2003: Starting with Foreign Trade

Chapter 874 A Trip to North America to Avoid Trouble
"Boss, are you arguing so openly with General Manager Li? You even have to make a trip in person?"

Those familiar with Tan Jincheng know that he actually dislikes traveling around, especially abroad. If he weren't tied down by work, he could stay in Ningbo all year round without going anywhere else.

It's quite rare for someone to fly to the US specifically for one person.

"What's wrong with that? We're just competing fairly, which is better than them hurling insults at each other. Besides, the situation in China is quite complicated right now, so I'm just going out to lay low for a bit."

That's right, Tan Jincheng's trip to the United States this time was really just for one person, Lu Qi. Li Yanhong also knew that Lu Qi was in full competition with Baidu. He would see which company Lu Qi joined and what they could offer to impress him, so as not to affect the cooperation between the two parties.

The cooperation with Baidu over the years has been quite pleasant. Mr. Li is not a very aggressive person, and there are many factions within the company, which is not good for the company, but it may not be so good for the partners.

After selling 91 Assistant to Baidu for $19 billion, it seemed like a huge loss for Baidu from an outsider's perspective. However, 91 Assistant was still of great strategic significance to Baidu. At the time, Tan Jincheng gave it a mobile internet portal, which was the largest one on the entire internet.

In any case, Li Yanhong valued this favor at the time. That's how it is in business; many things can't be calculated in absolute terms, especially for people who aren't short of money.

Regarding Lu Qi's attitude, both parties agreed to compete fairly and demonstrate their abilities to gain the other's recognition. In Li Yanhong's view, Tan Jincheng had no chance of winning, after all, he had known Lu Qi for eight years.

Moreover, in every respect, Baidu's position in the internet field is unmatched by Orange Technology, and it can offer Lu Qi far more than Tan Jincheng.

"There are people who want to invest in you, right? Can you help them?"

Gu Qingqing was somewhat worried. Everyone knew that they were now popular entrepreneurs with plenty of money. There would always be people coming to them. She could let small problems go, but she was afraid of getting into big trouble.

"It's nothing. Some people have indeed contacted me, but I've been able to deflect most of them. Don't worry, as long as we do the right thing, there won't be any problems."

He has indeed had a lot of troubles this year. With more and more money in his hands and more and more resources under his control, the troubles have also increased accordingly.

Taking the cooperation with Lifan as an example, from the perspective of enterprise development, it is beneficial and harmless. Not only did we acquire valuable land, but we also found a partner with a strong background in the southwest region. However, it is difficult to manage the relationship with the local government.

The mountain city has a special geographical location, and with this person still alive, even though he knew his fate, Tan Jincheng couldn't afford to offend him, nor could he get involved, especially since it was on someone else's turf. Therefore, at that time, he could only hide abroad to avoid too much contact.

However, aside from these, he doesn't care about normal business dealings. This trip to the United States is suspected to be for seeking peace and quiet, but more so for Lu Qi, the absolute big shot in artificial intelligence. He has to find a way even if there is only the slightest chance.

The two hottest topics in the market recently are both related to capital, and as long as there is capital, it is inevitable that they will want to win over ByteDance's funding. However, Tan Jincheng does not want to touch these two things, or is unwilling to touch them.

“There is really no need to touch these two companies. Our investment is not something that just anyone can get. It would be good for you to go out for a few days. Just tell Huang Ming to ignore them.”

The two hottest topics in the A-share market right now are the Vanke-Baoneng battle, which has been going on since last year. As one of the most influential mergers and acquisitions in the history of Chinese business, the Vanke-Baoneng battle can be described as full of twists and turns.

With multiple capital players taking turns entering the fray, after testing the waters for half a year, Mr. Yao aggressively acquired Vanke's shares, causing a huge stir and even giving rise to a completely new concept in the A-share market.

