2003: Starting with Foreign Trade

Chapter 863 Acting as a "Shill" for Zhang

"We have to be in a hurry. Look at how many acquisitions or investments have already been completed in just the beginning of March."

During the transition from gasoline-powered vehicles to new energy vehicles, car manufacturers and listed companies in the automotive industry chain have been aggressively expanding their reach. In just two months of 2016, several acquisitions were completed.

Tesla is currently pursuing an acquisition of SolarCity. Once the acquisition is completed, Tesla will no longer only sell electric vehicles, but will also sell SolarCity's battery panels, electric vehicle charging stations, and more.

It has transformed from a pure automobile company into a comprehensive new energy company with multiple businesses including energy storage.

In addition, Nissan is launching a takeover bid for Mitsubishi, planning to acquire 34% of Mitsubishi's shares and become its single largest shareholder. Furthermore, other multinational automakers, including Volkswagen and General Motors, are also making moves.

This applies to both international and domestic situations.

Geely acquired Dongfeng Nanchong Automobile Company for 4 million yuan, obtaining commercial vehicle production qualifications and a commercial vehicle production base, thus making up for Geely's shortcomings in the commercial vehicle sector.

The profit margin of commercial vehicles is quite considerable. Although large-scale infrastructure construction has contracted to some extent and the economy may fluctuate in the future, the diversification of the use scenarios for commercial vehicles is also in line with the development trend.

In addition, the parent company is also repurchasing the shares previously transferred by Baoji Geely and Shanxi Geely. Geely has officially begun its strategic expansion, and Tan Jincheng also knows that Geely is also interested in Lifan's new energy industry resources.

Another company is Jinma Shares, an A-share listed company and the parent company of Zhongtai. It is currently planning to issue shares to acquire Zhongtai Automobile, which is to achieve the goal of Zhongtai Automobile's backdoor listing.

According to Jinma Shares' public announcement, the listed company plans to issue shares to all shareholders of Zhongtai Automobile to acquire 100% equity of Zhongtai, and at the same time, it will issue shares to no more than 10 qualified specific investors, including Tieniu Group, to raise supporting funds through a private placement.

The exact transaction amount is still unknown, but according to Zhongtai's valuation system, this is another large acquisition exceeding 10 billion yuan.

Other listed and unlisted companies are also making frequent moves, with investments and acquisitions worth billions of yuan constantly appearing in the media and listed company announcements. Every now and then, a related company on the A-share market suspends trading, all of which are driven by capital operations.

If Wei Lai wants to avoid falling behind in this round of major capital rotation, he must speed up.

Lifan's brand is ruined, but its assets are still very valuable. In addition, Geely is keeping an eye on it. Tan Jincheng has to take it over as quickly as possible before Geely can make a move.

Otherwise, once Mr. Li vacates his position, Wei Lai will be at a competitive disadvantage. Given Mr. Li's background and strength in the domestic automotive industry, Tan Jincheng doesn't think he can beat him in mergers and acquisitions.

It's just a time difference.

Geely has just announced the acquisition of Dongfeng Nanchong Automobile Company. Given that they have no experience in the commercial vehicle sector, they will need a long time to digest the acquisition. This period of time is Geely's advantage.

"But this won't escape Li Fan's eyes."

"I didn't expect to escape it anyway, it's not like it's anything shameful."

No matter how discreetly Zhao Xinyi acted, Li Fan could still guess who orchestrated the centralized news campaign. This kind of thing didn't require evidence; all it took was working backward from who benefited.

News reports about Lifan were limited to attacks on business aspects such as product quality and the company's financial situation, without any further in-depth reporting on its family. Zhao Xinyi handled this point quite well.

"Haha, there's definitely more to this than meets the eye, but Mr. Tan, you're absolutely right. Acquisitions in the automotive industry have been happening at an increasingly rapid pace in the last two years."

There was no other intention behind it. The main issue was that Lifan currently lacked a true decision-maker. He was unhappy that the three parties were dragging him into the mess for their own interests. This was done to expedite the process of reaching a consensus among them as quickly as possible.

