2003: Starting with Foreign Trade

Chapter 853 The First Shot of the New Year!
Invited by Tan Jincheng, Li Bing rushed over from Shanghai on the evening of January 7.

"See how badly it fell?"

Tan Jincheng hadn't left work yet. He was the only one in the huge office, and his computer screen was flashing with dense green lights, which looked quite frightening.

"You summoned me here because of this?"

Li Bing pulled up a chair and sat down next to Tan Jincheng. In Tan Jincheng's office, there were several computers at one angle specifically for observing the stock market, with three screens.

At this moment, one screen displays the overall market trend, another screen displays the stock price trend of Weilai Shares this year, and Tan Jincheng is pointing to the trend of Lifan Shares.

Two circuit breakers and two limit-down days have completely disrupted the market trend.

"Pretty much. They've run into some trouble lately, which is quite a blow to their car business."

"Hehe, today's stock market performance is unprecedented. The A-share market is truly bizarre."

As expected, the A-share market experienced its second circuit breaker in history today. Compared to the first circuit breaker, today's circuit breaker was truly eye-opening for all industry professionals and investors.

Trading in the Shanghai and Shenzhen stock markets was only allowed for 15 minutes at a time, and two circuit breakers forced both markets to close.

Whether they are professionals or ordinary stock investors, they all seem at a loss. Starting at 10 o'clock, they all turned into comedians, which can be considered as making the best of a bad situation.

"Xiao Li from a securities company was late for work this morning. When he arrived at the company, he found that his colleagues had already packed up and were ready to leave."

"When Old Wang from next door knocked on the door today, I was already home."

"Urumqi securities firm employee: Damn it, they're already off work before dawn."

Tan Jincheng pointed to the tea room next door and said, "Let's go talk over there. I've had dinner prepared. How about we eat here tonight? You don't mind, do you?"

"You're looking down on me with those words, but at least you're eating noodles in the dark."

On his way here, Li Bing came across a lot of jokes about A-shares and found them quite amusing. He is currently chatting with Tan Jincheng about these interesting stories.

开年四个交易日，尉来股份跌了13.96%，股价从12月30日最高点133.17元下跌至7月收盘的109.20元。

In just four trading days, our boss Tan lost nearly 20 billion yuan on two stocks combined.

"Haha, it really is like eating noodles in the dark, what a ridiculous stock market."

The circuit breaker, which had drawn widespread public outrage, has been abruptly halted. This is probably the shortest-lived major policy in the history of the A-share market; it's practically treated like child's play.

"You bet it is. It's ridiculous. The past six months have been unbelievable. Those who hold your company's stock are really unlucky. We could have made a profit right now, but now we have to wait at least a few more months."

There were only two circuit breaker events, but the impact on the market was not limited to these two financing rounds. The biggest fear for a policy-driven market is a blow to confidence. The implementation of the circuit breaker was rushed, and it was met with considerable skepticism when it was launched.

It has now been urgently halted. Although this is a correction, the damage to consumer confidence will be difficult to repair in the short term.

Furthermore, instability in the secondary market is not a good thing for the companies themselves.

While the two chatted, the cafeteria staff delivered the dinner the boss had ordered.

"Hehe, not bad, there are also sweet potato starch dumplings."

It's simple yet not simple: four dishes and a soup. The portions aren't large, but Tan Jincheng has clearly put a lot of thought into it.

"You probably won't have time to go home for Chinese New Year this year, so let me let you experience some hometown cuisine. Our company's chefs are pretty good at making authentic hometown dishes."

The boss is from Anhui Province, and there are many managers and employees from Anhui Province in the company. The internal canteen of Weilai has many chefs who can cook Anhui cuisine, and there are also many who know Yicheng cuisine.

"Thank you for your kind intentions. I really don't have time to go home for the Chinese New Year this year. I'll see if I can find some time to go home after the New Year."

Li Bing could tell that Tan Jincheng had put a lot of thought into preparing these dishes, and he was tempted to have a drink. However, he knew that Tan Jincheng didn't like to drink and generally didn't drink when he wasn't socializing, so he didn't bring it up.

