2003: Starting with Foreign Trade

Chapter 866 The Sense of Crisis Brought to Boss Li by Cooperation
"Old Li, your sense of smell is indeed amazing, but let's not talk about this."

Wei Lai's strong capital restructuring capabilities, his successful case of revitalizing Yangzi Automobile, and Tan Jincheng's investment style of always keeping his word make him very popular in every city he appears in.

The situation at Lifan was too complicated. The Chongqing government preferred Weilai to take over Lifan's automotive business, but Tan Jincheng had no interest in the Lifan brand at all.

Li Jianxin was simply limited by the times, and his attitude towards running a business was completely different from that of the Yin family. Yangzi Automobile was also only limited by its product iterations failing to keep up with the times. In terms of reputation, Lifan was simply no match for it.

Having no intention of taking over the brand and not wanting to have too much contact with the Chongqing government, Tan Jincheng took advantage of an overseas inspection trip to find some peace and quiet.

Li Chunrong nodded: "The cooperation with Lifan, right? I've heard some things about that, but the boss's decision is still very correct."

He greatly admired Tan Jincheng's attitude towards the government. Some things are not for businessmen like them to get involved in, and it's not shameful to stay out of it.

"It's not just because of that. The main reason is that the new Sega is about to be launched, so I came to cheer you on and also to show my attitude to Malaysia."

Before Proton was acquired, there were plans to launch a new Saga in 2015. At that time, Proton engineers had completed the basic design of the Saga. The acquisition delayed the launch of the Saga by a year.

The second-generation Saga was still designed primarily by Proton engineers, but the design style was quite different from the previous one. According to Tan Jincheng, it looked somewhat outdated in Proton's previous designs.

Therefore, Tan Jincheng overturned the original design in both the exterior and interior, even though he still couldn't launch the new model in 2016, he still had to overturn the existing design.

The new car inherits the design of the previous model, with bold changes to the exterior giving the Sega a strong sense of technology, and the interior has also been significantly improved.

Most importantly, in terms of the powertrain, the second-generation Sega will be equipped with a brand-new 1.5L naturally aspirated engine, comparable to Volkswagen's naturally aspirated engines, with more abundant power output, up to 113 horsepower.

In addition, the engine has lower fuel consumption, fewer problems, higher stability, and cheaper maintenance, making it more suitable for family use.

In addition, a CVT transmission was recommended, which brought a smoother and more efficient driving experience to the Sega. The addition of the CVT transmission not only improved fuel economy, but also made the vehicle more stable during acceleration and cruising, greatly improving driving comfort.

These technologies are quite advanced even in China. Tan Jincheng applied the most advanced technologies and concepts from Weilai to the second generation of Proton Sega. The level of support he provided to Proton was so great that even the Malaysian government did not expect it.

"We haven't ventured into the domestic A-class gasoline sedan market yet. Proton has extensive manufacturing experience and excellent engine technology. Making the Sega more advanced is also an attempt to enter the A-class sedan market."

Supporting Proton is one aspect; after all, Proton's success is definitely a good thing for Wei Lai. But more importantly, we need to make some new attempts.

Weilai does not produce gasoline-powered cars in China. This is part of the group's strategy, but it is also a matter of necessity. The competition in the A-class sedan market is too fierce, and Tan Jincheng really doesn't dare to invest heavily without a mature model as a foundation.

If the Sega performs well in Southeast Asia, Weilai can try introducing it to China first. If it is also popular in China, then developing an A-class sedan is not out of the question.

A-class gasoline sedans aren't Wei Lai's main focus, but after manufacturing cars for so long, it's really time to give it a try.

"Take me to see the design progress of the Y series again tomorrow."

In addition to restarting the Sega, Proton also designed its own SUV based on the Cerato series. This series is named with Y in the beginning, and the initial models are divided into three types: Y50, Y70 and Y90.

