2003: Starting with Foreign Trade

Chapter 935 Responses to the First Year of 5G

Tan Jincheng's interview sparked a huge social response. The interview took place in his hometown, so he was in a relatively relaxed state of mind.

Knowing that he couldn't refuse this interview, he decided to cooperate and answered almost everything he could, much to the host's delight.

In high-level interviews, these hosts like to create some difficult questions for the interviewees, such as digging a hole in the topic. Tan Jincheng had experienced this when he was interviewed by them before.

What impressed her most at that time was that this young man was very vigilant and had a very quick mind. It was impossible to "trick" him. He was either prepared in advance for many topics with traps, or he would talk about other things.

She has met many entrepreneurs in her interviewing career, and many of them have been brought into the conversation, but interviewing this one must be one of the most difficult. The key is that he doesn't want to answer many normal questions, which makes it very uncomfortable.

She was truly flattered by Tan Jincheng's generosity this time. However, she dared not set any traps or topics for him. This interview was conducted with a mission in mind, and it was already very kind of Boss Tan to cooperate.

Furthermore, they control a company with revenues of 100 billion, a company close to 100 billion, and a company with revenues of tens of billions, with industries spanning new energy, automobiles, the internet, light industry, and almost all consumer sectors except food.

Oh, right, there's also a mobile phone company. Meizu, which he acquired through a blitzkrieg, was given a new lease on life under his leadership, undergoing a complete transformation from the small factory in Zhuhai that it was before.

Meizu was in some chaos in 2017, but by 2018 it was back on track, making great strides in everything from component procurement and sales channel integration to the development of the Flyme ecosystem.

According to IDC data, the total number of mobile phones shipped in China in 2018 was 4.14 million units, a decrease of 15.6% compared to 2017. Under such circumstances, Meizu, a brand known for its cost-effectiveness, and Meilan, a brand known for its mid-to-high-end products, performed well.

In addition to the three key figures, the management team has brought in well-known figures who have left competitors, including the new CEO Chen Mingyong. At the same time, they are actively poaching talent from competitors to enrich Meizu's talent pool.

Meizu's phones used to be unprofitable, for many reasons. One of the most important reasons was the various drawbacks of family-style management. When everyone in key positions was focused on their own pockets, it would be a miracle if the products they made could make money.

It's somewhat similar to the automotive industry where the entire vehicle doesn't make money, but everything else does, except that the money doesn't go into Meizu's account.

After Tan Jincheng took over, he used ruthless methods to clean up Meizu from top to bottom, and the changes he brought about were very obvious. The same products with similar configurations could be significantly cheaper under the new Meizu.

With just this one point, Meizu solved the prerequisite for competing on price with its rivals. With Tan's support in terms of resources, Meizu became the only mobile phone manufacturer besides Huawei to achieve positive growth this year, despite the overall decline in mobile phone sales.

With shipments of 2090.7 million units and a market share of 5.05%, it is more than 4 percentage points behind Apple, which ranks ahead of it. However, it has managed to squeeze into the top six and become a top brand among second-tier brands, which is already quite impressive.

Given Meizu's strength and size, there is absolutely no possibility of it becoming a first-class mobile phone manufacturer. Therefore, the goal of Meizu is to be the number one second-tier brand. Maintaining its brand influence and existing market share in a saturated market is enough.

According to the host, Meizu's business strategy also reflects the young man's pragmatism, as he entered the fiercely competitive mobile phone market after achieving an absolute leading position in other industries.

Regardless of his motives, this young man was quite rational in his business strategy. He did not become arrogant because of his achievements, nor did he think about challenging the existing order.

"Meilan's shipment volume is still very important. Let's keep it up. Meilan's market is very important for both Meizu and Weilai."

It was March, and Mr. Tan was still in Beijing for a meeting. His interview caused a huge sensation. But if we're talking about the hottest topics in 2019, it would definitely be 5G and Huawei. That's unshakeable.

According to the information the host revealed to him, the first episode was originally scheduled to feature Mr. Ren, and the interview had already been recorded. However, due to various considerations, the episode featuring Tan Jincheng was released ahead of schedule.

The friction between the two sides has eased somewhat recently, and the current situation is quite good. Maintaining the current situation is more advantageous for us. Tan Jincheng and Wei Lai's performance over the past year can demonstrate our openness to the world.

The new Foreign Investment Law was passed at this year's Two Sessions. In the context of significant changes in the investment environment, this law provides a legal guarantee for attracting foreign investment.

"Okay, no problem, we will continue to maintain our current business strategy."

Li Nan came to the capital to report to his boss. He was accompanied by the other two members of the "Three Musketeers" and Chen Mingyong. The boss was too busy and it was usually difficult to schedule a time with him.