The reason why ByteDance bought Midea's stock at that time was against this background. Fortunately, Tan Jincheng reacted quickly and, with Lei Jun's introduction, personally visited Midea to explain that it was just to seek cooperation opportunities. Otherwise, it would have caused unnecessary misunderstandings.

After all, Midea's shareholding structure, apart from its major shareholder, was also very dispersed at the time, and Midea's understanding of capital was far superior to that of Vanke's management.

The battle between Baoneng and Vanke was almost over when Belt and Road re-emerged, making the already complicated storyline even more unpredictable. Belt and Road's ambitions are equally great, and his covetousness for Vanke is no less than that of Baoneng.

The complex situation had little to do with Tan Jincheng, but these guys were all desperate people who dared to engage in leveraged buyouts with hardly any money. They wouldn't let someone like Tan Jincheng get involved in the main battlefield, but there were other places besides the main battlefield. It was only natural that the massive amount of funds invested in ByteDance would be targeted.

The circle of top-tier capital is only so big. Even two complete strangers can find a middleman to connect them. Tan Jincheng has indeed been extremely annoyed by this over the past few months.

He genuinely didn't want to get involved in the Vanke-Baoneng battle. This whole thing eventually alarmed the government, and the government's instructions to Hrun were that they weren't allowed to respond without their notification. There was also the power struggle with the local authorities in Shenzhen.

He likes making money and investing, but he doesn't try to make money from just any kind of money. Moreover, Vanke's stock price was already high at that time, so even if he could make money, it would be limited.

Furthermore, it's already 2016, and to still go into the real estate market, which is a terrible mess, is simply crazy. Housing prices will likely peak in about two years.

After several rounds of negotiation, Tan Jincheng declined all the pleas for leniency, explaining that he had no interest in the real estate industry and that ByteDance's investment in its advertising platform, ByteDance Engine, already had concrete plans and would not invest in the capital-intensive real estate sector.

This reason is somewhat far-fetched and unconvincing for Tan Jincheng now. He is also under some pressure, as he has made considerable investments in Shenzhen and needs to consider personal relationships.

As for the other company, it was even more ridiculous. Jia Yueting, the boss of LeEco, actually approached him through various connections, wanting him to participate in LeEco's private placement. In June, they acquired 28.9% of Coolpad's shares for HK$10 billion, becoming Coolpad's controlling shareholder.

The acquisition of Coolpad was originally a good deal for LeEco Mobile. LeEco's ecosystem even posed a great threat to Xiaomi, and the two sides had been in constant conflict since 2015.

Unfortunately, Coolpad's transformation failed and it was short of funds. Jia Yueting was not a wealthy man either. This good deal directly exposed LeEco's fake cash flow.

In early August, LeEco conducted a private placement, issuing approximately 1.07 million shares at a price of 45.01 yuan per share, raising 48 billion yuan. Prior to this, Jia Yueting had tried several times through intermediaries to get the fund under ByteDance's advertising platform to participate in the private placement project.

ByteDance Engine enjoys an excellent reputation in both the primary and secondary markets, and several of its funds rank highly on the private equity fund rankings.

In terms of both reputation and capital, they are excellent targets for private placement. Mr. Jia's idea is to persuade Tan Jincheng to participate in LeEco's private placement. In addition to raising more funds, they can also use Tan Jincheng's and ByteDance's reputation for publicity, which can be regarded as an endorsement for LeEco's private placement.

"That old guy really knows how to play the game. Others may not know about LeEco's financial situation, but I certainly do."

Since 2014, LeEco has been plagued by cash flow problems. During that time, he went abroad for a long period of time, and many people thought he would never come back. However, he unexpectedly returned to China.

However, Jia Yueting was completely different after returning to China. LeEco entered a period of rapid growth, and he spouted a series of internet memes, which fooled a large number of investors.

Two years have passed, and LeEco's situation is now practically an open secret. However, they still managed to raise 48 billion yuan in financing. It has to be said that this old guy really has a knack for it; his ability to deceive is truly unparalleled.

