2003: Starting with Foreign Trade

Chapter 972 "Look Further Ahead!"

At 9:30 p.m. on June 27, a message quickly spread in the automotive industry and then began to spread on the internet, reaching the top 20 of Weibo's trending topics by the middle of the night.

A statement from the founder of Bordrin Motors in the company's internal WeChat group, announcing that Bordrin had officially entered bankruptcy liquidation, made this little-known new energy vehicle company a hot topic on the internet.

Bordrin, which burned through more than 50 billion yuan, had foreign investment, state-owned enterprises, and local government support. It even started building a factory in 2017, so it was not without capital. However, it failed before it could even start mass production.

"Goodness, another car company has gone bankrupt. How many is this now? I'll have to be extra careful when buying a car from now on."

Besides emerging brands, many traditional automakers are also facing bankruptcy or operational difficulties, such as Dongfeng Renault, Borgward, Southeast Motor, Zhongtai Motor, and Lifan Motor, which was taken over by Wei Lai and entered bankruptcy liquidation last year.

According to statistics from the China Passenger Car Association, more than ten car companies had no sales in 2020, including well-known traditional car companies such as Tianjin FAW, Zhidou Electric, and Huatai Auto.

The series of scandals involving car companies have not only sparked heated discussions online, but have also made consumers realize that they need to be more discerning when buying a car in the future, and not to believe every car company's boasts.

If the business goes out of business, where should I go to repair my vehicle, and who should I contact if I need to replace parts?
"Did you see the news last night?"

The next morning, Zhang Xupeng brought his child to Tan Jincheng's house early, just as Tan Jincheng was getting up.

Two days ago, primary and secondary school students in Beicang District had already started their summer vacation. However, this year's summer vacation is the most special one for students. It seems that there is not much difference between having a vacation and not having a vacation.

Accompanying Zhang Xupeng was Zhu Chuan, the newly appointed general manager of Beicang City Investment. Xie Hongjun, the former head of the city investment company, had already been promoted to a new position.

Although he missed out on Orange Group, Xie Junhong still invested in two large conglomerates, Flash Group and Weilai Group, during his tenure. This not only brought tremendous development opportunities to Beicang, but also allowed Chengtou itself to reap huge benefits during the growth of these two companies.

Through its parent company's holdings in Shanchi Technology and Bafang Electric, it directly holds shares in Weilai Group and Leichi New Energy. These four companies alone are enough to elevate Beicang City Investment to a higher level.

Most local government financing vehicles (LGFVs) rely on land revenue for their livelihood; however, thanks to its ambition to invest in Fortune 500 companies and the network of contacts it has accumulated in the investment community, Beicang LGFV has long since escaped the predicament of relying on land revenue.

Xie Junhong was clear-headed during his tenure. Although he missed out on Orange Group due to a lack of understanding, he would find opportunities to get involved in any internet company that Tan Jincheng personally took charge of.

If you can't get in the first round, then try to find a way in the next round, even if it's just to join in the fun. And as internet companies go public one after another, even those who just join in the fun can reap considerable profits.

Zhu Chuan's luck has been worse since he took office, as Tan Jincheng has become less active. However, opportunities have arisen, and Beicang City Investment is still operating smoothly under his leadership.

Moreover, Zhu Chuan also knew that although Tan Jincheng wasn't making many moves in the current investment environment, what about the future? Didn't he make two big acquisitions last year? There were still plenty of opportunities.

Since January, Inco Medical's stock price has surged by 670.34%, reaching around 128 yuan. With a market capitalization exceeding 300 billion yuan, it has become one of the A-share listed companies with the highest growth this year.

Tan Jincheng gained over 85 billion yuan through this acquisition, a remarkable speed at which he made a profit.

"How could that be? That would be a great disservice. Old Zhang, you show Mr. Zhu around, I'll be right there."

This was Zhu Chuan's first visit, and he brought some gifts, mostly children's toys, nothing expensive. However, several children playing in the yard were curiously looking at them.

Seeing this, Zhu Chuan laughed and greeted Tan Jincheng before following Zhang Xupeng out to distribute gifts. After wandering around for a while, Tan Jincheng had a simple breakfast and then led the two of them to the study.

"I've heard that the industry is becoming more and more concentrated. In fact, it's similar to the electric vehicle industry. Although the market cannot form a monopoly, the trend is that, like in Europe, only a few mainstream car companies remain."

Tan Jincheng finally answered Zhang Xupeng's question.

"Do you think anyone will come to the rescue?"

Tan Jincheng shook his head: "No one will save them. First, there's no need, and second, there's no value in it."

With the ability to burn through more than 5 billion yuan, Bordrin must have some strength. However, this new force, established in Nanjing in 2016, doesn't actually have much to offer. There were previous reports that Bordrin's employees last received their salaries in November 2019.

