2003: Starting with Foreign Trade

Chapter 926 You have your Zhang Liang's plan, I have my way of getting over the wall.

With my trip to Zhangjiagang over, the golden autumn of August has arrived.

However, this August was not a good time for companies like Tan Jincheng's that have multinational businesses, as the old man came up with new tricks again.

On August 1, another round of tariff increases was introduced across the Pacific, imposing additional tariffs on related industries totaling $200 billion, with the tax rate rising from 10% to 25%. This move triggered stock market turmoil worldwide.

The A-share market has fallen for three consecutive trading days since the beginning of the week, with the index falling by a cumulative 5%, approaching 2700 points. Looking at the monthly candlestick chart, the ChiNext index has closed down for four consecutive months since April, with a cumulative drop of 17.85%.

There's almost no doubt that August will see another large bearish candlestick on the monthly chart, because Tan Jincheng remembers that the friction between the two sides should continue until October, after which a new round of negotiations will begin.

If we can get through October, the situation will ease up a bit.

"Boss, would you like to take a look at some of our warehouses?"

Zeng Jixiang's business trips this year are no less than Zhang Yong's. Tan Jincheng has set up a so-called "cost coordination group", with several companies sending specific persons in charge, and Zeng Jixiang is in charge of managing this group.

Since the beginning of the year, they have been flying all over the world to prepare for the import of equipment, raw materials, parts and other items, which is what Boss Tan calls "stockpiling".

This stockpiling is not only aimed at imported products, but also at exported products.

Affected by bilateral relations, the RMB exchange rate against the US dollar has fallen to the 6.9 mark this month. At the beginning of the year, it was around 6.5, and even as low as 6.3 at one point. Since April, the exchange rate has fluctuated greatly, which has undoubtedly had a significant impact on business operations.

Jin Yi Industrial, in particular, which is engaged in import and export business, is greatly affected by exchange rates.

Following Zeng Jixiang was Li Yanning, the general manager of Jinyi Industrial. She was the deputy leader of this group. After Qin Junchao was transferred to Dexian Electronics as general manager, Li Yanning was responsible for assisting Tan Jincheng and Zhang Xupeng in managing Jinyi Industrial for a long time.
Li Yanning may not be particularly capable, but after years of experience in large companies, she should have no problem being the general manager of a foreign trade company.

For a long time, with no results from the investment in ByteDance's engine, Jin Yi Industrial played the role of Tan Jincheng's money bag. Jin Yi Industrial had no great ambitions and did nothing but make money.

Most importantly, Li Yanning is one of Tan Jincheng's own people, the kind he can trust.

Currently, she is the Vice President of Flash Group and the General Manager of Jinyi Industrial. With the results of ByteDance's investment in ByteDance Engine, Jinyi Industrial no longer needs to play the role of a money bag, so this position can actually be considered a semi-retirement position, which is more suitable for those who followed Tan Jincheng in the early days and whose abilities are not very strong.

Li Yanning chuckled: "Boss, are you insulting me? I've been living a leisurely life for so many years, it's time for me to do my part for you."

Tan Jincheng looked her up and down a few times, then smiled and said, "Indeed, you should lose weight. You're not much older than me."

After getting married and having children, Li Yanning gained a lot of weight. At first glance, she looks a bit like a younger version of Wang Fengying. However, the two are very different in terms of personality and ability. Perhaps it is because she suffered a lot in society when she was young. Li Yanning and her cousin have completely different personalities.

Compared to Li Jinglan, Li Yanning was much more reserved. In the early days, she was a bit prone to being overly concerned with how others perceived her, but she improved later on. Li Jinglan, on the other hand, didn't work in the electronics factory for long before her cousin introduced her to Jinpeng Trading.

She followed the company as it grew and prospered. She was quite lively and bold in front of Tan Jincheng. She even treated him like a younger sister when he was in his newfound state of mind.

In recent years, the traditional Chinese style has gradually gained popularity. Yueyue, a children's clothing brand named after Tan Jincheng, has become quite well-known in the children's clothing industry. In addition, Jinpeng Industry's Hanfu business is also doing well, with several well-known Hanfu brands under its umbrella, which are known for their design and quality in the Hanfu circle.

Li Jinglan is now the general manager of the e-commerce division of Jinpeng Industrial. Although her position is not as high as her sister's, she manages the e-commerce affairs of brands including GXG and Yueyue (children's clothing), and has great power.

Unlike her cousin who's practically retired, she's quite the fashionista, though it's all their own choice.

To sum up how comfortable Jinyi Industry has been these past few years, it's like they haven't gone bankrupt, and they've become a boss version of LeEco. They have money, connections, no KPIs, and they only care about making money. Life couldn't be more carefree.

