2003: Starting with Foreign Trade

Chapter 938 The Excellent Performance of the European Market

"So, Mr. Wang, are you ready to face the media?"

As the saying goes, even an ugly daughter-in-law has to meet her in-laws eventually. Weilai's corporate culture is different from that of Great Wall. In terms of publicity methods and attitude towards the public, Weilai is more open. This openness is not only reflected in its marketing model.

For example, Weilai regularly organizes events that include groups such as netizens, car owners, and car reviewers to listen to these most authentic voices, break the information cocoon, and avoid making blunders in car design.

This activity has been ongoing since the launch of the first-generation Yuechi A1 for ten years, and many senior executives involved in design, development, and marketing, including Tan Jincheng, are required to attend regularly according to the schedule.

At least twice a year.

Since they are not from the industry, as their status rises, they will be surrounded by a group of people who only know how to flatter or agree with them. These people may not be doing it on purpose, but they just don't want to refute.

If a company is in this state for a long time, its founders and executives will be trapped in a tangled information cocoon, making abstract decisions.

Many leaders are very wise and decisive in the early stages of starting a business, and each step can bring the company to a new height. However, in the later stages, both the company's development and their words and actions seem very abstract, and this is the reason why.

The most famous example is probably Ms. Dong, who seems to have fallen into a severe information cocoon.

Wang Fengying has never participated in such an event before, but she will have to accept it starting this year. The car owners in Weilai are mainly young people, and the selection method is random. They won't give you any special treatment.

At the event, some car owners actually criticized the designers and even Tan Jincheng himself harshly because of a certain unreasonable function. Wang Fengying had never encountered such a situation when she was with Great Wall Motors.

"Haha, Mr. Tan, are you referring to this time or later? If it's later, I'll still have to learn more. As for this time, I believe the reporters here won't dare to ask any random questions, right?"

In the six months since Wang Fengying came to Weilai, she has maintained her low-key habits, but her mental state has changed significantly compared to when she was in the later stages of the Great Wall project. Simply put, she has found the feeling she had when she first started working.

Passion.

Being with her family, the youthful Wei Lai, and the new track—all these experiences were incredibly fresh and exciting for her, who was still in her prime. Tan Jincheng's trust also made her feel right at home.

Although she had only known this young boss for about six months, his magnanimity and vision had already won her over.

"Haha, that's hard to say. I don't believe President Wei won't send someone to cause trouble."

The first official debut of Yuechi Auto certainly needs a formal occasion, and choosing to make its official debut on the media day of the Shanghai International Auto Show is arguably the best opportunity.

As the general manager of Yuechi Auto, Wang Fengying was undoubtedly the star of the show at this afternoon's press conference.

"It shouldn't be that bad. Mr. Wei is probably a little uncomfortable with me joining Weilai, but after all, I have served Great Wall for so many years. Mr. Wei still has that kind of personal connection and perspective. However, it's hard to say about other car companies."

The unfavorable market environment, coupled with the entry of Tesla and new players, has made the market increasingly complex. Since the first quarter of this year, there has been a noticeable increase in negative online opinions about Weilai.

Especially after the broadcast of the dialogue program and the release of Weilai's impressive financial report last year, coupled with the continuous problems of Wenjie M9, a large number of negative public opinions about Weilai emerged.

Wei Lai, who is in the eye of the storm, is not only selling cars well, but also facing public scrutiny.

"Haha, then we'll have to see how quick you react, Mr. Wang. You're the star of the show today, I won't be attending."

Just as Wang Fengying had thought, Wei Lai took this press conference very seriously and made all the necessary arrangements. However, there was no guarantee that competitors might send people to cause trouble. These competitors included not only vehicle manufacturers but also battery suppliers and even intelligent driving system suppliers.

What are the advantages of Weilai Auto, including Yuechi Auto?

The novel design and outstanding appearance have brought huge traffic to the products of Weilai. When the first generation Yuechi A1 appeared, compared with the domestic companies that were still copying each other, Weilai gave people a refreshing feeling.

