2003: Starting with Foreign Trade

Chapter 974 Own Car Logistics? Take it!
P.S.: Wishing everyone a happy Dragon Boat Festival and good health to your families!

It's the last day, so don't waste your monthly tickets! Also, I apologize for the last chapter. I remember making changes, but I might have chosen the wrong version!

The new model jointly developed by Chrysanthemum Factory and Xiaokang Motors over two years was officially unveiled in April this year. This car is the initial result of the cooperation between the two parties and is named Smart Choice SF5. It is touted as a dual-motor coupe SUV with 700 horsepower.

However, due to the influence of the Chrysanthemum Factory, Xiaokang's model has received considerable attention and has officially debuted in the Chrysanthemum Factory's various experience stores.

As a mid-size pure electric SUV, the SF5 has garnered considerable attention, but its price range of 21.68 to 24.68 yuan did not offer much of a competitive advantage in the market environment at the time.

In the pure electric SUV segment, the SF5 is priced only lower than the WM ES6 and WM M9. Among other models in the same class, competitors such as the Chery Ant, Weltmeister EX5-Z, BYD Song Pro EV, and GAC's new models are all cheaper than the SF5.

In the current market environment, Xiaokang vehicles have not yet shaken off the image of "minivans," and coupled with their lack of price advantage, their sales have been very dismal in the past few months.

Although Xiaokang adopted a new brand name, it didn't make much difference.

"Chrysanthemum Factory's marketing methods in the automotive industry are still somewhat immature, but the bigger reason is that they currently do not have the energy to devote to the automotive business."

On July 13, Tan Jincheng appeared in Longkou City, Shandong Province. A reporter asked him about his views on the recent buzz surrounding Xiaomi's car manufacturing and the SF5 project, a collaboration between Xiaomi and Sokon Motors.

"As for Xiaomi Group's car manufacturing, I can't comment on that. Although I am a shareholder of Xiaomi Group, as everyone knows, I have never been involved in Xiaomi Group's specific business strategies."

"Whether it's a rumor or something completely unfounded, time will tell. Of course, if Xiaomi Group enters the car manufacturing industry, we at Weilai will definitely welcome it. Only when more and better companies enter an industry can the industry develop better."

The reporters on site were concerned about this issue mainly because Chrysanthemum Factory released its financial report for the first half of this year this morning and evening. The report showed operating revenue of 4540 billion yuan, a double-digit growth rate of 13.1%, and a net profit margin of 9.2%. Under the special circumstances of the first half of the year, this financial report can be described as quite impressive.

In the words of Huawei fans, this financial report is a slap in the face to many people. The more they are suppressed, the better they become. However, this statement is not wrong. After Huawei was suppressed, the mobile phone industry hardly produced any innovations.

The reverse charging technology that became popular this year is already quite mature. Even Meizu, a "small manufacturer," is able to use it skillfully, yet it is being repeatedly touted a few years later. It's as if the internet has no memory.

Apple is another example. With Huawei suppressed, Apple has almost lost its once-proud innovative capabilities.

However, amidst rapid growth, Huawei is currently facing very serious problems. On May 15, a second round of suppression against Huawei was launched. After the stipulated 120-day grace period, Huawei is no longer allowed to use the other party's EDA software to design chips.

They also cannot produce chips using chip foundries that use the other party's technology, unless they obtain a license.

With only two days left in the 120-day grace period, releasing the financial report at this time is somewhat intended to boost morale. Since July, the head of the Chrysanthemum Factory has been making frequent visits to major universities and key research institutions.

Starting in 2018, this previously unusually low-profile gentleman began to frequently appear in public, participate in various activities, and accept interviews from various media outlets. These frequent public appearances became even more intense starting last year.

If the company hadn't faced a serious survival crisis, this old man would obviously not be making such frequent public appearances.

Clearly, Huawei realized that the other side would not let them off the hook, and they were preparing for the upcoming third round of suppression. At the current pace, the other side was directly blocking all of Huawei's channels for obtaining chips.

