2003: Starting with Foreign Trade

Chapter 909 "Stockpiling Plan"

With 2018 already here and the next few years ahead, how should Tan Jincheng cope? This is his biggest headache right now.

Only when you're in the thick of it do you realize how difficult it is. In the context of a globalized market, complete isolation is virtually impossible, and domestic products cannot provide a complete substitute.

Take the most famous lithography machine as an example. At the beginning of last year, Horizon Robotics ordered a 14nm machine from ASML, which cost as much as 1.5 million US dollars. But this is only one part of the domestic chip industry.

Having a lithography machine does not mean that we can produce domestically made chips.

Currently, WILAY is following the same path as Tesla in intelligent driving. In terms of high-end intelligent driving, it uses NVIDIA's solution, Drive PX2, which is a computing platform designed specifically for autonomous driving.

In terms of chip architecture, the CPU uses an NVIDIA Tegra processor, which is responsible for general computing tasks, while the GPU is a standalone GPU based on the NVIDIA Pascal architecture, used for computer vision and neural network inference.

There are other acceleration units and the like, all of which require purchasing components from abroad. Although Weilai is also pursuing self-developed technology like Tesla, it is only in its initial stage at present.

Journey 1 performed well, but due to its limited computing power, it can only be applied to low-end fields.

The current plan is to develop an independent chip based on a 14nm process, using a dual-core neural network accelerator to increase computing power to 144 TOPS. The order for lithography machines is also for this research and development.

The problem is that 14nm is just a starting point, not the end point. It is considered relatively advanced at present, but what about a few years from now? Technology is iterative, and even if you want to stockpile components from a few years from now, you can't do it now.

"Boss, why are you so pessimistic about this trade friction?"

In November, the old man from across the Pacific made a state visit to us. During his three-day trip, he posted nine tweets, the most since he took office, and his attitude was friendly, as can be seen from the current trend of A-shares.

In December, the A-share market emerged from the 2015 stock market crash and reached a high of 3450 points. The Shanghai Composite Index rose by 6.56% throughout 2017, and the market performance after New Year's Day was also quite good.

In summary, the old man's actions after taking office, though somewhat abstract, can be summarized in a few key points after a year in office: "withdrawing from international organizations, repealing the policies of his predecessor, taking action against Russia, and tweeting."

Although there have been some frictions with us, the overall situation is still within a controllable range.

Zhao Xinyi, a long-time employee who joined FlashCheer and is now with Weilai, has experienced multiple trade frictions, including those in the apparel, 3C products, and two-wheeled electric vehicles categories, but in the end, they all came back to the negotiating table to be resolved.

During this time, she didn't notice that her boss seemed so worried.

Throughout Tan Jincheng's entire business empire, clothing, two-wheeled vehicles, electric vehicles for the elderly, automobiles, and now Meizu's mobile phone business, all are closely related to import and export trade, including Orange.

Orange Products has an overseas site, and games developed by TiMi Studio are also released and sold in North America and Europe.

The entire consumer sector, except for food, has export business. When these figures are added together, they are even higher than those of some provinces with small import and export volumes, such as Guizhou and Gansu provinces.

"Actually, you can understand it from an economic perspective. In the past, everyone had enough to eat, and no one cared much about who ate a little more or a little less. But now that there isn't enough to eat, the situation is different."

"The current economic situation is generally downward, especially for Americans. If they can't make money, they have to think of other ways."

Faced with this complex situation, there wasn't much Tan Jincheng could actually do. He could only stockpile some components he might need in the future through various channels, such as mobile phone chips, computer chips, computing chips, automotive chips, and so on. He would try to get as much as he could.

It's okay if it becomes outdated in the future; you can just use it in lower-end cars and phones. Take the current mainstream Snapdragon 835, for example; it will still be usable in three to five years. Stocking up on this stuff won't do any major harm except for the expense.

As for the other deeper issues, those are beyond his control, but ultimately things will get better, and domestic alternatives will gradually improve.

"Okay, if that's the reason, then there's really nothing wrong with it."

