2003: Starting with Foreign Trade

Chapter 721 Foolish and rich? Not a chance!

Tuesday, April 2010, 4.

"RTMD, when it comes to marketing hype, you have to look to Lei Jun."

Looking at the table laden with fine wine and food, along with bowls of millet porridge, Tan Jincheng couldn't help but recall Lei Jun's boasts in his previous life about how 14 people shared a bowl of millet porridge when the company was founded.

Damn it, you didn't mention any of these good drinks and food. It makes people think that you had a very difficult time when you started your business.

"What are you standing there for, Mr. Tan? Help us take a picture. You're a member of Xiaomi now, so after we take our picture, you have to come over and take a group photo too."

Lei Jun smiled broadly as he took out a DSLR camera and handed it to Tan Jincheng.

Just now, Xiaomi Technology has signed a formal investment agreement with ByteDance's advertising platform.

With $500 million and a 20% stake, ByteDance became Xiaomi's second-largest shareholder and its first venture capital firm.

Lei Jun's opening ceremony for Xiaomi was neither high-profile nor low-profile. He invited some friends and people from the internet circle in Beijing, including his good friend Chen Nian.

The middle-aged man wearing glasses was looking at Tan Jincheng with great interest.

When he arrived this morning, he heard that this young man had directly invested $500 million in Old Lei, which really surprised him.

Wow, he's really rich. I just wonder if he's interested in investing in Vancl. Speaking of which, he has a lot of clothing supply chains, factories, and a lot of offline channels.

If we could get him to invest in Vancl, it would greatly help Vancl's expansion.

Vancl is currently preparing for its fourth round of financing. Last year's major expansion and the fact that the top leader of the capital city visited Vancl again in January this year and affirmed Vancl's achievements have made Chen Nian very excited.

In addition, in March they signed Han Han and Wang Luodan as brand ambassadors, and a series of promotional plans are underway.

However, one painful thing is that Vancl's money is almost gone.

He came to Xiaomi's opening ceremony, partly to support his old friend, and partly to see if there was any way to raise more money, as Vancl would run out of funds if the fourth round of financing didn't proceed soon.

Tan Jincheng, unaware of Boss Chen's gaze, clicked the shutter button repeatedly, taking several photos from different angles.

"By the way, you knew you were coming here to take photos today, couldn't you have worn some nicer outfits?"

Tan Jincheng complained as he took the photos.

Lei Jun was still wearing the same leather jacket and jeans he wore on their first meeting, with a white shirt underneath. Liu De's attire remained that of someone working within the system, while Lin Bing had a more overseas-educated, elite look.

As for the others, they were dressed in a complete mess. Some wore plaid shirts with jackets, some wore white shirts, some wore pink shirts, and some were even wearing thin down jackets.

Individually, they might not seem like anything special on the street, but when all 14 are in one shot, they exude an earthy charm.

"Haha, don't worry about the details. We're a startup, we don't need to be so neat and tidy. This is the effect we want."

"Exactly, a startup should embody the spirit of a startup; only that spirit suits us."

"Okay, okay, you're all right. Stop talking nonsense and look at the camera."

An investor captured the founding of Xiaomi Technology in a few shots. Tan Jincheng then took photos with the founding team of Xiaomi, including a group photo and individual photos.

The young Karami found that Tan Jincheng, this young tycoon, was quite easy to get along with. Like them, he would occasionally utter some swear words, a national treasure.

"So, how's it going with finding this investor?"

Lei Jun patted his buddy on the shoulder, who was a little envious. Although his buddy was currently enjoying great success and had more influence in the capital than Tan Jincheng, he was still no match for Tan Jincheng in terms of popularity among young people.

Even his partners showed great interest in Tan Jincheng. Xiaomi was his Xiaomi, but it was also his partners' Xiaomi.

Bringing in investors also requires discussion with the partners. ByteDance's investment in Xiaomi was agreed upon by all parties, especially Liu De, who is in charge of the supply chain and has been the biggest headache for them recently.

The discovery of the first electron undoubtedly solved a major problem for him.

"He's really good; he meets all the needs of Xiaomi investors right now. How did you meet him? You two don't seem to have much interaction, do you?"

"Introduced by Lao Ding, we got along well and finalized the investment after having a meal together."

The two talked until nearly midnight last night. The more they talked, the more Lei Jun felt that their business models had a lot in common, such as the mobile phone distribution channels he wanted to ask about.

Currently, there are two models for mobile phone distribution channels. One is led by ZTE, Huawei, Coolpad, and Lenovo, which cooperate with the three major operators and bundle sales with package discounts and other methods. The other is the large and small retailer mechanism led by D.Phone.