During the Spring Festival, they knew that their boss was having a comfortable time in his hometown and had even made it to the trending topics on short video platforms a few times. They also thought about visiting their boss's hometown to get closer to him, but in the end they didn't dare to, as their relationship didn't seem to have reached that point.

Tan Jincheng was satisfied with Meizu's performance in 2018. The company's business strategy for the mobile phone business was quite pragmatic, which was to maintain an annual shipment volume of 1500 million to 2000 million units.

As for market share, that's not particularly important. If Meizu maintains shipments of 15 to 20 million units per year, its user base will grow over the years, eventually exceeding 100 million.

With over 100 million users, even a second-tier mobile phone manufacturer has a terrifying influence. He was somewhat glad that he hadn't cut off the mobile phone business back then.

The automotive industry can't really benefit from the hype surrounding 5G, but he's different. He's able to maintain a certain level of popularity in the tech world thanks to his personal influence and his status as the actual controller of Meizu phones.

This popularity is entirely due to the sale of 2000 million phones. If the phone business were to be cut off, or if Meizu were to be discontinued like Huang Zhang did because it wasn't profitable, leading to a sharp drop in sales, then it would be too late to cry.

Many people believe that Huang Zhang is the soul of Meizu, but after running Meizu for two years, Tan Jincheng has found that Huang Zhang is now the biggest obstacle to the company's progress. When he retired, Meizu, led by the three musketeers, performed quite well.

Once he steps into the limelight to manage things personally, Meizu will start doing all sorts of abstract things. These days, it's really absurd that some people still cling to the idea that answering user questions on forums is service.

If Huang Zhang were still in charge of Meizu, he would never have had the courage to implement the same reforms that Tan Jincheng did to Wei Lai. The departure of the three key figures was practically inevitable.

"MediaTek has requested a collaboration with us. Boss, how would you respond?"

Before Tan Jincheng took over, Bai Yongxiang was in charge of Meizu's chip procurement business, mainly acting as an intermediary with MediaTek. However, Bai Yongxiang was just a figurehead; the real decision-makers were Huang Zhang and his family members.

Regardless, Bai Yongxiang also established a good relationship with MediaTek during this period.

After taking over Meizu, Tan Jincheng immediately chose to reconcile with Qualcomm, shedding the reputation of being a sycophant of MediaTek. It was this reconciliation that enabled Meizu phones to achieve a qualitative leap in performance.

In terms of public opinion, Meizu's actions have severely damaged MediaTek's business. After Tan Jincheng took over, Meizu suffered a huge blow, losing a customer with annual sales of 20 million units, which was met with cheers from tech enthusiasts.

Two years have passed, and Meizu is doing better and better. MediaTek wants to continue the cooperation. After all, making money has always been MediaTek's top priority. The so-called high-end chips supplied to Meizu are being used by Xiaomi in Redmi phones. Isn't that all for the sake of making money?

"That's just how realistic the market is. If we don't perform well this year, MediaTek probably won't even give us a second glance."

To maintain the chip supply contract with Meizu, Tan Jincheng's approval was required. MediaTek couldn't reach Tan Jincheng, so they had to rely on Bai Yongxiang as a mediator. The success of Yangzi Motors and Meizu made people realize that this young man possessed a kind of magic.

That is, to bring a company on the verge of bankruptcy back to life. Once that impression is formed, it is truly terrifying. It will lead more companies to be willing to cooperate with Tan Jincheng, or even to take the initiative to seek cooperation with him.

As the world's second-largest mobile chip supplier, MediaTek dared to betray Meizu, which shows that it didn't take Meizu seriously. However, Meizu under a new owner is completely different from the previous Meizu.

With the same annual shipment volume of 2000 million units, Meizu's current quality is much higher than that of the small factory in Zhuhai before. It uses Qualcomm chips, BOE screens, Luxshare manufacturing, and its batteries are supplied by sister companies.

There are significant differences in terms of high-end suppliers, contract manufacturers, and costs. In addition, Meizu's current collaboration with Weilai to develop an in-vehicle infotainment system is also attracting considerable attention in the industry.

"Cooperation is no problem, but let's stick to the low-end market. Also, let's skip it this year. We also need to consider Qualcomm's attitude. Just keep in touch with MediaTek and let them express the possibility of a settlement."

When it comes to high-end products, MediaTek has always boasted impressive specifications on paper, such as deca-core chips, and its product launches certainly dazzle the eye. However, the actual performance has been less than satisfactory.

"Never lost in benchmark tests, never won in user experience."

This is how users describe MediaTek's high-end chips—a very vivid description.

