2003: Starting with Foreign Trade

Chapter 922 Preparations Under the Strange Change

Monday, August 2018, 7.

Great Wall Motors, a listed company, announced that Wang Fengying has resigned from her position as general manager of the company, but will continue to serve as a director.

Although she continues to serve as a director of the company, everyone knows that it is only a matter of time before Wang Fengying leaves Great Wall.

Wang Fengying's departure did not cause much of a stir outside of shareholders of Great Wall Motors and people in the automotive industry. Compared to Ms. Dong, this female executive, who is among the top 100 most influential women in the world, has a much more low-key personal style.

In addition, Great Wall Motors also intended to downplay the impact of Wang Fengying's departure. Apart from announcing the successor to the general manager, the announcement did not mention much about the reasons for Wang Fengying's departure.

However, this matter still caused a huge stir in the industry, with everyone speculating about Wang Fengying's next move, since she is only 48 years old this year and is far from retirement age.

The most common speculation is that these are emerging electric vehicle companies. In recent years, executives of traditional car companies have been poached by these emerging companies. Whether they are leading companies or unknown brands, they are all spending a lot of money to poach executives from traditional car companies.

Rumors have circulated about emerging leading companies like Weixiaowen, and these companies are naturally eager to capitalize on this opportunity to promote themselves and at least gain some attention.

Some media outlets even wanted to interview Zhang Li, the general manager of the manufacturing department of Weilai, hoping to find out Wang Fengying's whereabouts from him. However, Zhang Li refused to be interviewed by any media, and Weilai also issued a gag order on this matter.

To be honest, very few media outlets have linked Wang Fengying with Weilai. Although Wang Fengying's husband works at Weilai, Weilai Group, which is full of talented people and offers excellent benefits, is the company with the fewest employees poached by emerging forces.

What emerging forces can offer, Weilai can offer as well. Given that the benefits are not lacking, the platform is obviously more important.

In addition, Tan Jincheng rarely appears in the same frame as Wang Fengying in public. On the few occasions they do appear together, it is either Wang Fengying representing Great Wall at industry or Weilai events, or Tan Jincheng representing Weilai at Great Wall events.

Moreover, in these scenes where people are in the same frame, there is almost always a third person present.

However, some media outlets have speculated about the possibility of Wang Fengying joining Weilai. A relatively unknown self-media blogger, who is clearly very knowledgeable about Weilai and Tan Jincheng, speculated on the feasibility of Wang Fengying joining Weilai.

Firstly, there are family reasons. Because they work for different companies, Wang Fengying and Zhang Li live apart for a long time. However, Wang Fengying would visit her husband in Ningbo from time to time, and she even spent the Spring Festival in Ningbo once.

Although they rarely appeared together in public, it didn't mean that Tan Jincheng didn't have the opportunity to contact Wang Fengying. Considering that this was someone who dared to have his subordinates hand out business cards at Tencent headquarters back then, how could he possibly give up such a person?

In addition, considering the current staffing and business operations of Weilai, Wang Fengying is also very suitable for the Weilai system.

Rumors are circulating that Wei Lai intends to spin off the Yuechi brand. Considering the performance of the Yuechi series after the first quarter, this rumor does not seem to be unfounded. If it does spin off, Yuechi will need a strong leader.

Wang Fengying, who hails from Great Wall Motors and single-handedly created the Haval series, is clearly the most suitable candidate.

In addition, there is Zhang Yong, the current CEO of Weilai Group. As a tech-savvy individual with a background in Foton Motor, Zhang Yong's strengths lie in technology and the B2B market, while his sales capabilities in the end-user market are somewhat weak.

Previously, Zhang Yong was mainly responsible for the group's operations and B-end market development, while the sales in the terminal market were mostly promoted and decided by President Tan Jincheng.

Tan Jincheng is the highest leader of Weilai, and also like Weilai's sales manager. Wang Fengying's arrival can effectively free up Tan Jincheng's energy, allowing him to focus more on the overall situation of Weilai.