This includes finished chips and wafer foundry services. If any supply chain company uses their technology and raw materials, Huawei will be prohibited from purchasing them. This is almost a certainty.

The frequent visits to major universities and research institutions are clearly preparations for the reserve of technical talents and cooperation between universities and enterprises, and between research institutions and enterprises. Just like the cooperation between Weilai Power Battery and the Institute of Physics in the past, this is one of the fastest ways for domestic and foreign companies to make breakthroughs.

"Mr. Tan, could you explain why you placed such a large order this time?"

Tan Jincheng's answers satisfied the professional reporters present. He was very experienced in dealing with the media, and his experience was that he had talked for a long time but got nothing out of them. Today, he had given clear answers to both of these questions.

Regarding the issue of Huawei, the other party clearly stated the problems that Huawei is currently facing. As for whether Xiaomi will manufacture cars, Tan Jincheng also indirectly responded that the rumors about Xiaomi manufacturing cars are not just rumors.

"Why? I think we can make it back. Our export volume this year has been very good, and I believe it will only get better in the future."

Tan Jincheng's visit to Longkou City was actually to attend the signing ceremony with CIMC Raffles for a car roll-on/roll-off (Ro-Ro) ship order. Recently, Wei Lai announced that it would spend 30 billion yuan to order six professional Ro-Ro ships that can carry more than 7000 vehicles.

Of these, it is almost certain that four ships will be built, while the other two are optional orders. Of these six roll-on/roll-off ships, two will be built by Guangzhou Shipyard International and four by CIMC Raffles. All of them will be propelled by a combination of liquefied natural gas and fuel oil.

Each ship costs approximately US$7200 million, and the total cost of all six ships is nearly 30 billion yuan.

Is it really necessary to place a 30 billion yuan order just to buy a car carrier ship? Considering that Weilai's net profit for the first half of this year was only around that amount.

Also in mid-July, Weilaiye released its financial report for the first half of this year. The first half of 2020 was a special year. Whether a person is a ghost or a devil, whether a company is a donkey or a horse, the financial reports for the first half of the year can be said to reflect this very clearly, except for some special industries.

In a sense, the financial reports for the first half of this year represent the performance of these companies for many years to come, especially for automobile manufacturers.

Weilai's financial report combines its power battery business, vehicle business, parts business, and other investment businesses. The vehicle business includes two main entities: Weilai Auto and Yuechi Auto.

The combined revenue of the main businesses of the several major entities of Weilai reached 763.32 billion yuan in the first half of the year, with a net profit of 34.63 billion yuan. Both revenue and net profit of Weilai showed a slight decline.

In particular, the power battery business saw a year-on-year decline of 7.08% in revenue and 7.86% in net profit in the first half of this year, making it the business with the most severe decline among all of Weilai's businesses; of course, this is largely due to the fact that European and North American automakers were unable to resume production in a timely manner.

In addition, Jinsheng New Era's battery factory in Germany was unable to operate for a long time, incurring significant expenses.

However, there are also some very obvious highlights in Weilai's financial report. The new energy vehicle business segment, which Weilai values ​​most, saw a 14.29% year-on-year increase in net profit despite a decline in revenue in the first half of the year.

Putting aside the possibility of financial fraud, the fact that net profit could increase year-on-year despite a slight decrease in revenue can only mean that Weilai's advantages in cost control and industrial chain are becoming increasingly apparent.

The integration of the supply chain and the first breakthrough after more than a decade of technological accumulation have also brought cost advantages to WILAY, especially in the field of power batteries. WILAY's current power battery cost is no less than that of BYD, making it the company with the lowest battery cost among all car manufacturers in the world.

However, to outsiders, it seems that the more than 30 billion yuan that Wei Lai had worked so hard to earn in the first half of the year was spent all at once by Boss Tan, and that it was used to buy transport ships. This does not seem to have much to do with Wei Lai's current main business.