In corporate bankruptcy liquidation, employee benefits are usually the top priority. At least when a new owner takes over, you must make this commitment; it is the most basic condition for taking over.

The unpaid wages, which have been outstanding for more than six months, amount to a considerable sum. However, this is not the most critical issue. The most critical issue is that Bordrin Motors has virtually no assets.

The land for the factory building clearly belongs to Jinling, and the rest is leased. It's essentially a light-asset company, no different from a shell company. There's no need to intervene in the liquidation, and no capital would be willing to take over such a mess.

"Will the peptides be ready soon too?"

In the sweltering heat of late June, several children from the Tan and Zhang families were playing games in the pavilion in the courtyard. From the study of Tan Jincheng, Zhang Xupeng, and Zhu Chuan, one could clearly see the children's activities.

Zhu Chuan had no intention of discussing these gossips; what he cared about was the status of Zhongtai. This new manager of Beicang City Investment had been negotiating with Zhongtai for almost a year regarding the 10% stake in Leichi that Zhongtai held, but unfortunately, Zhongtai was not yet willing to give up Leichi.

Receiving tens of millions of yuan in cash dividends from Leichi every year is still very attractive to Ying Jianren. In fact, before Zhongtai went bankrupt, Ying Jianren had already used various methods to transfer this equity to his personal investment company.

With the shares in his personal name, he could receive a considerable amount of cash every year, so he was naturally unwilling to give them up.

"It should be soon. Zhongtai didn't sell many cars in the first half of this year."

According to the information Tan Jincheng learned, Zhongtai only sold more than 3000 cars in the first half of the year. This is the sales volume for half a year, not just one month. Such sales volume is a recipe for disaster for a car company.

Although domestic sales were greatly affected in the first quarter and overseas recovery was slow in the second quarter, the domestic market has almost returned to normal and sales are gradually picking up. Most car companies performed quite well in terms of production capacity and sales in the second quarter.

Take Wenjie, which received life-saving funds at the end of April, for example. Their sales have increased rapidly. Car companies are essentially a financial game, but no matter how they exist, the most basic thing is to ensure sales.

Automakers set annual sales targets, and many of these seemingly exaggerated targets are actually the foundation for a car company's survival. If a car company fails to meet its sales targets, it will face certain difficulties.

Although he really wanted to acquire Leichi's shares from Ying Jianren, Zhu Chuan couldn't help but sigh, "It seems that for a car company to get on the right track, independent research and development is a must; relying on imitation is obviously not going to work."

Tan Jincheng smiled and said, "Actually, there's nothing wrong with imitating at the beginning, but not all imitations are the same. There are too many tricks to it."

From its early, precise positioning in the small SUV market to product diversification, resource integration, and backdoor listing, Zhongtai has been very successful, at least until 2017.

For a long time, Zhongtai received more attention in Zhejiang Province than Weilai. Geely, Zhongtai, and Weilai were the three car companies initially ranked in Zhejiang Province. Even Hozon New Energy, also known as Nezha, which joined later, did not receive as much attention in the province as Zhongtai, which was already facing difficulties.

The reason is simple: compared to Zhongtai, Hezhong is not a homegrown Zhejiang-based car company. They have considerable assets in Jiangxi and Guangxi provinces, and their focus is more on Jiangxi province.

Back then, when Weilai partnered with Zhongtai, it was considered a brilliant move and even seen as "climbing the social ladder." After all, Weilai had virtually nothing at the time, while Zhongtai not only had mature car models and a complete production line, but also a very good network of parts suppliers.

Even Tan Jincheng at the time needed to use his own marketing skills to help Zhongtai with its marketing in order to bring the two parties closer.

"Over-reliance on imitation is indeed one of the problems of Zhongtai, but poor management and product quality issues are actually the biggest reasons."

In the century-old automotive industry, newcomers simply cannot bypass those who entered the market early, just as a student who wants to surpass their teacher must first learn the teacher's knowledge.

This isn't just a phenomenon in the automotive industry; it applies to other sectors as well. Take beverages, for example. If Master Kong's iced tea is a hot seller, Uni-President will definitely launch a corresponding product immediately, otherwise they won't be able to compete.

For latecomers without any experience or technology, imitating mature models is one way to get started quickly. Several of our well-developed domestic car companies have come this way.

BYD's F3, Geely's Haoqing, Chery's Fengyun, and QQ were all developed by imitating mature car models.

However, as Tan Jincheng said, there are differences between imitation and imitation. Imitation is not simply copying homework, but rather thoroughly studying the other party's product technology and transforming the relevant technology into one's own technology. This is the essence of imitation.

