2003: Starting with Foreign Trade

Chapter 901: The Appearance of Orange Group.

"First of all, congratulations to President Tan! The second launch plan for oranges has been successfully approved. The secrecy this time was indeed excellent."

"Haha, we have to thank the Hong Kong Stock Exchange for their cooperation. It's just a bit of a pity that it can't be included in the Stock Connect program, so mainland investors can't buy directly through the Stock Connect."

After the press conference ended, He Xiaopeng specially asked Tan Jincheng to stay for dinner, which was actually more like a late-night snack. By the time everything was finished, it was already past midnight.

After taking a sip of mutton soup, Lei Jun, who had missed the press conference, caught his breath and said, "Don't be too greedy, kid. With your size, you can only do a secondary listing. There's no way you can relist. Do you think the Hong Kong Stock Exchange doesn't want that?"

A few side dishes and a bowl of mutton soup for each person, the three of them sat around a table. It was an ordinary restaurant, but late at night, they were the only customers left.

After leaving Tan Jincheng behind, Lei Jun rushed over from the capital, and He Xiaopeng must have something to say.

"Yes, how could Orange, a company of this size, possibly go through the relisting process? No matter how much the Hong Kong Stock Exchange values ​​you, it cannot break the rules."

The return of Chinese concept stocks to the domestic market is a major trend, but there are many types of returns, such as privatization and delisting like 360, and secondary listings like Orange. However, there are two ways to conduct a secondary listing.

One type is the conventional secondary listing, which allows shares to circulate across markets through international custodian banks and securities brokers. In this method, the stock price is converted using the market price in the primary market as a reference price and is determined by the issuer and underwriter.

Another option is dual listing, which is similar to issuing new shares. It is listed according to the standards and requirements of the Hong Kong Stock Exchange. The shares issued on both sides are completely independent and cannot be traded across markets. In fact, there may even be a price difference between them.

The advantage of doing this is that dual-listed Chinese companies listed in the US can access the Hong Kong Stock Connect program, allowing mainland investors to buy them directly through the program, and they may also have the opportunity to list on the A-share market in the future.

In this way, a single stock could potentially be listed in three locations: the A-share market, the Hong Kong stock market, and the US stock market.

Tan Jincheng's initial idea was for Orange Group to be dual-listed. However, the requirements for dual-listing are very strict, the listing process is complicated and more expensive, and there are strict requirements on many aspects such as market value and revenue.

Orange Group exceeds the standard with just these two points.

"Speaking of which, you got to fire the first shot again. You're really lucky."

Lei Jun sighed and said that Xiaomi has been preparing for its IPO for more than a year, and its listing is now in the final sprint. Unlike Orange Group's secondary IPO, Xiaomi's IPO process has been quite difficult.

The main reason is that Xiaomi's gross profit margin is too low, making it unpopular in the Hong Kong market, which is dominated by institutional investors.

Orange Group, however, is different.

Since Ali delisted from the Hong Kong Stock Exchange, there hasn't been a decent internet e-commerce platform company listed on the exchange. Although Orange Group has reorganized and is trying to transform into an artificial intelligence company, its main revenue still comes from Orange Club.

Before Pinduoduo became mainstream, Orange Mall was the fourth largest e-commerce platform in China, after JD.com, Alipay, and Suning.com, with total revenue expected to exceed 500 billion yuan this year. This does not include the three major segments: Gaode Maps, TiMi Studio, and Dingding.

Without major breakthroughs in artificial intelligence, Orange Group remains positioned as an internet e-commerce company. With the addition of map infrastructure services and a highly profitable gaming business after restructuring, its future prospects are limitless.

During the winter in Beijing, when Ali was not listed on the Hong Kong Stock Exchange, Orange Group was the largest e-commerce platform listed on the Hong Kong Stock Exchange, and also the most popular mainland Internet company after Tencent.

Investors flocked to it, and the Hong Kong Stock Exchange welcomed it with open arms. When Orange Group, having completed its restructuring and business integration, submitted its listing request to the Hong Kong Stock Exchange, the exchange gave it the green light all the way.

According to the Hong Kong Stock Exchange's listing rules, Orange Group, which is listing for the second time, is automatically exempt from some of the listing rules and is allowed to apply for several additional exemptions.

A confidential listing is within the rules. The reason for keeping it confidential is simply to avoid excessive interference from the capital market, reduce abnormal stock price fluctuations caused by the capital market prematurely digesting the listing news, and facilitate the smooth listing of Orange Group.

The pricing of the secondary listing is based on the closing price on the last business day of the primary listing on the Nasdaq market. Orange Group's confidential application method for the secondary listing maximizes the extension of excess returns to the IPO pricing stage.

In plain terms, it means that Nasdaq shouldn't get all the benefits.

"That makes sense, and that's a good point."

Tan Jincheng picked up a peanut and put it in his mouth.