The roll-on/roll-off ships ordered by Weilai can each carry more than 7000 cars. With six ships combined, they can carry more than 40,000 cars at a time. This is just the capacity for a single shipment. How many complete cars does Weilai need to export in a year to earn back this 3 billion?

What will be the final utilization rate of these roll-on/roll-off ships? Moreover, the annual maintenance cost for such a giant hull is astronomical.

"Imagine a roll-on/roll-off ship leaving port fully loaded, and a car earning 10,000 yuan. Wouldn't that be close to achieving a small goal?"

Tan Jincheng is quite optimistic about this. After 2020, there will be a big change in both sea and land transportation patterns. First of all, transportation costs will definitely continue to rise over the next three years, and it will be difficult to change this in the short term.

Whether for reasons of cargo security or logistics costs, it is essential for Weilai to have its own ships for going to sea. After all, although the China-Europe Railway Express is performing well at present, it is not a long-term solution.

The cost of sea freight is still better than that of land freight. Car carriers are one of the best means of shipping complete vehicles by sea. Back then, the largest car carriers on the market could transport 8500 cars at a time, and their internal area was equivalent to the size of 10 football fields.

The ship ordered by Wei Lai this time is the largest roll-on/roll-off ship that can be produced domestically at present. It can carry 7500 standard cars at a time, and it is currently completely produced domestically.

The car carrier looks like a super-huge shell.

"It looks really impressive. Although I was a sailor, I have never seen such a behemoth."

CIMC's leaders took Tan Jincheng on a tour of their factory and dock, where they had their own ships. They were very satisfied with Tan Jincheng's performance. Securing such a large order was a godsend for CIMC Raffles.

"Haha, Mr. Tan was a seaman around 2000. Twenty years have passed, and we should always strive to improve."

The basic parameters of the roll-on/roll-off vessel ordered by Weilai this time are as follows: overall length 199.9 meters, beam 38 meters, depth 14.8 meters, design draft 8.65 meters, speed 19 knots, and range 12000 nautical miles.

"The ship has 13 car decks, 9 of which are fixed and 4 are movable, and it features the most advanced fire protection design currently available..."

The designer explained the specific parameters of the roll-on/roll-off ship to Tan Jincheng step by step with the design drawings, while secretly thinking that it was fortunate that this man had a year of seafaring experience and could understand many of the professional terms.

Otherwise, it would be much more complicated to explain.

"The top two decks are the captain's and crew's working and living space, right? We could try adding more recreational facilities. You might not know, but life at sea is incredibly monotonous. If you have a weaker mental fortitude, it's easy to become depressed, especially on transport ships like this." Back when he and Zhang Xupeng were on cruise ships, life was quite dull, to the point that they had to pass the time by learning English. It's even more extreme for transport crew members who deal with steel machinery.

Making money is indeed possible, but it's not an easy task; most people simply can't stand the loneliness.

"Sure, no problem. The second floor is designed with various entertainment facilities. If Mr. Tan has any good suggestions, please feel free to let us know."

The designer was able to fully accept Tan Jincheng's suggestions without affecting the overall design.

“Okay, you’re the professionals, so we have no other opinions. We just hope that the delivery can be completed on schedule.”

Tan Jincheng smiled and nodded, his attitude was very good. He left the professional work to the professionals. As a reborn person who had lived in Beicang for more than his own age, Tan Jincheng knew all too well that our shipbuilding industry was quite advanced.

In Beicang, there are many excellent shipbuilding companies, including several dry docks with a capacity of 70,000 to 100,000 tons. Huanhai Heavy Industry, Beicang Lantian, the Port Authority Shipyard, and Samsung Heavy Industries are all excellent shipyards.

However, CIMC Raffles is quite professional in the field of roll-on/roll-off ships, which is why we chose Raffles.

"Don't worry about that. We will definitely not delay President Tan and Wei Lai's plans and will do our best to complete the delivery within the contract period."

