2003: Starting with Foreign Trade

Chapter 911 A €40 billion deal

The top live streaming companies, according to current regulations, are not really that regulated, and Orange Live is no exception.

In the absence of perfect laws and regulations, some irregularities are unavoidable, such as female anchors engaging in borderline activities or having unclear relationships with executives. These are things that cannot be controlled.

There were two bottom lines he repeatedly told He Jia not to cross: illegal activities and tax evasion. These two points were absolutely forbidden, otherwise he would exercise his rights as the controlling shareholder.

As for whether He Jia has any ambiguous relationships with any female anchor or multiple female anchors, they are all adults, and he simply can't be bothered to care. Besides, He Jia is currently single, so this matter can only be condemned from a moral standpoint.

According to the latest data, Orange Live now has nearly 600 million registered streamers and more than 5000 exclusive contracted streamers, including eight top ten streamers, with a wider and more evenly distributed coverage from top to mid-tier streamers.

Compared to other platforms like Huya that poach streamers with huge sums of money, Chengzi has a stronger incubation ability. The current top male and female streamers were all cultivated by Chengzi from the very beginning. In terms of star-making ability, Chengzi is the strongest.

In terms of revenue, Orange Live also improved. In 2016, Orange Live's annual revenue was 7.87 million yuan, and in 2017, the revenue soared to 18.86 billion yuan, with a growth rate of 100%.

However, the only commendable thing about Orange Live is that it does not belong to any of the BAT companies. The ultimate fate of many internet companies is to work for BAT, and the live streaming industry is almost entirely dominated by Tencent. Orange Live is an exception.

After giving a few more instructions, Tan Jincheng returned to the Flashpoint Building, as he had many people to meet that afternoon.

The first person I need to meet is BMW CEO Krüger, who is visiting our country again.

"Hai, Tan, it's been a long time. I wish you a happy Chinese New Year in advance."

Upon meeting, Kluge gave Tan Jincheng a big hug. It was clear that this serious German was in a very good mood; he had come all the way from Zhangjiagang.

Tan Jincheng was still a little unaccustomed to the Germans' enthusiasm.

"Hi Kruger, Happy New Year to you too, and welcome to my city."

"I am very satisfied with the progress of the project of Yuchi Power. I am very grateful to Tan for his attention to this project. Oh, by the way, congratulations on your sales exceeding one million."

"Thank you; come, please sit down and try our magical tea from the East."

At the end of last month, Jinsheng Technology received a letter of intent from BMW to purchase batteries. Based on the sales volume of relevant models, the corresponding battery demand is approximately 40 billion euros. BMW's intention is to have Jinsheng Technology establish a battery production base in Germany for local supply.

This aligns with Tan Jincheng's strategy for the globalization of power batteries. He had no objection to BMW's request and expressed his willingness to cooperate.

He originally planned to fly to Germany after the Two Sessions in March, but he didn't expect Kluge to come.

"At the current pace of construction, the first BMW MINI we're working on will be rolling off the production line soon."

"Yes, I'm also really looking forward to the first domestically produced all-electric MINI Cooper rolling off the production line. I'll definitely collect one when it comes out."

Since the groundbreaking ceremony on July 1, the Yuchi factory has officially broken ground. The project is progressing smoothly, and the first all-electric MINI Cooper is expected to roll off the production line in December 2018.

In addition, MINI's first all-electric model will also be launched at major auto shows this year. The two companies operate through different channels. BMW is mainly responsible for overseas operations, while Weilai is responsible for marketing and promotion in China.

From the moment the groundbreaking ceremony was held, the management team of Weichi, led by Zhang Hailiang and Qin Zhi, began to reshape the image of this model and the MINI brand. The first thing to do was to break the stereotype of small three-wheeled cars.

This is difficult, but it's something we have to do.

Just like how Maserati's business declined after it partnered with WeChat sellers, it's difficult to boost sales without breaking this preconceived notion.

"Tan, your marketing plan is quite bold."

