2003: Starting with Foreign Trade

Chapter 931 "Earning your own money isn't a real skill"

December is more than halfway over, and the new year is just around the corner.

Although the rumors about Wang Fengying joining Weilai have not yet been officially confirmed by Weilai, they are essentially true.

For the past two weeks, Wang Fengying has frequently appeared at the Weilai Automobile and Parts Factory and Research Institute around Ningbo. At first, her husband Zhang Li accompanied her, but now they are no longer trying to hide it.

Sometimes Wang Fengying would conduct research with Weilai's staff, and sometimes she would be accompanied by Weilai's chairman, Tan Jincheng. In these situations, it was basically a matter of waiting for an official announcement.

Indeed, Wang Fengying has taken office, and her first task is to assume the role of Senior Vice President and conduct a comprehensive review of the group's entire supply chain system.

She fulfilled the promise she made to Tan Jincheng when she joined the company, optimizing cost control throughout the entire Weilai system, especially the fuel vehicle system.

Currently, gasoline-powered vehicles remain the mainstay of sales. In the face of fierce competition, optimizing the supply chain is imperative to ensure quality while increasing profits.

The passenger vehicle market has seen sluggish sales for several consecutive months, and the downward trend continued in December. This year has been confirmed as the first year of negative growth since 1990, which is not good news at present.

Tan Jincheng learned that the trade negotiations between the two sides had made some progress, with the tariff policy, starting with the automobile industry, being restored from 40% at the time of the dispute to the original 15%.

This serves as a signal of easing tensions in trade negotiations between the two sides.

This has given both sides' industrial systems some relief. In fact, American companies have also been significantly impacted by this friction. The old man's idea of ​​transferring the industrial chain to North America is clearly too idealistic.

The supply chain alone is almost an impossible task. Apple needs a large number of factories around the world and cheap labor to maintain their supply chain. How could the US population possibly be enough?

However, no matter what, the era of globalization will never return. But we still can't stop doing business around the world. In fact, we will increase our exports to North America in the future.

Strategically, some adjustments need to be made. Tan Jincheng is already considering whether to take over some of the export capacity through Proton and Lotus channels, and use Proton's relationship to achieve the conversion between domestic and foreign exports.

However, the immediate priority is to sort out the internal issues. Large corporations have had their share of problems over the past ten years, and through nearly a month of visits and investigations, we have indeed discovered quite a few problems.

First, some poorly managed parts factories began to shut down, non-performing assets were divested, and workers had to be reassigned. For example, Wang Fengying suggested that a poorly managed seat factory under Weilai be shut down directly.

Taking the electronics R&D and production department as another example, this business unit lost 2.46 million yuan in the first half of 2018. With Wang Fengying's cooperation in conducting a thorough investigation, the board of directors decided to directly cut some projects that involved redundant development and construction.

According to cost calculations, after these redundant projects are eliminated, the electronics R&D and production department will be able to break even within six months and become profitable after one year.

"By streamlining our internal operations and introducing new supply chain components to create a 'catfish effect,' we believe that our entire system will soon be more complete than before."

After nearly a month of investigation, Wang Fengying was pleased to find that although Wei Lai had many problems and its costs had considerable room for optimization, the company's overall operation was still very healthy and did not require major changes.

The management team has been very cooperative with the rectification efforts. There has been internal power struggle, but it is not considered serious at present. It is only reflected in the competition between fuel vehicles and new energy vehicles regarding their contributions and internal resources.

With the independence of Yuechi Company, these issues have largely subsided, demonstrating the founder's strong control over the company.

She also discovered that some of the suggestions she made were actually already known to the boss, who understood them immediately. It was clear that this young boss was very knowledgeable about the company's internal issues and details.

Wang Fengying naturally knew that her boss was waiting for an opportunity, and she was the key to that opportunity. Since her boss understood her company, she had even fewer concerns about what to do.

