2003: Starting with Foreign Trade

Chapter 752 Hello, 2011
PS: The timeline is sped up a bit in this chapter, but it's not the end. The automotive industry was relatively stable in 2011, so the timeline is sped up a bit.

"That kid was right."

On the desk were two mobile phones, one of which was Nokia's latest 801T, running the Symbian Anna system. It was a high-end business phone jointly developed by Nokia and China Mobile.

The other one is the Xiaomi 1, which runs on Android. Both phones were released this year.

Despite their similar prices, the two phones offer vastly different user experiences and are incomparably popular in the market. Nokia, which once sold out immediately upon release, is now almost forgotten.

The Nokia 801T is Nokia's fourth phone released this year. In terms of both build quality and features, it is no less than its competitors on the market. However, it has failed to make a splash.

On the contrary, the Xiaomi 1 has generated a huge response since its new product launch.

The Xiaomi 1, which was sold exclusively online, was in short supply from the moment it officially went on sale. Originally, only 10 units were planned to be produced, but when the pre-sale started after the launch event, the number of pre-orders reached 30 units.

Besides the Xiaomi 1, which sold extremely well, other Android phone models also enjoyed very strong sales. In contrast, the sales of Symbian phones, represented by Nokia, declined day by day.

Everything was just as he had said a year ago.

As for BYD, they accepted the Xiaomi manufacturing contract last year out of some sense of obligation, even though they were prepared to lose money or even make a loss.

Now that the Xiaomi 1 has been officially released, judging from its hot sales, its sales volume is bound to be high.

"Now we're in trouble, we'll have to do this kid a favor."

After fiddling with the two phones for a while, the boatman couldn't help but smile wryly.

He had originally agreed to take on Xiaomi's order last year, partly out of respect for Tan Xiaozhi, but now it seems that the other party might have introduced BYD Electronics to a long-term major client.

Foxconn is probably regretting it now, right?

"How strong is the mental fortitude of the first batch of Xiaomi fans? Haha, just look at the buying frenzy and you'll know."

The first batch of 100,000 Xiaomi 1 units, which went on pre-sale at the launch event on August 16, sold out in three hours.

Three hours was not the limit for the Xiaomi 1, but the limit for the Xiaomi network. At this moment, the Xiaomi network's capacity was extremely poor. During these three hours, the webpage frequently returned HTTP 404 errors and could not be refreshed at all.

The reason we were able to buy for three hours was because the page was constantly showing a 404 error...

These days, netizens have an incredibly high tolerance for such things. However, Lei Jun's pre-conference hype was so intense that he couldn't even squeeze into the press conference himself and needed special personnel to escort him in.

"I heard Xiaomi is raising funds again? Will ByteDance's advertising platform be investing this time?"

"Follow along, continue following this round, but stop following in the next round."

"Hehe, in the next round, even if you want to join, President Lei might not be willing, otherwise the company would be yours."

At the beginning of the year, taking advantage of the relocation, Xiaomi completed its Series A financing, raising a total of US$1025 million, equivalent to about RMB 7000 million.

With limited funds and not wanting too many shareholders, ByteDance's advertising platform, Ocean Engine, took over the entire investment, maintaining its 20% stake.

At the end of July, Lei Jun launched a so-called Series B1 financing round, raising a total of $2750 million, less than 1.8 million yuan, which Tan Jincheng was actually able to come up with.

In the US stock market, the market value of Tan Jincheng's Tesla holdings rose to $2.5 million, finally seeing a return on his $2.2 million investment.

Apple's market capitalization has soared to $20.52 billion.

If someone wanted to invest in Xiaomi, they wouldn't need to spend their own money; they could simply pledge a small amount of their shares. Unfortunately, Lei Jun didn't want Tan Jincheng to continue monopolizing the investment.

In the B1 round, Lei Jun attracted IDG and Qiming Venture Partners, an old friend of Tan Jincheng. ByteDance only symbolically followed suit with a small investment, and its shareholding decreased accordingly to 19.75%.

IDG and Qiming Venture Partners, in terms of capital background, it seems that Lei Jun (CEO of Lei Jun) had planned for a Hong Kong stock listing from the very beginning. Having a professional team is definitely an advantage.

Speaking of Qiming Venture Partners, Kuang Ping's investment style is truly enigmatic. He is very obsessed with venture capital rounds, having invested in projects like Orange Technology that yielded huge profits, but also in quite a few that failed.