Besides these, there are other offline store channels, but it's almost impossible for Xiaomi to break into any of them.

Externally, international brands such as Nokia, Motorola, and Samsung dominate the high-end market, while internally, there are a series of mid-to-low-end brands such as ZTE, Huawei, Coolpad, and Lenovo, as well as counterfeit phones from Huaqiangbei, and newcomers such as Meizu and HTC.

Furthermore, there are rumors that the next generation of Apple phones will officially enter the Chinese market, making the competition in the mobile phone market even fiercer than in the automotive industry.

Tan Jincheng knew that traditional giants like Nokia and Motorola would gradually decline in the smartphone era, but people of this generation didn't know that. Who could have imagined that Nokia, the king of the mobile phone market today, would disappear in just a few years?
No matter how you look at it, it will be extremely difficult for Xiaomi to succeed, especially since they don't even have a channel to sell their products.

"That's easy. Since we can't squeeze in, we'll just build it ourselves. Look at how we're developing new energy vehicles now, isn't that the same approach?"

"Build it yourself?"

“Yes, the internet is open. Xiaomi can build its own online shopping website and adopt a direct sales model. In addition, Orange Products will open a separate section for Xiaomi phones. I can help Xiaomi contact SF Express for delivery. We can go directly to the online shopping route.”

"Offline sales are also easy to handle. We just need to build a batch of flagship stores in large and medium-sized cities. We can then develop some franchisees later when sales are good. Wouldn't that solve the problem?"

Break free from traditional business thinking; if we can't beat you, then we won't play along.

Father, like son.

Before Xiaomi, there was no such direct sales model for mobile phones. The newly established Xiaomi hadn't thought about that aspect, since the company had nothing at that time and hadn't considered that area yet.

Upon hearing Tan Jincheng's words, he instantly understood.

"I am increasingly convinced that finding this investor was worthwhile. Mr. Tan has provided me with a lot of business ideas, and now it seems that Mr. Tan has a clearer vision of Xiaomi's future than I do."

"Hehe, Mr. Lei may not know this, but if I hadn't started making two-wheeled electric vehicles in the first place, I might have chosen mobile phones instead of cars."

"It's fortunate that they went into the car business; if they had gone into the mobile phone business, Xiaomi wouldn't have stood a chance."

In the business world, Lei Jun was generous with his praise, but after chatting for several hours, he increasingly agreed with Tan Jincheng. Like the three giants of Weilai Auto, Lei Jun also believed that Tan Jincheng was stronger than many others in terms of strategy and foresight.

He doesn't understand technology, and many of his suggestions are far-fetched, but upon closer examination, they seem to have a very high probability of being realized and possess considerable commercial value.

For example, he just casually mentioned applying mobile operating systems like MIUI to future new energy vehicles. Wouldn't that create an opportunity to achieve so-called intelligent driving?
No wonder Weilai Zhijia, which he founded earlier, has been making a lot of moves lately; it seems they are laying the groundwork in this area.

Using operating systems to assist driving can indeed bring more enjoyment to driving and also give cars more commercial value.

He also mentioned some controls within smartphones, which, although not yet achievable, will not be difficult to implement with technological advancements.

The so-called technology tree is actually quite simple. With a clear direction for development and avoiding detours, it can be gradually realized under the guidance of tech experts.

Don't think that bringing an iPhone or an Android flagship back to 2010 in 2024 is pointless.

In the eyes of tech giants, this is a god-tier tool, enabling a company to maintain a technological lead over its competitors for over a decade. This is a classic example of overwhelming the competition.

"Tell me about it in a bit. Vancl is currently working on its fourth round of financing, and we're planning to make a big splash."

Lei Jun looked at his old friend, rubbed his head, and couldn't help but feel a headache coming on.

"This is the fourth round. If this continues, how many shares will you have left?"

He is a shareholder and a director of Vancl. Vancl, which was established less than a year ago, has indeed been welcomed by the capital market thanks to the promotion of his group.

However, Chen Nian's actions were completely unexpected.

The speed at which they're burning through money is just too fast.

Is it necessary for a vertical e-commerce website that only deals with clothing to burn through so much money in such a short period of time?
Four rounds of financing! Orange Technology went public after all four rounds, but Vancl, let alone going public, would have been lucky to expand its business even after four rounds of financing, according to Chen Nian's plan.

From an investment perspective alone, Lei Jun already felt that Vancl was not a good project, or rather, that his old friend did not understand the operation of internet companies and was not a qualified investment target.

I never expected that he would now be eyeing Tan Jincheng.

"You just need to introduce me, I'll take care of the rest."