The two ate sporadically, chatting as they ate.

"The best way to cooperate is definitely to go with Jianghuai. We are currently in talks with them about this. But what you said makes sense too; we should be prepared for both possibilities."

If he can cooperate with JAC, he can access resources in the Anhui automotive industry. In addition, Luzhou has a very complete industrial chain in the automotive industry, which is very advantageous from all aspects.

However, JAC has not yet made any statement. In 2015, JAC sold a total of 500,000 vehicles, of which less than 80,000 were SUVs.

A sales figure of 50 vehicles is not bad, but for a car company that relies on the full support of the entire province, this result is really unacceptable, especially considering that their sales reached 45 vehicles in 2014. This growth rate is really hard to believe.

In the passenger vehicle sector, JAC has consistently failed to produce a blockbuster model to escape its predicament, which is currently their biggest problem.

"They are currently in talks with Volkswagen for collaboration, and they probably won't have time to meet up for a while, but there are still opportunities, and they also have needs."

According to existing joint venture regulations, a foreign automaker is only allowed to have two joint ventures in China. Therefore, whether JAC and Volkswagen can reach a cooperation agreement is attracting much attention, as it relates to the government's attitude towards joint venture automakers.

"This can be considered a desperate measure. Volkswagen has two excellent partners in China, FAW and SAIC. Even if the cooperation is successful, Volkswagen is unlikely to give too many resources to JAC."

"Let's give it a try. Anyway, they're not worried about losses, and their business strategy hasn't changed."

JAC is considered one of the car companies in the same industry as Dongfeng and Changan. In terms of resources and policy support, it is no less than these companies. However, look at other peers, they are already aiming for sales of one million or even two million units.

JAC is still struggling around the 50 yuan mark, unable to compete with even rising stars like Chery and Weilai. If it weren't for its advantages in commercial vehicles, it would be difficult for them to survive by relying solely on the passenger vehicle market.

Tan Jincheng vaguely remembered this collaboration. It seemed that the two parties did eventually reach an agreement and form a joint venture company, which focused on new energy vehicles, but ultimately they didn't produce anything of value.

"Haha, there's a hint of sourness in your words, but it's true; let's not talk about that, tell me what's going on with Lifan?"

Regardless of whether the deal goes through or not, Li Bing is still very grateful to Tan Jincheng. Although Wei Lai is not a major shareholder in his company and has very limited shares, Tan Jincheng has provided a lot of help in the company's establishment and in matters such as automotive qualifications.

"You know about the subsidy fraud, right? They've probably been confirmed, which will have a huge impact on their performance. They might even lose their subsidy eligibility."

According to the information Tan Jincheng learned, this company with a strong background in Chongqing had probably defrauded more than 100 million yuan in subsidies.

Don't underestimate this 100 million yuan. In 2014, all their businesses combined only earned 3.86 million yuan. Their semi-annual and third-quarter reports this year were not very good either, so it still hurts to give up this 100 million yuan.

Many large companies eventually fall apart, perhaps simply because of a few tens of millions or even a few million yuan in cash flow.

"The water is too deep. On the way here, I checked their sales figures for 2015. 14.5 vehicles is not too bad."

“Operating costs are too high. Another issue is that their main business is shrinking significantly. They made some money in real estate before, but it’s difficult to make a breakthrough if they can’t expand beyond Chongqing.”

It took Lifan five years to go from 5 billion to 10 billion in revenue, and it will be very difficult to make another breakthrough unless there is a major breakthrough in the automotive business, such as launching a blockbuster model.

However, which model did they sell best? The X60, an SUV that was almost a copy of the RAV4, never even broke 10,000 units in sales in a single month.

What people probably remember them for is their football, their successors, and the infamous steering wheel incident involving a car reviewer back in the day.

"But buying it wouldn't be that easy, would it? Selling their car business would reduce their revenue by at least half, which would be very bad for the capital market, and a premium wouldn't be worthwhile."

Tan Jincheng nodded: "That's true. Currently, they can still sell a few hundred thousand vehicles a year, so they're still struggling to survive."