For example, at the last investment meeting, Kuang Ping said that he invested in a website called B-Hua, which was established last year and currently has less than 10 users. He acquired a lot of shares for very little money.

As for Zhihu, Tan Jincheng is very familiar to everyone. Regardless of his reputation, the fact that he was able to survive in the fierce internet market and go public shows that he has something to offer.

Kuang Ping has a good eye for venture capital, but once he enters Series B or later rounds of investment, the success rate of his projects is not high, which makes Kuang Ping very frustrated.

After all, while venture capital rounds offer high returns, only Orange Technology has the potential for a quick IPO, and investments beyond Series B typically involve substantial amounts of capital.

Xiaomi's valuation rose rapidly, and Kuang Ping, who had finally mustered the courage to invest again, consulted Tan Jincheng before making the investment.

Since he himself didn't have the opportunity to invest in everything, Tan Jincheng was happy to have a familiar investment partner, so he encouraged him to invest actively.

When Xiaomi was at B1, its valuation was only $10 billion. In just one month, the valuation quadrupled, and Kuang Ping was overjoyed.

Xiaomi Technology, which owns four major products—MIUI, MiTalk, Xiaomi Community, and Xiaomi smartphones—is planning to raise $8800 million in its Series B2 funding round, bringing its valuation to $40 billion.

In less than a year and a half since its founding, Xiaomi has created a remarkable miracle in the capital market. Through four rounds of financing, from the venture capital round to the B2 round, the company's valuation has reached nearly 260 billion yuan.

"Haha, this is just the beginning. It will probably take several more rounds of financing before it can go public."

Xiaomi went public in 2018, with a pre-IPO valuation of approximately $500 billion to $700 billion. Based on the current fundraising progress, Xiaomi will need to go through at least three to four more rounds of financing before its IPO.

ByteDance will certainly not have the opportunity to lead the financing rounds again, but there is still a chance to participate in the follow-on investment to guarantee shares. Tan Jincheng's plan is to ensure that he holds at least 17% of the shares at the time of the IPO.

Based on a pre-IPO valuation of at least $500 billion, the Xiaomi shares held by ByteDance's advertising platform would be worth at least $80 billion at that time.

This was just before the IPO.

The price of 1999 yuan is really too attractive. The second batch of 10 pre-orders sold out within hours after the sale started. Xiaomi's website still has such poor capacity.

In fact, before the second batch of sales even started, there were internal suggestions to add some servers, but Lei Jun, who has a knack for marketing, rejected them.

Xiaomi's production capacity was indeed limited in the early stages because no one expected it to sell so well. It was so popular that scalpers even appeared, and those who managed to grab a pre-sale qualification could easily make four or five hundred yuan by reselling it.

But later on, this guy really learned from Jobs and became a master of scarcity marketing.

Keep in mind that the Xiaomi 1 was in high demand for a whole year. Which manufacturer could sell millions of units in a year and still have insufficient production capacity?

"That being said, while the Xiaomi 1 completely outperforms its competitors in terms of performance, surely it shouldn't be experiencing such a severe shortage? What could be the reason?"

The people chatting with Tan Jincheng were Huang Ming and Cheng Linfeng.

ByteDance holds an investment summary meeting every six months, with the timing depending on Tan Jincheng's schedule. The reason this year's semi-annual summary meeting was scheduled for the end of August is largely due to the launch of Xiaomi 1.

On the one hand, as an important shareholder, Tan Jincheng had to support Xiaomi 1; on the other hand, Huang Ming and others also wanted to wait until Xiaomi 1 was launched to see the specific sales performance.

Currently, ByteDance's advertising platform manages 30 billion US dollars in funds across 5 USD funds and 4 RMB funds.

By 2010, China's capital market had already taken shape, but good companies were becoming increasingly scarce, and investment premiums were rising. Going forward, it would be extremely difficult to acquire any truly exceptional companies.

The success of Xiaomi 1 was not only a celebration for the Xiaomi team led by Lei Jun, but also a celebration for many investors. The investment of more than 1000 million US dollars by ByteDance's advertising platform appreciated to 7.9 million US dollars in just one and a half years.

This investment efficiency is unmatched by Bitauto, which went public at the end of November last year.