Chen Nian wasn't familiar with Tan Jincheng, and Tan Jincheng didn't even recognize him before he entered, which made him somewhat frustrated.

"Alright, I'll introduce you to them when I'm done with this. Let's eat first."

Lei Jun was also helpless. Introducing a project that he himself didn't think was good to Xiaomi's first VC was just asking for trouble.
He was still thinking about getting closer to Tan Jincheng.

The most discussed topics at the dinner table were naturally the mobile phone industry and the future of Xiaomi.

Just like Lei Jun's investment in Vancl, Tan Jincheng also appeared on Xiaomi's board of directors. If it were a regular investment, Tan Jincheng wouldn't bother to be a director, but Xiaomi is different.

Being a director will not affect Tan Jincheng's current work.

"Speaking of which, Mr. Tan's Weilai Auto has been quite the star these past few days."

As the conversation went on, the topic turned to Tan Jincheng. For all members of Xiaomi Technology, it was a joyous occasion that the company had investors so soon after its establishment, and the investment was substantial.

With an extra $500 million, everyone won't have to work so hard anymore; both the working environment and benefits will be much better.

"Huh? Haha, winning the sales champion title is indeed a happy event, I didn't expect this at all."

The success Lin Bing mentioned refers to the sales figures for the Yuechi A1 in March, which have been officially released by the China Association of Automobile Manufacturers. With monthly sales of 11792 units, the Yuechi A1 surpassed the Honda CR-V by a difference of 1260 units, to become the top-selling SUV in April.

As for the RAV4, which was severely affected by the recall incident, its monthly sales plummeted to 6526 units under the siege of automakers led by Weilai Auto.

To be fair, these sales figures are already quite good, and Toyota's 4S dealerships responded promptly. If it weren't for Weilai Auto's leading attack, with Toyota's financial resources, public relations capabilities, and the whitewashing efforts of various car reviewers, sales might not have dropped much.

This is the strength of Japanese brands; even when safety issues arise, they can be easily resolved.

If it were a domestic brand, the consequences of such a serious recall would be unimaginable.

Since its launch, the Yuechi A1 has enjoyed booming sales. In mid-March, Yuechi launched a comprehensive promotional campaign, building on its existing sales of the RAV4, leading the market to anticipate a surge in Yuechi sales in March. However, no one expected the Yuechi A1 to top the monthly sales charts. We knew it sold well, but we didn't expect it to sell this well.

Since last year, domestic brands have begun to rise, and the urban SUV market is no longer a niche market. The performance of the Yuechi A1 has influenced many companies' judgments about the car market to some extent.

Since the beginning of the year, many automakers have started researching models for this segment and are preparing to develop urban SUVs.

The Yuechi A1's design, which is ahead of its time, has become a reference for many car companies.

When it comes to industrial design, Weilai Auto is really not bad. The Yuechi A1 references the second-generation model of the legendary car from its previous life, as well as the design concept of Weilai Auto from its previous life, and looks very pleasing.

The reason for choosing the brand Wei Lai is largely based on its design sense from its previous life.

You can criticize Weilai's battery swapping, you can criticize its exploitative practices, you can criticize the quality of its vehicles, and you can even criticize founder Li Bing's outspokenness, but you absolutely cannot criticize Weilai's industrial design.

The EC, ES, and ET series, regardless of the model, all have very beautiful exteriors.

In addition, there's the pure electric concept sports car from Weilai, which is also very high-tech. Once the research institute is built, Weilai Motors will definitely have to find a way to bring it to market. Pure electric sports cars are really exciting!

"By the way, there have been reports online these past few days that Yu Liguo, the CEO of BAIC, has joined the Weilai Automotive Engineering Research Institute?"

After lunch, the junior staff started working, while several executives and Chen Nian moved to Lei Jun's office to continue their chat. This was Chen Nian's question.

Hehe, Weilai Auto's public relations department has already started generating buzz by leaking inside information.

Let's hype this up for a few days, riding the wave of Yuechi A1's March sales champion status, and then confirm Yu Liguo's joining the company through official announcement, followed by a formal press conference.

By then, it will be close to the end of April, and we can extend the hype surrounding Weilai Auto to the auto show held in Beijing at the end of April.

Do it all at once, second time tired, third time exhausted.

Starting with the Spring Festival Gala after the Lunar New Year, Weilai Auto has been doing its best to boost sales. During this period, it also happened to be in the midst of Toyota's recall scandal, which allowed Weilai Auto to win the sales championship in March.

This gave Weilai Auto a new hot topic for hype, again leveraging Yu Liguo's fame, but this kind of hype cannot continue indefinitely.