2018 12 Month 31 Day.

The day before the official announcement of Wang Fengying joining the company, Weilai's parts supply chain, which was based on the "Jinxin" system, was shut down and integrated into five new subsidiaries.

Jinshidai Battery Co., Ltd. produces 3C batteries (subsidiary Dexian Electronics), power batteries and energy storage batteries, which are used in multiple fields for secondary applications.

Jinxin Vision Co., Ltd. focuses on the research and development and production of automotive lighting and signaling system products. This company will become the "lighting factory" of Weilai.

Jinxin Technology Co., Ltd. possesses extensive automotive electronics and chassis technologies; Jinxin Power Co., Ltd. is dedicated to developing powertrains for gasoline vehicles, powertrains for new energy vehicles, and overall solutions.

The last one is Jinxin Mould Co., Ltd. This company is a professional welding production line for white car bodies and parts. You can tell the difference in the division of labor among the subsidiaries just from the name.

"Break the egalitarian model and make each subsidiary a small company."

"Making money on your own is not a real skill. The key is to build up your competitiveness and then earn money from external manufacturers and foreign companies. Currently, our battery company already has this capability, and I hope that other subsidiaries can develop in the same way as the battery company."

At the beginning of the year, everyone knows that Boss Tan likes to stir things up; this is almost a consensus.

Unlike previous years when Boss Tan made a big fuss outside, this time Tan Jincheng targeted Wei Lai from within. With Wang Fengying's cooperation, they played good cop and bad cop, and the internal rectification was carried out swiftly.

In less than two months, Wei Lai formulated a reform plan for the entire industrial chain. Everyone could see that the boss had prepared for this long time and was just waiting for the right opportunity.

For a long time, companies have viewed their supply chain as one that supplies themselves, using the components they produce in their own products. This mindset is not wrong, but it can also easily create a sense of inertia among their subordinates.

Anyway, the head office will buy the parts we produce, so profits are not important at all. If we make money, everyone will happily share bonuses, get promoted and get raises; if we lose money, the head office will cover it.

This is similar to the idea of ​​eating from the same pot during the collective era. Now, Tan Jincheng integrates and subdivides the component companies, allowing each company to maintain a certain degree of independence, and uses the power battery company as a standard to create a component industry chain that belongs to Weilai.

Different divisions of labor will lead to different specific standards, but in the end, it all comes down to KPIs. From his own perspective, he doesn't really approve of KPIs.

However, there's no other way; setting KPIs is one of the most effective management tools for companies to maintain their vitality.

Within Weilai, Jinxin Group companies are no different from external suppliers. They compete on an equal footing. If Jinxin Group can offer better and more cost-effective products, then Weilai will use Jinxin Group's products; otherwise, they will use external suppliers' products.

Whether you can win the bid and how much share you get depends entirely on your ability.

The subsidiary's supply chain companies are separated from the parent company, retaining a certain degree of autonomy in their operations and assuming responsibility for their own profits and losses. This reform can be described as very bold, especially since Didi's Fudi series has not yet been launched yet.

"Everyone, you need to change your mindset in time. Before, you did whatever the company asked you to do, but from now on, you will only do what the market asks you to do."

At the expanded meeting of the entire industry chain, Tan Jincheng spoke earnestly to the management of each company.

This has also brought a great shock to the management of major auto parts companies. At present, very few large domestic enterprises dare to do this. Allowing subsidiaries to maintain a certain degree of independence is undoubtedly a way for the boss to relinquish power.

No matter how laid-back a business manager may be, who wouldn't want more power in their hands?
They were naturally happy that the boss was giving them more authority, but at the same time they felt unprecedented pressure. Among those present, the only ones who could guarantee that they had a certain status in the boss's eyes were probably from Jinxin New Era Battery and Mold Company.

Battery business is one of the three core businesses of Weilai, including parts and components. Although it belongs to the parts and components company category, it is obviously at a different level and has a different status in the eyes of the boss.