The person who just asked the question was Cheng Linfeng. Cheng Linfeng, who has been in charge of the secondary market, has some understanding of the ins and outs of the supply chain, but ultimately he doesn't understand it very well.

With a price tag of 1999, its performance far surpasses that of many similar models. Note that it is popular, but he still doesn't quite understand why it's so popular. Android phones aren't like Apple; there are far too many other options.

"There are reasons for the superior quality of the products, as well as objective reasons. Xiaomi has pioneered a new mobile phone industry chain model and made it successful."

Huang Ming, who works in primary investment, knows much more than Cheng Linfeng. Currently, domestic OEM manufacturers all operate on a heavy asset model, while Xiaomi operates on a light asset model, making mobile phones by integrating the supply chain.

The quality of the early Xiaomi 1 and even the early Xiaomi 2 was terrible, with a low yield rate. The root cause was the lack of coordination in the supply chain.

This asset-light model is not uncommon; Apple is the best at it. To put it bluntly, Xiaomi aims to be the Apple of the Android system, and it has succeeded. This is why Xiaomi's valuation has risen rapidly.

From the very beginning, Lei Jun's goal was to benchmark against Apple.

In addition, regarding sales channels, Xiaomi initially relied entirely on online sales, without any offline distributors or middlemen making a profit.

This model certainly has its advantages, but at the same time, the disadvantages are also very obvious. To put it bluntly, if no one shares the profits with you, then no one shares the risks with you either. As a result, you don't dare to have too much inventory, especially in the early stages.

Out-of-stock situations are normal. In addition, with only one sales channel across the entire network, the cluster effect will be amplified infinitely when everyone is crowding together.

Scarcity marketing is a method, but the inability to predict production capacity is also an objective reality.

Take Weilai Auto as an example. It currently operates on a dealership model rather than a direct-sale model. Because of this, given Weilai Auto's current situation, it simply does not have the capacity to establish a comprehensive direct-sale model.

Distributors, having received payment, are expected to deliver on their promises. They'll conduct market research, help manage inventory, and directly engage with consumers who have a keen eye for product quality. These frontline distributors can adjust their promotional policies promptly based on market changes, and even have the ability to unify pricing.

This is the benefit of being a distributor.

Last year, the Yuechi A1 narrowly defeated the Honda CRV with sales of 14.56 units, winning the 2010 urban SUV sales championship by a slight margin of more than 300 units. Its average monthly sales of 1.21 units truly astonished the automotive market.

However, regarding this year's production and sales forecast, Wei Laiding's idea of ​​setting it between 15 and 18 vehicles also took into account the opinions of primary dealers.

This approach not only distributes profits but also balances risks.

As expected, this year's car market did not experience the explosive growth seen in 2009 and 2010. Overall sales were almost flat compared to last year, with a growth rate of less than 3%.

The Yuechi A1 outperformed the market overall, with an average monthly sales volume of 1.31 units in the first half of the year, maintaining a growth rate of 8.26%.

Huang Ming explained, and Cheng Linfeng understood some of it, but not others.

But that's okay. He works in the secondary market, which is all about expectations. Hong Kong stocks are all about valuations. As for A-shares, there's not much investment left in the secondary market besides the primary market.

Banks and liquor companies with high dividend payout ratios are ByteDance's main investment targets, followed by companies related to the industrial chain.

Given ByteDance's current size, investing in A-shares would seem wasteful, given its $30 billion in assets under management and 200 billion RMB in cash reserves.

"To put it bluntly, the more people share the money, the less risk there is. If you eat it all by yourself, then you will definitely bear all the risk."

Seeing that Cheng Linfeng was still pondering, Tan Jincheng gave a straightforward summary.

Isn't the same with ByteDance's advertising platform? If Huang Ming and Cheng Linfeng weren't given shares so that they could receive substantial dividends every year and enjoy the benefits of the company's growth, why would they work so hard?

"Haha, that makes sense; by the way, boss, will Orange Technology's Orange Products not be launched on Xiaomi 1? I think we could do that, taking advantage of this wave of popularity could bring a lot of traffic to the website."

In Cheng Linfeng's and even most people's minds, the Xiaomi 1 pre-orders should end after its official release.

Once the device becomes available, those who can't buy it will choose another brand.

September is Apple's month, along with other top international brands like HTC and Samsung.