Krueger had several important matters to attend to during his visit to China. One was to inspect the progress of the Yuchi factory, and the other was to discuss the European battery factory with Tan Jincheng. The order, worth about 40 billion euros, was a very large order, and it was worth his personal involvement as CEO.

In addition, I discussed with Tan Jincheng the marketing strategies for the domestic MINI brand. I learned from Zhang Hailiang, Qin Zhi, and the senior executives sent by BMW that a large part of the MINI brand image reshaping came from Tan Jincheng.

Tan Jincheng smiled and said, "That's quite bold, but how will we know if we don't try? Besides, who says the MINI brand can only be targeted at female users?"

"Actually, you should know that the Cooper is not that popular among female users, or rather, not as popular as other brands. Also, no one has ever said that small cars are necessarily suitable for female users."

MINI has a certain racing DNA, and its traditional gasoline-powered models are not really suitable for female users in terms of handling or other aspects. On the contrary, some male users prefer this car.

In addition, from the perspective of consumer psychology, the vast majority of female users still prefer large cars, which gives them a certain sense of security. The main reasons for choosing small and medium-sized cars are: "cheap, good-looking, and easy to park".

However, MINI doesn't have an advantage in any of these three aspects. Instead of focusing on the female market, it would be better to rebuild its brand influence.

Another point is, who says MINI can only make small cars? It's just that the brand name is MINI, it doesn't mean it can't produce larger models. Just stretch and widen the Cooper, and follow Volkswagen's approach, and you'll have a completely different MINI, right?
"Have you noticed Great Wall's newly released ORA? This car is definitely going to dominate the female market."

During his last trip to Hebei Province, Tan Jincheng visited the production line of Great Wall's ORA brand. ORA is a brand recently launched by Great Wall. While Wey takes a high-end route, ORA focuses on the low-end market, and its first ORA model is aimed at the female market.

Photos of the new car have been released, and it's safe to say that it looks very good. However, the Cooper doesn't have any advantage in terms of either appearance or price. After the new car from Great Wall Motors is released, its price will definitely be below 10 yuan, which alone will attract many female users.

"I have noticed that the design of this model is indeed able to stimulate the purchasing desire of female users."

Kruger nodded, then smiled and said, "I've seen your marketing plans, including your ideas for future models. To be honest, they're very bold. They're almost completely overturning the image of MINI in the minds of your country's users, but they're also very risky."

"Yes, it is indeed very dangerous. If the marketing plan fails, we may lose our current user base."

Tan Jincheng's marketing plan consists of five parts. The first is brand reshaping, which focuses on creating the impression that MINI is not a brand for female users by showcasing a diversified user image.

The second point is the product positioning survey, which emphasizes performance and practicality, high performance and safety endorsement, price and policy optimization. The current guide price of MINI Cooper is in the range of 18 to 36 yuan.

Tan Jincheng's plan is to use a series of marketing and cost control measures to eventually bring down the price of the electric version of the Cooper, keeping the overall price below 20 yuan.

A MINI priced at over 30 yuan is definitely not cost-effective, but a MINI priced under 20 yuan is a different story. In addition, there are policies such as "trade-in" to attract existing gasoline car users to switch to electric vehicles.

The third point is the online and offline marketing methods. Offline, we promote test drives more, and online, we operate communities to create a MINI lifestyle circle, just like Cadillac owners have the title of "King of Bathhouses" and Maserati owners are micro-business owners.

Secondly, through public relations and reputation management, targeted advertising, and other means, we will do our best to remove MINI from the negative image of a small three-wheeled car.

These are the main marketing guidelines that Tan Jincheng has given so far. As for how to implement them, that's up to the management of Weichi.

"Another issue is the price, which will also offend most of the existing car owners."

"That's right, so what do you mean?"

Kruger smiled. "It's risky, but I admire it, so I support your decision. It's worth a try."

