2003: Starting with Foreign Trade

Chapter 663 The Pioneers of the Four Big and Four Small

"Wow, Changan's restructuring is over. An annual production capacity of 200 million vehicles, that's awesome."

On November 10th, less than half a month before the Guangzhou Auto Show, big news frequently broke in the automotive industry. Geely and Volvo were still in difficult negotiations, while the restructuring of Changan Automobile was successfully completed.

"That's right. Now Changan Automobile has firmly entered the first tier. We need to increase our production capacity as soon as possible."

"With three shifts and full capacity, our monthly production capacity can reach about 10,000 vehicles. The second phase of the project is also accelerating. Actually, our construction speed is still a bit slow."

What Zhang Yong mentioned also gave Boss Tan a headache. He didn't have many connections in engineering projects and could only rely on the power of the government. The idea of ​​building a large factory in a year and a half was simply not feasible for him.

Take Orange Technology's headquarters as an example. If things go smoothly, this thing could be officially delivered this year, but at present, it seems uncertain whether it can be delivered by February next year.

Project delays are common with him. For example, the first large factory of Flash Technology in Beicang would have been delayed if he hadn't kept a close eye on it and applied pressure.

After realizing this problem, Tan Jincheng consciously pursued mergers and acquisitions with Weilai Automobile. Building factories was one thing, but buying existing factories and production lines was another. Although they were more expensive, they saved time.

The restructuring of Changan Automobile is somewhat related to Flashcar. It is an important part of the "Four Major and Four Minor" M&A plan proposed by the National Development and Reform Commission to revitalize the industry since the subprime mortgage crisis in 2008.

The so-called "Big Four and Small Four Mergers and Acquisitions Plan" refers to the formation of two to three enterprise groups with an annual production capacity of more than 200 million vehicles and four to five groups with a production capacity of 100 million vehicles within a few years.

The restructuring of China Ordnance Industry Group, AVIC and Changan, SAIC's acquisition of Nanjing Automobile, FAW's interest in Brilliance Auto, and the cooperation between Dongfeng and Nissan, etc.

These are the so-called "Big Four," while Flash Motors' acquisition of Changfeng Group is the first of the "Little Four." As an experimental merger, Weilai Automobile's profits a year after the acquisition were in line with policy expectations.

With too many brands and structural overcapacity, the national automotive industry saw fixed asset investment reach 500 billion yuan last year, yet the industry's capacity utilization rate was only 63%, and the capacity utilization rate for passenger vehicles was even lower at 55%.

To put it bluntly, a lot of cars were built, but only a few were sold, resulting in serious waste. This is the basis for this policy-driven merger and acquisition.

According to international experience, car companies can only make money when their capacity utilization rate reaches 70% or more. Now that Weilai Auto has implemented three shifts, its capacity utilization rate is naturally very high.

With a third of November gone, the popularity of the Yuechi A1 continues to rise. Although the company has not released sales figures recently, judging from Honda's attitude towards the CRV, it is clear that the Yuechi A1, which has been closely competing with the CRV, is selling very well!
Starting in November, the CRV, showered with praise, boasts six top titles: "No. 1 in sales, No. 1 in fuel efficiency, No. 1 in safety, No. 1 in quality, No. 1 in product appeal, and No. 1 in environmental protection."

The unbeatable CR-V in the urban SUV segment has launched a large-scale thank-you promotion on Happy Camp, offering multiple discounts on CR-V purchases and also urgently releasing a new pearl white model.

It's important to remember that this was the last quarter of 2009, and also the most booming quarter for the car market. Stimulated by policies, demand exploded, and many manufacturers were also short of production capacity.

There is a real shortage of cars available, especially models with an engine displacement of 1.6L or less. Prices are holding firm, and it feels normal to sell them at a premium. It's definitely a seller's market.

For a joint venture brand that is already in a position of high standing to offer significant discounts and promotions when its cars are selling like hotcakes, Yuechi is truly remarkable.

“The CRV is having a promotional event, right? Let the marketing department set the pace and say it’s thanks to Yuechi. I’ll have Shanchi cooperate with you.”

The boss is the one who's really dirty, so what can Zhang Yong do?
Not only do they have to set the tone themselves, but they also have to get the Flash Marketing Department to set the tone. The Flash Marketing Department's online trolls are notorious within the group and even in the entire internet industry. With them getting involved, Xiao Rizi's marketing capabilities might not be able to handle it.

Zhang Yong looked constipated, and Tan Jincheng laughed: "Don't be surprised, this is nothing. We're just taking advantage of public sentiment. Think about the Iveco incident back then, that was really shady."

It's said that Japanese companies were behind this, but we don't know if it's true or not. However, the commercial competition among car brands is far greater than that among two-wheeled electric vehicles.

Their methods are also much more ruthless; a single marketing event can ruin a brand.