This year, MediaTek will release its first 5G chip, the Dimensity 1000, which is touted as a mass-producible high-end 5G chip. However, MediaTek's reputation for being a high-end brand has been ruined, and nobody trusts it anymore.

"Also, MediaTek chips will only be used in Meizu's Blue brand series from now on. We can't let ourselves be cheated a second time after being cheated once."

MediaTek is definitely a must-have for collaboration. Even Xiaomi, often criticized as Qualcomm's "son," partners with MediaTek. After all, while Qualcomm chips have good processing capabilities, they're also expensive, and it's not sustainable to keep using Qualcomm chips in Meizu's products. However, Tan Jincheng still wants to maintain a good working relationship with MediaTek. Although the betrayal didn't happen to him, he still needs to get some benefits in return. If this drags on for a year or two, it will be 2020.

The Dimensity series is a key product for MediaTek to turn around its image, and its performance is quite good. After suffering so many losses over the years, MediaTek has learned something, but as its first 5G chip, Tan Jincheng is not very convinced that MediaTek can mass-produce it this year.

Didn't you see the release date was changed again and again?

"This time we need to get some benefits from MediaTek. You can handle the specifics of the negotiation yourself, but you can tentatively reveal that I have money."

Tan Jincheng's words caused Chen Mingyong, who was drinking water, to spit it out.

He quickly apologized, wiping the table as he smiled and said, "Mr. Bai, you know what, this is indeed one of the most effective negotiation tactics."

Although I criticized it, there's really nothing to criticize.

The boss is really rich. His requirement is for Meizu to increase its shipments. Whether it makes money or not is not important. In addition, even if the negotiations with MediaTek fall apart, and they really continue to use Qualcomm chips, it will not pose any supply chain security issues for a small factory of their size.

Qualcomm wouldn't go so far as to allocate a portion of its market share to MediaTek, a small company like this. As long as the key issues are handled properly, given the current complex relationship between Tan Jincheng and Qualcomm, they won't care too much.

As a fellow shareholder of Xiaomi, Tan Jincheng had a good relationship with Qualcomm, having secured Qualcomm's flagship chips for his mobile phone back in the day, along with some minor collaborations in the automotive sector and connections on Wall Street.

"Haha, that's a really good idea, unless MediaTek doesn't want to do business with us."

Bai Yongxiang still harbors resentment about the betrayal he committed years ago. On the surface, he was in charge of the business dealings with MediaTek, but he really had to take the blame. This incident left him feeling utterly humiliated.

He felt a little uneasy about accepting the request for further cooperation so easily.

Like Qualcomm, MediaTek's most important business is mobile phone chips, but it also has involvement in areas such as TV chips, IoT and automotive chips. Compared to Xiaomi's system, although the Weilai system is weaker in home appliances, Weilai has automobiles, which makes it seem more high-end than Xiaomi's system.

From LeEco to Xiaomi, and then to Weilai, these three companies have all followed similar paths in terms of their overall direction. Jia Yueting's idea of ​​an ecosystem chain is very forward-thinking.

It's a pity that his LeEco venture failed to materialize, and he's currently in the process of returning to China next week. However, this is evident in his work at Xiaomi and with Wei Lai. It wouldn't be an exaggeration to say that Xiaomi expanded rapidly by stepping on the corpse of LeEco.

The competition between these two companies was extremely fierce back then. Both LeEco and Xiaomi phones had their share of minor flaws, but in terms of hardware configuration and price, Xiaomi really couldn't compete with them.

In terms of user reputation, LeEco phones were better than Xiaomi phones back then. The two companies were neck and neck in the competition. After LeEco ran into problems, Xiaomi took over most of its mobile phone market share.

One rather conspiracy theory suggests that the news of LeEco's debt crisis first spread to the media through Lei Jun's (LeEco's CEO) WeChat Moments. In reality, LeEco's debt crisis had not yet fully erupted and could still be kept secret.

However, after Lei Jun's WeChat Moments post was exposed, LeEco's debt system gradually and fully erupted.

Of course, this matter has a bit of a conspiracy theory to it. LeEco's fundamental problem is not actually its debt. As its most direct competitor, Lei Jun could at most kick it while it's down, which is common in corporate competition. Tan Jincheng himself often does this.

“MediaTek probably has ulterior motives. I’ll try to talk to them about this, but please don’t call me out on this, boss. Anyway, I won’t agree to anything.”

Every company has a main business and a side business. MediaTek's revenue in 2018 was NT$2380 billion, a slight decrease compared to 2017. The decline was in its main business, but its performance in areas such as TV chips and the Internet of Things was still good.

Clearly, in an environment where the mobile phone market is entering a period of intense competition for existing customers, MediaTek is also looking to expand into its side businesses to increase revenue. While companies like Weilai, which have a large domestic presence, may not bring about any significant changes to its core business, they are certainly good partners.