Before becoming CEO of BMW, Kruger was in charge of the MINI brand. He used the MINI brand to enter the new energy vehicle market and strongly promoted cooperation with Chinese automakers. To be honest, he is not entirely satisfied with MINI's sales in China.

With annual sales of 20,000 to 30,000 vehicles, it's incomparable to the sales of the other two companies' sub-brands or models priced under 400,000 yuan. Tan Jincheng's approach was risky, but it was exactly what he wanted.

If successful, sales in China will increase to at least 50,000 units, and it's even possible to launch a brand new, larger MINI model.

Yes, there's no rule saying that MINI can only produce small cars.

"Then there shouldn't be any problem. As for building a battery factory in Germany, we've had that plan for a long time. BMW's order has given us the motivation, so there's absolutely no issue with that."

That said, according to the 2017 ranking of the top 100 domestic auto parts companies led by Automotive News, Jinshidai, a wholly-owned subsidiary of Weilai, has entered the top ten nationwide, ranking tenth.

The traditional top three remain Weichai, Huayu, and Hainachuan. Hainachuan is a parts company under BAIC. Among the top ten, Jinshidai is the youngest auto parts company, followed by Junsheng, which ranks sixth.

Furthermore, Weilai is a major shareholder and important strategic partner of Junsheng. It is worth mentioning that Preh owns many important technology patents for BMW iDrive and Audi MMI systems.

Preh is a wholly-owned subsidiary of Junsheng, which gives it a significant advantage in patent usage. Traditional automakers all have their own parts supply chains; Hainachuan is to BAIC, BYD Electronics to BYD, and even Great Wall's established independent brands have considerable advantages in parts supply.

The fact that Jinshidai has entered the top ten of auto parts manufacturers demonstrates the progress of Weilai's strength. It is difficult to survive without its own auto parts supply chain. Now that Weilai has its own auto parts supply chain, it no longer has to worry about being held back when cooperating with other manufacturers.

Other OEMs operate in the same way. For example, Great Wall Motors purchases power batteries from Weilai, while Weilai purchases other components from Great Wall Motors. This interdependent cooperation model minimizes the possibility of any one company having too much bargaining power during the cooperation process.

Take the mobile phone industry as an example. Back then, once our mobile phone manufacturers gained momentum, they were easily held back by Samsung, especially in the areas of processors and screens. However, these situations gradually disappeared after Qualcomm, MediaTek, and BOE grew up.

The automotive industry is much better in this respect. No single car company dares to claim a monopoly, and there are more choices available, which is relatively better.

Unlike the traditional top three, Joyson, Jinxin, and Top, as well as other component suppliers, are all pursuing the new energy route. After completing the integration of Takata's business, Joyson has become the world's second largest safety product manufacturer.

In addition, several other important component partners of Beicang, such as Top and Xushen, are also in the field of new energy components. These manufacturers are also partners of Tesla.

Tesla has a strong ability to integrate its supply chain. Tan Jincheng also played a trick. He would cooperate with Tesla's important partners. If they were suitable, he would incorporate them into Weilai's supply chain system. If they were not suitable, he would find a way to cultivate them or start his own business.

After years of hard work, Weilai's auto parts business has become a partner for various companies, including well-known enterprises such as BMW, Tesla, and Geely.

"OK, it's settled then. As for the battery supply contract, Tan, let's find a time to renegotiate it."

Just before the Lunar New Year, the company renewed its battery supply contract with Tesla, and now BMW has placed another large order. This is another good start for Jinshidai, but it will also require increased investment as a new factory construction plan is underway, this time overseas.

According to data from CATARC, the production and sales of new energy vehicles increased throughout 2017, which drove the installation of core component power batteries (single cells) to continue to reach new highs. The total installed capacity of power batteries for the year was approximately 36.24 GWh, an increase of approximately 29.4% compared to 28 GWh in 2016.

The top ten power battery companies in terms of total installed capacity accounted for approximately 26.22 GWh, or 72.3% of the total. Among them, Jinsheng New Era's installed capacity of 10.4 GWh accounted for about 30% of the total, followed by BYD, which accounted for about 15%.