Large corporations are most sensitive to changes in the economic situation. The difference lies in how the decision-makers perceive how long the changes will last, which in turn influences the corporation's decisions.

The boss's view is clearly pessimistic, and his practice of stockpiling goods seems rather bizarre.

Currently, Tan Jincheng's stockpiling plan is jointly controlled by his two secretaries, Zhao Xinyi and Zeng Jixiang. They use various subsidiaries and overseas companies to carry out the specific operations. For example, Juliang is stockpiling computing power-related products, while Weilai is stockpiling automobile-related products.

The people stockpiling on the Horizon side are more professional, and now they're adding Meizu to their portfolio, stockpiling mobile phone-related products.

In terms of certain currencies, the boss has "stockpiled" quite a lot through accounts of various sizes. In his words, although these currencies are restricted in China, they are still very convenient to trade in international trade.

It is indeed very convenient, in some ways even more convenient than using US dollars. However, it is tough on the secretarial team. Every time the boss comes up with a new idea, their workload increases.

"Let's stick to the plan. This year's focus can be shifted a bit towards Meizu."

Meizu has been given a lot of resources, but we can't just give them away and then ignore them. We have to make these resources work to their maximum potential and try to boost sales.

"Ok, I see."

Zhao Xinyi still holds the titles of Chairman and Legal Representative of Meizu. She also receives a share of Meizu's equity incentive plan. The boss values ​​Meizu, so he is naturally happy. After all, if the company goes public, she will make a fortune.

"Meizu and Weilai's offline channels are currently being integrated, and we will speed up the process later."

While most mobile phone sales occur online, offline channels are equally important. Xiaomi, which previously lacked offline channels, is now accelerating the development of its own offline channels, demonstrating that this product ultimately cannot be separated from the physical world.

After New Year's Day, some urban residents may have noticed that the Meizu experience stores have added mobile phone display areas. At the entrance of the Meizu experience stores on the first floor of some shopping malls, Meizu's new models for this year are displayed very prominently.

Behind the mobile phone display counter are the new models of the Weilai ES series and L series. Consumers can play with their mobile phones while looking at the cars, which is a great experience.

Similarly, some Meizu offline stores are also accelerating their upgrades and renovations to introduce the Weilai series of cars into the stores in the same way.

The way mobile phones and cars drive traffic to each other will be the future offline ecosystem of Meizu and Weilai. As for the original Weilai brand, it has been sold to Meizu.

After several years of trying to build the brand, he hadn't sold many phones and was losing a fortune, so Tan Jincheng gave up on it.

Furthermore, having already acquired Meizu, developing mobile phones within Weilai would be a waste of resources. Weilai will still be retained in the future, but only for peripheral products, focusing on customization.

The design and production were handled by Meizu, and the system was also synchronized with Meizu.

Going forward, the Weilai brand will no longer be sold on the open market, but will only be available to Weilai car owners. Weilai will provide options during the vehicle ordering process for car owners to choose from.

"Yes, this can definitely be done faster."

Tan Jincheng strongly agrees with this point. Both sides have excellent channels. As a perennial star in the technology circle, the popularity of mobile phones has remained high since the era of feature phones.

“From a psychological perspective, some consumers will not go into a car dealership to take a look. They will mentally prepare themselves by thinking things like, ‘I can’t afford it anyway, so there’s no point in looking.’”

“But this doesn’t happen in mobile phone stores. Even if they don’t want to buy, customers will still go in and take a look if they see something that interests them. Once the two offline channels are integrated, it will increase the exposure of our car brand.”

Meizu, which hasn't completely died out yet, doesn't have as many offline channels as OPPO, Vivo, Huawei, and Xiaomi, but they are still quite strong. Many of its stores are suitable for being transformed into experience stores for sharing mobile phones and cars, which was something that was highly valued when it was acquired.

"That's true, but in that case, the mobile phone business can't be cut off if it doesn't perform well, just like you said before, boss."

"Haha, it's just a temporary plan. Now that Meizu has stabilized, of course we hope it will get better and better."

"Okay, I'll get ready now."

"Okay, go ahead."