Orange Group's IPO was leaked to the public by an institution two days ago, on October 10. Although the IPO was kept confidential, it was no secret to the participating institutions and top-level personnel.

As early as last year, many people in mainland China knew about Orange Group's secondary listing plan. People like Jack Ma and Lei Jun knew about it from the very beginning.

After all, no matter how secretive it is, it still has to pass the review of regulatory agencies in the three regions, and which bigwig doesn't have a few informants?

After the news was leaked to the public, the Hong Kong Stock Exchange and Orange Group stopped trying to hide it and readily admitted it. The Hong Kong Stock Exchange also published Orange Group's prospectus.

According to the prospectus, Orange Group plans to issue 1.33 million shares to the public at a price of HK$113 per share in this secondary listing, raising a total of HK$150.29 billion. The funds raised will be used for the infrastructure construction of artificial intelligence projects and cash reserves.

If the IPO is successful, Orange Group will become the first e-commerce company in China to be listed in both the United States and Hong Kong.

"I'm so jealous I can't eat anymore."

Lei Jun stared at Tan Jincheng, who had a calm expression. Speaking of his three companies, apart from Flash Technology, which had some trouble going public, Weilai and Orange went very smoothly. Orange is currently the company with the shortest establishment time and the fastest listing time in China.

Now it is the only internet company in China listed in both the US and Hong Kong, holding multiple capital records. After restructuring, its future is limitless, and the company has also completed a magnificent transformation through secondary listing.

Earlier, in an internal letter, Tan Jincheng mentioned that after the restructuring, Orange's mission changed from "small and beautiful" to "technology-driven, committed to a more efficient and sustainable world".

Regardless of whether Orange Group's artificial intelligence is just a gimmick, with e-commerce/gaming + artificial intelligence as its main selling points, Orange Group has no need to worry about being met with a cold reception in the capital market or its share price falling below the offering price after its IPO.

On the contrary, Xiaomi's IPO was fraught with difficulties. It had to prepare earlier than Orange Group, but it would take at least six months longer for them to go public.

According to the plan, Orange Group will be listed on the Hong Kong Stock Exchange on November 1, 2017.

There are no difficulties in raising HK$150 billion. According to public information, Orange has 396096 subscribers, with a 10% chance of winning a single lot and an oversubscription rate of 178.9 times.

Previous information also indicated that Orange's global offering raised net proceeds of approximately HK$148.86 billion. Assuming the over-allotment option is fully exercised, the additional net proceeds will amount to HK$22.54 billion.

This also makes Orange Group the internet technology company with the highest fundraising amount on the Hong Kong Stock Exchange this year.

"Don't worry, there's definitely no problem with Xiaomi going public. Besides, you're not the only company queuing up for dual-class shares. The Hong Kong Stock Exchange really wouldn't turn you away."

2018 was a banner year for Chinese internet companies to go public.

Currently, Tan Jincheng knows of Xiaomi, Meituan, Pinduoduo, iQiyi, Bilibili, Tencent Music, and Li Bing's Wenjie. Among them, Bilibili and iQiyi are basically confirmed to be going public around the first quarter of 2018.

There are also some smaller companies, such as Cheng Yilong, Uxin Used Car, Qutoutiao, etc. It is quite rare for a domestic internet company group to go public on such a large scale.

Unlike other companies that apply for listing on the US stock market, Xiaomi and Meituan, two large and prominent companies, submitted their listing requests to the Hong Kong Stock Exchange.

The Hong Kong Stock Exchange, now in its twilight years, hasn't seen a star company list for many years. No matter how complex the rules are, they will find ways to meet the listing requirements; it's just a matter of time.

"I'm not worried, it's just that the timeline is too long and it's exhausting."

"Come on, you said before that you wouldn't go public for at least five years, so what's wrong with going a little later?"

"Haha, our CEO Lei always likes to tell little lies."

Tan Jincheng's disdain drew teasing from He Xiaopeng. Through the investment in Xiaopeng Motors project, the three had become good friends. In Lei Jun's words, investing is about investing in friends. You introduce a few friends, and I introduce a few friends.

Lei Jun wasn't embarrassed by their mockery and laughed, "Alright, alright, tell me what you wanted to see us about?"

As a key investor in Xiaopeng Motors, he and Tan Jincheng initially invested in Xiaopeng in their private capacities during the angel investment round. However, after the Series A funding round, they could no longer use their private capacities to officially begin the project.

During its Series A funding round, Weilai Group and Xiaomi Group both increased their investments. To date, Xiaopeng Auto has raised nearly 30 billion yuan through its angel, Series A, and Series A+ rounds.

Tan Jincheng then smiled and said, "You don't have enough money, do you?"

He Xiaopeng managed to produce a mass-produced car with less than 30 billion yuan, although there were only 15 of them, and they were not sold to the public. Compared with his peers in the internet car manufacturing group, He Xiaopeng's performance is still satisfactory.