"Just like the transition from PC to mobile internet, when the automotive industry is transforming, some want to cash out and leave, while others want to grow bigger and stronger. If we want to keep up with the times, we need to be more efficient."

"Speaking of which, ByteDance is about to raise funds, right?"

Late at night in the capital, in Zhang Yiming's office at ByteDance's Zhongguancun headquarters, Zhang Yiming and Tan Jincheng sat facing each other. On the desk were some snacks, which Zhang Yiming called treating Tan Jincheng to a late-night snack.

ByteDance is no longer what it used to be. Although it is listed as one of the four emerging Internet companies along with Meituan, Kuaishou, and Didi, it is still the most low-key of the four. Toutiao is still very popular, but few people in the public know about Zhang Yiming.

This is consistent with his usual style. On the other hand, unlike the high-profile behavior of the previous generation of internet entrepreneurs such as Jack Ma, the new generation of internet founders, including Zhang Yiming, Wang Xin, and the owner of Kuaishou, are all very arrogant in their actions but very low-key in their personal lives.

Zhang Yiming picked up a skewer of grilled meat, nodded, and said, "Yes, we're going to start another round of financing this year, and this time the amount will be quite large."

Perhaps the initial difficulty in raising funds left a shadow on Zhang Yiming, as ByteDance was very cautious in its early fundraising. After its Series C funding in June 2014, ByteDance had not raised funds for nearly two years, which is very rare among internet companies.

"Is it for the newly incubated short video project? It's about to officially compete with Tencent and Kuaishou, which definitely requires a lot of funding."

In 2015, the ride-hailing war, the food delivery war, and the 618 online shopping festival created by Dongzi were definitely the main characters of the internet, but the short video field on Angle was equally exciting.

Meipai, Weishi, and Kuaishou are the three major apps that occupy a large market share. In addition, apps like Miaopai, Xiaokaxiu, and some apps in the ByteDance ecosystem, such as Huoshan Video, also occupy a considerable market share.

There are numerous short video apps, each with its own unique features, but everyone knows that only Weishi and Kuaishou truly pose a threat to the market.

Backed by Tencent, Weishi had access to a wealth of resources, and it experienced explosive growth immediately upon its IPO. Pony Ma personally produced videos to promote Weishi, and it ranked among the top five free apps during the 2014 Spring Festival, with more than 4500 million new users per day.

However, Weishi did not see significant growth in user data in 2015, and Tencent also reduced its advertising investment accordingly. The only real player in the market was Kuaishou, especially in the northern region, where Kuaishou held a huge market share.

"In the past two years, our auto shows have started to hire internet celebrities as car models. It was actually brought about by short videos."

The popularity of Kuaishou has created a large number of internet celebrities. This group, which is different from celebrities, is highly controversial, but it has formed its own unique fan economy culture, which has also attracted the attention of many manufacturers.

Take last year's Guangzhou Auto Show as an example. Great Wall Motors invited more than a dozen internet celebrities at once, and other manufacturers also invited many. The number of internet celebrities participating in one exhibition exceeded one hundred, forming a unique exhibition culture.

"Weishi is nothing to fear. Your real opponent is Kuaishou. Whether you can beat Kuaishou depends on whether your algorithm can work and on your content."

ByteDance didn't enter the short video field very early, and it didn't have any advantages in the early stages. Before Douyin really grew, Kuaishou was practically invincible. Kuaishou's dominance in the short video field is no joke.

Zhang Yiming laughed and said, "Although Weishi's investment was small last year, it would be a bit too simplistic to say that it's nothing to worry about, wouldn't it?"

"Actually, Weishi's weakness is the same as Tencent's Weibo. Their rapid growth was due to Tencent's social system, but their failure was also based on the same reason. You can't possibly not understand this."

When Weishi was first launched, it was touted as Tencent's "favorite son," with an astonishing amount of resources invested, and its development speed was indeed very fast.