Didn't you see that many of the contracts for power battery companies are negotiated personally by the boss? Zhang Xuhui, the general manager of Jinshidai Power Battery, was the boss's earliest secretary, brought over from Shanchi.

In addition, he is a cousin of the boss's good brother. Although he has been staying in Luzhou for a long time, he is definitely the boss's most trusted subordinate. Or to put it bluntly, he is just a mouthpiece for the boss to control the power battery company.

As for the mold company, it can be simply understood as a factory. No matter how much the boss reforms, he would never outsource the production of the entire car to other factories. That's pure nonsense.

Look at who the general manager of the mold company is; it's Zeng Jixiang, the secretary-general of the president's office, who also serves as the general manager.

The other subsidiaries are different. While they have gained autonomy, they need to be responsible for their own profits and losses, and they also need to compete with external suppliers. If they don't perform well, they may lose all their orders.

What kind of competitiveness do you think a subsidiary can't even get orders from its own parent company has?
"Of course, to put it bluntly, it's like how sons in rural families separate after getting married. I believe everyone can understand this simple principle. I won't say anything more. May everyone be well, and we'll see how things go next year."

While delegating authority, Tan Jincheng certainly wasn't out of his mind. He would relinquish core powers, but he would definitely keep a firm grip on things like the factory and core businesses.

As for the purpose of doing so, it could also be a new business model.

"Take the Yuechi A1 as an example. Through the effect of scale, we can make a single model not profitable or even lose money. Then we can make money by selling parts, forming a new business loop."

Selling complete vehicles is less profitable than selling auto parts, which is not a new phenomenon in the industry. The leading players in Europe all have a fairly large auto parts system.

For example, Mitsubishi's engines are a perfect component system from the era of gasoline vehicles, while Jinxin in the new energy era uses power batteries that are like a completely different engine system.

By splitting and integrating large component subsidiaries, we can activate the role of internal forces and create more "engine" systems belonging to Weilai.

The entire vehicle may not be profitable, but once a certain scale is achieved, batteries can be supplied to more automakers, and the intelligent driving system can be used in more models, leading to partnerships with more companies. "It is indeed feasible, and the timing is perfect."

The supply chain of European car manufacturers is already very mature. It is extremely difficult to penetrate the traditional supply chain, which is now dominated by only the top players, by using parts. However, the new energy vehicle sector is different. Everyone is on the same starting line, and some companies are even in a leading position in certain technologies.

In addition, the emergence of so many new players in the domestic market has created favorable conditions for various auto parts companies to achieve independent profitability.

Purchasing parts directly from Weilai's parent company may raise concerns among some competitors regarding supply chain security. Weilai also has similar concerns when purchasing certain parts from other automakers.

However, once a subsidiary becomes independent, such concerns are greatly reduced. This is precisely why Musk's Tesla was able to purchase batteries from Jinshidai and even required the latter to establish a separate subsidiary to ensure the security of battery supply.

However, if Jinxin Times fails to maintain greater independence, what will happen in the future under the current circumstances, and whether Tesla will continue to trust Jinxin Times, remains to be seen.

Only by maintaining greater independence can these companies with core competitiveness better meet the challenges of the market.

"Don't be too optimistic. In 2018, we said that the industry would reach a turning point, and then the turning point came. But I would say that 2019 will be even more difficult."

At the small meeting of senior executives following the expanded meeting, Tan Jincheng was not as optimistic as everyone else.

This isn't just about unexpected events; in fact, unexpected events have a very strong positive impact on the automotive industry. Take, for example, certain groups of people who work and live in big cities. In the past, it wasn't that they couldn't afford cars, but rather that they were used to convenient public transportation.

With subway and ride-hailing services available, and shared bikes not far from their workplaces, cars don't really hold that much significance in their lives, given their daily routines and infrequent long-distance travel.