These correspond to the A1, A3, and A9 models, respectively. This is Proton's current product structure. For sedans, the Sega brand is used, which not only preserves Proton's culture but also ensures the brand's high recognition in Malaysia.

As long as the car is well-made, even selling it based on nostalgia can generate a surge in traffic, so there's no need to worry about it not selling well.

SUVs have always been a strong point for Weilai, so how could they not introduce them to the Southeast Asian market? The Yuechi series, especially the Yuechi A1, is the best product to test the waters.

"No problem, they are all mature models. In fact, the development progress of SUVs is faster than that of Sega, but it is due to the principle of prioritizing Sega, and also because our current production capacity is not ideal."

In less than a year since its arrival, Proton has undergone tremendous changes, but in terms of production capacity, it is indeed unable to keep up with the simultaneous production of two models. The main reason is that Proton has declined too much in recent years.

Take dealerships as an example. Although Proton's dealership network spans more than a dozen countries, most of them in Malaysia are still 1S stores, which only sell and do not repair. This is simply because there is still a lack of confidence in Proton's previous models.

If you only sell but don't repair or provide after-sales service, even if Proton has excellent quality and high brand recognition, it can't withstand this kind of abuse.

"Let's promote Saijia first. We must do a good job in the early stages of promotion and give Saijia more exposure. After all, the Y series is still a new product here, and its brand awareness is not as high as Saijia's."

The second-generation Saga will be launched in Malaysia this September and officially sold in January next year. This marks a new beginning for Proton and is also Wynn's first attempt in the Southeast Asian market.

"Once we establish ourselves in Malaysia, the Southeast Asian market will be much easier to manage."

As the largest market in ASEAN, Malaysia is the best springboard for opening up overseas markets, but it is also quite challenging.

Our brand was once very popular in Southeast Asia, occupying a large share of the market. However, due to its own reasons, it eventually failed miserably. Currently, apart from their local brands, the Southeast Asian market is dominated by Japanese brands.

In the Southeast Asian market, Japanese brands hold an unshakeable market position, making it extremely difficult for domestic brands to re-enter the market. Even Proton, a local brand, must make thorough preparations if it wants to reopen the market.

With two new car models, a parts industrial park, and a final assembly plant, Proton's plans came one after another. Tan Jincheng stayed in Malaysia for a long time, and even brought Gu Qingqing over for a few days.

During this period, Tan Jincheng also inspected the markets of other ASEAN member states besides Malaysia.

"Overall, the outlook isn't very optimistic."

The Southeast Asian market is very fragmented, and the market size of each country is not large. Taking the Malaysian market as an example, the overall sales forecast for this year is about 60 to 70 vehicles, which is lower than the forecast for this year.

However, even in such a market, the competition is fierce. Currently, the largest car brand in Malaysia is Perodua, which rose rapidly after Proton's decline and now dominates the market.

Of the top five, apart from Proton and Beirut, the remaining three are Japanese brands: Toyota, Honda, and Nissan. Even Beirut is a Japanese joint venture brand.

In other words, among the top five, apart from Proton, which is a completely independent brand, the entire Malaysian market is completely monopolized by Japanese brands, even though Proton initially relied on Mitsubishi technology.

As the fourth largest industry in the Malaysian economy, it was completely controlled by other countries. Wei Lai did not deliberately ask for that 0.1% share, which earned him great goodwill from the Malaysian government.

Proton, 50.1% owned by the Malaysian State-Owned Enterprises Commission, can be considered the last vestige of dignity for the entire country.

The situation is pretty much the same in other ASEAN countries. Japanese brands are incredibly dominant here. They even forced GM to shut down its factories in Southeast Asia. Even a powerhouse like Volkswagen only has a single-digit market share in Southeast Asia.

"Yes, Japanese brands have almost monopolized the country's automobile industry. We are besieged by Japanese brands on all sides."

This is not like the domestic market, where there is the combined strength of major joint venture brands and the wolf pack tactics of independent brands, which rely on the maturity of their own industrial chain to compete with Japanese brands.

