obligations during the cooperation process.

"Mr. Tan, your company has participated in two auto shows now, but there hasn't been a single domestic brand on display. When will we see a domestic brand from Weilai?"

Unable to get any answers, the reporters started asking other questions to make things difficult for Boss Tan.

(End of this chapter)