In fact, Xiaomi had planned to release 1000 engineering prototype commemorative editions on August 29th, and Tan Jincheng and Boatman Brother received these commemorative editions.

The quality of the products they can get is definitely better than what's available on the market. It has to be said that if all products of this quality were in the hands of people like Tan Jincheng, then at a price of 2000 yuan, no other brand would stand a chance.

As soon as Xiaomi's press conference ended, the entire Huaqiangbei area went dark.

Fortunately, they didn't know that Lei Jun originally intended to price it at 1499 yuan, but it was priced at 1999 yuan due to cost reasons; otherwise, they would have been even more desperate.

"No rush, let's wait for Singles' Day. At that time, let's not steal the limelight from Xiaomi's terrible internet speed."

Others may not be able to imagine the frenzy that the launch of the Xiaomi 1 caused, but Tan Jincheng knows it all too well. The Xiaomi 1, which was able to keep the rush to buy for a whole year and earned Lei Jun a reputation for playing tricks on people, could even be defined as China's own iPhone 4, to exaggerate a bit.

It changed the landscape of the entire mobile phone industry. After the Xiaomi 1 became a hot seller, the ZTE, Huawei, Coolpad, and Lenovo companies no longer dared to rely on the carriers for support.

The Xiaomi Mi 1 ultimately sold around 790 million units. Tan Jincheng saw this news. One phone brought Xiaomi over 150 billion yuan in revenue, which was simply amazing.

On the other hand, the emergence of Xiaomi 1 has had a significant impact on both Dexian Electronics and BYD Electronics. BYD Electronics has already experienced six consecutive days of decline, and its stock price has fallen below HK$3.

Counterfeit mobile phones in Huaqiangbei almost stopped selling overnight, which led to a sharp drop in battery shipments for Dexian Electronics.

Overnight, the entire mobile phone industry chain, large and small, led by the Pearl River Delta, was impacted to varying degrees, and the industry is even facing a new reshuffle.

However, Tan Jincheng didn't care much about the short-term impact. Based on Xiaomi's shipment volume in his previous life, Dexian Electronics, which was responsible for supplying batteries to Xiaomi, was doing very well.

In fact, after reaching an agreement with Brother Chuanfu at Dizi's headquarters last year on Xiaomi's OEM manufacturing, Tan Jincheng then reached an agreement with the leaders of Longgang District.

Longgang District has granted Dexian Electronics another plot of land to build a new mobile phone battery factory. The new factory will be put into production in November this year, which will not only meet Xiaomi's production capacity but also generate profits for Dexian Electronics.

The first generation of Android phones were all detachable. The Xiaomi 1 also offered a replaceable shell function and came with an orange back cover, all of which were manufactured by Dexian Electronics.

In addition, original battery manufacturers can also provide Xiaomi after-sales battery services to mobile phone repair shops and distributors, which is also a source of income.

As for the production capacity shortage of the past two months, it was conveniently filled by counterfeit phones, so it was not affected at all.

In an era when consumers had a huge information gap, small businesses like charging stations, data cables, batteries, and phone cases actually had pretty good profit margins.

Take phone cases as an example. Apart from the cost of plastic raw materials, molds, and injection molding machines, the other costs are almost negligible. You can also make use of recycled materials.

A regular phone case costs about two to three yuan to make. Silicone cases are slightly more expensive, but they can easily be sold online for 29 or 39 yuan.

It may seem like a small business, but if done well, it can be quite substantial for a company. Dexian Electronics has its own e-commerce division and has registered many such mobile phone accessory online stores across the internet.

The best-selling single store has a monthly turnover of several million yuan. With the popularization of smartphones, this thing will only sell better and better.

Despite its small size, Dexian Electronics has a source of profit that is invisible to most people.

As for the mention by Cheng Linfeng that the Xiaomi 1 would be available at Orange Products, Tan Jincheng had already said that small websites can no longer compete with Taobao during the current Double Eleven shopping festival.

If Dong Ge (Liu Qiangdong) is no good, then Orange Products, which pioneered the Double Eleven rules, is even worse.

Last year, there was not much we could do. We originally planned to acquire a batch of Apple phones to attract some traffic, but unfortunately, Apple is very cautious about channels other than its official website, so we couldn't reach an agreement.

In the end, Orange Technology internally found some channels at its own expense for the purpose of the lottery.