Just like car models are divided into high, medium, and low grades, domestic car companies can also be roughly divided into three tiers. The first tier consists of large state-owned enterprises and central enterprises that have connections with joint venture brands, such as SAIC, FAW, Dongfeng, and Changan.

Their sales target is over one million vehicles, and they also have the strongest bargaining power.

The second tier consists of domestic brands such as Great Wall, Weilai, and BJQ, with annual sales expected to be between 30 and 100 million vehicles. Together, they form a second camp to compete with joint venture brands for market share.

The third tier is easy to understand; it includes companies with annual sales of less than 30 vehicles, such as Zhongtai and Lifan.

Compared to the first two tiers, the third tier is relatively more dangerous, especially those with annual sales around 10 vehicles; these are often the most vulnerable automakers.

An overly complex product line, coupled with a failure to keep pace with market demands in product design and manufacturing, can lead to the collapse of the entire company.

"Here's what we'll do. Your side will mainly be responsible for negotiating with Jianghuai regarding OEM manufacturing and qualifications. As for Lifan, if you trust us, we'll handle the negotiations for you. You just need to set up a company and send a representative."

Obtaining qualifications through contract manufacturing is not a long-term solution. Every car company must have its own production qualifications, otherwise it may be held hostage by the industry.

"How could I not trust you? I'm more than grateful."

What a joke! If Tan Jincheng had designs on Lifan, why would he need to go through him? With Wei Lai's current status, he has a huge advantage in investing or acquiring anywhere.

"But let's be business. What does Mr. Tan want?"

ByteDance is a professional investment institution. With them in charge of negotiations, the results will definitely be much better. He had no doubt about Tan Jincheng's intentions in helping him, but such a large acquisition project could not possibly be undertaken without any ulterior motives.

"Sure thing, I would have brought it up even if you hadn't mentioned it. Helping to facilitate the acquisition definitely comes with an ulterior motive, haha."

"Actually, it's quite simple. I've got my eye on Lifan's industrial base in Chongqing."

Li Bing's factory will definitely be located in the Yangtze River Delta region. Even if he didn't say it, Tan Jincheng would know that. Shanghai and Luzhou are his best choices. With his current capabilities, he doesn't have enough resources to set up a long production line across the country.

“Our industrial layout in the southwest is relatively weak. We want to set up a factory there, but there are not many other options. Besides Chengdu, there is only Chongqing.” During his last meeting in the capital, Tan Jincheng received definite information that pickup trucks may be unbanned in some provinces and cities this year, and restrictions on pickup trucks entering cities will be lifted.

However, it is not yet clear which specific provinces and cities are involved.

However, it is clear that the market demand for pickup trucks will gradually expand, and the Southwest region, due to its special terrain, has always been an important consumer area for pickup trucks, and is currently one of the main sales areas for Yangzi pickup trucks.

After taking over Yangzi Pickup, Wei Lai did not give up on the brand. Instead, he continuously optimized and improved product design capabilities and quality, enriched the product line, and has now completed a full-price range of pickup trucks, with the Qilin series as the main product.

"In 2015, we sold 3.77 pickup trucks, achieving a market share of 11.46%, which puts us in the top four. If the ban on pickup trucks is lifted, our current production capacity will not be enough."

In the pickup truck market, Great Wall Motors is in a league of its own, with its market share consistently maintained at around 30%. The rest are Jiangling, Nissan, and Yangzi, which has gradually gained momentum in recent years.

These three belong to the second tier; the rest are the others.

The top four manufacturers account for almost 70% of the pickup truck market share, while the remaining 30% is divided among third-tier manufacturers. However, there are not many companies that are seriously making pickup trucks at present.

The reason why Yangzi was able to rise so quickly is largely because most manufacturers did not pay enough attention to the pickup truck market.

It's actually quite simple. In 2015, the total sales volume of pickup trucks was nearly 33 units, which is less than the sales volume of the Yuechi A1 alone. It's normal that manufacturers are unwilling to invest in its development.