"It now seems that our strategy of starting with Proton to open up the Southeast Asian market was very reasonable."

Only a national brand like Proton, with a powerful controlling shareholder, could allow Wei to gain a foothold. If they had just charged in headfirst, they would have definitely run into a brick wall.

Meanwhile, the three-way transaction between Lifan, Weilai, and Wenjie is also progressing steadily.

On March 25, the China Securities Regulatory Commission officially approved Lifan's sale of 100% equity in its subsidiary, Lifan Automobile Co., Ltd. With this, Li Bin's Wenjie officially became the first new energy vehicle brand in China with production qualifications.

Boss Tan has fled abroad, and Li Bing is enjoying immense success.

"Haha, brother, you're really riding high right now! I can even see news about you from abroad."

It seems that Li Bing's luck has turned around since he got married. Although Yiche's stock performance has not been good in the past two years, as the only domestic automotive media company listed on NASDAQ, it has its own unique value, so it is not as bad as some other companies that cannot survive.

In addition, after merging with Autohome, its market share is now sufficient and its revenue has increased. Recently, Tencent and JD.com have also expressed interest in investing in Bitauto. Li Bing called Tan Jincheng today to discuss this matter.

"You're kidding me, but having the car production qualification really makes a difference. It's like I've suddenly become much more confident."

Although Li Bing had previously told JAC that the total contract manufacturing order was 5 vehicles, JAC did not take it seriously. JAC, which has a market share of over 30% in the domestic new energy vehicle market, only expects to produce 10 vehicles next year.

Your newly established company will be producing 5 vehicles in a very short time, not to mention that you may need to rely on your own automobile production qualifications.

The butterfly effect had taken hold. Due to Tan Jincheng's involvement, the Luzhou government's attitude towards Li Bing became ambiguous. Frankly, there was no need to be overly enthusiastic about a newly established, uncertain-future car brand registered in Shanghai; it was better to stick close to Wei Lai's coattails. Li Bing understood this as well. If he couldn't secure a manufacturing agreement with JAC, he would build his own factory ahead of schedule. After all, a factory would have to be built eventually, though he hadn't yet decided where to locate it.

"Haha, don't be modest. You have amazing skills now. It's okay to be a little arrogant."

With the automotive qualification in hand, and Wenjie backed by powerful conglomerates like Tencent, Jingdong, and Weilai, Li Bing certainly had the financial and technological resources to back him up.

Among the emerging brands, it seems that Li Bing and He Xiaopeng have already broken through the competition. Li Bing is backed by Tencent, while He Xiaopeng is backed by Ali, which also invested in Xiaopeng's latest round of financing.

Tan Jincheng, who holds shares in both Weilai and Gaode Maps, has a profound influence on both companies, even though his shareholding in neither is particularly high.

From batteries and other automotive components to map navigation and Horizon Robotics' intelligent driving system, it's difficult for any emerging company to escape Tan Jincheng's influence if it wants to develop.

"As for Yiche, let Tencent and Jingdong invest if they want. You can decide that yourself; you don't need to ask me."

Tencent's desire to cooperate with Yiche is simply to expand its ecosystem. Within the entire automotive ecosystem, Yiche, Autohome, and the future Autohome, among other automotive media, form a crucial marketing ecosystem.

As an internet giant, Tencent, which wants to gain a foothold in the automotive industry, naturally cannot let go of Bitauto, which currently holds a monopoly. As early as last year, Tencent established a vehicle connectivity department.

"Okay, I'll let you know if anything changes."

Li Bing breathed a sigh of relief. He had been the CEO of Yiche for many years, and Wei Zi had been cooperating with Yiche since its inception. No one knew better than him how much Tan Jincheng valued marketing and automotive media.

For a long time, he even thought that Tan Jincheng would privatize Yiche like he did with the acquisition of AutoNavi.