However, this thing is completely different from the social systems of QQ and WX. QQ and WX rely on social connections among acquaintances, but short videos do not rely on this; on the contrary, they are somewhat resistant to social connections among acquaintances.

If you're doing social dances and rapping on a certain platform, you probably don't want people you know very well to know about it, right?
"That's true. We will devote more resources to competing with Kuaishou and try to take more market share from them. However, we can't underestimate Weishi either, after all, it's Tencent."

Tencent has simply sheathed its fangs, but when it comes to being domineering, it is still extremely domineering, even more so than Ahri.

"That's true. When do you plan to raise funds?"

"It will probably be around the end of the year. We have to wait until our short video app has accumulated some users and started to show some improvement before we can get a high valuation."

In its last funding round, ByteDance was valued at $5 million. Last year, its revenue was around 16 billion RMB, and its valuation rose to around $28 billion.

If ByteDance doesn't make breakthroughs in its business, its prospects are actually limited, and its valuation is roughly the same as UC's. Short videos are one direction for ByteDance to break through.

"What does Mr. Tan say about this round of financing?"

This is the real reason why Zhang Yiming met with Tan Jincheng tonight. After several rounds of financing, Juxing Engine's shareholding in ByteDance has decreased to 12%, with a valuation of about US$3.36 million. Compared to the initial investment, it has already made a fortune.

Tan Jincheng shrugged: "I'm fine with either co-investment or dilution."

Currently, the market capitalization of BAT (Baidu, Alibaba, Tencent) is $2000 billion, Tencent's is about $1500 billion, Baidu's is $670 billion, and others, including Jingdong and Orange Technology, have market capitalizations of around $100 billion.

Among unicorn companies, Ant Financial and Xiaomi Technology have the highest valuations, with Ant Financial valued at $450 billion and Xiaomi Technology at $413 billion. The valuations of the remaining unicorn companies are all below $200 billion.

This is the current overall landscape of the internet industry. ByteDance, valued at $28 billion, is among the top unicorn companies. However, even after Douyin (TikTok) is launched and becomes a hit, no one believes that ByteDance's valuation will surpass Ant Financial or Alipay.

Zhang Yiming wouldn't know, and neither would institutional investors, but Tan Jincheng knew that this was his advantage.

"The amount of funding we need this time is quite substantial. If possible, I would like Mr. Tan to co-invest. It doesn't need to be much, just enough to maintain the current shareholding ratio."

Zhang has big ambitions and a series of plans for ByteDance. He is also very confident in the short video project he has high hopes for. In this round of financing, he hopes to increase ByteDance's valuation to more than 10 billion US dollars.

To get investment institutions to accept such a grand plan, the cooperation of existing shareholders is needed, and ByteDance's Huge Engine, which has supported ByteDance since its venture capital rounds, is the best partner.

To put it bluntly, they wanted Mr. Tan to act as a shill for them, so that the valuation could be inflated.

"How much is not a small amount?"

Faced with Tan Jincheng's question, Zhang Yiming was somewhat embarrassed: "I plan to raise $100 billion in funding and give up 10% of my shares." "A valuation of $10 billion?"

"Yes, isn't it a bit too high?"

Currently, among unicorn companies, there are only seven with valuations exceeding 10 billion, concentrated in the financial, local services, and travel sectors. The only two, Xiaomi and DJI, are also in the hardware sector, while ByteDance, which is positioned in the cultural and entertainment sector, has the highest valuation of itself.

If ByteDance wants to break through the limitations of its valuation, it needs to change its self-positioning. The next six months will be Zhang Yiming's time to prove himself.

Zhang is clearly still somewhat lacking in confidence. Raising the valuation of an internet company currently positioned in culture and entertainment to the same level as unicorn companies in hardware services and finance is obviously a difficult task, and he'd probably be laughed at if he told anyone.

Tan Jincheng smiled and said, "Don't be shy, having ambition is a good thing. How about this, if you can really get the valuation to this level and need us to co-invest, I don't mind."

"But if the valuation is below 100 billion, then we will not participate in the investment."