The niche markets that major manufacturers overlook are very important to Yangzi Motors.

With an annual revenue of around 20 billion yuan, Yangzi Automobile is self-sufficient, which will not burden the parent company and will ensure that they can live a relatively comfortable life.

"Is it for the pickup truck business? Then I understand."

After listening to Tan Jincheng's explanation, Li Bing understood why he was interested in Lifan's factory. The SUVs produced by Weilai were in a completely different class from theirs, so logically he should have looked down on their production line.

However, since it's Yangzi's pickup truck business, it's understandable.

"The lifting of the ban is basically confirmed. Although we don't know the specific provinces, setting up another factory would definitely be a good idea."

He wasn't the only one who knew about the lifting of restrictions on pickup trucks; interested manufacturers would likely start increasing their investment in this area. In fact, most cities aren't particularly strict about allowing pickup trucks into the city at present.

This is especially true in industrial cities, such as Beicang District. During the day, there are no problems as long as you don't enter the city center, but in the morning and evening, they turn a blind eye.

Everything is driven by the economy.

"Although I don't quite understand why Mr. Tan would pay attention to the pickup truck market, I can accept your reason."

Pickup trucks are work vehicles. Unlike foreigners, Chinese consumers still find it difficult to accept that work vehicles can replace passenger cars in their daily use.

In most people's consumption view, the attributes of a car are actually similar to those of a house; it's more about saving face. For young people in their 20s dating, having a car versus not having one makes a big difference.

"That's not how it works. Every company has its own responsibilities. As the company that supported Weilai's development to its current scale, Yangzi Automobile is the company that helped Weilai get started. Since I didn't abandon it back then, I can't and won't allow myself to abandon it now."

Weilai obtained its automobile production qualification through Yangzi Automobile, and part of its initial development funds were obtained by pledging Yangzi Automobile shares and issuing bonds.

Given the positive development trend, the future of Yangzi Motors must be considered from both an emotional and corporate responsibility perspective.

"Besides, pickup trucks can also be exported, and the overseas market is vast."

The Middle East, Latin America, Southeast Asia, and Africa markets also have great potential. While we may not have the same brand advantage as the US, our products are cheaper, and we can definitely compete with the US in terms of cost-effectiveness.

Since acquiring Proton six months ago, Weilai has been gradually digesting Proton's technology and, most importantly, its distribution channels. This is Weilai's first step in opening up overseas markets.

Li Chunrong's appointment as CEO of Proton is the first step for the company to go global, and also the first step in Proton's revival plan.

Tan Jincheng gave Li Chunrong an ambitious goal: to regain the number one car brand in Malaysia and one of the top three in Southeast Asia. At the media conference on May 18, most people thought it was a pipe dream.

After all, the sales gap with competitors is too large. However, in Li Chunrong's view, this seemingly ambitious goal is not impossible to achieve.

The seemingly complex problem is actually quite simple to solve: it's about restoring Proton's market recognition.

BYD's experience in this regard is worth learning from. As a leading independent brand, various problems once brought BYD to the brink of being abandoned by the market.

If you can get through this, a whole new world will open up before you.

As for the solution, it's quite simple: put in the hard work and do a solid job in quality and service. This is also the current corporate tenet of Weilai.

The first step in transforming Proton is to start with SUVs. However, currently, the level of suppliers in Malaysia is eight to ten years behind that in China, making it difficult to find suitable suppliers locally.

Transforming Proton is tantamount to upgrading Malaysia's industry, so it's a long-term plan.

Fortunately, both Li Chunrong and Tan Jincheng were able to wait and had enough patience.

“The subsidy fraud investigation is a headache for manufacturers like Lifan, but it’s not for us; in fact, it’s even beneficial to us.”

“Using this as a starting point, we can definitely negotiate with him, and I’ve also prepared another trick; hehe, just wait and see.”

"Then I'll look forward to Mr. Tan's methods. I won't stay overnight; I'll go back and prepare after dinner."

Although he didn't quite understand what Tan Jincheng's other trick was, Li Bing still chose to trust Tan Jincheng. Having worked with Tan Jincheng for a long time at Yiche, he knew Tan Jincheng's working methods.