There are also some people who advocate low-carbon travel. This group is actually quite large and obviously has a certain level of purchasing power. They don't have a particularly strong feeling about cars as a means of transportation.

They have little interest in buying cars; they prefer to spend their money on bicycles that cost several thousand or even tens of thousands of yuan.

However, special events brought public transportation to a standstill for a long time, making travel extremely difficult. In his previous life, he had heard this complaint from an office worker.

This person also needed to go to work during this special period. In fact, many companies in Ningbo were still operating during this period, but the suspension of public transportation made it very difficult for him to get around since he did not own a car.

Sometimes he couldn't get a taxi, so he was forced to take time off work, which reduced his working hours significantly each month. It was during that time that he developed a strong urge to own a car.

He also saw some posts on the internet, such as a migrant worker emphasizing the importance of having a private car during that period, which made some sense.

Three years is enough time to change the consumption habits of a large number of people, including car consumption. The subsequent boom in the new energy vehicle industry is actually related to these three special years.

Tan Jincheng's so-called pessimism is a conclusion drawn from the macro environment and changes in the automotive industry, including factors such as slowing economic growth and the large number of people tied up in housing, leading to a decline in consumer desire.

In the industry, starting in 2019, the subsidy policy for new energy vehicles has decreased by 50% compared to 2018. This rule remains the same as this year, and will be implemented starting in June of next year.

The growth rate of new energy vehicles will also slow down significantly, just like in the second half of this year.

New energy vehicles without subsidies are still too expensive. Take the ET5, the lowest-priced model in the entire Weilai brand lineup, for example. Without any subsidies, it would cost over 20 yuan, which would only buy a base model similar to a gasoline car.

It's easy to imagine how much sales would be affected by this situation, not to mention the ES and L series with higher starting prices.

In addition, the subsidy threshold has been raised significantly. Next year, the subsidy threshold will be a range of more than 250 kilometers. Low-end models will be phased out more quickly. Furthermore, the implementation of the China VI emission standard will also accelerate the industry's turmoil.

Over-reliance on policies and overcapacity in low-end production were the biggest problems faced by domestic automakers in 2019. Automakers had to start transforming, and the days of using low-end models to get subsidies were only about six months away.

And then there are the emerging forces. If 2018 was the year of their launch, then 2019 was the year of their delivery.

According to data provided by the three emerging electric vehicle companies, Wenjie, Xiaopeng, and WM Motor, their delivery volumes in 2019 were 1.2, 1.6, and 1.7 vehicles respectively, which can be considered as an initial step in opening up the market.

Tesla's Shanghai factory has already been completed. The simultaneous efforts of emerging electric vehicle manufacturers and Tesla will intensify the competition next year.

Policy and industry changes, coupled with the overall environment, have led Tan Jincheng to be pessimistic about the car market in 2019. Wei Lai's current goal remains to "maintain" its position.

"We don't have any low-end models, so apart from the reduction in subsidies, we haven't been greatly affected in this regard. However, the reduction in subsidies also means a reduction in profits, and our stock price may face some pressure this year."

"There's no need to worry too much about that. After falling this low in 2018, where else can it go? The stocks of major companies have already shown signs of stabilizing this month."

"Oh? Is that so? That's a good thing."

Tan Jincheng was certainly aware that the market had crashed in 2018, but he didn't pay as much attention to the exact extent of the crash as he usually did. He only knew that from the beginning of October to before New Year's Day, the market value of Weilai shares fell below 240 billion yuan at its lowest point.

This is the lowest market capitalization for Weilai in recent years. Currently, it is maintained between 2500 billion and 2600 billion yuan, and the stock price fluctuates between 115 yuan and 120 yuan. This is due to both Weilai's own factors and the overall economic environment.

However, this should be the most cost-effective price for Weilai, at least in Tan Jincheng's opinion.