Just after Tan Jincheng finished making arrangements after New Year's Day, the deterioration of their relationship occurred as he had imagined, and everything seemed so sudden.

"Boss, just as you thought."

On January 9th, Huawei lost its mobile phone order from AT&T. AT&T is an American telecommunications company, similar to China Mobile or China Unicom. It had previously cooperated with Huawei to develop some contract phones.

"Hey, it's still too fast. We need to speed things up a bit more. Oh, and have Zeng pledge some of my shares."

The A-share market is still on a runaway upward trend. After a brief adjustment in December, the A-share market, which has been performing well for more than a year, has resumed its upward trend after a brief period of adjustment, thanks to the encouragement of institutional investors.

Stimulated by the sales figures released on the 5th of this month for the entire year of last year, Weilai's stock price has reached 169.89 yuan, and its market value is close to 3700 billion yuan. While continuing to break historical highs, it has also brought countless hidden dangers.

Amidst a general surge in stock prices, Weilai Co., Ltd. alone brought Tan Jincheng a net worth of nearly 1900 billion yuan, a truly astonishing increase.

If it weren't for the rapid growth of internet stocks like Tencent, Tan Jincheng would already be the undisputed richest man in China.

However, a crisis is brewing, and risks in the A-share market are accumulating rapidly.

If the conflict between the two parties fully erupts, the stock price will plummet. "Pledged shares?"

"Yes, let's pledge some of it, I'll need to get some money out of it."

Tan Jincheng didn't offer much explanation. He wouldn't reduce his holdings, but pledging wouldn't be a problem. The stock price was currently favorable, and the collateral he was pledging was very popular, allowing him to get a good price.

"Okay, boss, your ideas are always so unique. How much to pledge? I'll arrange it."

After thinking for a moment, Tan Jincheng said, "Let's bet 5% based on the amount of shares I hold."

Holding 5% of the share capital, or more than 2.5% of the total shares, is roughly equivalent to a market value of nearly 10 billion yuan. Even with a 40% discount, he could raise around 6 billion yuan, although it would be pledged and would have to be redeemed later.

However, the pledging of a market value of tens of billions of dollars serves as a reminder to those manipulating stock prices: don't go too far, or it will be no fun if things get out of control.

Although car sales figures were not released before New Year's Day, market institutions were very optimistic about WILER's overall sales in 2017. Sure enough, WILER performed well in the 2017 sales rankings of car companies released by the China Passenger Car Association on January 5.

In 17, my country's total automobile sales reached 2887.89 million vehicles, a year-on-year increase of 3.04%. Following Great Wall and Changan, two more domestic brands broke the million-vehicle sales mark. Among them, Geely had the largest growth rate this year, with sales of 120 million vehicles, a 54.8% increase compared to last year.

Another automaker, Weilai Auto, continues to perform very steadily, with its Yuechi A1 remaining the king of the SUV market.

Although the sales volume of 50.75 vehicles was a significant decline compared to the 58.07 vehicles sold last year, Weilai still maintained an overall growth rate of 5% thanks to the growth of models such as the A3 and A9, as well as its efforts in the new energy vehicle and pickup truck sectors.

In 2017, Weilai's total sales exceeded 100 million vehicles, reaching 100.25 vehicles, of which 12.11 were new energy vehicles, making it the first domestic new energy vehicle company to achieve annual sales of over 10 vehicles.

These sales figures are the envy of everyone. It's worth noting that among these 12.11 units sold, not a single one is a cheap A00-class sedan. Nearly half of the sales came from the three models with a guide price of over 30 yuan: the Weilai ES6, ES8, and L1.

After the China Passenger Car Association (CPCA) released its sales figures, professional media outlets such as Yiche, Autohome, and Pacific Auto followed up with reports on various sub-sectors. On Autohome's forum, a post imitating the tone of "Boatman Brother" and others was published on Weilai's forum.

Jealousy can make you unrecognizable.

This attention-grabbing title, coupled with detailed data, provides a thorough analysis of the current state of new energy vehicle companies. It's easy to see from the article that the author has a certain level of professionalism or is a professional in the field. His analysis is well-reasoned and supported by evidence, and he even brought up Tesla's data for comparison.