“It would be a good thing to be able to acquire it. Otherwise, we would still have to put a JAC logo on the back of our cars, which would affect our sales figures to some extent.”

"Not staying overnight?"

"I'm not staying here. It's the end of the year, Mr. Tan, and you must be very busy. I don't want to trouble you. Ningbo and Shanghai aren't far apart. If I go back now, I can get a good night's sleep."

"I think you just can't bear to part with your little darling wife, hehe."

"Screw you."

Li Bing came and went in a hurry.

After having a meal and chatting with Tan Jincheng for over an hour, Li Bing left. He soon learned what the follow-up plan Tan Jincheng had promised was.

"That's ruthless. This move isn't just a headache for Lifan; it's going to give all the other manufacturers a headache."

Those who can build a large business all have a ruthless side, and Tan Jincheng is no exception.

While you are sick, I will kill you.

2016年1月8日，刚刚以碾压姿态拿下2015年SUV销量冠军的悦驰A1宣布2016款即将上市，同时对于旗下悦驰A1全面下调市场指导价。

升级版的悦驰A1售价仅仅为8.88万元至12.68万元，其中顶配降价了3万多，入门版1.5T 6MT两驱超值型更是比老款车型降低了1.1万元。

With WooLan and Great Wall Motors making a fortune in the SUV market, major brands, including joint venture brands, are all venturing into this segment.

According to incomplete statistics, since the Guangzhou Auto Show, dozens of SUV models (facelifts and new generations) are about to be launched in the domestic SUV market, which has suddenly increased the pressure of competition.

The sudden price drop of the Yuechi A1 caught many players, both those looking to enter the market and those already in the market, off guard.

"Damn, when this kid was replying to netizens' questions about the 10 billion yuan year-end bonus on Weibo, he mentioned that there would also be a reward program for consumers. I felt something was off at the time, but no one expected it to be a price reduction!"

Those who were watching Wei Lai originally thought that Tan Jincheng would give gifts to both new and old car owners, like giving out year-end bonuses.

Wei Lai had done this before and left a good reputation among consumers.

While their peers marveled at Wei Lai's many tricks of the trade, they were also helpless. Even if they wanted to follow suit, they couldn't achieve the same level as Wei Lai. In terms of express delivery services alone, Wei Lai and SF Express were strategic partners, with cross-shareholdings.

In addition, Weilaiye, with its foundation in internet companies in areas such as data processing and gift suppliers, also has a significant advantage.

To give a simple example, you can customize a T-shirt or polo shirt through Jinpeng Industrial, fully utilize the data processing capabilities of Orange Technology, and have it delivered to the consumer by a SF Express courier. The cost advantage is evident in just this one process.

"Sigh, the price reduction is fine, but the key issue is their subsidy policy for customers who bought cars three months before the price reduction, which is really a headache."

What's most disgusting about big-ticket consumer goods is that companies betray consumers. I just took delivery of the car and the price drops the next day. The three-month price guarantee mechanism that consumers have formed is simply a killer weapon.

Other car manufacturers lowered prices, and existing customers complained bitterly.

When Wei Lai lowered prices, consumers within three months of the announcement were overjoyed, anticipating a windfall.

With the first shot of the new year, based on the follow-up to the 1 billion yuan year-end bonus and the hidden acquisition plan, Yuechi A10 has indiscriminately entered the entire SUV segment market.

The price range of 8.88 yuan to 12.68 yuan covers almost all of the low-end SUV models currently on sale or about to be launched by car manufacturers.

"We've been trying every possible way to raise prices on our low-end models for the past two years, and this guy has knocked us back to where we were a few years ago. The worst part is that he's the upgraded version. It's just outrageous."

The day after the official announcement of the price reduction, countless comments praising "Boss Tan for his generosity" appeared under the comment on Tan Jincheng's personal account that had previously replied to netizens' questions.

He said he'd give back, and he did just that in just a few days. He really doesn't mince words.

(End of this chapter)