In early August, before the Xiaomi press conference, Tan Jincheng had already discussed with Lei Jun that 3000 Xiaomi 1 phones would be sold at the Orange Products Fair during this year's Double Eleven shopping festival. At the time, Lei Jun was somewhat dismissive, thinking that Tan Jincheng was being too stingy by only offering 3000 units.

As soon as the press conference ended, he regretted it terribly. 3000 units was simply too many. He couldn't even sell any himself, and he still had to give away 3000 units.

Tan Jincheng then jokingly said, "I don't want to rip you off. I can sell 10,000 units slowly, and even if I can't sell them, I can use them as prizes in a raffle. In short, I can't lose money. You should be happy if I only take 3000 units from you."

What's the point of 3000 units? They'll probably be gone in a flash.
That's the effect we want. After the peak traffic ends, those who are still not satisfied will look at other products. As long as they are attractive enough, that's a good conversion rate.

As for the claim that Xiaomi 1 has little profit, aside from the fact that traffic itself is a form of profit on such a stimulating day as Singles' Day, Tan Jincheng has other methods.

You can sell them as bundled packages, such as a phone plus a phone case, a phone plus a spare battery, or a phone plus a power bank, etc., using the Xiaomi 1 to sell peripherals.

When it comes to the tricks of unscrupulous merchants, Boss Tan, who has experienced the impact of the self-media era, knows quite a few tricks.

Half of 2011 has passed, and in terms of Tan Jincheng's career, it can be summarized as flourishing both domestically and internationally.

It's almost September now, and it's the start of the new school year again. In the past eight months, all sorts of big and small events have happened. As we entered the 2010s, Tan Jincheng became increasingly low-key.

He occasionally attends meetings and university events, but his public speaking is no longer as direct as it was during his time on CCTV's "Face to Face".

In the smartphone era, everyone is a self-media outlet, and a single sentence can easily be maliciously edited, causing controversy.

In terms of manufacturing, FlashTech, backed by a listed financing platform, sold 312.93 million vehicles last year, with a market share of 11.59%, far ahead of its peers such as Yadi, Aima, and Xinri.

Yadi is the electric vehicle company that poses the greatest threat to Flashcar. As for Aima, it still focuses on the low-end market, with good sales but average profit margins. The former king, Xinri, has completely become low-key.

Like Flash, leading electric vehicle companies are also actively expanding into overseas markets. Meanwhile, Yadi and Xinri are also seeking to go public, and Aima also has such plans.

The two-wheeled electric vehicle market, whose structure is already established, is no longer the core business of the Flash Motors Group, but it still occupies a very important position. Flash Motors Technology, which has the most abundant cash flow, is also developing its own business.

Dingding was incubated by FlashTech and has also made some investments, but Tan Jincheng no longer cares about these things. He lets the management do whatever they want, as long as the main business remains unchanged, everything will be fine.

As for automobiles, due to the reduction in subsidies for gasoline vehicles, coupled with the surge in the previous two years, the car market this year, although still performing well, seems to have entered a cooling-off period.

Many companies have begun to invest in new energy vehicles. Even car manufacturers that are not mainstream, such as Lifan and Zhongtai, have increased their investment in new energy vehicles.

Whether they're after subsidies or genuinely developing new energy vehicles, it's always a good thing for more manufacturers to get involved.

In the past six months, apart from increasing promotional efforts for the Yuechi A1 in an effort to achieve its annual targets, Weilai Auto hasn't made any major moves, since its flagship models won't be officially launched until next year.

Of course, private R&D investment has been continuously increasing. In the boss's words, Weilai Auto hopes for a period of accumulation, rather than just looking at sales volume.

As the real economy enters a period of consolidation, Orange Technology focuses on the Orange Products Fair, while TiMi Studio buries itself in development, seemingly disappearing from the public eye for the past six months.

However, ByteDance's reputation in the capital circle is growing. Xiaomi's success has established Tan Jincheng and ByteDance's position in the investment circle.

With only four months left in 2011, what will happen? Nobody knows.

Meanwhile, in Hangzhou, Chen Weixin, born in 1983, was a star entrepreneur during his university years. After graduation, he made a lot of money in the mobile game industry. After being mistreated by a taxi driver, he first had the idea of ​​making a ride-hailing app.

(End of this chapter)