This would also make up for Zhang Yong's shortcomings, and the low-key Wang Fengying would not cause much power struggle in Weilai, which would also boost the brand influence of the Yuechi series.

Sales of the Yuechi series declined sharply in the first quarter. Although significant discounts were offered on older models starting in the second quarter, which boosted sales to some extent, the sales volume of the Yuechi series from January to June was still significantly different from that of last year.

Clearly, this brand has entered the most critical moment of its life cycle.

No car model can stay at its peak forever, but it is crucial to know how to smoothly transition back to the top and continue to maintain the brand's vitality.

"Boss, did you really succeed in the negotiation?"

Zhang Yong rushed to Tan Jincheng's office with a look of surprise. Compared to the various rumors about Wang Fengying's whereabouts, he was probably the one who knew the inside story best, except for Zhang Li and a few other high-ranking officials from Weilai. This matter was handled with great secrecy.

He had read the analysis from that small self-media outlet, and it made a lot of sense, but it was only from Wei Lai's perspective. From the perspectives of Changcheng and Wang Fengying, Zhang Yong always felt that it would be very difficult for Wang Fengying to join Wei Lai.

This is Wang Fengying, a well-known iron lady in the automotive industry. Zhang Yong seems less senior in comparison. Although Wang Fengying may not be as important to Great Wall Motors during this period of change, and the company's senior management needs to be reshuffled, Great Wall Motors would not easily let Wang Fengying leave.

Since joining Great Wall Motors in 1991, Wang Fengying has served the company for 27 years. This well-known female executive in the automotive industry has long been successful, and joining Great Wall Motors is obviously more difficult than competing with emerging brands.

Surprisingly, the boss actually managed to negotiate the deal. It's just unknown what conditions the boss offered to get this tough woman to join.

"Keep it low-key, there's no need to make a fuss, and of course, don't reveal it to the outside world. Actually, this matter isn't as difficult as you think."

Zhang Yong's excited appearance amused Tan Jincheng; of course, he was also very satisfied with Zhang Yong's attitude.

Tan Jincheng will definitely give his full support to Wang Fengying's arrival. To a certain extent, it can be seen as a way to share Zhang Yong's power and influence in the company. As a professional in the automotive industry, there is no need to argue about who is more famous, Zhang Yong or Wang Fengying.

Of course, this doesn't mean Zhang Yong is incompetent. This CEO, who comes from a technical background, still has a strong influence in the commercial vehicle and B-end market. The transformation of Huanghai Bus was led by Zhang Yong.

Riding the wave of a good era, Huanghai Bus achieved remarkable results during Zhang Yong's electrification transformation process. In addition, the entire Aion brand is also under the responsibility of this CEO.

Under Zhang Yong's leadership, the Aion series, primarily targeting the ride-hailing market, has been going toe-to-toe with BYD, and has gradually earned the title of "King of Ride-Hailing." Although this title may not sound very appealing, Tan Jincheng doesn't care at all.

In addition, as CEO, Zhang Yong is also responsible for the operation of the entire group, coordinating with branches and major brands, and so on. For example, the car rental company that other companies set up themselves is also under Zhang Yong's purview.

With so many jobs, if we were to say who is the busiest person in the Weilai Group, it would definitely not be President Tan Jincheng, but CEO Zhang Yong. At the same time, with so many businesses under his belt, his power is also immense.

"Haha, then boss, can you tell me how you managed to invite Mr. Wang? I asked Mr. Zhang, and he said he didn't know either. He only knew that after you had a private conversation with Mr. Wang, he agreed to come."

Zhang Li either genuinely didn't know or was unwilling to say. Zhang Yong didn't care. He was as low-key as his wife. Although he was occasionally brought into the public eye by his boss, he still seemed somewhat uncomfortable when facing the media.

These are all manifestations of their traditional automotive background. At first, Zhang Yong was also a little unaccustomed to it, but fortunately he overcame it.

"Actually, it's nothing much. It's just that we've restructured Ms. Wang's career path. Also, Great Wall is currently facing some significant problems. Of course, her compensation will definitely be better than what she received at Great Wall."