According to the contract, the first roll-on/roll-off ship from Weilai needs to be delivered in July 2022. At that time, it will carry out its first sea voyage from Beicang Port, passing through multiple sea areas and heading to Europe.

At that time, Weilai will be able to use its own transport ships to transport its complete vehicles, completing a series of processes from production to transportation and then to end-user sales, and finally delivering the cars to European consumers.

"Then there's no problem. Thank you for your help, leaders."

"Not at all, it's all thanks to President Tan for taking care of us."

CIMC is a very large group company. The predecessor of CIMC Raffles can be traced back to 1977. It is a leading international shipbuilding and marine engineering company with three major manufacturing bases in Shandong Province and more than 4000 employees.

The large order from Weilai is of historical significance for CIMC Raffles. To date, among domestic automakers, only SAIC Motor has its own roll-on/roll-off (Ro-Ro) vessels. Even Chery, whose export business is doing better and better, has never thought about owning its own Ro-Ro vessels.

SAIC's Anji Logistics currently owns various types of automobile vessels, including 11 river vessels, 9 domestic trade ocean-going vessels, and 12 foreign trade ocean-going vessels. Apart from SAIC, other export companies such as Chery and Weilai mainly rely on COSCO's container shipping and professional ocean roll-on/roll-off shipping service providers.

SAIC has already achieved considerable scale and layout in the field of roll-on/roll-off (Ro-Ro) ship propulsion. Wei Zi independently ordered multiple Ro-Ro ships, which is a huge stimulus to shipyards like theirs.

If these roll-on/roll-off (Ro-Ro) ships can be used effectively in the future, more car companies will inevitably join the ranks of those ordering their own Ro-Ro ships. At that time, as a professional manufacturer, Raffles will surely win more orders.

The orders from Wei Lai made Raffles' senior management realize that a new development opportunity seemed to have arrived.

In fact, while Wei Lai was placing orders, BYD and Geely, among other automakers, also began to exert their efforts in the roll-on/roll-off (Ro-Ro) ship sector, with plans to either lease or build their own ships already on the desks of their CEOs.

"This kid is still as fast as ever, and his courage is still as strong as ever."

The signing ceremony between Weilai and Raffles was a big event for Raffles and the local area, but it was not a big deal for Weilai. It was part of the company's specific operational strategy, so Weilai kept a low profile in terms of publicity.

However, the news that Wei Lai spent 30 billion yuan to buy a ship still attracted a lot of attention from his peers in the industry, and of course, there was also a lot of controversy.

Weilai's export business in the first half of the year was indeed good, with nearly 20,000 vehicles exported, mainly to Europe. Other regions have not yet picked up the pace. However, even if the market improves in the second half of the year, Weilai's total export volume for the whole year will be at most around 50,000 to 60,000 vehicles.

With an export volume of 50,000 to 60,000 vehicles, even if the growth rate is rapid in the following years, is it necessary to order so many roll-on/roll-off ships? One or two ships would be enough. The order volume of three times is obviously incomprehensible.

However, since Boatman and Comfort often deal with Tan Jincheng, they greatly admire his strategic vision, especially since both companies have benefited from Tan Jincheng's help to some extent during this year's unexpected events.

Geely, in particular, after receiving a subtle reminder from Tan Jincheng, quickly followed up on Wei Lai's specific actions at the beginning of the year, such as stockpiling core components.

However, it was too late. In addition, the situation in the first quarter led Geely, like other large manufacturers, to make a misjudgment and not place sufficient orders with suppliers like Weilai Automobile.

Taking automotive-grade chips as an example, the problem of chip shortage has actually started to appear in the commercial vehicle market since May, which is another blow to Geely, which has been making efforts in the commercial vehicle market in recent years.

A few days ago, NXP once again signaled to automakers that there was a shortage of automotive chips. The problem of insufficient production capacity for automotive-grade chips has become increasingly serious, and major manufacturers such as Volkswagen, Ford, Honda, and GAC Toyota have gradually realized the severity of the problem.

