2003: Starting with Foreign Trade

Chapter 934 Top-Tier Treatment for Revenue Exceeding 100 Billion!

January 29th, the 1th day of the twelfth lunar month.

With only a week left until Chinese New Year, some employees at Tan's various factories have already started taking leave to go home for the holiday. Unlike previous years, this year Tan has not asked his executives to encourage employees to stay and earn wages during the holiday.

"Money can never be earned enough. We can't keep our employees here every year. This year, we encourage them to go home for the Chinese New Year. They've made money, so they should go back and celebrate."

This is tough on Zhang Li. In previous years, the boss would encourage employees to stay and earn triple overtime pay. This year, for some reason, even the boss himself is planning to go back to his hometown for the Chinese New Year, which is quite unusual.

In his memory, the boss hadn't been back to his hometown for Chinese New Year for many years.

“Our little darling is over three years old and has never been back to her hometown. Let’s take her back to get acquainted with the place, otherwise she won’t remember where her hometown is.”

The real reason was known only to Tan Jincheng himself, but he couldn't reveal it to others.

Tan Jinqin, who is over three years old, has a personality that is exactly like Tan Jinyue's when she was a child. This is not only because Tan Jinyue often plays with her and influences her personality, but also because the couple has been raising her in this way.

According to the itinerary, the family will go to Yiwu two days later, stay there for two days, return to their hometown early on the 29th day of the twelfth lunar month, and then stay until the third day of the first lunar month before leaving.

Also today, ten departments, including the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Transport, jointly announced a series of policies to promote consumption, including the policy of subsidizing automobile sales in rural areas. The specific details are easy to understand.

Simply put, rural residents can enjoy a 10% subsidy on the vehicle price when purchasing trucks of 3.5 tons or less or passenger cars with an engine displacement of 1.6 liters or less. This subsidy covers most of the models currently on the market, including pickup trucks.

The prices are mostly between 8 and 15 yuan. With this level of subsidy, without additional corporate subsidies, a car can be cheaper by 8000 to 1.5 yuan.

"If companies want to capture more market share, how can they not provide subsidies themselves?"

In real life, many of these subsidies are shady. Things like raising prices first and then providing subsidies are just the tip of the iceberg. There are many other tricks involved, and consumers actually receive very little real benefit.

As big data becomes more mature, many of the so-called subsidy wars, including Singles' Day, are rife with shady practices.

"After the subsidies begin, we need to monitor 4S stores and other terminal retail stores to prevent them from doing anything that could damage our reputation."

Rural markets still have decent spending power during the Spring Festival. There are quite a few people who have earned money and want to buy cars to go home. This year, with national subsidies and corporate subsidies, such major policies can still stimulate some car consumption.

Tan Jincheng is also somewhat from a rural background, so he has some understanding of the consumption habits of rural consumers. In his hometown, the consumption power is very strong during festivals. People who usually smoke cigarettes that cost a few yuan or a dozen yuan a pack will spend a different amount during the Spring Festival.

Brands like Zhonghua are very common, and the same applies to car consumption. With the post-90s generation becoming the main consumer force, some post-90s users with certain economic capabilities are very accustomed to buying cars before the Chinese New Year.

Wei Lai cannot guarantee that every 4S store will follow the rules, because some of them are suppliers, but he also needs to ensure that most of the terminal retail stores can adhere to the bottom line and make these benefits reach the users as much as possible.

Big data is becoming increasingly sophisticated, but users' consumer intelligence is also rising. Treating users like fools will inevitably face the consequences.

"Besides this, we need to tighten our grip on the finances."

Having sold over a million vehicles, with some models commanding high market prices, Weilai Group's revenue ultimately failed to break through 100 billion yuan in 2017, a year generally viewed favorably by the market, which greatly surprised the market.

It's actually quite simple. Given the limited scale of its power battery business, in order to achieve sales of one million vehicles, WIL will definitely offer discounts to suppliers on some models, and the prices offered to suppliers will certainly be lower than usual.

Sacrificing some profits to achieve sales of one million vehicles was the goal of Weilai in 2017. In the view of Tan Jincheng and Weilai's management, the annual sales record of one million vehicles was obviously more important than revenue of hundreds of billions.

A revenue of hundreds of billions may not be possible this year, but it can be achieved next year. However, achieving sales of millions is not something everyone can do.

Once it enters the million-sales club, Weilai will officially become a leading company. Compared to this year, Weilai can use marketing to claim the title of million-sales, which sounds impressive.

This year is no exception, which is why Weilai's gross profit per bicycle has declined significantly in the past two years.

The financial reports for the first three quarters of last year are already confirmed. The only one that is uncertain is the financial report for the fourth quarter, but the general data is still available. Therefore, Tan Jincheng still knows the approximate revenue of Weilai in 2018.