Tencent's involvement will inevitably affect Tan Jinhe's say in Yiche. Currently, the three-way cooperation is going well, and he is really afraid that Tan Jincheng will not agree, which will create a gap in the cooperation.

"Okay, or you can contact Huang Ming directly; don't worry, we've been cooperating with Tencent for a long time, how could I disagree if Pony Ma wanted to give you money?"

Yiche's strategic significance to Weilai is naturally important, but with the growth of Douyin, its strategic position has naturally declined. Pony Ma kindly offered money to invest, so he wouldn't stop him from doing so.

Besides, Yiche has basically not made any money after investing for so many years, and Tan Jincheng doesn't want to continue investing. He just wants to maintain a certain shareholding and keep the partnership going.

Having Tencent as a savior is the best thing ever.

Wenjie has secured the automotive qualification, but negotiations between Weilai and Lifan are still ongoing. The two sides have reached a general agreement, with the two plots of land in Yuanyang acquired for a transaction amount of 33.15 billion yuan.

In addition, Wei Lai acquired 16.97% of the equity of Shancheng Wanguang New Energy Co., Ltd. held by China Development Bank Fund for RMB 1.89 million, and succeeded China Development Bank Fund as the second largest shareholder of Wanguang New Energy.

In addition, Lifan issued 5100 million shares to Weilai Group at a price of 8.21 yuan per share, raising 4.19 million yuan to supplement the company's working cash and repay short-term debt.

"After the private placement, Lifan's total share capital increased to 13.07 billion shares, and our shareholding ratio is 3.9%, making us the second largest shareholder. That's enough."

Apart from the controlling shareholder, Lifan Group, which holds 49.40%, Lifan's shareholding is quite dispersed. Their second largest shareholder is the state-owned enterprise, holding 1.79%, while from the third to the tenth largest shareholder, no single shareholder holds more than 1%.

With the top ten shareholders holding 54.81% of the shares, there are over 70,000 shareholders, which shows how many retail investors Lifan has trapped.

"That's about enough. Let's work together like this for now. We've already put in a lot of effort, so let's finalize the cooperation agreement first."

To be honest, Tan Jincheng was not very satisfied with this cooperation method. The payment license was not obtained, and the new energy company only took over a portion of the shares from the China Development Bank Fund. Apart from the two plots of land, there was not much substantial progress in the cooperation.

However, Tan Jincheng could understand that although Boss Yin had stepped down from the front line, he had not completely retired. He was still very optimistic about the new energy vehicle industry and wanted to save it to some extent.

In addition, although Lifan's production and sales both exceeded 70% in the first quarter due to negative news, resulting in a huge loss of over 1.2 million yuan, its motorcycle and power business was not affected at all.

Furthermore, although the new energy subsidies were cancelled in 2016, it is not impossible for them to be reinstated in 2017 if rectification is carried out and fines are paid in a timely manner.

In Mr. Yin's eyes, Lifan could still be saved, and he could try to salvage it.

"Indeed, according to Mr. Mou, while shedding their burdens, they promptly adjusted their business in the second half of the year and found ways to continue producing cars. With a huge cash reserve, they may not suffer a particularly severe loss for the whole year, and may even be profitable."

Yes, they received 6.5 million yuan from Li Bing and another 37.34 billion yuan from Wei Lai, totaling 43.84 billion yuan in cash flow replenishment, which greatly alleviated the company's current predicament.

It's not impossible to rebuild the new energy industry and even the automotive industry through this kind of cooperation, even if it's a struggle.

"I understand. This is the best cooperation we can get right now. Anyway, there's no rush. Let's take it slow. At least we've acquired two plots of land, giving Yangzi Automobile and its tank series a foothold in the southwest. This is a good thing."

With the addition of the equity transfer of the China Development Bank Fund, Wei Lai will actually have to invest 39.23 billion yuan this time, which is basically in line with Wei Lai and Tan Jincheng's expectations. However, apart from the two plots of land, Tan Jincheng believes that the equity transfer and private placement of the China Development Bank Fund are still a bit expensive.