"In that case, we can repurchase a portion of it and use it for employee stock ownership incentives or cancel it directly. The specific amount will be determined by the accounting and securities departments based on the situation."

"Okay, that's exactly what I wanted to report to you. Currently, quite a few large companies listed on the A-share market have announced share buyback plans."

As the saying goes, "ducks are the first to know when the river warms in spring." These people who play with capital are quite vigilant. There are already signs of institutional investors forming groups. Weilai's mediocre stock performance this year may also be part of this institutional group formation.

"Okay, if we don't need to worry about the stock market, then financing will be much easier, and corporate financing can proceed as planned. Now let's discuss other topics."

The next two days will be filled with meetings; there's no New Year's Day holiday. In the days leading up to and following New Year's Day, the senior executives will be busy discussing this year's work plan and sales targets.

Besides the changes brought about by policy and macroeconomic factors, the most important thing for Wei Lai to pay attention to is his competitors.

In the era of new energy, the Aion series is BYD's main competitor, along with the upcoming domestically produced Tesla Model 3 and its successor Model Y, as well as a series of emerging brands.

We shouldn't underestimate these new players. Although their sales may not have a significant impact on the Weilai series, their marketing capabilities and ability to stir up trouble are definitely something that can affect Weilai.

Of course, the biggest competitors of the entire Weilai brand series also include rapidly advancing domestic brands such as Geely. Geely, which has firmly established itself as the number one domestic brand since last year, has made even greater strides this year.

The flagship Emgrand remains as stable as ever, while other models including sedans, SUVs, and new energy vehicles have all seen explosive growth. In the SUV segment, they have captured a significant portion of the sales from the Yuechi series. Apart from lagging behind in the new energy vehicle market, Geely's performance this year has been truly remarkable.

In contrast, Weilai, a young company led by a young boss, has exposed many problems on its tenth anniversary. Lack of experience is the biggest problem it currently faces. Fortunately, its main competitors have also performed poorly this year.

On January 1, 2019, Weilai Group officially announced on its website and social media that Ms. Wang Fengying, the former general manager of Great Wall Motors, had officially joined Weilai as senior vice president of Weilai Group and general manager of Weilai Yuechi Co., Ltd.

Meanwhile, Weilai also announced its overall sales for 2018 on the same day, becoming the first automaker in China to release its full-year sales figures for 2018.

1071077 vehicles!
Compared to 2017, the overall sales increased by 6.84%. In addition to the timing of the announcement, this data also greatly surprised the market. It should be noted that the sales of the most important Yuechi series of Weilai were severely declining in the first half of the year. As a result, there were even rumors that Mr. Tan, who has always had a friendly public image, was furious inside the company.

"Judging from the data released, Wei Lai is really amazing!"

"If you say that Boss Tan meant well, his unexpected announcement of the overall sales figures for 2018 today might be to dilute the news of Wang Fengying joining the company."

In the past, sales figures were usually released between the 5th and 10th, with the earliest being the 5th and the latest being the 10th. However, this year, the figures were released on the 1st, which was quite unexpected by the market. However, not many people would question the accuracy of the data.

In the automotive industry, Weilai Auto's sales figures have always been the least inflated, a fact acknowledged both within and outside the industry, and even by the China Passenger Car Association.

"But if you want to call him bad, he really is bad. He released the news of Wang Fengying joining the company on the same day as the sales figures. How is Great Wall supposed to respond?"

For the second consecutive year, it has broken the million-unit sales mark. If nothing unexpected happens, Weilai will be the second-best domestic independent brand this year.

On its tenth anniversary, Weilai Motors, which has always been compared to the "Little Great Wall" in the market, defeated its predecessor, which also performed poorly this year.

With the addition of the number two figure in the big brother, there is a very high probability that sales will officially surpass those of the big brother. The two pieces of news were announced on the same day.

For a moment, it was truly impossible to tell whether Boss Tan meant well or was sly.

(End of this chapter)