"Haha, it's okay, it's fine as it is."

Li Yanning didn't mind her boss's teasing. She had indeed been living a comfortable life these past few years. Jinyi Industry's import and export business channels, distributors, and supplier system were all very stable, and there weren't many employees. The boss no longer had any KPIs for the company.

Although business has not been as good as it was when China first joined the WTO in recent years, the overall earning capacity is still very strong, except for this year which is a bit difficult.

"Alright, we've been raising you for a thousand days to use you for one. Now is the time to use you. Let's go, take me to the warehouse."

Several months of conflict and disputes have affected many technology companies, but not car manufacturers. Currently, the only impacts on car manufacturers are increased costs and import/export restrictions on lithium batteries.

However, Tan Jincheng had prepared for all of this. Although he was powerless to change the outcome, he had made many preparations, which could be traced back to the very beginning of the establishment of the power battery company.

From the very beginning, Tan Jincheng placed great importance on the supply of raw materials, and he intentionally avoided the United States. For example, the supply of raw materials needed for lithium batteries, including but not limited to lithium, cobalt, nickel, copper, graphite, etc., was sourced from South America, Africa, Indonesia and other places.

By cooperating with well-known domestic resource companies such as Huayou Cobalt and GEM Co., Ltd., the company owns a considerable amount of mineral resources overseas, which greatly ensures the security of its raw material supply.

Against the backdrop of geopolitical tensions, starting from the old man's predecessor, various resources were gradually acquired through channels of companies large and small, with Jinyi Industrial playing a certain role in this process, despite the low prices of these resources.

Jinyi Industrial, under the leadership of Li Yanning, does not have KPIs for making money, but it is very particular about spending money, which is to bring back some raw materials or parts it needs from overseas.

"Based on our current reserves, we have enough chips and battery raw materials for a long time. As for how much we can produce after we run out, the cost will be much higher."

"In addition, the batteries shipped to Tesla's battery factory in Nevada are enough for their 2018 production, so overall the impact on us is relatively small."

While guiding his boss, Zeng Jixiang introduced the specific details of various resources. If he still didn't understand the seemingly nonsensical operations his boss had made a few years ago, then it wasn't that he was unqualified, but that he had a problem with his intelligence.

The old man's unpredictability has tormented businesses large and small. In fact, the most unfortunate ones are not them, but Tesla and the maverick Musk. Tesla, which is extremely dependent on our supply chain, has seen its costs rise significantly.

While Weilai is not on the Entity List, Jinshidai is on the list of companies under key review. Tesla relies on Jinshidai for more than 60% of its battery supply. It can be said that before the Shanghai factory officially starts production, Tesla will face great difficulties without Jinshidai's battery supply.

Of course, Musk is no stranger to his current level of success; he was based in North America and had already asked Jinshidai to allocate more production capacity to Tesla at the beginning of the year.

Jinsheng Technology naturally didn't want to lose such an important customer. After March, the number of batteries shipped to the Nevada factory gradually increased, which not only reduced huge costs for Jinsheng Technology, but also ensured Tesla's battery supply.

Tesla's Shanghai factory is progressing very quickly. The land auction, procedures, approvals and other processes are being unlocked one by one at an extremely fast pace, but these all take time, and Musk is also very anxious.

Given the old man's nature, since he's on the review list, even if Jinshidai isn't on the entity list, its lithium batteries exported to North America will be significantly affected, and this impact might even affect Wei himself.

Tan Jincheng made it very clear that once the company was added to the Entity List, the only option would be to cut off supplies, and Wei Lai's cooperation with Tesla in North America would have to be canceled. He would not accept any unreasonable demands from the old man.

If Tesla doesn't want to find a new battery supply chain outside of China, then it can only leverage its network to try its best to negotiate.

As for just increasing taxes, that would be much easier. The two companies could share the costs, and everyone would earn less. He's not an unreasonable person, and Musk couldn't refute that argument because everything Tan Jincheng said was perfectly reasonable.

Right now, his biggest wish is for the Shanghai super factory to start production as quickly as possible. In addition, he also wants the battery factory in Germany to start production as soon as possible, which would be much better for their supply chain security.

"We have made some preparations, which is relatively better. However, this is only a temporary measure. In the future, the company's mindset needs to change, and safety should be the top priority."

"But it doesn't matter. If we can't do business with the Americans, we can do business with other people. If all else fails, we can focus on domestic demand. There are 14 billion people in the market. We only need to take a small bite of such a huge market."

Tan Jincheng is quite satisfied with the progress. Weilai's profit margin this year should be better than its peers, although there will be a significant overall decline.