Furthermore, prolonged hype can easily provoke consumer backlash. What Weilai Auto needs to do now is to maintain this buzz before the Beijing Auto Show.

At the Beijing Auto Show, Weilai Auto can leverage this buzz to boost sales.

This is the plan for Weilai Auto in the first half of the year. As for the second half of the year, let's see if Weilai Auto can come up with a new model or concept car. Even if it can't be sold, it can still be used for publicity.

"Ha, that's right. We've already discussed it with President Yu, and he will take on the role of the director of the newly established research institute at Weilai Automobile."

"Good heavens, you said you came to the capital to take care of some small business, is this what it is?"

Leibusi said with some surprise, "I haven't been paying much attention to current events these past few days. When I met with Tan Jincheng, the kid didn't reveal at all what he was doing in the capital. I thought he was going to start some new business in the capital."

"Back then, it wasn't confirmed yet, so it wasn't appropriate to announce it publicly to avoid causing unnecessary trouble for President Yu."

After discussing the compensation a few days ago, Tan Jincheng had his legal team prepare contracts for Yu Liguo and Hu Zhengnan respectively. With the formal employment and stock option contracts signed, there were no further surprises.

It's not that I intentionally concealed anything. If such an important matter can't be finalized and signed after the contract is signed, who can guarantee that it will definitely be successful?

Who knows, maybe he'll go back and think about it all night and then change his mind; it's not impossible.

Lei Jun's eyes darted around, seemingly lost in thought, while Chen Nian kept marveling at how Tan Jincheng had managed to invite such a powerful figure.

The addition of a top-notch individual can be a significant boost to a company, even if that individual doesn't seem to fit the company perfectly, it can still have a substantial social impact.

Lin Bing and the others were having a great time chatting, which really worried Chen Nian, who kept giving Lei Jun meaningful glances.

He had already inquired with Tan Jincheng beforehand and learned that the young boss had been stuck in the capital for a week and would be flying back today.

Lei Jun was also helpless. He didn't actually want to bring up this matter. He had gathered a group of executives in his office to chat in order to gloss over the issue, but he couldn't tell his old friend directly.

This guy is quite concerned about his image.

Leibusi gave Lin Bing and the others a wink, signaling them to disperse, and then brewed another pot of tea for Tan Jincheng and Chen Nian.

"What's wrong, Mr. Lei?"

Lin Bing and the others left, and the contract was signed. Tan Jincheng had originally planned to leave Xiaomi as well.

Lei Jun forced a smile and said, "Haha, Chen Nian has something he'd like to discuss with President Tan. I wonder if President Tan would be interested?"

Vancl's first investment was $2 million, which was invested by Lei Jun, and it was considered a venture capital round. This was in July 2007, when Lei Jun had not yet left Kingsoft.

In the following year, Vancl completed three more rounds of financing, making a total of four rounds including the venture capital round. All four rounds of financing were denominated in US dollars, which was a considerable sum of money given the high exchange rate.

It's only been nine months since Vancl's last round of financing, and they've already burned through all four of those rounds. It's a bottomless pit.

"Mr. Tan also owns a vertical e-commerce website. I wonder what Mr. Tan thinks of Vancl?"

Before Lei Jun could finish speaking, Chen Nian interrupted, and Tan Jincheng was taken aback, suddenly having a bad feeling.

Damn it, could this guy be thinking that because I readily sponsored Lei Jun, he can easily get money from me and is now coming to me for help?

What a money-burning expert!

"Vancl is a very promising company. What does Mr. Chen mean by that?"

"That's right, Vancl is currently preparing for its fourth round of financing. I wonder if Mr. Tan would be interested."

Damn it, that's true. Tan Jincheng was a bit of a headache. It would be a bit hurtful to refuse directly. But it wouldn't matter if he invested a few million to build connections. If he lost money, so be it. It's not like he couldn't afford to lose.

The problem is that this guy is really not a good candidate. What impressed Tan Jincheng the most was that he cursed Jay Chou on a TV show, which caused a huge social backlash. He refused to apologize afterwards, which led to Lei Jun being criticized as well.

Given these words and actions, would Tan Jincheng dare to vote for him?
Jay Chou is the spokesperson for his own products, and there are many other business collaborations between them. To a certain extent, they are a community of interests. Losing money by investing in him is a minor issue, but it would be a significant blow to the commercial value of Flashpoint Technology.

Chen Nian VS Jay Chou's fans, is there even a choice?
"Fourth round already? Congratulations! I wonder how much you plan to raise for the fourth round?"

Tan Jincheng asked calmly, while inwardly considering a solution.