Currently, lithium iron phosphate is still the mainstream in power battery shipments. In Jinxin's shipments, lithium iron phosphate accounts for more than 55%, while in companies such as BYD and Guoxuan High-Tech, the proportion of lithium iron phosphate exceeds 80%.

All companies are accelerating their research and development of ternary lithium batteries. Their advantage in energy density has led to a rapid increase in their market share. However, these batteries are relatively expensive, and currently, companies including Woolly, Tesla, and BYD only use them in high-end models.

BMW's procurement this time also mainly consists of lithium iron phosphate batteries.

"OK, no problem. It depends on your schedule. If you have time, you can attend our supply chain conference, and then we can sign a formal contract."

"Of course, if you are busy, I can fly to Germany after our traditional Spring Festival holiday."

"There's no need for that. I'll be staying in your country for a week, which is plenty of time."

BMW's largest partner in China is still BMW Brilliance. With the opening up to foreign investment, coupled with some problems of Brilliance itself in recent years, the German headquarters has also had some new ideas about the equity of BMW Brilliance for commercial reasons.

In addition, this time they cooperated with Weilai, and Brilliance Auto was not to be outdone. Its parent company approached Renault and completed a cooperation with Renault, mainly between Renault and Jinbei Automotive.

The two sides have encountered some disagreements for the first time regarding their cooperation, or rather, it's not so much a disagreement as both sides want to gain a larger share of the new energy vehicle sector. Kruger will also visit Liaoning Province during his trip to China, which can be seen as a way to explore the equity issue.

"Okay, then there's no problem; by the way, you're welcome to join our company's annual meeting tonight and experience our local culture and customs."

"Definitely, I've wanted to try it for a long time."

Kruger readily agreed. After a few hours of rest, he arrived as scheduled at 7 p.m. Accompanying him were the leaders that Tan Jincheng had met that morning. Since the BMW CEO had come to Beicang, he was naturally treated with high protocol.

"Isn't this the annual meeting of Weilai Motors?"

Kruger was clearly not quite sure what was going on. The entrance display area of ​​the Sports and Arts Center not only featured the automotive products of Weilai Group, but also the flagship products of Flash Group, as well as the mascots of Orange Group and the image of King of Glory, the company with the largest cash flow.

According to authoritative data, in 2017, driven by major tournaments and live streaming, Honor of Kings achieved rapid revenue growth, with global revenue (Android, Apple, and third-party platforms including Xiaomi, Huawei, and OPPO/Vivo) reaching approximately US$16 billion, or about RMB 105 billion.

With peak daily revenue reaching 2 million yuan, and a single Zhao Yun skin generating 1.5 million yuan in revenue in a single day, the company boasts over 2 million registered users and 8000 million daily active users. All these figures demonstrate the immense popularity of this cash cow.

According to estimates from third-party organizations, this single game could bring Orange Group over 40 billion yuan in net profit. Based on Orange Group's financial reports for the first three quarters, the net profit from this one game alone exceeded that of Orange's previous core business, Orange Products Club.

Last year, Orange Technology, whose main business was vertical e-commerce, showed concerns about growth. Orange Technology, which previously positioned itself as "small but beautiful", is obviously facing great pressure from intensified market competition and rising costs.

Although profits have been maintained through high user stickiness, paid membership systems, and cost control, concerns about a slowdown in growth have already emerged.

The capital market is profit-driven. A company making money is not enough for them. When your growth fails to meet their expectations, they will short your stock, which is one of the most troublesome things for listed companies.

In order to maintain high growth and cater to the capital market and keep the stock price rising, many companies will even manipulate their finances. For example, a certain coffee company used sophisticated financial tricks to rip off Wall Street elites.

Orange Technology's stock price didn't rise much when it was listed on the US stock market, largely because Tan Jinhe was unwilling to cater to the capital market for the sake of growth. For example, Orange Technology has never been willing to get involved in the most profitable online lending business. Among all the well-known internet companies, Orange Technology is the only one that is so unique.