Tan Jincheng's statement that he was not in a hurry to find a successor was enough to sway Wang Fengying. This almost certainly secured her career status until retirement. Zhang Yong and Hu Zhengnan also stayed in Weilai for this very reason.

Among traditional leading domestic brands, it can be said that WILAY's future is the clearest and most stable.

"That's really true, boss. That's a brilliant statement. But it's true that Great Wall itself has a lot of problems."

Half a year has passed, and the first half of the year's results for various car companies have been released to consumers. Leaving aside joint venture brands and large manufacturers like FAW and SAIC, there has been a clear differentiation among domestic brands.

Admittedly, the automotive market has performed poorly in the past six months, with almost all leading companies experiencing sales declines. However, this only applies to the sedan market. The SUV segment remains hot, although competition is becoming increasingly fierce.

In addition, the new energy vehicle sector is becoming increasingly popular, fueled by the dual-credit policy and high oil prices.

From January to June, the total sales of new energy vehicles in China reached 41.2 units, an increase of 111.6% year-on-year. Although there was a 17.5% month-on-month decline in June due to the implementation of the new subsidy policy, 8.4 units were still sold.

This figure still represents a 74% increase compared to the same period last year. Furthermore, the so-called month-on-month decline in sales compared to May is mainly due to changes in the subsidy policy in the A00 segment, which has made A00-class sedans less marketable.

Sales of vehicles in the A0 segment and above saw a significant increase, growing by 239% year-on-year. The biggest beneficiaries were BYD and Weilai, two new energy vehicle companies with very few A00-class sedans. Weilai, in particular, doesn't even have a single A00-class sedan, yet its sales were completely unaffected.

From January to June, Weilai New Energy Vehicles sold 8.4 vehicles, maintaining its top position in the new energy vehicle sales rankings and achieving 56% of the revised sales target of 15 vehicles in 2018.

Market expectations are that the total sales of Weilai New Energy Vehicles in 2018 may exceed 20 units. If this trend continues, the sales proportion of Weilai New Energy Vehicles is very likely to reach 20% of the total sales.

With new energy vehicles not yet fully released, the fact that a car company whose overall sales are based on gasoline vehicles can achieve such a proportion is enough to demonstrate its considerable success in the traditional vehicle sector.

And what about Great Wall Motors, which seems to be learning from Wei Lai in the field of new energy?
ORA has not yet been officially launched, so its performance is still unknown. However, despite the huge hype and the large amount of marketing expenses and resources invested by the high-end brand Weipai, its performance does not seem to be as good as expected.

Since the end of May, Wey's sales have shown a trend of starting strong but declining, with its massive advertising blitz seemingly failing to achieve the desired effect. Meanwhile, Great Wall's overall sales of less than 39 vehicles represent a 0.2% year-on-year decrease, falling far short of their expected targets for this year. Great Wall, a latecomer to the market, appears to have had a poor start in the new energy vehicle sector. It remains to be seen whether the performance of its currently popular ORA series can reverse the overall sales trend of Great Wall's new energy vehicles.

Compared to Wei Lai's transformation, Great Wall Motors, which is also undergoing a transformation, still relies heavily on pickup trucks and the Haval series for sales, which is clearly not a good sign.

In addition, Great Wall Motors has done almost nothing in the sedan market, while Weilai, which previously also did nothing in the sedan market, has performed much better. The ET5 has now successfully squeezed into the top 20 in B-class sedan sales with an average monthly delivery volume of more than 2000 units.

This is only the second full month since the ET5 was delivered, and with production ramping up, this B-segment sedan still has great potential.

This alone makes Geely more promising than Great Wall Motors, a fact clearly demonstrated in both sales volume and market value. In the first half of the year, Geely surged ahead among domestic brands, reaching fourth place in sales.

Meanwhile, Weilai officially surpassed its competitors, leading Great Wall Motors by one position with sales of 42.27 units compared to Great Wall's 38.95 units, ranking eighth.

In terms of market capitalization, the two companies are not comparable. By the end of June 2018, Great Wall's market capitalization was close to 850 billion yuan. It had been declining for four consecutive months since March, with an overall drop of more than 23%. The performance in July was not much better.