The article provides a detailed comparison between Weilai and other mainstream new energy vehicle companies on the market. In China, Weilai, a high-end brand, is currently the company with the highest gross profit in the new energy vehicle sector.

With its main focus on models priced above 30 yuan, the newly launched range-extended electric vehicle has been controversial. Some fans of the brand and pure electric vehicle enthusiasts have even criticized this model as a sign of the brand's lack of ambition.

Instead of developing electric vehicles and researching battery power to increase range, you're going to focus on range extenders.

Regardless, this car has sold really well. Since its launch at the end of March, it has sold more than 20,000 units throughout the year, which is enough to show how popular this model is in the market.

Range-extended electric vehicles alleviate driver anxiety, and the combination of features like refrigerators, TVs, and large sofas makes them even more appealing to families. In addition, the driving experience, which is comparable to that of pure electric vehicles, makes them irresistible to users who prefer a human driving experience.

According to the forecast data provided by the agency, after solving some minor problems and continuing to improve the intelligent driving level, the sales of Weilai L1 will explode in 2018, and it is very likely to become the first blockbuster new energy vehicle in China.

The so-called blockbuster is a single vehicle with annual sales of more than 10 units. This post also focuses on the Weilai L1, discussing its advantages and disadvantages. The author's views are similar to the media's predictions.

Since the 5th, this post has remained highly popular and has now gained wider attention, which has to some extent contributed to the rise of Weilai's stock price.

Wei Lai's public relations department had already noticed the article and had shown it to Tan Jincheng. Tan Jincheng's opinion was that it was created by certain institutions to boost the stock price.

Such detailed data is difficult for ordinary people to obtain. In addition, although the article seems to analyze the major manufacturers fairly and impartially, it always intentionally or unintentionally hypes up the stock price of Weilai, which makes it seem like there are ulterior motives.

The attitude towards Dizi is not so good either. Although Dizi's sales this year are less than 41 units and its overall performance is stable, it should be noted that a quarter of those 41 units were contributed by new energy vehicles.

Both companies are new energy vehicle manufacturers with annual sales exceeding 10 units, but Dizi's proportion of new energy vehicles is much higher than that of Weilai, making Dizi seem more like a pure new energy vehicle company than Weilai.

In addition, Dizi is one of only two new energy vehicle companies in the world with an annual production capacity of more than 30 vehicles. The other one is, of course, Weilai, whose strength in plug-in hybrid vehicles is the best in the country.

BYD sold over 6.6 plug-in hybrid vehicles throughout the year, making it the undisputed king. However, the Weilai L1 is currently challenging the position of the Dizi in the plug-in hybrid market. Weilai has achieved nearly one-third of the total sales of Dizi with just one vehicle.

"We can't underestimate Dizi. Although they have been performing slowly and steadily in recent years, their technological accumulation is not bad. In addition, they are following the same route as us, which is battery plus vehicle."

"If Tesla is the disruptive force that can compete with it, besides us, the company we are most optimistic about right now is Dizi. These bullshit articles that openly and covertly belittle Dizi are just because their stock performance is mediocre. If we take them seriously, we will lose."

Apart from its headquarters in Shenzhen, Dizi's factories are almost all located in cities with lower labor costs, such as Chang'an, Xiangcheng, and later Zhengzhou. Some factories are even located in small county towns like Tan Jincheng's hometown.

While solving local employment, it also brought a lot of high-quality human resources to Dizi. To put it bluntly, all these years they have just been paying back the debts of the boasts they made back then. A big overreach coupled with the reshuffling of the photovoltaic industry has almost killed the boatman.

Once he recovers, the assets left over from the period of great expansion, along with the high-quality human resources, can be quickly transformed into productivity.

In contrast, the car factories in Weilai are mainly concentrated in Ningbo, Shanghai, and Changzhou and Zhangjiagang in Jiangsu Province. Labor costs are not cheap in these places. Only Luzhou and Xiangcheng can compare with Dizi.