But now things are different. Pinduoduo has arrived, and this company doesn't have one. However, this is because they don't have a payment license yet. As for whether they will have one in the future, we don't know. But Tan Jincheng does know that Pinduoduo is not engaged in online lending business, and there seems to be no sign of cooperation with online lending platforms.

As for his pay-later payment system, it's more like a credit card system, with limited credit limits for ordinary users, ranging from a few hundred to a few thousand yuan.

Compared to the other two e-commerce giants, although Huang Zheng also offers some financial services, he has been quite restrained in this regard, at least not like Jack Ma who has turned finance into a giant.

No matter how they package it, what Lao Ma and Dongzi's company does is still online lending, with extremely high interest rates. Even Lei Jun and Xiao Ma can't resist this temptation, and they also have their own online lending platforms.

Orange's unique approach has inadvertently grasped the psychology of ordinary people. Other companies offer loans, but Orange doesn't. Its products aren't expensive compared to others, so how should one choose?
However, compared to these intangible positive feelings, the average annualized interest rate of over 20% and the market's still-growing nature made Orange's shareholders extremely envious. After all, Orange has its own payment license, and in the shareholders' view, not doing this business is worse than killing them.

Over the years, Tan Jincheng has withstood considerable pressure on this alone.

At one shareholders' meeting, Tan Jincheng got fed up with the numerous accusations from shareholders of all sizes and declared that if they brought it up again, he would sell his shares and just let it go.

If most people keep bringing this up, he might as well just privatize the oranges and stop everyone from playing with them.

After that shareholders' meeting, Orange Technology's stock price fell for a week. However, all of this was alleviated with the merger of TiMi Studio. The shareholders did not care whether the transformation to artificial intelligence was successful or not, but the merger of a huge cash cow gave the company a second major growth point, and those who remained were overjoyed.

The fourth quarter financial report has not yet been finalized, but Tan Jincheng knows the general data. After listening to Lu Qi's report, Tan Jincheng smiled happily and arrogantly.

"Haha, at this year's shareholders' meeting, I can give those short-sighted guys a piece of my mind. If I wanted to make money, would I need to lend money?"

Seeing Kruger's confusion, the leader took the initiative to explain: "This is the joint annual meeting of the four companies under President Tan in Ningbo. These are all products from these companies."

Meizu did not participate in this year's annual meeting for two reasons: firstly, it was inconvenient for Meizu to come from Zhuhai, and secondly, Meizu, which had only been merged with the company for a year, still felt a sense of coercion towards Tan Jincheng.

Rather than forcing them to eat at the same table, it's better to let them do their own thing. However, Tan Jincheng didn't show favoritism; Meizu products were also available in the exhibition area at the entrance.

"Oh, really? I know Tan has a wide range of businesses, but is this product also part of his business?"

Kruger pointed to a low-speed electric vehicle that looked like a miniature ES8, his eyes filled with curiosity. This kind of thing was not common in Europe, but he had heard of it. Low-speed electric vehicles often used lead-acid batteries.

"Yes, this was produced by Leichi New Energy Vehicle Company, which is under Mr. Tan's control."

The leaders were somewhat embarrassed and didn't know how to explain it. To use a trendy term, this thing was rather low-end. Many of them hadn't obtained production licenses from the Ministry of Industry and Information Technology, which meant they were illegally operating on the road. However, local governments turned a blind eye for their own interests.

Moreover, Leichi's shares also include Beicang City Investment. Tan Jincheng has consistently paid dividends every year, and the amount has been increasing. In 2017, they were able to receive at least 3000 million yuan in dividends.

They're so comfortable making this money that they all want to buy the 10% stake held by Zhongtai, not to mention the significant tax revenue and jobs it provides.

"Interesting, very interesting. I must ask Tan about it when I have time. Let's go in and watch the performance now. I can't wait."

Fortunately, Kruger didn't ask any further questions.

(End of this chapter)