The establishment of independent automotive logistics is not as simple as buying a few ships. Currently, Weilai's domestic logistics and transportation are being improved step by step, combining road, rail and waterway transportation.

In addition to its own fleet, Weilai's main mode of transportation in China is to cooperate with several professional logistics companies. This advantage in the industrial chain must be utilized. In addition, Weilai's layout of production bases and sales areas in coastal or riverside regions is also quite advantageous.

From the mountain city in the upper reaches to the cities of Hunan and Jiangxi in the middle reaches, and then to Shanghai in the lower reaches, Weilai has production bases and logistics centers along the entire Yangtze River. Weilai is able to cover most areas well through this line.

However, while Tan Jincheng and Wei Lai were improving the logistics and transportation system, he received another request for help from Shufu Ge.

"It's no use. If you place orders now, you'll only be preparing for next year. Since the chip shortage has already formed, it will only get worse. Just watch, it won't be long before we see news of chip factories catching fire."

The global chip shortage is not limited to automotive-grade chips; it also exists in the consumer electronics sector.

Shufu was speechless for a moment: "Isn't there a better way?"

After the chip shortage comes the chip factory fire. How could he not know this routine? It's simply that chip manufacturers want to raise prices. In March, a fire broke out at Renesas Electronics' small factory, which greatly affected the supply of automotive-grade chips.

"Yes, look for BYD. I think our Uncle Wang has that kind of vision."

The boatman's vision is quite impressive. This year, they have turned themselves into the world's largest mask manufacturer. In terms of technology research and development, BYD has been able to make large-scale investments on top of its long-term stable sales of 50 vehicles.

In addition, its overseas market strategy focuses on high-end markets such as Europe, aiming to bring new energy vehicles to the world, which is quite different from Great Wall Motors.

Old Wei's operations in recent years have become increasingly incomprehensible. They are also going overseas, but this time to Russia, where they are building factories on a large scale. To be honest, Tan Jincheng doesn't understand this.

If he really had to choose, he would prefer to cooperate with India rather than Russia.

Furthermore, Great Wall's behavior in the new energy vehicle business is also rather perplexing. They always give people the impression of being somewhat resistant to new energy vehicles, and the performance of Wey and ORA this year has been mediocre.

To put it somewhat humorously, Lao Wei also said he wanted to sell ORA in Europe, but how could a car model that imitates the Beetle be a bestseller in Europe?
"Is there no other way?"

The relationship between BYD and Geely has not been good in recent years. Although business still needs to be done, if Geely wants to ask BYD for help with core component supply, then it is definitely up to Geely's brother, Shufu, to ask for help himself.

It also requires the boatman's consent. While it's a matter of perspective, as a major competitor, the boatman must have a clear idea of ​​how to help him.

"Uncle Li, you want us to give you some of our orders, right? That's impossible, don't even think about it. We're short of orders ourselves."

Before Shufu could even speak, Tan Jincheng immediately cut off his thoughts. What a joke! Although Weilai had plenty of orders and sufficient inventory, it wasn't like BYD, which could produce its own products.

After six months of development and establishing connections with relevant wafer fabs, National Technology has made rapid progress, but it still cannot meet the requirements for mass production in 2020. Currently, it still has to rely on ordering from suppliers and bear the price fluctuations.

"You little brat, you've already given up on my idea before I even said anything; never mind, I'll think of another way."

Shufu smiled wryly on the other end of the phone. This kid is so cunning, he really doesn't give me any chance at all.

As if in response to Tan Jincheng's prediction, a fire broke out at Micron Technology's factory in Idaho on July 19, leading to the temporary closure of the factory.

As a leading global memory chip manufacturer, Micron mainly produces NAND flash memory and DRAM memory chips. Although the direct impact on automotive-grade chips is relatively small, all global memory chip suppliers have been affected by this fire.

Micron's questionable actions have further exacerbated the chip shortage.

(End of this chapter)