With a valuation of $10 billion, offering 10% of the shares means seeking to raise $100 billion. In the current investment climate, not all investment institutions dare to invest. Tan Jincheng could only think of a few investment institutions such as Sequoia Capital and Gao Ling.

Zhang Yiming approached him to act as a shill, clearly wanting Hongshan to get involved.

"No problem, then it's up to us now. Also, we need President Tan to persuade Red Shirt."

Tan Jincheng readily agreed, and Zhang Yiming was clearly relieved.

"I'll talk to Sequoia Capital, but with such a large amount of funding, you still need to find other options. If Sequoia Capital takes it all, their shareholding will be substantial, which will be detrimental to future financing and IPOs."

"Of course."

ByteDance holds a significant number of shares in ByteDance Engine. The reason Zhang Yiming is not worried is because he has been given the voting rights of ByteDance Engine. Starting from the venture capital round, after each round of financing, ByteDance Engine has signed a concerted action agreement with Zhang Yiming, entrusting him with the management of the company's voting rights.

It can be said that ByteDance provided everything it could for his fifth venture. Whenever the company's decisions changed, Tan Jincheng stood by his side, which Zhang Yiming was very grateful for.

After 2018, Douyin (TikTok) became a viral sensation across the internet, and ByteDance gradually transformed into an internet behemoth surpassing BAT (Baidu, Alibaba, Tencent). It wielded absolute influence in overseas markets, especially in North America, even causing concern among Americans.

However, its development was far from easy. Before 2016, ByteDance was just a rising star in the internet industry. Although its user base and valuation were growing, the doubts never stopped.

The main issue is that, so far, ByteDance has not found any other way to generate revenue besides advertising.

For internet companies, users are fundamental. ByteDance, with hundreds of millions of users, doesn't need to worry about financing. However, it's also unacceptable to be unable to make a profit for an extended period. After experiencing a large number of delistings and crashes of Chinese concept stocks, investment institutions have become much more realistic.

Internet companies that only have data and no profits will never have a high valuation.

Take Didi and Meituan as examples. The reason why these two companies have such high valuations is that, in addition to user data and market share, they also have clear profit models, and their current losses are only temporary.

Pinduoduo, which was founded last year, has a clearer profit model than ByteDance. Pinduoduo, which focuses on low-end e-commerce, achieved a monthly transaction volume of over 1000 million yuan in February this year, and its number of paying users has exceeded 2000 million.

2000 million paying users are far more valuable than 2 million free users.

ByteDance currently has user data, and the most important thing is to find a new profit model. This is what Zhang Yiming has been working on for the past six months. Otherwise, ByteDance will never become a great company.

"Finding a way to make a profit is the key."

After a long night of conversation, it was already late when Tan Jincheng walked out of ByteDance's headquarters. Looking back at the ByteDance building, it was still brightly lit.

The unicorn company, valued at $28 billion, now has its own office building and is no longer the small startup with only a dozen employees, housed in a residential area.

As Zhang Yiming just mentioned, ByteDance will be renamed Douyin Group in a few months, the same name as their upcoming IPO app. This reflects a change in the company's strategy, and it's a big deal for an influential company to change its name.

"Who would have thought that this would become the most influential internet company in the future?"

Tan Jincheng tightened his coat. The nights in the capital in early March were still a bit chilly, but his heart was burning with warmth.

The internet was changing in 2016, and so was the automotive industry.

"Come on, go home."

During the Two Sessions, Tan Jincheng and his family of four came to the capital. Gu Qingqing's parents also came with him. Gu Qingqing is now quite influential in the women's business world, and she was attending some meetings as a female representative.

Having returned to work, she is currently organizing the King of Glory Professional League (KPL). 2015 was the year that King of Glory experienced its fastest growth, with registered users exceeding 100 million and tens of thousands of new players joining this virtual battlefield every day.

From street stalls to quiet corners of homes, players are everywhere, forming a massive community for Honor of Kings.