However, there are advantages to being expensive, namely, you've secured a spot. In the cooperation agreement, Lifan's new energy vehicle company has a clause that if they want to transfer equity in the future, Weilai has the right of first refusal.

This can be considered a promise from Boss Yin to Tan Jincheng; it's better than nothing.

"Then just sign it. You don't need to wait for me to get back. I won't be able to go back for a few more days."

Tan Jincheng, dressed casually, was lying on the beach with Gu Qingqing. He had some free time these past two days and didn't want to go back yet, so he called Gu Qingqing, who was busy, over for a vacation, which was a way to steal a moment of leisure from his busy schedule.

Zhang Yong on the other end of the phone hurriedly said, "Okay, then I'll sign it first. This still needs the approval of the China Securities Regulatory Commission."

Lifan is selling its business and is currently still suspended from trading. However, Weilai's investment does not involve any major acquisitions, so it does not need to be suspended from trading. The investment of nearly 40 billion yuan is not low, but Weilai has made many large investments over the years, so it is not a big deal.

For Weilai, this collaboration with Lifan can be simply understood as an investment activity.

Over the weekend, Lifan announced its cooperation plan with Weilai, awaiting approval from the China Securities Regulatory Commission. Lifan's announcement quickly sparked heated discussions online and in investment circles.

"Damn, Mr. Tan is something else. He acquired two plots of land from Lifan. These two plots are in very good locations."

"The equity of the China Development Bank Fund is not particularly expensive, and the private placement was priced at a 10% discount. Wei Lai's team has very strong negotiation skills."

Surprisingly, Mr. Tan was not very satisfied with the cooperation, but institutions and investors were still quite optimistic about it. Although he paid nearly 40 billion yuan, both the land and the cooperation with Lifan in the field of new energy were viewed favorably by everyone.

Most importantly, through this investment, Weilai successfully established itself in the Southwest region. According to Weilai's announcement, the two plots of land they acquired from Lifan will be of great use to them.

The two plots of land in the plan will be used for the construction of a pickup truck production line and the production of a tank series, respectively, with a planned increase in production capacity of 5 vehicles for the Qilin series pickup truck and the tank series by 2019.

At the same time, Weilai will also increase its channel construction in four cities including Chongqing, Chengdu, Guizhou and Kunming, mainly for the construction of sales channels for pickup trucks and tank series.

The China Securities Regulatory Commission (CSRC) approved Weilai Investment's investment in Lifan on April 1st. In just over a month, Weilai has already secured another major investment.

"That kid, he just throws away 40 billion yuan like it's nothing, and he beat me to it again. It's unbelievable."

At the headquarters in Taizhou, Mr. Li looked frustrated. They had acquired Dongfeng Nanchong Commercial Vehicle Company quickly, but they had to put a lot of effort into handling the follow-up matters. Wasn't it said that the negotiations between the two parties had stalled?
How come the progress is faster now that Zhang Yong is in charge of the negotiations? It's unbelievable.

Since 2015, whenever he thinks of the boatman's expression of both admiration and resentment when talking about this rising star, he feels increasingly empathetic.

Geely, which also follows the international capital acquisition and expansion route, has always had Proton and Lifan on its watchlist. Who would have thought that this young company would act so quickly?

He had seen the promotional materials for Proton's second-generation Saga. The car's design was indeed very European and American. Combined with Proton's consistently affordable prices and its brand recognition in Malaysia, it was almost certain to be a bestseller after its launch.

This car company, which was only established eight years ago, is becoming increasingly threatening.

"Have the investment department keep an eye on the investments that ByteDance and ByteDance make in the automotive industry. If they find any conflicts with our goals, they must notify me immediately."

Having been outmaneuvered by Wei Lai once or twice, Geely had to do something.

(End of this chapter)