"Okay, you can control that yourself. I won't comment on it publicly."

"Then thank you boss."

Bai Yongxiang smiled happily. In the past two years, his title of president has no longer been just a name without substance. He is still in charge of chip procurement, but his actual power is completely different. He has truly become the person in charge of this business.

Tan Jincheng's arrangements for Meizu were quite simple: Bai Yongxiang was in charge of the procurement of core components such as chips and related businesses; Li Nan was in charge of Meilan; and Li Yan was in charge of the Flyme system and automotive-related matters.

CEO Chen Mingyong is responsible for Meizu, including channel optimization and daily operations management. The four core management teams are each responsible for a part, which seems to be scattered. However, because the responsibilities are assigned to individuals and Chen Mingyong and Zhao Xinyi act as intermediaries, Meizu's operations are smooth.

Zhao Xinyi is currently the legal representative of Meizu and also serves as the general manager of the purchasing department. Although she does not officially work at Meizu, she travels to Zhushi for a few days every month and every quarter.

In terms of procurement, Zhao Xinyi can be considered his chief steward. From Shanchi to Leichi, and then to Weilai, Zhao Xinyi has always been in charge of this work and has a wealth of experience.

In a transparent market, even if she doesn't know much about the mobile phone industry, it's still hard for her to escape the notice of shady practices in the procurement of some components.

In addition, she understands the boss's mind best. As long as it does not affect the company's strategic goals, including sales, there is no need to worry about some "minor" things that are not noticed, and there is no point in worrying about them anyway.

It's impossible for such a large company with so many people from top to bottom to be absolutely clean. If we were to check this stuff every day, we wouldn't be able to do any other work.

"Alright, that's about it. Let's hold on a little longer. In about two years, the market landscape will change a bit. This year, let's move towards 5G to add another selling point."

Whether 5G is useful or not is highly controversial, but it is indeed a very good selling point for mobile phone manufacturers. 2019 was the hottest year for 5G, and everyone was trying to associate it with everything.

A certain influential Bilibili user became a sensation across the internet this year, and even after that unexpected incident at the end of the year, the popularity of 5G remained undiminished for the next two years.

Phones that ride the wave of the 5G concept will sell well, and Meizu needs to seize this big trend and keep up with the pace.

Furthermore, Chen Mingyong, Bai Yongxiang, and others were well aware of the changes in the market landscape that Tan Jincheng referred to.

In recent years, in the domestic mobile phone market, almost all manufacturers, including Apple, have been suffocated by Huawei. It wouldn't be an exaggeration to describe it with the line from the movie, "I'm not targeting anyone in particular, but everyone here is trash."

Of the four major Chinese smartphone manufacturers (ZTE, Huawei, Coolpad, and Lenovo) that started with contract phones and had a terrible reputation, only ZTE, Huawei, Coolpad, and Lenovo have truly succeeded in their transformation and now hold a 30% market share. This is truly astounding. In addition to their strong marketing capabilities, their technological accumulation is the key to their success.

In this respect, no one in China can compare.

Last year, the friction incident pushed their national pride to its peak. This kind of behavior, where one company becomes the world's leader, is highly admired in any culture.

This year is almost certainly the peak year for Huawei, and all other manufacturers will have to avoid its dominance.

However, consumer enthusiasm will gradually fade over time. No one can maintain high spirits forever. When the supply of various aspects, including chips, is affected, the drawbacks of this friction will gradually become apparent.

In fact, this situation was already evident in the second half of 2018, but it is not very obvious yet. In that time, our competitors will have an opportunity.

For a small manufacturer like Meizu, if Huawei continues to maintain this market share and squeeze the living space of other leading manufacturers, then other manufacturers will inevitably come to take their market share, and survival will truly become a difficult task.

The trade friction has boosted the public's awareness of the chrysanthemum factory to its peak, but it has also caused considerable problems in the supply chain. It can only be said that every event has its advantages and disadvantages.

"Alright, that's enough, you guys can go ahead and get busy. I have other things to do."

In Tan Jincheng's memory, Meizu's sales plummeted in 2018 due to the discontinuation of Meilan, leaving it without a high-volume product. By 2019, it had officially gone out of business. Now, under his leadership, the situation has changed significantly.

The three musketeers didn't leave, and Meizu is still pushing sales. However, he wasn't entirely confident about how well it would perform in the first year of 5G. He knew Huawei's performance this year; it was unprecedentedly strong, directly reaching the second-largest global shipment volume, even dethroning Apple.

Despite the economic downturn, consumer enthusiasm remains high. How should Meizu and Weilai capitalize on this consumer enthusiasm?

(End of this chapter)