In terms of investment, Wei Lai's earliest investment can be traced back to the Flash Technology era, which was in 2005. At that time, apart from continuing to invest in companies such as Flash Technology and Orange, almost no money was spent on himself.

For a long time, he did not acquire many personal assets, including his initial house or even the villa, which could be classified as "essential needs".

The money earned was invested in preliminary layouts, including batteries, design institutes, and equity investments in auto parts factories. Weilai was founded in 2008, but preparations had already begun three years earlier.

In 15 years, Weilai has its own design institute, its own battery brand and factory, as well as its own engine factory. The chassis and other tuning aspects have also been greatly improved thanks to the technology acquired from Lotus, Proton and other companies.

It is precisely because of these huge investments that Weilai has become what it is today.

"On the surface, Weilai appears to be a company that excels in marketing, but in reality, Weilai's competitiveness lies in its products."

This is how most people in the automotive industry perceive Weilai. No matter how good the marketing is, in the end, it is the product that speaks for itself. It is precisely because of its strong product capabilities that Weilai dares to market and dares to take the initiative to lower prices in competition with its peers.

Attacking the product competitiveness of Weilai is what our competitors have been doing most this year.

Batteries have become the preferred choice for competitors. From Tan Jincheng's investment in Jinshidai and Weilai's financial reports, it is clear to everyone that Weilai's battery business is more threatening than the whole vehicle system.

After all, this is a force that even the Americans are wary of. Among the competitors attacking Weilai's battery business are even some of Weilai's current customers. Cooperation is one thing, but the relationship between the partners is even more important.

"If asked about the live piercing incident, you can refuse to answer."

Tan Jincheng made many arrangements for the press conference, but Wang Fengying's words also made sense. It was entirely possible that some difficult problems would arise, and the live broadcast of the battery puncture test, which was currently the hottest topic, was the best target for attack.

Wang Fengying wasn't in charge of this area, so she really wouldn't know how to answer if asked. Now that she had her boss's permission, she wasn't worried anymore.

That being said, she has weathered many storms and seen all sorts of situations, but serving as the third-in-command in such a high-profile company as Weilai obviously presents her with even greater challenges than she did at Great Wall.

In the boss's words, you can be low-key, but in the future, it may be difficult for you to be as low-key as you say.

As of March 2019, among all the social media platforms of the Great Wall Group, the official Weibo account with the most followers had approximately 300,000 followers, while very few other matrix accounts had more than 200,000 followers.

In contrast, Wei Lai's official Weibo account has gained over 200 million followers due to its knack for creating humorous content and frequently making fun of executives, including the boss. Among the official accounts of many car companies, Wei Lai has a significant lead over Hyundai Beijing, which ranks second in terms of follower count, by more than 130 million.

The number of followers of just one official Weilai account is equivalent to the total number of followers of the top car companies.

Accounts managed by young people cater to their tastes, occasionally pranking leaders, promptly replying to comments, and holding frequent giveaways. In the words of netizens, Wei Lai's official account is as active as a mannequin.

After Wang Fengying joined the company, although she and Great Wall formed a certain tacit understanding and the management intended to suppress the hype, the official account operators didn't care about that. They used various methods to capture some of Wang Fengying's work and daily life.

I don't know how these people managed to stake out the area; they even managed to film Wang Fengying taking a walk after dinner.

Saying nothing, yet saying everything, it won't be so easy for Wang Fengying to maintain her mystery as before.

"Okay, with the boss saying that, I feel much more at ease. To be honest, I'm still a little nervous."

"Haha, Mr. Wang, you're joking. This is nothing to you."

As vice president, Wang Fengying's reform direction after taking office was the parts supply chain. As the general manager of Yuechi Automobile, the first major thing Wang Fengying handled after taking office was naturally the full acquisition of Yangzi Automobile, which is also under the parent company.

After abandoning the IPO plan and figuring out the boss's true intentions, Zhu Pei and his team had little resistance to the overall merger of Yangzi Automobile into Yuechi Automobile.