Oh, by the way, Zhang Mengzhu, a very powerful individual investor in the secondary market, participated in a private placement in his personal capacity, investing 1 billion yuan, which can be considered a complete loss.

"Tsk, with LeEco's financial situation, it still has a market value of 900 billion yuan, that's really bizarre; also, you've always been unwilling to do business with LeEco, and it's been like this for a long time, what are you thinking?"

What was I thinking? Of course, I knew in advance. I was afraid they wouldn't have the money to pay me, which would just increase the bad debt rate.

Long ago, Tan Jincheng had already instructed his various companies and ByteDance's advertising platform that buying their stock was fine, but it was absolutely forbidden to hold it for long. Moreover, since the bull market of 2015, Tan Jincheng had forbidden anyone from touching LeEco's stock.

As for business with LeEco, it's not that we can't do it, but the payment terms are the worst among all our partners. If payment isn't made within a month of the due date, all business dealings will be cut off.

These harsh conditions left Jia's companies helpless; they genuinely had no money.

"Based on the current situation, LeEco should owe suppliers tens of billions of yuan, so the 48 billion yuan raised through private placement is completely useless."

The 48 billion yuan private placement did not boost LeEco's stock price. Since trading resumed in June, LeEco's stock price has shown occasional performance, but it has been falling for four consecutive months and has fallen below the private placement price. This can be said to be the best opportunity for retail investors to escape.

If it gets any later, there won't be any way to escape.

"How do you know so clearly?"

"Hehe, Mr. Lei told me. He should have better access to information than I do."

LeEco's ecosystem and Xiaomi's ecosystem are quite similar, and the two companies are fierce competitors. They have publicly clashed many times and even taken each other to court.

When LeEco launched its mobile phones, it directly targeted Xiaomi's cost-effective strategy by publicly disclosing the phone's BOM (Bill of Materials) cost. LeEco aimed to challenge Xiaomi's market position with higher configurations and lower prices, which at the time raised concerns among Xiaomi about the growth rate of LeEco's mobile phones.

Besides smartphones, there is also direct competition in the fields of smart hardware and content ecosystems.

In terms of ecosystem design alone, Jia Yueting is indeed brilliant. His ambitious car manufacturing venture was later validated by Xiaomi, which has built an ecosystem that belongs to Xiaomi, from content to smart hardware and then to cars.

"Doing business should be done honestly and uprightly. LeEco actually had a chance to succeed. If they had taken it one step at a time, they would definitely have deserved their current market value. It's a bit of a pity."

With a college diploma, Mr. Jia's business acumen is indeed very sharp. When all the major internet companies were still indulging in piracy, he decisively saw the future market position of legitimate copyrights and acquired a large number of copyrights at extremely low prices.

The drama "Empresses in the Palace" sustained the entire LeTV video business, and the company also demonstrated impressive talent in producing its own dramas. Their vision is truly remarkable.

LeEco's tactics aren't new. Its performance was phenomenal for the first three years after its IPO, but then it suffered losses year after year. It was simply a matter of accounting manipulation. Jia Yueting had used this tactic once before on the Singapore Stock Exchange. Many listed companies operate in this way, and Jia Yueting's funding strategy was equally simple: repeatedly pledging shares to obtain funds to support the company's growth.

This tactic is actually similar to credit card cash advances, with each step linked to the next. Credit card cash advances can continue as long as the bank doesn't suddenly cut off access, while for LeEco to continue this tactic, its stock price must keep rising.

If the stock price falls continuously, the margin call could affect his cash flow. Therefore, he attaches great importance to LeEco's listing and financing, as it is the most important link for him to maintain the entire system.

The success of this 48 billion yuan private placement may be attributed to some people wanting to gamble with him; if he wins, it wouldn't be an exaggeration to say he could be the next Xiaomi.