"You also need to be vigilant. If our cars sell well, there will definitely be people who are envious. We must pay close attention to market comments and not let our guard down."

Yuechi's industrial design is impeccable. While it may not be considered exceptionally outstanding, it was still a stunning creation in 2009. Moreover, it was completely independent, showing signs of borrowing, but absolutely no trace of plagiarism.

There's no denying this; consumers aren't stupid.

If they become the target of envy, then the best approach should be to focus on the safety features advertised by Yuechi.

Safety is no small matter, but unless you sell very few of your cars, it's impossible for a particular car model to avoid traffic accidents. The more cars you sell, the higher the probability of them appearing in traffic accident compilations.

How the vehicle behaves during the accident and how it handles public relations afterward are things that companies must pay special attention to. "Okay, I'll pay close attention."

When Iveco was mentioned, Zhang Yong took it seriously. Compared to those ruthless tactics, his boss's was nothing.

"Yuechi is a brand new brand. Don't be fooled by its current good sales. It doesn't actually have a consumer base. It's no exaggeration to say that we're walking on thin ice. One wrong move could ruin us. We must pay close attention to public opinion, especially regarding safety."

Ultimately, it's because they lack a fan base; if the controversy escalates too much, their reputation will be ruined.

“We must pay attention to the supply chain, and we must not cut corners in the processes of the vehicle assembly workshop. We must pay special attention to quality. If necessary, we can find a car reviewer to make a teardown video.”

I've heard that Great Wall's supply chain system has extremely strict requirements. I don't know if it's true. I exchanged contact information with Mr. Wei at the press conference. I'll go and learn about it sometime.

Unlike FlashTech, Tan Jincheng at Weilai has very strict requirements for the procurement department regarding the supply chain.

We cannot take anything from suppliers, nor can we eat or drink casually. Any violations will be dealt with seriously, all in order to ensure quality.

With parts costing tens of thousands of yuan, the automotive industry chain is a very complex system. If strict requirements are not established from the beginning, then the phenomenon of buying inferior parts at high prices will occur.

A lot of money was wasted, and the overall quality of the vehicle still cannot be guaranteed.

The employees of Weilai Auto are well-paid, so Tan Jincheng has reason to demand that more attention be paid to quality in the supply chain and vehicle production process.

"Keep an eye on things here. I'm heading back now. I won't be coming over for the next couple of days. You guys get everything ready for the auto show. We'll meet up in Guangzhou then."

During this period, Boss Tan spent every day at the factory, and would occasionally go to the workshop to check on the assembly process of the vehicles. He also ate lunch in the canteen, working exceptionally hard.

However, it also put a lot of pressure on the management team, including senior executives.

Everyone knows that the boss has a wildly imaginative mind and may come up with a new idea at any time. Then other people have to be responsible for implementing it and doing so efficiently.

Zhang Yong nodded. The South China market is a very important market. CRV has started promotions, so Yuechi also needs to come up with some countermeasures.

Tan Jincheng wanted to go back, partly to relieve the pressure on the executives, and partly because tomorrow was Singles' Day.

In 2009, China was not yet dominated by the internet. Among the richest people in the internet industry, the highest was Pony Ma, with a net worth of 259.4 billion yuan, ranking ninth. Those ahead of him were bosses in the manufacturing and real estate industries.

In the first year since the founder of Taobao left, on September 9th of this year, several senior executives resigned en masse, the company's net profit fell by more than 10%, and user growth slowed down. This was reflected in the capital market, where Ali's stock performance was mediocre despite the recent rebound.

With his net worth plummeting to 88.8 billion yuan, Lao Ma (Jack Ma) ranks 44th on the rich list. If we're talking about who suffered the most significant loss of wealth among internet entrepreneurs during this subprime crisis, it has to be him.

But it won't be long before their era arrives with the widespread adoption of 3G.

In the past two days, because they were all small businesses, Taobao was unable to organize an effective Double Eleven event. Dongzi's business and Chengpin Hui are in completely different sectors, so Chengpin Hui did not encounter any major threats during the Double Eleven event.

But this year is different. This year is the first time that Taobao Mall has organized a large-scale event. In the first year of Double Eleven, Taobao Mall made a comeback despite most people's skepticism.

The pressure on Orange Products Club is still quite high, and Tan Jincheng needs to go and encourage them.

In addition, GXG is participating in Double Eleven independently for the first time today. There are some things that Zhang Xupeng is not entirely at ease with, since Li Jinglan, who was transferred back from Orange Technology, has no experience in independently managing large-scale events.

Zhang Xupeng, who has been back for several days, has been nagging Tan Jincheng to come and see their event every day.

This year's autumn trade fair performed quite well, at least it wasn't as quiet as it was in the first half of the year. While stabilizing foreign trade, Zhang Xupeng also hopes that domestic business can progress in tandem.

In its third year of official promotion, GXG is facing its first Double Eleven challenge.

(End of this chapter)