The establishment of KPL not only provides a platform for professional players to showcase their talents, but also injects vitality into the promotion and development of the game. The professional league of Honor of Kings has also received much attention in the player community.

This is also an important part of the e-sports industry that is currently being promoted. The success of the event not only makes the game thrive, but also responds to policy.

"Who would have thought that back when we were playing games, we would get electric shocks, and now games have become an industry chain?"

The home in the capital is a large flat in the HD district. The area is very large. The father-in-law and his wife came to visit, mainly to help take care of the children, as their youngest daughter is still too young and cannot be separated from Gu Qingqing. However, Gu Qingqing needs to go on business trips.

Since Tan Lihua and his wife needed to take care of Tan Jinyue's life and studies and it was inconvenient for them to follow along, Gu Hongshun and his wife became their daughter's personal assistants. In addition to taking care of their little granddaughter, they were also able to take care of their daughter's daily life.

When he got home, his father-in-law and mother-in-law were already asleep with Tan Jinchuan, and their little daughter was also sleeping soundly next to Gu Qingqing. Tan Jincheng pinched the little girl's face but couldn't wake her up.

"Things are changing faster and faster, but it's unlikely that I would get an electric shock. My parents are still very open-minded."

Besides attending the meeting, Gu Qingqing's main purpose in coming to the capital was to promote Honor of Kings and its tournaments, as Honor of Kings is now Tencent Games' most important game.

Tencent has stated several times that it wants to invest in TiMi Studio in exchange for their social resources.

Tan Jincheng's idea is to wait until KPL has a certain influence before accepting Tencent's investment, and to wait until the valuation of TiMi Studio increases before considering whether to accept Tencent's investment. In addition, NetEase also has the intention to invest.

Tan Jincheng does not intend to refuse the investment from these two companies. TiMi and miHoYo have different models. miHoYo can refuse investment from investment institutions and game companies because of their uniqueness.

However, if TiMi wants to make the professional league more influential, it needs more partners.

"That's true. Our parents were quite open-minded, otherwise we wouldn't be where we are now."

Most parents born in the 1980s are very resistant to computers and online games. The electric shocks that Tan Jincheng mentioned are not a joke, but a real phenomenon.

Fortunately, Tan Lihua and his wife were quite tolerant of him, as were Zhang Xupeng's parents; otherwise, they wouldn't have been able to let the two of them go on their graduation trip.

"Yes, family environment is very important for growth; by the way, Xiao Zhao said today that Ms. Yin from Lifan is planning to come to the capital and would like to meet you."

"Oh? Really? Well, they reacted pretty quickly."

Starting from March 4th, negative news about Lifan appeared more and more on Toutiao, and the scope of the push was also getting wider and wider. As a result, Lifan's stock price continued to slump and kept hitting new lows.

After a few trading days, the management team, led by Mou Gang, became restless.

This is an excellent opportunity to sell; any later and, just as Mr. Tan said, there will be no room for negotiation.

It is worth mentioning that Liu Qiaofeng, who is also Mr. Yin's second wife, has always been reluctant to let Lifan enter the automobile industry. From the beginning, she was not optimistic about Lifan's car manufacturing.

To a certain extent, the poor quality and disastrous state of Lifan Motors are largely due to her.

What can you do if the funding isn't approved?
The main reason why Young Master Yin decided to start anew and do whatever he wanted was because of this.

"Many things can't be accomplished if the family isn't united, but this time their reaction was quick, so it seems they really think the time is right."

The automotive business is Mr. Yin and Brother Jingcai's private domain. The fact that they are approaching him again so quickly means that the management and Liu Qiaofeng have reached an agreement and hope to expedite the transaction.

I just don't know how much they're asking for.
Gu Qingqing slapped Tan Jincheng: "Stop sighing. As long as you don't have any illegitimate children outside, this kind of thing won't happen in our family. Go to sleep."

Boss Tan gave a helpless, wry smile. Women's thought processes are really strange.

Would the Tan family ever see a dispute over inheritance? Probably not, since there are three large parts to manage.

(End of this chapter)