It's fine for a car company to imitate its first model, but if subsequent models continue to imitate, or even openly imitate, then the car company can easily fall into a vicious cycle and eventually lose its soul.

However, the reasons for Zhongtai's problems are complex. In addition to the poor quality of the products themselves, the internal strife within the family and the inability of the management to work together to run the company are actually the biggest root causes of the problems.

The business owners have no interest in running their companies anymore, so they don't care about the life or death of their businesses.

"I won't offer too much advice on this acquisition; it's up to you to handle the negotiations. Also, you'll need to deal with any inquiries from the regulatory authorities."

Zhang Xupeng represents Flash, while Zhu Chuan is one of the representatives of Leichi. Flash's acquisition of Leichi has not yet been formally submitted; instead, it is in the stage of private negotiations. Flash has its needs, and Leichi has its demands. The two sides have been negotiating for several months.

This acquisition differs from Yuechi's acquisition of Yangzi Automobile. The acquisition of Yangzi Automobile by Yuechi can be seen as an internal departmental adjustment, which is relatively simpler. However, the actual controller of the listed companies Shanchi Technology and Leichi New Energy, which are linked through equity penetration, is Tan Jincheng. Therefore, the acquisition between these two companies actually involves related-party transactions.

The China Securities Regulatory Commission (CSRC) has always been very strict in investigating related-party transactions. Not only will a transaction be rejected if it is not handled properly, but it may also result in penalties.

“According to the regulations governing the acquisition of listed companies, your transaction constitutes a related-party transaction. There is no problem with me abstaining from voting. I believe you two are aware of this.”

From the perspective of the acquired party, Leichi's qualifications are not in question. It does not have a large amount of debt that is overdue and in a continuous state, and it has not committed any major illegal acts or is suspected of committing major illegal acts in the past three years.

Furthermore, it does not involve special industries or anti-monopoly law review, so there are no issues with the acquisition qualifications.

"So, what is Mr. Tan's attitude towards the acquisition?"

They were certainly aware of the related-party transactions, and they could understand why Tan Jincheng chose to abstain from voting. However, they wanted to know Tan Jincheng's attitude towards this acquisition. The two sides had been dragging their feet for months, which was essentially a struggle for interests.

Now, the two companies have basically reached an agreement on their interests, namely, to acquire Leichi New Energy through cash and the issuance of new shares. Beicang City Investment has considerable influence in Leichi New Energy.

Their primary concern is protecting their own interests. Although the rise in Flashpoint's stock price would be beneficial to them, nothing beats the cash dividends they receive every year. Beicang City Investment would definitely not agree to a pure cash acquisition.

Even if Ying Jianren doesn't agree, it's different if cash or shares are used. Although Beicang City Investment lost its equity in Leichi, it is still very attractive when converted into shares of the corresponding listed company.

After the lock-up period ends, whether to liquidate and cash out or hold for dividends, it is a very high-quality asset for Beicang City Investment.

However, the opinions of these two major shareholders will ultimately depend on Tan Jincheng's attitude.

The same applies to Zhang Xupeng. At this moment, the three people in the study actually represent the interests of three parties.

Tan Jincheng smiled and said, "In principle, I don't object, but what will happen to Leichi's employees after the acquisition?"

This question was naturally directed at Zhang Xupeng. Leichi doesn't have many employees, and almost all of them receive bonuses. Although a few thousand or ten thousand yuan in bonuses each year may not seem like much to them, it is a considerable asset for ordinary employees.

In addition, because Leichi's operations are not highly technical, many of its positions have employees with disabilities. This can be considered a way for Tan Jincheng to do public welfare. The dividends of a few thousand or tens of thousands of yuan can be an emergency reserve fund for these families.

Of course, hiring disabled employees in a reasonable manner also has many benefits for companies. While helping others, they can also make profits for themselves and their companies. In Tan Jincheng's view, this model is actually very good.

Zhang Xupeng was taken aback, but immediately grasped the key point: "Are you afraid we'll cancel the existing welfare system?"

No wonder this old fellow never gave a straight answer; it turns out he was worried about this.

"Yes."

Tan Jincheng also does not deny that there are substantial differences between listed and non-listed companies in their specific operating methods. As a listed company, the responsibility lies not only with the investigators, but with all shareholders.

So, from the perspective of all shareholders, what is most important? Of course, it's performance and data. Only continuously growing business and data can drive up the stock price and allow them to get what they want.

From the perspective of a listed company, it is obviously unacceptable for a subsidiary to distribute a large amount of money as dividends to all shareholders every year. Wouldn't it be better to use this money to improve the data, make the data look better, and drive up the stock price?

In fact, if Tan Jincheng hadn't mentioned this, even Beicang City Investment, Ying Jianren, and the management of Leichi would have tacitly agreed to the cancellation, just like Shanchi, because these people would definitely have matched Shanchi Technology shares with the acquisition during the process.