In short, the 2018 financial report showed very impressive changes in both revenue and net profit!
Boss Tan urged the finance department to complete the 2018 annual report as soon as possible, hoping to release the official financial report in early March, just like before.

Weilai Auto's total revenue from complete vehicle business (including parts) was 701.27 billion yuan, and its net profit was 50.27 billion yuan. This translates to approximately 5000 yuan per vehicle in profit per vehicle.

Given the significant price reductions made to boost sales, this performance isn't too bad. It's comparable to the net profit per vehicle of top-tier domestic brands. The Yuechi series also targets the mid-to-low-end market. How can they expect to make big profits while simultaneously offering discounts?

However, in 2018, due to changes in the sales structure, the sales of new energy vehicles increased significantly out of the more than 107 million units sold, which brought about considerable changes to Weilai's revenue and net profit.

According to the financial report that Tan Jincheng saw, the annual revenue of Weilai Automotive's business segment was 1011.69 billion yuan, an increase of more than 40%. Net profit also increased significantly, with a net profit of 69.615 billion yuan for the whole year, which means that each vehicle earned 6500 yuan.

Whether in terms of overall revenue or net profit per vehicle, Weilai delivered a perfect performance throughout 2018.

During the first quarter when Yuechi's sales plummeted, Weilai actively adjusted its marketing strategy, boosting its internal capabilities through channel reforms, promotions, and strengthening the sales capacity of new energy vehicles.

The significant increase in sales of new energy vehicles has brought a substantial increase in revenue to Weilai. It is estimated that the revenue from selling one ES8 is roughly equivalent to that of two Yuechi A1s. This explains why Weilai's revenue and net profit per vehicle have increased significantly despite the relatively small increase in sales volume.

"Sometimes what consumers describe isn't wrong, haha."

Tan Jincheng has the 2018 annual financial report data at hand. Without calculating the revenue from power batteries, the revenue from the automotive sector alone is enough to rank him among the top ten car companies. In addition, this revenue is also enough to squeeze into the top ten private enterprises in Zhejiang Province.

If we include power batteries, Weilai Group's revenue this year should rank among the top five private enterprises in Zhejiang Province, and around 11th or 12th among the top 500 private enterprises.

As for ranking ninth among car companies, this is a calculation made by Weilai Group based on the financial reports of major car companies (including parts companies) for the first three quarters and the fourth quarter of this year.

Of course, the data that Tan Jincheng has is internal data. The data that is actually released may differ due to different accounting methods. But in any case, Weilai is already a real group with hundreds of billions in assets.

"That's not quite right. The main reason is that our new energy vehicles are generally more expensive, which indirectly increases our revenue."

"Another reason is that Weilai's stores are all self-operated."

Weilai's sales network is divided into two parts. The sales network for gasoline vehicles follows the traditional model of dealers plus 4S stores, while the sales network for new energy vehicles follows Tesla's model and goes entirely on a self-operated path.

Of course, this doesn't mean that Weilai doesn't have dealers in the new energy vehicle sector; it's just that the terminal stores haven't adopted a franchise model. This is also thanks to the fact that new energy vehicles weren't selling well a few years ago, and Tan Jincheng found an excuse to go the self-operated route.

At that time, despite the skepticism surrounding the market, Weilai built its own distribution network. By the time new energy vehicles became a trend, Weilai's channel advantage had already been established, making it difficult for traditional stakeholders to gain a foothold.

Nobody wants their products to have too many middlemen, but traditional interest groups are hard to break. Even when Tan Jincheng was dealing with the distribution network of gasoline cars, he considered going the self-operated route, but it was just too difficult.

With fewer middlemen in the new energy vehicle distribution channels, most of the revenue goes to the group. In addition, many companies are now following Weilai's example, and the company continues to offer discounts on gasoline vehicles. Therefore, Weilai itself is unlikely to experience any major disruptions in the new energy vehicle distribution channels.

To be honest, Meizu is probably the largest distributor in Weilai. In 2018, Meizu opened many more offline stores on top of its existing 3000-plus stores, while closing some poorly managed and small-scale stores to optimize its channels.

Of Meizu's more than 4500 offline stores, one-third operate on a mobile phone + car sales model. These stores act as Meizu's distributors, generating revenue for the company.

Selling one car is equivalent to selling hundreds of Meizu Blue phones. The sales profit and commission are better than those of the mobile phone business. Therefore, neither Meizu itself nor the store staff are opposed to promoting Weilai New Energy Vehicles.

On the contrary, the staff at the original Weilai store were not very interested in selling mobile phones. Each mobile phone sold would only bring in a hundred yuan or so, which was incomparable to selling cars. If the company did not have certain targets, they probably would not be willing to sell them.