And what about Weilai? Although Weilai also experienced a period of decline, its current market value fluctuates between 2800 billion and 2900 billion yuan, which is 2000 billion yuan more than Great Wall Motors. It is currently the second largest car company in China by market value, and also one of the top ten car companies in the world by market value.

While the reasons for this include the power battery business and the later listing, it is undeniable that Weilai, which is becoming increasingly balanced in its fuel vehicle and new energy vehicle businesses, is clearly more imaginative than Great Wall.

Capital markets may be affected by various external factors that cause stock prices to fall. For example, in June and July, the stock market was affected by the fact that the old man tore up the previous negotiation results in a single month and announced a list of additional tariffs, which led to a substantial confrontation phase and a sharp drop in the stock market.

However, within the same industry, the performance of major car manufacturers can reflect the strategies and thinking of the companies.

The first round of additional tariffs naturally includes both complete vehicles and auto parts. Everyone has to pay the 25% tariff on auto parts, but the 27.5% tariff on complete vehicles has almost no impact on Weilai.

Weilai has not opened up the North American market at all. Its cooperation with Tesla in the North American market is mainly based on technology and capital investment. In the United States, industries are mainly focused on easy monetization.

To paraphrase Tan Jincheng's private quip, if something seems amiss, they should grab a bucket and run away at any moment.

However, this round of additional tariffs is a significant blow to both Tesla and WTI. Batteries are also classified as automotive parts, and the tariffs have increased by 25%, causing headaches for both Tesla and WTI.

Tesla's batteries mainly rely on Chinese companies, and Tesla is currently the largest customer of the Weilai Power Battery project. On the day the list was announced, the stock prices of both companies plummeted.

The old man's flip-flopping was something no one expected. The two sides had been talking a good time in April and May, but then he suddenly changed his tune.

Although Tan Jincheng knew this would be the outcome, it was of no use. This was not something he, as a business owner, could decide. Even if he spoke out, no one would care, or perhaps the higher-ups were not unprepared.

"The second half of the year will be tough. We need to develop more markets outside of North America. Also, the battery factory in Europe needs to start construction as soon as possible. If necessary, we can bring in people from China to help with the work."

If the batteries supplied to Tesla were from European factories, that would be somewhat better; it's currently the only thing Weilai can do.

As for models exported to Europe, there hasn't been a significant impact yet, since the export business is still in its initial stages. Additionally, the Southeast Asian market hasn't been greatly affected due to Proton's situation.

"Yes, Yuechi's independence needs to be accelerated. Domestic competition is becoming increasingly fierce, and we need to find ways to open up more overseas markets."

"Okay, please inform Mr. Yu and ask him to come back to China. We can discuss it together, and if necessary, we can also explore the African market."

The Yuechi A1, a durable and affordable model, should have a certain market in Africa. In addition, it's not a good idea to keep offering discounts and promotions on older models in China, as this would seriously affect the company's overall revenue and profits.

Why not try selling it in Africa? After all, for users in most African countries, they don't care about old or new models, as long as it's cheap and works well.

"Okay, then I'll inform Mr. Yu."

The overseas market business is mainly managed by Yu Liguo, but progress has been relatively slow in recent years. Although exports are quite profitable, they are still not as profitable as the much larger domestic market.

In terms of overall operational strategy, Weilai still focuses on consolidating the domestic market, especially in the field of new energy vehicles. This is also why Tan Jincheng prioritized the delivery of ET5 to domestic users.

In addition, the uncertainty of the current situation and the instability of social sentiment have made Tan Jincheng's business strategy more cautious.

Just like the primary task of stock trading is to preserve capital, Tan Jincheng has certain advantages and knows the specific trends. However, his business in his previous life was not very large. Now that his business has reached this level, every move he makes may have a great impact.

His seemingly unusual actions, including but not limited to hoarding chips, are all out of caution. On a smaller scale, one of his decisions could very likely affect the rest of his life and that of his family; on a larger scale, it could affect the survival of hundreds of thousands of people, so he has no choice but to handle them with care.