"Yes, this kind of thing will happen again and again once it happens. We will have to face this situation at any time in the future."

In recent months, the biggest activity for large foreign companies has been stockpiling inventory. This isn't just limited to Weilai; almost all companies have been stockpiling various supplies and raw materials, especially since June. News of Weilai's inventory situation has gradually spread. Taking computing power as an example, ByteDance's Seven Star Data Center is one of the companies with the strongest reserves of computing power chips in China, and its reserves of high-end chips (Nvidia, AMD) are the largest among private enterprises.

In addition, in terms of domestic substitutes, we have many collaborations with companies such as Cambricon and Sugon, and our inventory is extremely high.

This dispute exposed the inadequacy of our chip reserves and the low level of domestic production. Major manufacturers have accelerated the process of domestic substitution, but we still mainly rely on companies such as Nvidia and AMD.

When other companies suddenly changed course, they discovered that Tan Jincheng already possessed a large amount of computing power resources. Upon inquiry, they found that it wasn't just in this area; this guy had been secretly stockpiling almost all the resources their companies needed for several years.

Tan Jincheng's stated reason was that he was considering costs at the time, and also that he had just taken over Meizu and was unfamiliar with the mobile phone industry, so he bought too many at once. However, no one in their right mind would believe this reason.

But there's nothing we can do; they're ahead of the game, so all we can do is admire them and buy from behind, even though the prices have gone up quite a bit.

After a day of inspection, Tan Jincheng was quite satisfied: "You did a good job, but you need to be more discreet in the future. Try not to use Jinyi's main entity as a front, and use more companies in Europe or Southeast Asia as fronts."

These old men used the guise of safety, so naturally they couldn't touch him. In Tan Jincheng's entire business system, apart from selling batteries in North America which barely qualifies as such, the rest were just some tricycles, electric vehicles, clothing, and the like, which were nothing special.

However, we must also be wary.

In addition to its core business, Weilai, Tan Jincheng also owns a world-leading power battery supplier in the high-tech field, as well as Horizon Robotics, a company dedicated to replacing domestically produced automotive-grade chips, and has already achieved some results.

Of course, there is also the Seven Star Data Center, which currently boasts the strongest computing power reserves among private enterprises. All indications suggest that this youngest billionaire in the world has companies that are all centered around high-tech and intelligent manufacturing.

They certainly pose no threat to them now, but what about the future? Nobody can say for sure. Given the old man's style, it wouldn't be surprising at all if one of his companies suddenly appeared on the Entity List.

He even has a reason for it now. As an automobile company whose main business is automobile manufacturing and power batteries, the demand for automotive-grade chips is not that high. What is the purpose of building such a powerful data center?
"A long time ago, in order to cope with globalization, we merged some companies to concentrate our efforts. With the joint efforts of all colleagues, Weilai has been developing better and better. This is the result we have achieved in the context of globalization."

"But now, the situation has changed, and we need to come up with new solutions."

August 17th, Friday, is also the Qixi Festival in the Chinese lunar calendar, and it is also the 33rd birthday of Tan Jincheng, president of Weilai Group.

Weilai convened a relatively formal board meeting, with all senior executives, directors, and major shareholders participating in the meeting both in person and via video. The topic of the meeting was to formally confirm the independence of the Yuechi series.

"Under the new international environment and the new economic situation, the independence of the Yuechi brand can better cope with the current situation, while also allowing the Yuechi brand to maintain its due vitality."

In January, Yuechi A1 sold nearly 6 units, which was the highlight of the year for Yuechi A1. After that, the sales volume was 3 units in February and 3.8 units in March. In June and July, the sales volume of Yuechi A1 only remained at around 2.6 units.

As of the end of July, the total sales volume of Yuechi A1 was 245,000 units, a decrease of 30.19% compared with the same period last year, showing a significant decline. The sales volume here refers to wholesale volume, including retail, export and terminal sales.

Starting from the second quarter, sales of the Yuechi A1, the main model of the Yuechi series, have been declining. There are objective factors, including the replacement of the model and the sluggish market for gasoline vehicles, but the decline in consumer enthusiasm for purchasing is an indisputable fact.

Whether the launch of the new Yuechi A1 can reverse this situation remains to be seen, but change is inevitable.

"As an SUV brand that has set countless records, I don't want to see the Yuechi series continue to decline like this. Even if it can't return to its peak, I hope that the vitality of this model can continue."

"Besides being able to better cope with the current economic situation and international environment, being independent is also an impetus for the Yuechi series."