Don't try to justify it by saying that 100 yuan is still money; that's completely useless. It's true that during the off-season, store staff will try to sell phones and cars depending on the situation, but honestly, when faced with a huge profit, no one is willing to give up something much bigger. If two people walk in at the same time, one intending to buy a phone and the other intending to buy a car, is there any doubt that they'll choose?

We need to find a way to improve the morale of the store staff this year, otherwise this situation won't work and will more or less affect Meizu's sales.

"There are these reasons, but overall the profit margin in the new energy vehicle sector is still relatively large."

There's a joke circulating online that new energy vehicles are just oversized toy cars with oversized batteries, so why are they so expensive? While this viewpoint has some bias, it does reflect the overall style and current state of new energy vehicles.

Whether it's traditional automakers or emerging players, the gross profit per vehicle for new energy vehicles is not low. Companies with a certain scale, such as WooLong, Tesla, and BYD, have relatively high gross profit per vehicle.

The reason why many emerging electric vehicle companies have negative gross profit per vehicle is not because their vehicles are not profitable, but because of the initial investment. These costs are spread across vehicles with low sales volume, making them appear unprofitable.

Take the ET5, the cheapest model in the Weilai series, for example. After sales increased, its gross profit per vehicle was also very good. Overall, it is indeed simpler and more profitable to produce electric vehicles than to produce gasoline vehicles.

Consumers' complaints are not entirely without merit.

"To give a simple example, when mobile phones first came out, a 'brick phone' was very expensive and completely unaffordable for ordinary people. But now? Even if you can't afford a flagship model, a phone that costs around 1,000 yuan has functions that a 'brick phone' can't match."

The electrification and electronic transformation of automobiles is essentially following the same path as mobile phones, evolving from a status symbol to a mass-market commodity. This is a process that the automotive industry is undergoing, and there is reason to believe that electric vehicles will become increasingly affordable in the future.

However, if that were the case, manufacturers would definitely turn cars into consumables like mobile phones for profit, with increasingly rapid replacement cycles, which would significantly reduce both the lifespan and resale value of cars.

For consumers, it may not be entirely a good thing, but in any case, the advantages definitely outweigh the disadvantages.

One problem is that they can't afford it, and the other is that it has a limited lifespan.

Along with the significant increase in revenue from its automotive business, Weilai also saw a surge in revenue from its power battery segment. The rise in sales of new energy vehicles drove demand for power batteries, and Weilai's power battery segment generated 296.11 billion yuan in revenue in 2018.

Compared to 2017, it increased by 48.08%, but its performance in terms of net profit was not as impressive as that of the automotive business. The net profit of 33.87 billion yuan decreased by 12.66% compared to last year, and the gross profit margin also decreased slightly.

Rising raw material costs and friction between the two sides meant that Jinsheng New Energy was under investigation until December of the second half of the year, and it almost got added to the Entity List. In addition, increased investment also contributed to the impact on the profitability of the power battery business.

Compared to the automotive sector, Tan Jincheng hasn't focused too much on how much money he can make in the power battery sector. After all, it's still in the early stages of the market, and focusing too much on profits could lead to losing market share.

Capital always operates on the same principle: first, it uses its advantages in technology and capital to seize a large market share; only after establishing its market position does it consider profits.

The revenue from the power battery business increased by nearly 100 billion yuan compared to last year, which is quite an achievement considering the trade frictions and tariffs imposed.

Speaking of which, the growth rate of Weilai's power battery business is truly remarkable. It has grown from almost zero to more than 50 billion yuan in revenue in 2015. The revenue of the power battery business, which is now on the right track, has increased almost every year.

57 billion, 147 billion, 200 billion, 296 billion.

Over the past four fiscal years, the power battery business has accounted for as much as 22% of Welai's total revenue and more than 32% of its net profit. Whether it is the business structure reform or transformation, Welai was quite successful in 2018.

"With total revenue of 1307.8 billion yuan and net profit of 103.485 billion yuan, the boss might as well apply for the 2018 Best Business Leader award."

Building a 100 billion yuan revenue entity over ten years, achieving record-breaking revenue and net profit on its tenth anniversary, and amidst a rapidly changing international situation, the financial report of Tan Jincheng and his team is truly remarkable.

Most importantly, against this backdrop, this young leader did not stand still. When the company encountered operational problems, he was able to make decisive reforms and bring about a qualitative change in the company through various strategic and specific tactical adjustments.

This is the content of the first episode of CCTV Finance Channel's dialogue program. It aired in early March after Weilai's financial report was released. The program's ratings increased by 300% compared to usual, and related topics on Weibo garnered over 5 million views. The hashtag #TanJinchengDialogue# topped the trending search list.

Numerous foreign media outlets cited the program's content to analyze Wei Lai's business strategies and Tan Jincheng's series of plans.