It makes sense. Even if Yangzi Motors successfully goes public, its market value will never exceed that of Jiangling Motors. At most, the value it gets will be limited by Jiangling Motors. However, if it is fully integrated into Yuechi Motors...

Once Yuechi Auto launches its IPO plan, with annual sales of nearly 80 vehicles, its valuation will be several times that of Yangzi Auto.

As for Chuzhou, the boss will naturally take care of that.

It was indeed Tan Jincheng who made the contact in this regard. Due to historical issues, Yangzi Automobile also has several shareholders, including the Chuzhou State-owned Assets Supervision and Administration Commission and Changfeng Motor. If Yuechi wants to acquire Yangzi Automobile in its entirety, it has to buy the shares of these small shareholders.

For the Chuzhou government and Langya District, it was a great pity that Yangzi Automobile lost its IPO opportunity. However, after Tan Jincheng's earnest persuasion, they finally accepted the fate in a very cooperative manner.

Every sale is painful, but overall it is for the sustainable development of the company. Only under Tan Jincheng's leadership did Yangzi Automobile truly rebirth and achieve glory, and in doing so, the brand was preserved.

They have reason to believe that Tan Jincheng did this for the better development of the company.

Moreover, Tan Jincheng promised that taxes and other revenues would remain in Chuzhou, and that the future development of Yangzi Automobile would focus on Chuzhou and Langya District as much as possible. It's not like we're moving Yangzi Automobile away, and that's enough.

For local governments, an important KPI is GDP. Large groups like Weilai cannot possibly include all of their hundreds of billions in revenue in Beicang District; otherwise, Beicang District would take off.

Each subsidiary and factory has an independent legal entity, and the revenue it generates is recorded in the local revenue account. The revenue from Luzhou belongs to Luzhou, and the revenue from Chuzhou belongs to Chuzhou. This is why local governments are willing to invest in and win over enterprises.

For Yuechi Auto, the integration of Yangzi Auto has also improved its overall system of gasoline-powered vehicles, from rugged off-road vehicles to urban SUVs and pickup trucks, creating a complete industrial chain. "Isn't this just Great Wall Motors without new energy vehicles and commercial vehicles?" Wang Fengying immediately felt a sense of familiarity.

Speaking of which, Great Wall Motors performed even worse than Weilai in the sedan market. Weilai doesn't make sedans (gasoline cars), but Great Wall Motors does. They have actually developed many sedan models, but without exception, none of them made a splash after being launched on the market.

After several failures, Great Wall gave up. However, in the field of new energy vehicles, ORA has performed quite well for the time being, gaining the favor of many users in the low-end market with its good looks and low price.

The ET5 from Weilai has also performed well in the B-end sedan market. Since its launch, its monthly sales have never fallen below 1,000 units, and since its official delivery, its monthly sales have been over 2000 units.

January sales reached a record high of 5795 units, making this model one of the best-selling new energy vehicles in the first quarter, though this figure is based on global sales.

It's often said that A-segment cars are all about sales volume, but to go for the high-end market, you have to look to B-segment cars. Weilai's first B-segment model not only sells well in China, but is also quite popular overseas, especially in the European market.

Chinese consumers prefer long and tall car models, but the European market is different. The ET5 has differentiated its production for the Chinese and European markets, and this strategy is clearly more popular in the European market.

The ET5, which competes with the Tesla Model 3, has a more luxurious interior and is cheaper. In addition, the ET5 can also compete with Tesla in terms of performance and safety.

In addition to the positive reputation built by the ES6 and ES8, the ET5, which has a higher delivery rate than Tesla, has now achieved total sales of over 8000 units in Europe. Although this is still less than half of Tesla's sales in March, its overall performance is already promising.

Deliveries of the Model 3 in Europe began in March, with a total of 15771 units delivered, setting a record for the highest monthly sales of a single model in Europe and solidifying its unshakeable position in the electric vehicle market.

However, Weilai is not far behind. In the entire first quarter, the total overseas exports of four models, including the ES3, ES6, ES8 and ET5 (L1 is not yet targeted at the European market), exceeded 1.6 units.