Fortunately, the impact on his career is relatively small at present, which is due to the various arrangements made before.

The first wave of attacks by the old man mainly targets our Made in China 2025 related industries, such as aerospace equipment, information and communication technology including semiconductors and chips, auto parts industry, industrial machinery, and so on.

The industries directly related to Weilai include information and communication technology, automotive parts technology, and industrial machinery, as well as the import of raw materials, including lithium battery materials.

Before the official start, he had made preparations in these industries. The effect of stockpiling chips has already been shown. In addition, there is the Meishan car factory, which even the tech visionary Musk praised.

Over the past few years, Tan Jincheng has used the renovation of the Meishan Automobile Factory as a pretext to bring back a lot of advanced foreign industrial machinery and equipment. The renovation of the Meishan Factory can be traced back to 2014.

Anyway, we bought a little bit every year. Those were the years of globalization, and there weren't many restrictions on equipment or anything like that.

As for raw materials, he started planning even earlier. As he matured, he made his plans in this area more discreetly. He made all the necessary and unnecessary preparations, and all that was left was to execute them.

The overall environment cannot be changed, and it is not just Tesla that is affected. American car companies are also severely affected. Tesla's stock price, which had finally stabilized, has started to fall again, even though their production capacity for the Model 3 has improved a lot, it cannot stop the decline.

Unfortunately, the 25% tariff increase not only affects Tesla's costs but also significantly restricts their sales in China. It's worth noting that in 2017, even for imported products, the overall sales volume in China accounted for 15% of the total.

The Chinese market is extremely important to Tesla.

In a rush, Factory Director Ma made another emergency flight in early July and signed a lightning-fast agreement with the Shanghai Municipal Government on the 10th, officially bringing the Shanghai factory project to fruition. Like the Shanghai battery factory, Tesla's Gigafactory is also located in the Lingang Industrial Park.

The two families officially became neighbors.

In truth, Factory Director Ma, who was extremely dependent on the Chinese industrial chain, was more anxious than Tan Jincheng. The old man's move had really ruined him.

According to the plan, Tesla will win the bid for approximately 86 square meters of industrial land in Lingang for 9.73 million yuan, and will build a car assembly plant with an annual production capacity of approximately 50 vehicles for Tesla.

This is also Tesla's first overseas factory, which is of great significance.

“Let’s take it one step at a time. Let’s finalize the matter of making the Yuechi brand independent first, and then organize an extraordinary shareholders’ meeting.”

"Then who is responsible?"

"I'll take on this role temporarily, and hand it over to Ms. Wang once she officially takes office."

As agreed with Wang Fengying, she will officially join Weilai in January 2019, taking on several positions including Weilai CEO and General Manager of Yuechi Automobile Co., Ltd., reporting directly to Chairman Tan Jincheng.

In terms of compensation, Tan Jincheng was very generous. Considering that Wang Fengying's annual salary at Great Wall exceeded 500 million yuan, Wei Lai offered her an annual salary that was 60% higher, reaching between 800 million and 1000 million yuan (including basic salary, performance bonuses, etc.).
In addition, according to the industry practice of new forces poaching talents, they usually grant restricted stock options of millions of shares, which are generally unlocked in stages over four to five years.

Given the importance of Wang Fengying's profession, she could receive 300 million to 500 million stock options. Based on the potential incentive of up to 500 million and the current stock price, Wang Fengying could receive up to 6.5 million yuan in equity incentives in addition to her annual salary of tens of millions.

His treatment was second only to Zhang Yong, Yu Liguo, and Hu Zhengnan.

Despite being on par with Ms. Dong, she was far "poorer" in terms of wealth. Such generous treatment was one of the reasons why Wang Fengying was tempted.

To add to that, Tan Jincheng himself also receives an annual salary in Weilai, which is neither high nor low, exactly the same as the boatman's annual salary of 567 million yuan.

He has no need to play the trick of paying Dong Ge's one-yuan annual salary. Not only at Weilai, but he also receives a salary at two other listed companies.

(End of this chapter)