"It's good, but it's not good either."

The advantages are obvious, but the downside is that under the current circumstances, almost every aspect of Wei Lai is under public scrutiny, including the exposure of Tan Jincheng's overseas raw material resource arrangements.

He no longer dared to dream of making a fortune in silence, but such intense attention, especially the considerable stir it caused on foreign websites, still had some impact on his globalization strategy.

Resources are different from business. Business can be adjusted, but resources are non-renewable. If you take more, others will have less. Starting this year, Weilai needs to put more effort into ensuring the security of raw materials.

The financial channel gave him the first episode of the year, which he initially refused. Logically speaking, this kind of thing really shouldn't have been his turn. The founder of Chrysanthemum Factory, who underwent a huge test in 2018, Zhang Yong, who also set various records in 2018, who succeeded Lao Ma, and Dong Mingzhu, who won the 10 billion yuan bet with Lei Jun, as well as some other entrepreneurs, were all prominent figures in 2019.

Tan Jincheng, who delivered a perfect performance in a complex environment, is certainly qualified to be interviewed by the dialogue program, but the first episode of the year is taking too much attention.

However, he couldn't refuse this thing even if he wanted to. The interview program was also very sincere, and the recording time for this interview was even mentioned during the Chinese New Year.

The set was built in his hometown house. The host and interview team gave up their holiday and flew to a small mountain village to conduct the interview, just to give Tan Jincheng no chance to refuse.

In addition, Boss Tan received a phone call; those who know, know.

The buzz surrounding the show, including the pre- and post-broadcast discussions, was also driven by behind-the-scenes factors. The reason why Boss Tan gained such attention was actually quite simple: to set a new example, and also because Wei Lai did indeed perform well in 2018.

As a leading global supplier of power batteries and the world's number one seller of new energy vehicles, Weilai has performed exceptionally well in terms of sales volume, revenue, net profit, transformation, and reform. Even before Weilai's financial report was released, its stock price had already been rising steadily in February.

This also boosted a series of stocks related to Weilai, including its suppliers, and the entire automotive sector also saw significant gains driven by Weilai.

In 2018, there were 11 companies in Zhejiang Province with revenue exceeding 100 billion yuan, an increase of three compared to 2017. Weilai was one of the three new companies, with revenue exceeding 130 billion yuan, which directly propelled it to fourth place on the list of companies with revenue exceeding 100 billion yuan.

It has 20 billion yuan more in revenue than petrochemical giant Rongsheng. Ahead of Weilai are Ali, Zhongda, and Geely.

Besides the incredibly successful Weilai Group, Tan Jincheng also owns Orange Group, an internet company with revenue of 845 billion yuan, and Flash Technology, a leading two-wheeled electric vehicle company with revenue exceeding 10 billion yuan.

This achievement, placed in the hands of a young entrepreneur not yet 34 years old, seems like science fiction, but it is indeed the case.

The combined revenue of the three companies exceeded 220 billion yuan, making Beicang District surpass Yinzhou to become the number one county in Yongcheng District, and also bringing Beicang into the ranks of the top 100 counties in the country.

This speed has allowed Beicang to improve its performance for several years. Although most of Weilai's factory revenue and personal income tax are not in Beicang District, the majority of the revenue is still in Beicang. Moreover, Weilai's core technology department has been in Beicang for many years, which has made Beicang District very happy.

Besides Wei Lai, don't forget that Orange Group has a total revenue of 845 billion yuan, which is another company with a revenue of hundreds of billions of yuan. According to the expectations given by Boss Tan, even if it is not achieved in 2019, it is almost certain to be achieved in 2020.

This is not an exaggeration at all. The rapid application of artificial intelligence, as well as the major business segments such as Dingding and Gaode that previously had little revenue, will have an increasingly significant impact in the coming years.

Although traditional vertical e-commerce websites are not as influential as before, their established customer base will allow Orange Goods to maintain its vitality, not to mention its gaming business.

This is still a modest statement from Mr. Tan. In fact, it is certain that the revenue for fiscal year 2019 will exceed 100 billion. It was about the same in 2018. However, due to different financial statistics, exchange rate fluctuations, and the fact that some businesses were not included in the statistics, this figure was obtained.

It's not that he wanted to keep a low profile, but rather it's due to the financial standards for listed companies. If he wanted to keep a low profile, he wouldn't need to resort to this method.

According to the host's private words after the interview, Mr. Tan is fully deserving of being the first person featured in the new year, and there is no need to think too much about it. However, the host also had his own reasons for saying this, as it has become increasingly difficult to get an exclusive interview with Mr. Tan in recent years.

Even they are no exception; those two reporters from Car Friend magazine were incredibly lucky last time.

(End of this chapter)