However, they underestimated Jia Yueting. A major reason for LeEco's overall collapse was this private placement, which was carried out through financial fraud. The China Securities Regulatory Commission's investigation left LeEco with nowhere to hide, ultimately leading to its forced delisting.

Having lost his most important financing platform, his game could no longer continue.

It's already September, so it should be almost over, right?

"While I'm in the US, have all the major companies take stock and see if they have any business dealings with LeEco. If so, cut them off immediately, regardless of whether there are any losses."

LeEco's so-called ecosystem is also very large. Take the mobile phone business as an example. Their initial OEM was Foxconn, and there are only a few excellent domestic mobile phone battery suppliers.

Initially, LeEco also approached Dexian Electronics. Qin Junchao was naturally happy to have another client who was at the height of his success. At first, the cooperation between the two parties went fairly well, and LeEco was also quite generous with its payments.

However, it didn't take long for their true colors to be revealed. After learning about it, Tan Jincheng had Qin Junchao end the cooperation between the two parties on the grounds of insufficient production capacity.

It was the battery supply issue that made Tan Jincheng realize the huge problem. He then had the entire system investigate. However, with such a large operation, he himself was still unsure whether there were any supply issues with LeEco.

"Okay, I understand. I'll make sure the entire system is careful to check."

Tan Jincheng didn't plan to bring Zhao Xinyi with him on this trip to the United States. Instead, he asked Zeng Jixiang to accompany him. Compared to the energetic Zhao Xinyi, Zeng Jixiang, who had some technical skills, was more suitable.

Zeng Jixiang is now a member of the vice president team at Weilai. After being promoted from special assistant, he is currently in charge of the general manager of the asset and engineering management department, in charge of the group's asset allocation, engineering construction and the implementation of major projects (such as the preparation of Shanghai Lingang Industrial Zone and Liyang Industrial Base).

Construction in China is proceeding smoothly, and Zeng Jixiang can easily serve as a special assistant again in the short term.

As Tan Jincheng's special assistant, Zhao Xinyi held a very high position. From Shanchi to Leichi, and then to Weilai, Zhao Xinyi gained Tan Jincheng's full trust.

Currently, he is in charge of the administration department of Weilai Group, responsible for daily administration, employee welfare and corporate culture development. In addition to the administration department, he is also the chairman of Weilai Procurement Committee, reporting directly to Tan Jincheng.

In any company, the finance department may not be the boss's people, but the purchasing department is definitely the boss's people, and the person in charge of purchasing is absolutely the most trusted confidant.

Tan Jincheng firmly controls two special assistants: Zeng Jixiang, who is in charge of engineering construction, and Zhao Xinyi, who is in charge of procurement. These two interest chains, which are most likely to cause waste of resources, are also firmly in his hands. In addition, the finance department is also personally appointed by him.

Once he grasped these three aspects, he would have a clear understanding of Wei Lai's costs.

"Well, let's just give up on the smaller gains, but we should pursue the bigger ones. Also, check if there are still a lot of business dealings after I've reminded them multiple times. If so, investigate whether there are any underlying transactions."

Weilai also has its own mobile phone brand. Although it sells only so-so and not many people know about the brand, it still has its own mobile phone business. In addition, it has some peripheral products such as small gifts, etc., and has a very large supply chain system.

It is impossible to completely cut off contact with a large company in the same industry. Even with such fierce competition between Xiaomi and LeEco, it does not mean that there are no cooperative relationships between their respective industrial chains.

However, such cooperation must be kept within a controllable range. If a large amount of cooperation continues despite repeated reminders from the boss, then it is necessary to investigate.

On September 8, Tan Jincheng traveled to Wall Street via a connecting flight in Beijing.

On his first day on Wall Street, Tan Jincheng arrived in Beijing and met with Lei Jun privately to inquire about LeEco. Recently, Jia Yueting and Xu Jiayin have been the two most popular figures.

"Haha, you've got a quick reaction, that's practically the same as turning your back on me."