"We are looking to raise $5000 million in our fourth round of funding. Tiger Asia has expressed interest, and we are wondering if Mr. Tan would be interested. If ByteDance wants to lead the investment, that would be fine too."

Chen Nian continued, "The newly raised funds will mainly be used for marketing and to supplement Rufengda's working capital, aiming to achieve a sales target of 10 billion yuan by 2012."

Vancl has big ambitions. Like Jingdong, they also built their own logistics network, named Rufengda, which is why they are burning through money so quickly.

However, Chen Nian clearly underestimated the difficulty of building his own logistics network, or rather, Dong Ge at this point didn't have a concrete concept of how difficult it would be. Building his own logistics network would cost more than $5000 million, let alone $5 million.

For a long time, Jingdong was hampered by its self-built logistics system.

Dream on! I wouldn't even invest, let alone lead the investment. I'm not going to be a sucker. Orange Products doesn't even dare to build its own logistics, why would they invest in you?
If you didn't have that kind of stubborn attitude of making statements and refusing to repent, investing a few million as a token gesture would have been fine, but now... never mind.

“5000 million US dollars is a considerable sum. How about this, I’ll go back and discuss it with our investment manager, Mr. Huang, and do an evaluation of the investment project. What do you think, Mr. Chen?”

If I can't think of a better way to shirk responsibility right now, then I can only resort to delaying tactics.

Lei Jun smiled subtly. Tan Jincheng's meaning was probably a refusal, but he didn't know if his old friend had understood.

Given Tan Jincheng's style of doing things, and his way of doing things in the company, he has always been a one-man show. If he were really interested in this project, he wouldn't have said he would go back and discuss it with Huang Ming; he would have directly learned about the project details.

Hopefully, Lao Chen won't let his lack of money cloud his judgment; he should at least save face for himself.

Chen Nian asked Lei Jun to leave, citing that he still had business to discuss with Tan Jincheng.

“Building our own logistics network for $5000 million is simply not enough.”

Seeing Lei Jun's puzzled expression, Tan Jincheng said frankly that the two were now strategic partners, and there were some things that needed to be said.

Speaking of which, Dongzi also started building his own logistics network this year, and he hasn't been having an easy time lately.

Dongzi's success should be attributed to two benefactors. One is Xu Xin, known as the "Queen of Investment," who gave Dongzi ten million US dollars at the beginning of his business, enabling his company to survive.

The second one should be the one that appeared this year, the one who went all in on Tencent.

"5000 million US dollars isn't enough?"

Comrade Lao Lei has figured it out: Tan Jincheng has absolutely no interest in Vancl. But the initial investment of 5000 million US dollars is not enough, so where does this come from?
That's normal. Lao Lei hasn't had much experience in the logistics industry. When Dongzi first asked Zhang Lei for $7500 million, he was still a little embarrassed, thinking it was too much.

“Brother, we at Orange Products have been cooperating with SF Express for so long, and we also have our own internal logistics system. If $5000 million can build our own logistics, why would I invest in Vancl? I would build it myself.”

The idea of ​​building our own logistics system is absolutely correct, and the current road transportation system is also suitable for promoting it.

However, what is right is not necessarily suitable. Many companies have been dragged down by building their own logistics. Dongzi's success is due not only to Zhang Lei's support, but also to his own strong willpower.

Lei Jun thought about it and agreed. Although investing in logistics doesn't conflict with his own vertical website, there's no reason why Orange Technology wouldn't build its own logistics system now if it could.

$5000 million is not a very large sum for either Orange Technology or Tan Jincheng.

"Building your own logistics system is actually a very complex system. I won't go into the details of the logistics system if you don't understand them. I'll just give you the simplest example: how much land would you need to build logistics warehouses across the country?"

SF Express has bought airplanes, not to mention other things like trains and truck fleets. But the most important thing for warehousing and logistics is land.

A logistics company can actually be seen as a nationwide real estate company, holding a large amount of land. This land is currently used for industrial purposes, but it is not impossible to convert between industrial and commercial land.

When business is good, it's a warehouse; when business is bad, it can be a residential area or a commercial building.

$5000 million, over 3 million, and you think you can get this thing? Chen Nian is dreaming.

"Just wait and see. If he really only raises $5000 million in this round, then I estimate that the fifth round of financing will have to take place this year."

It's easy to understand why a real estate company is used to describe a part of a logistics company. After figuring it out, Lei Jun could only smile wryly.

This guy is really blunt. He's going to do his fifth round of financing this year. How can this company even survive?
Damn it, Chen Nian, you've really gotten too big for your britches. You were looked down upon by a young kid and you don't even realize it. And you still think you can outsmart him?

(End of this chapter)