This can be seen from Weilai's financial statements. Whether it is labor costs or taxes, Weilai is a major taxpayer in Zhejiang Province, consistently ranking among the top 100 taxpayers in Ningbo.

On January 9, the loss of AT&T orders by Chrysanthemum Factory and the subsequent announcement of the actual controller's pledge plan did not raise much alarm in the A-share market, or rather, institutions were unwilling to make ordinary shareholders more vigilant, so how could they unload their shares?

In the media's view, this loss of orders by Huawei is just another continuation of history. As early as 2003, Cisco listed Huawei as its strongest competitor, and the two sides have been involved in numerous lawsuits.

In 2007, Huawei's attempt to acquire 3Com was blocked by the US. In 2010, its offer to acquire specific assets from 3Leaf in California was also blocked. In 2011, when bidding for Motorola's business, the other party preferred to sell to Nokia for $12 billion less than Huawei rather than sell to Huawei.

This time, under the media's hype, it was deliberately portrayed as just another targeted incident in business competition. Given the Chrysanthemum Factory's absolute strength in various domestic businesses, one order is nothing.

As for Tan Jincheng's announcement of pledging nearly 10 billion yuan worth of assets, it didn't cause much of a stir. Some media even interpreted it as Wei Lai about to do something big again.

Just like Li Nan's idea, according to past practice, the beginning of each year is a time when bosses make trouble, and the so-called high-level pledging cash-out can actually be interpreted as "good news".

"It's quite outrageous. With the advent of the era of social media, it's become very difficult to distinguish between true and false information."

Tan Jincheng was also speechless. From December 28th to January 12th, the Shanghai Composite Index had an astonishing 11-day winning streak, heading straight for the highest point in 2017. After just one trading day of adjustment, the market had another eight-day winning streak.

The index broke through the 3500-point mark without any doubt, reaching a new high since January 2016, and is heading towards 4000 points, with calls for a bull market growing louder and louder.

"It's no use. You can't stop the market. And who knows how many more people will suffer."

As Zhao Xinyi, who was in charge of handling a series of matters, read through the collected information, she became increasingly alarmed. The loss of AT&T's orders by Chrysanthemum Factory was far from simple. Moreover, their so-called stockpiling plan was becoming increasingly difficult.

It's much harder to buy advanced equipment now than it was a few years ago. Direct purchases are almost impossible; you have to go through several channels to buy it, which increases costs.

I really admire the boss's awareness of potential crises. If we hadn't prepared for more than a year in advance, we might have been in an even more passive position when the time came.

"This is called being born in hardship and dying in comfort."

Luckily I had a cheat code, otherwise who would dare to play like this? Would there be few people who know the risks? Absolutely, but no one would dare to play like Tan Jincheng.

On January 29, the Shanghai Composite Index opened higher but closed lower throughout the day. After reaching a new high of 3587.03, it fell rapidly, with a daily drop of nearly 1%. This was followed by three consecutive days of decline and correction.

After a brief two-day recovery, the Shanghai Composite Index continued its downward trend. In just ten trading days, the index plummeted by 12.04%, hitting a low of 3062.74 points. On February 9, it closed at 3129.85 points, a sharp drop of 4.05% during the day, marking a new low in eight months.

The overseas stock market also performed similarly, with all three major NYSE stock indexes falling by more than 3%, and the Dow Jones Industrial Average plummeting by 4.15%.

"How long has it been since we've seen such a large drop?"

As the saying goes, "ducks are the first to know when the river warms in spring." All risks originate from the capital market, especially the sharp drop in the US stock market, which has the most mature financial system. Wall Street elites are busy selling off risky assets, while our institutions are still calling for positive energy today.

"This year is going to be tough."

Today is the 24th day of the twelfth lunar month, which is also a Friday. The weekend is the annual meeting of Weilai Group. To celebrate the million-unit sales, Weilai's annual meeting this year is also quite large.

"Speaking of which, boss, why aren't you dancing this year? It's a bit unfair to have Mr. Zhang dance."

"Haha, I won't embarrass myself this year, I have other things to do."

For this year's annual meeting, Wei Lai invited many guests from other companies; he really did have something to do.

(End of this chapter)