It's certainly difficult to achieve monthly sales of 70,000 to 80,000 units in the past, but Tan Jincheng still hopes that the Yuechi A1 can maintain an average monthly sales volume of over 30,000 units. In other words, for this single model, Tan Jincheng expects annual sales of around 400,000 units.

With the addition of other Yuechi series models, the brand's annual sales are guaranteed to be around 70 vehicles. Furthermore, Tan Jincheng of the Tank series is also scheduled to be incorporated into the new Yuechi company, thus creating a complete vehicle company with annual sales of around 80 vehicles.

With the Yuechi series, Weilai series, Aion series, Tank series, Yangzi series, plus Huanghai buses and some other commercial vehicles, Weilai's overall sales were expected to remain stable between 100 million and 120 million vehicles in 2020, before the new energy vehicle market fully took off.

The car market in 2018 was not good, and the car market in 2019 was not much better. The continued decline in subsidies for new energy vehicles, the real estate market tying up too many people's wallets, as well as unforeseen events and consumption downgrades, all led to a decrease in car demand.

But no matter what, Weilai has already developed to this point. Even if Tan Jincheng sets the target lower, the overall sales volume of millions must be maintained, otherwise it will be like BYD back then.

Of course, for Wei Lai right now, the most important thing is still the Yuechi series, and he can't think about the future.

The decline in consumer purchasing enthusiasm is a major problem. The data that Tan Jincheng presented at the meeting today were wholesale data compiled by Wei Lai himself, which included some distributors, B-end customers, and so on.

Once the cars are in their hands, they may not be able to sell them all. Before last year, dealers certainly wouldn't have any worries; they could sell as many cars as they wholesaled. But this year, the inventory of the Yuechi series in the hands of dealers has started to increase slowly.

To avoid a repeat of the dealer scandal that happened with BYD, Weilai must work together with the dealers to clear out the inventory. This is one of the most important things right now.

In addition, during the inventory clearance process, Wei Lai must also restrain dealers and 4S stores to prevent them from harming consumers' interests too much.

In the past, when making money was easy, everyone was happy to follow orders. But now, with inventory piling up, making money isn't so easy anymore. Some more aggressive distributors are even experiencing cash flow problems due to inventory pressure. At this point, there's no point in trying to reason with them.

This is where Wei needs to demonstrate his coordination skills; ensuring that partners overcome difficulties together is also a necessary part of business operations.

"I hope all my colleagues and shareholders will support the independence of the Yuechi series and give it better room for development. We also want to sell a classic model for 30, 40, or 50 years, just like European and American companies do."

"Today I am 33 years old. I hope that when I retire at 60, the Yuechi A1 will still be selling well in the market and will still be popular with consumers."

As expected, the board of directors passed the proposal to separate the Yuechi series at the routine meeting. Subsequently, Weilai Co., Ltd. issued an announcement that its Yuechi and Tank series would be separated from the parent company and established as a new brand subsidiary.

Mr. Tan Jincheng, Chairman of Weilai Group, also serves as the General Manager of the newly independent subsidiary. Meanwhile, Weilai's official website and major social media platforms have launched a campaign to solicit designs for the new logo of the Yuechi series.

"It's a new look, so the car logo always needs to be changed. Although it's a bit bold, let's see what consumers and netizens think first."

It's common for car companies to change their logos; Geely, for example, frequently changes its logo, which is part of the car company's development process.

Some car companies have gained consumer recognition by changing their logos, while others have been criticized by consumers for their logos becoming uglier and uglier, even to the point of affecting sales.

Although Yuechi previously had some differences in its logo, such as color, and there have been some changes over the past ten years, the overall changes have not been significant.

Now, ten years later, taking advantage of the opportunity to become independent, Tan Jincheng also wants to try to make some changes to the Yuechi series logo. After all, this can be considered a reform, and besides, the Yuechi series will also produce new energy vehicles in the future.

Take this opportunity to test the waters with consumers. If the reaction is too strong, we can leave it as is. But if consumers are tired of the current car logo, then launching a design contest would be a logical next step.

It will also boost the popularity of Yuechi.

The media is no stranger to Wei Lai's hype, but they have some doubts about Tan Jincheng personally taking on the role of general manager of the new company.

Given Tan Jincheng's current busy schedule, does he have the time to specifically manage a subsidiary company?
"There is only one possibility, and that is that it is a transitional arrangement, and the person in charge of the new company should be transferred from another company."

"Or, another possibility is that they are poaching people from other companies. Which companies have recently made personnel changes?"

Several professional journalists from a certain media outlet, who have long followed the automotive industry, suddenly had a flash of inspiration while analyzing Wei Lai's announcement, and a name popped into their minds at the same time.

This guess is a bit too bold; if it's true, it would be big news!

(End of this chapter)