Li Bing, who had the idea of ​​making cars around the same time as him, spent more than 40 billion yuan and it was still just a concept car. However, Li Bing's mass-produced car, the Wenjie M9, will be launched at the end of this year. It is also an SUV.

I don't know if these internet people have any other skills, but their ability to spend money is truly amazing.

Tan Jincheng was somewhat fooled by them. Influenced by the news he had seen in his previous life, these internet car manufacturing groups were always raising billions or even tens of billions of yuan in funding. WM Motor had raised 350 billion yuan in two years and hadn't even obtained the necessary qualifications yet.

So much so that when he first started thinking about building cars, he felt it would be extremely difficult. He thought it would be almost impossible to make a car without spending hundreds of millions of dollars. At that time, he was almost going all in on building cars.

Before starting to manufacture cars, he did a lot of preparation work, such as taking FlashDrive Technology public, setting up a financing platform, acquiring technology R&D companies, investing in parts companies, and accumulating cash reserves. This process lasted for several years before and after FlashDrive Technology's IPO. His thinking at the time was that it was all or nothing; if all else failed, he would just put the entire business centered around FlashDrive on the line and save some money for retirement.

However, when Tan Jincheng went through the process of building the car, he found that it was not so simple.

Moreover, he highly suspects that Lei Jun, in his previous life, was likely misled or frightened by these internet veterans when he announced his car manufacturing plan, which reportedly involved a budget of 1000 billion yuan.

Any random new force has raised tens of billions in funding, and that old guy Li Bing has even burned through nearly a hundred billion.

"Yes, we're out of money and are preparing for Series B funding."

He Xiaopeng also frankly admitted: "The main reason is that we do not have any plans to go public yet. To paraphrase what Mr. Lei said, we have no intention of going public within the next three years, so we still have to rely on the financing system for factory construction."

"Don't be too optimistic, your spending spree has only just begun."

Having been in the car manufacturing business for several years, Tan Jincheng knows the ins and outs better than anyone. The prototype of the Xiaopeng car cost about 30 billion yuan to produce, which is not an exorbitant price in this era of severe capital inflation; it is a relatively reasonable price.

Moreover, not many people on their team have experience in car manufacturing; it's their first time doing this, so it's normal for them to make some mistakes.

However, the process of going from a prototype to a mass-produced car is a very expensive one. If we continue in the current way, Xiaopeng will have to pay even more tuition fees, and Tan Jincheng is well aware of this.

Throughout the entire supply chain process, if the boss doesn't personally oversee things and doesn't understand the ins and outs of the physical industry, they'll be easily fooled like a fool.

The same screw can be sold to someone else for a completely different price than it is sold to you. You might not even realize you've been ripped off if you don't know anything about it.

Tan Jincheng wasn't without his share of detours, but he was luckier. He started making cars when money was still relatively valuable, and he also accumulated a lot of experience in the physical supply chain during the operation of Flash Technology.

"So I just wanted to ask Mr. Tan for advice. Financing is one thing, but more importantly, I wanted to learn some experience from Mr. Tan."

He Xiaopeng raised his glass and said very sincerely.

At the afternoon press conference, he singled out Tan Jincheng to express his gratitude, which was truly from the bottom of his heart. Tan Jincheng was not the biggest investor in Xiaopeng Motors, and his investment amount was even lower than Lei Jun's, but the influence he brought to He Xiaopeng was greater than that of these big investors.

Through Weilai Auto, he learned about the entire car production process, the ins and outs of the supply chain, and also learned some marketing techniques.

Even the core selling points of Xiaopeng Motors were inspired by this.

He still vividly remembered Tan Jincheng's explanation of the core selling points.

"Car manufacturing can use the internet model, but it's different from the internet model. To be honest, car manufacturing is much more difficult than the internet. Take your UC for example, at the same time, there were at most a dozen or so projects that started at the same time, right?"

"But look at the new players and traditional car companies now, there are so many of them, many of them can't even come up with a good name, everyone wants a piece of the pie."

"But very few companies can truly succeed or become well-known. This is something that money can't solve. I don't have a good opinion of WM Motor. They raised too much money at the beginning, and their economic situation is not as good as before."

"Of course, the most crucial thing is to find your core selling point. Just like with internet products, without a core selling point, it's useless."

"Our core selling points are cost-effectiveness, technological advantages, and perfect after-sales service. You can experience a different driving experience with our Weilai cars."

"Of course, these are important, but the most important core selling point must be safety. Safety will always be the selling point of the automotive industry; life comes first."

Through years of observation and participation, He Xiaopeng has gained a deeper understanding of Tan Jincheng's words at the time.

Weilai's cars are definitely not the best. News outlets frequently report news and videos of serious car accidents involving Weilai. The Yuechi series also had numerous minor problems when it was first launched.