Compared to the domestic sales of 3.65 vehicles, the overseas sales of more than 1.6 vehicles by Weilai New Energy are even more surprising. It is true that it is not popular at home but popular abroad. Weilai's overseas strategy has already taken shape.

Among the vast overseas markets, Tan Jincheng values ​​the European market the most. After all, as a mainstream market, Europe has the highest profit margins, and its electrification infrastructure is also more complete compared to other markets.

"Once our German battery factory is officially in operation and reaches full production capacity, we will no longer be able to export according to the proportion of complete vehicles. This will make us more competitive in Europe."

Under the current tax rate, the tax rate for domestic automakers exporting complete vehicles to the EU is 10%. If the batteries are manufactured in Europe, the specific tax rate could be even lower, but the specific tax rate still needs to be negotiated with EU countries.

Tax rates are negotiable once a certain scale is reached, both domestically and internationally.

As long as Weilai doesn't lower the price too drastically, which might raise suspicions of anti-dumping by the EU, there shouldn't be much of a problem.

Based on current orders from Europe and other markets, Weilai's export volume in 2019 is expected to reach over 60,000 vehicles. If the performance is good in the following three quarters, the export volume could potentially reach 70,000 or even 80,000 vehicles.

An export volume of 60,000 to 80,000 vehicles is enough to get into the top ten of domestic car exports. This includes first-tier domestic brands such as BYD, Geely, and Great Wall, whose export volumes are roughly the same.

In the past few years, although Weilai has been making international plans, it started too late and its annual export volume is not very large. In terms of fuel vehicles, apart from being cheap, it has no advantage in overseas markets.

In Tan Jincheng's view, he did not want to pursue this purely low-price strategy in overseas markets, especially in the European market. Rather than putting on a show of wealth and having our employees work hard to subsidize overseas markets, it would be better to sell a few fewer cars.

Another crucial point is that if Weilai wants to establish a mid-to-high-end image like Tesla in the European market, which it values ​​most, then it cannot allow its models to be too cheap.

The ES3 and ET5 are the two best-selling models, which are positioned to compete with the Model S and Model 3. Although the ET5, which sells for 3 euros, is 1 euros cheaper than the Model 3, it still sells worse. However, Tan Jincheng does not consider this a failure.

Firstly, the ET5 was released and launched later than the Model 3, and its global impact was not as great as that of the Model 3. Secondly, Western cultures are essentially one, which gives Tesla a natural advantage.

Moreover, in the first quarter of exports, they were able to deliver more than 8000 vehicles, capturing a significant market share from Tesla. What more could anyone in Weilai possibly want?
This year is a year of change, and it is also the first year that WILI has officially launched its efforts in overseas markets after making full preparations.

Despite the unforeseen circumstances at the end of the year, Tan Jincheng's ambitions remain high: to break into the top ten in the European pure electric vehicle market.

Currently, Tesla ranks first in market share among pure electric vehicles in Europe, followed by BMW, Renault, Hyundai, and Mitsubishi, among other local and smaller companies.

Among the top ten companies, there is not a single Chinese company. Wei Lai wants to be the first one.

Dizi has performed strongly in the new energy vehicle market, but it has not yet fully emerged from its predicament. It will take another one to two years before it truly takes off, during which time Dizi will definitely focus on the domestic market.

This gave Wei Lai an opportunity to establish a foothold in the European market, without having to compete with domestic manufacturers, making things much easier.

However, before that, there is still one major problem to solve, which is to prepare for unexpected events at the end of the year.

It should be less than eight months in total, right?

"Given the current international situation, it is necessary for us to establish two supply chain systems."

The first press conference of Yuechi went smoothly, just as Wang Fengying had expected. There were many sharp questions about her positions at Great Wall Motors and Weilai, but with prior preparation, these were not difficult to handle.

In the boss's words, it's like saying both sides praise it, what else can we do?
After the press conference ended, Wang Fengying received a call from her boss. She thought he was going to ask about the press conference, but she didn't expect him to want to talk to her about the restructuring of the supply chain.