In any case, their interests will not be violated, and naturally they will not bring up this topic without reason.

Tan Jincheng's frank admission caused Zhang Xupeng and Zhu Chuan to frown slightly. They were not unaware of these things, but in order to complete the acquisition smoothly, they had not discussed them. As for whether or not the acquisition would be implemented, that would be dealt with later.

Now that the matter is out in the open, they have no choice but to face it. If their answers fail to satisfy Tan Jincheng, then Tan Jincheng can directly reject the transaction regardless of which company he uses as the actual controller.

"From the perspective of friends and brothers, I can understand your thoughts, but from the perspective of business operations, I really can't give you a direct and accurate answer. We need to have a meeting about this."

"But no matter what, I will push for Leichi to maintain its existing welfare system, and even push it forward within Flashtech."

"What does President Zhu mean?"

Zhu Chuan smiled. His status was different from that of Tan Jincheng and the others, and his understanding of what Tan Jincheng mentioned was also different.

"I have no problem. Mr. Tan is so generous, I definitely have to give you a thumbs up."

After the acquisition, whether it's ByteDance's advertising platform, Tan Jincheng personally, Beicang City Investment, or Ying Jianren, they all have to withdraw from Leichi's shareholders. Leichi becomes a wholly-owned subsidiary of Flash, and they will no longer be involved in profit sharing.

In a sense, Tan Jincheng's actions somewhat infringed upon their interests, and even those of ByteDance's engine. However, since the person who takes the lion's share doesn't care, what else can they say?

"Let's take a long-term view. To be frank, if this clause isn't followed, I will reject the entire acquisition."

Tan Jincheng didn't bother with any more pleasantries and simply stated his position.

Regardless of this unexpected event, the economic stagnation was irreversible. During periods of economic growth, everyone made money, so the issue of distribution was not taken seriously. But things are different now.

Did Fat D suddenly appear out of nowhere? No, he has existed for many years. His company has been established longer than any of Tan Jincheng's companies. But why was he unknown before, and why did he suddenly become popular and sought after in recent years?
Essentially, it's still a matter of distribution, and in this regard, Fat D fits the current economic structure.

Having a company that treats its employees with complete respect and avoids discrimination not only helps many people but also benefits itself.

Zhang Xupeng nodded: "Okay, then we'll go back and convene a meeting with the management and independent directors."

Years of cooperation had fostered a tacit understanding, and Zhu Chuan was a knowledgeable person. How could they not understand when Tan Jincheng suggested taking a longer-term view?

After saying that, Zhang Xupeng and Zhu Chuan prepared to get up and leave, which surprised Tan Jincheng: "Are you in such a hurry? It's the weekend, why don't you stay for a meal before you go?"

"I'm not eating anymore. I'll leave the child with you. If I have time tonight, I'll pick him up myself. If not, you can just take him over."

This is probably what is meant by being close friends.

Zhu Chuan also smiled and said, "I'll bother President Tan again next time. Let's take care of business now."

He did indeed want to stay for a casual meal, but Zhang Xupeng was in a hurry to leave, so there was nothing he could do.

Tan Jincheng was just being polite: "Okay, then I'll invite President Zhu to my home again next time. I happen to have some things to do here, let's go together."

He went to the headquarters industrial park in Weilai, and since the beginning of this year, he has rarely worked in the Flashpoint Building.

Zhang Xupeng nodded: "Let's go to Weilai. Weilai's sales have recovered quite well in the past two months. Can you reveal the expected sales for the first half of the year?"

"It's alright, less than 70,000 vehicles, but it's still quite good."

"I've heard about that too. It seems that customs has a very high opinion of Wei Lai's export volume."

Tan Jincheng smiled and said, "The biggest highlight in the first half of this year was probably exports."

In the first quarter, especially in February, all car companies were completely shut down, and no one could laugh at anyone else. But in the second quarter, it all came down to how well each company could integrate its supply chain and adapt to changing circumstances. After making many preparations, Weilai was able to start making a strong push after fully resuming production in the second quarter.

Besides production, Weilai's biggest advantage is the China-Europe Railway Express, which does not affect its export business at all. In fact, it has even captured a lot of market share from European car companies because they cannot produce normally, but some consumers do have a demand for cars.

In May and June, the biggest achievement for Weilai was its overseas exports. In the European market, the ET5 and ES3 models sold better and better. In addition to the good performance of exports, Weilai also had another piece of good news.

That is, the ET5 has officially entered the official vehicle fleet of some local government agencies. Through unremitting efforts and good market performance, the ET5 has been selected for the procurement framework of official vehicles.

This is quite important for the promotion of ET5.

(End of this chapter)