However, Wei Lai never deliberately suppressed these press releases, nor did he hastily ignore them; instead, he responded positively and proactively.

By maintaining active communication with car owners, we can identify and address problems, and then upgrade and resolve them in subsequent products. If the issue is with the car itself, we are quite generous with after-sales service for the car owner.

While Weilai may not be the best car company in China in terms of sheer strength, it is undoubtedly number one in terms of service spirit.

"As I said before, if you want to do better and for your products to be recognized by consumers, you must personally participate in every step of the process."

After saying that, Tan Jincheng pointed at Lei Jun and said, "Mr. Lei should have learned a lesson from this."

Xiaomi's supply chain system used to be a complete mess, which is why Xiaomi phones have such a bad reputation. However, in the past two years, after Lei Jun personally took over the entire supply chain system, there has been a significant improvement.

Correspondingly, as product quality improves, so does its acceptance.

Consumers aren't fools.

"That's absolutely right. What President Tan said is truly invaluable advice. Back then, we were almost ruined by Samsung because of this."

Tan Jincheng added, "You can be the chairman, but you must be the CEO."

Zhang Yong is indeed the CEO of Weilai, but Tan Jincheng will not let things go unchecked. From product design to the final product launch, he may not be able to say that he understands every step of the process, but he at least has a clear understanding of it.

If anything goes wrong, he can handle it well. At least he won't be completely clueless about the public relations plan and leave the company's public relations department to do whatever it wants.

While many factors contribute to the collapse of a brand's reputation, a failure in public relations is always a crucial factor.

"That's a good point. You can be the chairman of the board, but you must be the CEO!"

As a friend, Lei Jun naturally supports He Xiaopeng, but from an investor's perspective, He Xiaopeng previously served as a senior executive at Alibaba, allowing Xiaopeng Motors to develop independently for several years, a move that Lei Jun had some reservations about.

However, he was too embarrassed to say much before the prototype appeared.

Now that He Xiaopeng has officially left Ali and taken on the role of chairman of Xiaopeng Motors, he can finally feel a little more at ease. How could the founder possibly leave such a big project unattended?

He Xiaopeng nodded: "I will seriously consider your opinions."

"Financing is easy to discuss. Just tell us when you need it and how much you need us to invest."

Compared to investing in Li Bing, He Xiaopeng, whom Tan Jincheng met later, was more in line with his preferences. Whether it was the decisive sale of UC to Quan Ali at a high price to cash out, or the operations on Xiaopeng Motors, He Xiaopeng demonstrated his execution and foresight.

The statement that there are no plans to go public within three years may be a joke, but it also reflects his confidence in the company.

To put it bluntly, internet companies think about going public after only a year or two, citing financing needs, but deep down they lack confidence.

If employees and management have confidence in the company, why are they in such a hurry to go public?

Orange Technology was in a hurry to go public for this reason. On the one hand, Tan Jincheng's focus was not on Orange Technology at the time, and on the other hand, he was afraid that he could not compete with Tencent.

At that time, Orange Technology was essentially begging for food under Tencent's nose. Orange Products had just started, and Orange Technology's biggest source of income was Kaixin.com and a series of social mini-games such as Happy Farm.

Once Pony Ma and his Tencent show an overbearing attitude, Orange Technology is very likely to be squeezed out. Going public quickly is undoubtedly to give themselves more security, and if things go wrong, they can cash out and run away.

"You're absolutely right, he's the cash king of Zhejiang Province."

In today's business community, who doesn't envy Tan Jincheng's abundant cash flow? He can freely sell his Tesla and Nvidia shares once they fall below 5%. In addition, among the only holdings disclosed by ByteDance's stock trading platform, sectors like liquor and banking, which were relatively sluggish at the time, have seen the best performance this year.

Tan Jincheng is indeed a big spender, investing billions of dollars at a time, but it seems that he's spending more and more money.

"Alright, then thanks for your support, my two good brothers; I'll drink it, you can do as you please."

He Xiaopeng was also very happy today. Tan Jincheng gave him face by making a special detour to support the launch ceremony of his new car. Given Tan Jincheng's status as an internet celebrity, his participation will bring considerable exposure to Xiaopeng Auto.

Although Mr. Lei couldn't make it to the press conference due to work, he still came so late to keep the appointment, and this support is worth remembering.

"Sure, but I can't drink too much. I have things to do tomorrow, and I have to leave tonight."

"What's the matter that's so urgent? Oh, by the way, the leaders here in Zhengzhou asked me to arrange a meeting with you."

Tan Jincheng shook his head: "I really don't have time this time. You should tell them that Orange Group is about to go public, and I need to focus my energy there for the time being. In addition, I have other things to do in Hebei Province."

"I understand, I'll tell them."

(End of this chapter)