It's impossible to predict what unexpected events might occur, and Tan Jincheng's excuse of changes in the international situation is equally applicable. After all, his series of stockpiling plans had already given his companies a lot of room to maneuver.

"How exactly will it be restructured?"

Wang Fengying didn't quite understand what her boss meant. Hadn't they just reorganized?
"I'm referring to the restructuring of inventory management."

As the head of a vehicle manufacturer with annual sales of millions of vehicles, Tan Jincheng needs to make many changes given the anticipated risks. These changes include four major dimensions: supply chain restructuring, production system transformation, financial risk mitigation, and market layout transformation.

These four dimensions can be considered an unconventional strategic deployment. In addition to the fact that Weilai's supply chain system reform had its own need for change, it was also related to the layout in these four aspects.

Due to the maturity of the supply chain, car manufacturers typically do not keep more than three months' worth of inventory for common parts, and some even only have one month's worth of inventory. The more inventory they have, the greater the risk.

The stockpiling of some key components and high-end parts is generally done between three and six months, or six to a year. Wei Lai has followed this approach before.

However, it is clear that the events at the end of the year are more serious than the old man going crazy. At most, the old man will just buy expensive things. As long as they are not on the Entity List, the impact will be limited, and he will not have to worry about not being able to buy them.

By the end of the year, it's quite possible that you won't be able to buy them at all. Not to mention high-end ones, even the most common screws, nuts, washers, and other parts might experience supply shortages during times of panic.

As far as I can remember, even large manufacturers like Volkswagen seem to have had to shut down some factories due to the shortage of Bosch ESP chips, as well as the impact of other factors such as the second chip crisis.

"I plan to extend the stockpiling period for chips in key components such as our ESP ECU."

Tan Jincheng's deep voice slowly drifted in, causing Wang Fengying to momentarily lose her senses.

For a moment, he even wondered if the new boss had paranoia, considering that Wei Lai's stockpiling period for these key parts had already reached six months!

Six months' worth of inventory isn't enough? Do we need to increase it further?

Zhao Xinyi, who was responsible for assisting Tan Jincheng in managing procurement, was unfazed. Having experienced her boss's previous shady practices of hoarding goods, she was already numb to it.

"Don't panic, Mr. Wang. Let the boss explain in detail. Besides, he has money. If he wants to prepare, let him prepare."

Wang Fengying smiled wryly. Stocking up on goods is not something that can be done on a whim. She finally understood what her husband meant.

“Our boss is very insightful, and sometimes he makes decisions that seem mindless at the time, but in hindsight, these decisions are very forward-thinking. The biggest challenge in dealing with him is keeping up with his line of thought.”

The biggest problem between them, who are from different generations, and their new boss is actually a clash of ideas.

Of course, in her husband's words, it doesn't matter if you don't understand; just do what the boss asks. Doing the tasks assigned by the boss well can also demonstrate your value.

"What are you talking about? What do you mean I'm rich? What does that have to do with me?"

He rolled his eyes at Zhao Xinyi, but what he really wanted to say was more than that. Hubei Province, with Jiangcheng alone, accounts for 37% of the country's auto parts production capacity. This major automotive industrial city holds an extremely important position in the automotive industry chain.

Weilai needs to start signing backup agreements with second-tier suppliers outside of Hubei Province now to ensure the integrity of the supply chain.

The dual-track supply chain is just a foundation. For Tan Jincheng, this is also an opportunity, although it is somewhat unfair to say so.

Of course, what he needs to do is not only from a business perspective, but also from a humanistic perspective. Not to mention that Wei Lai has many businesses in Jiangcheng, he can do a lot just from the perspective of humanistic care.

Unlike in 2008, he now has the power to change certain things, but he can change the outcome.

P.S.: This chapter was quite difficult to write. It would be inappropriate not to write it, but if I did write it, I wouldn't be able to control the tone. If anyone is unhappy with it, please be gentle with your criticism.

(End of this chapter)