When Lei Jun heard that Tan Jincheng was having Zhao Xinyi investigate the entire system's cooperation with LeEco, he couldn't help but chuckle. At the same time, he secretly admired Tan Jincheng's decisiveness; he really acted immediately as soon as he noticed something was wrong.

"But so be it. They really have no chance of making a comeback. Their financial fraud is too serious. We basically have no business dealings with them anymore."

Most importantly, Mr. Jia no longer has any backing, and after such a big incident, his fate is almost sealed.

"It's a pity. If things had developed normally step by step, they could have really become your biggest competitor. To be honest, they've done a really good job with their content."

"Hey, you're right. Actually, we paid a lot of attention to their phones and TVs when they came out, and they did a really good job. Their content is even better than ours. If they keep doing this, they'll really be an excellent company."

"Furthermore, I really admire Mr. Jia's financial skills. It's truly impressive that a video website can achieve profitability."

The reason why LeTV was able to list in China and become the first listed video website in China before Youku Tudou and other video websites was largely because its boss, Jia Yueting, made the financial reports look good.

It's important to know that there are profit requirements for companies to list in China, and this alone excludes 80% of internet companies.

"Now it's nothing to worry about. In short, you have no rivals in the country. Mr. Lei, just focus on your work. I'm waiting for you to make money for me."

Tan Jincheng was certainly aware that Xiaomi was secretly planning an IPO, but they would not list on the US stock market. Moreover, there was no precedent for dual-class shares (AB shares) in either the domestic or Hong Kong stock markets, so Xiaomi's listing would not be smooth sailing.

"What? You want to cash out? You're not short of money, are you?"

Lei Jun frowned slightly. Xiaomi was indeed planning an IPO, personally overseen by CFO Zhou Shouzi. However, Xiaomi's profit margin was too low, which, apart from its equity structure, caused them to face severe setbacks in the current capital market.

Capital, large and small, has woken up from the old storytelling formula and now prioritizes profitability above all else.

"How could that be? You're overthinking it. What I mean is that my net worth will increase after the company goes public. Have you ever seen me sell any shares?"

Noticing Lei Jun's expression, Tan Jincheng smiled.

Lei Jun thought about it and realized it was true. He couldn't help but smile and said, "That's right. You really rarely reduce your holdings in important partners and your own company."

Currently, Tan Jincheng holds more than 53% of the shares in the three listed companies he owns: Flash Technology, Wei Lai, and even Orange Technology, where he holds the least shares, has a shareholding of 29.23%.

As for important partners such as Bitauto, Xiaomi, and ByteDance, they have never actively reduced their holdings or cashed out.

Most institutional investors develop an exit plan when they invest, but Tan Jincheng never thinks about exit plans for important investment projects and doesn't have many requirements for investors; it seems like he's just investing for the time being.

However, he sometimes invests like he's playing the stock market, selling without hesitation when it's time to sell, which is a truly incomprehensible investment style.

"Don't worry, unless my financial situation reaches the point where Mr. Jia is in, I won't think about cashing out Xiaomi shares after the IPO. You just need to make money for me honestly."

"You're so confident that we can successfully go public?"

Despite his verbal rebuttal, Lei Jun felt a warmth in his heart. From the venture capital round, this young man, 16 years his junior, had been supporting Xiaomi and his growth with resources and money.

As a member of Xiaomi's board of directors, he has all voting rights, but he will not shirk his shareholder obligations when it is his turn. He has contributed a great deal to Xiaomi's growth.

With Xiaomi currently facing a cold reception in the capital market, this move is clearly intended to reassure him.

"You don't need to test me. Xiaomi will definitely go public. There's no doubt about that. If you're not worried, I'm not worried either."

"Haha, then I'll take your kind words. I also wish you a successful trip to North America."

He wasn't really sure what Tan Jincheng was going to North America for, but for him to make a special trip there, it must be something important. For some reason, he always felt that this proud young man didn't really like going abroad.

(End of this chapter)