2003: Starting with Foreign Trade

Chapter 821 Letting Go May Not Be a Good Thing

Just as Boss Tan was thinking about how to cause trouble, things took a turn for the worse than he expected.

Since February 3, there have been continuous media reports that the two ride-hailing giants will merge.

"It seems some people are getting restless; they're afraid something might go wrong."

Although Tan Jincheng's shareholding has dropped to only 2%, he still knows some of the details of the merger of the express train in advance. Pony Ma secretly met with Jack Ma, hoping to push forward the merger and stop the subsidy war, and Jack Ma agreed.

The management teams on both sides are also communicating in secret, and the progress is actually quite good. Both sides are tired of fighting and are almost losing their will to fight. Merging seems to be the most advantageous option.

I heard from Chen Weixin that they originally planned to wait until after the New Year to make a decision, since the New Year is just around the corner and it would be very disadvantageous for the employees to promote it at this time.

However, it seems we can't wait any longer. Obviously, the investors don't want any changes and hope to finalize things as soon as possible.

"See? This is the consequence of being deeply bound by capital. They have control of the company, but in reality, they no longer have control over it."

He wouldn't be very willing to run a ride-hailing service like Didi or a similar company.

Chen Weixin and Chen Wei now only have operational control over the company; they can no longer decide where the company will go in the future. If the capital agrees to let them continue fighting, then they have to continue fighting.

Similarly, if capital demands that they merge, then they have no choice but to comply.

"Capital may be driving the merger, but shouldn't the two companies still have the upper hand in negotiations?"

"Of course, they still won't do anything that breaks the rules."

The biggest problem in the merger is actually whether to use Alipay or WeChat Pay. Balancing the interests of Alipay and Tencent is a major challenge for Didi and Express in their merger process.

"It seems like Didi still has the reins of the new company. Sigh."

Balancing the interests of the two giants is something neither Chen Weixin nor Chen Wei can do, even if he never relinquished his shares from the beginning and is still the second-largest shareholder of the express car company.

The only person I can think of who can reconcile the interests of the two companies is someone from the Shuzhi family.

At the height of his power, Lao Liu has the ability to convince two internet giants, so it seems that everything has returned to its original state.

Sure enough, some things are irreversible once you get involved. Perhaps this was the inevitable outcome when Chen Weixin and Lü Chuanwei rejected their daughter.
February 2th, Valentine's Day.

The two ride-hailing giants, which had been the subject of continuous media coverage, finally succumbed to the pressure and simultaneously announced their merger.

The merged company is jointly managed by a seven-member board of directors, with Tencent and Ali each holding one seat, and the remaining seats being obtained by senior executives and venture capitalists from both companies. This arrangement can be considered as an equal arrangement for Ali and Tencent.

As for the payment issue, which is of utmost concern to both companies, the choice was left to the new company after the merger, and neither Tencent nor Ali interfered.

The new company adopts a co-CEO mechanism, but there are some discrepancies in the senior management information released by both parties. Didi claims that Liu Qing will serve as the president of the new company, while Kuaidi has not mentioned Liu Qing's role.

This detail has sparked various speculations from the outside world. The mainstream view is that this is a power struggle between the two companies, and whoever can place more senior executives will have more control.

Because the shareholding structure after the merger no longer determines the actual controllers of the two companies.

As agreed, after the merger, Kuaidi will hold 52% of the shares in the new company, while Didi will hold 48%. It seems that Kuaidi has the advantage and a dominant position in terms of equity, but this is not actually the case.

The 52% stake in KuaiChe is held by the co-founders and various VC firms. However, once the merger takes place, these VC firms may not continue to stand with the co-founders of KuaiChe for their own interests.

The biggest obstacle to this merger comes from Ali, because they know that once the merger is complete, Ali will definitely be in a weaker position.

The new app can simultaneously support both Alipay and WeChat Pay, but there's a significant difference in which payment method is listed first. Furthermore, the new app can still be placed on the main WeChat interface, which is a major advantage for WeChat Pay.

If people can hail a ride directly through the WeChat interface, then some people will definitely not use the app to hail a ride, which will in turn reduce the transaction volume of Alipay.

The resistance to Ali was agreed upon after coordination among various capital parties. It's impossible for the capital parties not to value Ali's feelings. Even Tencent had to consider Ali's feelings and take their interests into account.

"Mr. Tan, we are preparing to withdraw."

When the official announcement was made on Valentine's Day, Chen Weixin, the founder of Express, did not appear at the event. Instead, he handed over the work to CEO Lü Chuanwei and came to Ningbo alone.

Chen Weixin's voice was somewhat low, and he seemed rather dejected.

The subsidy war between Kuaidi and Didi lasted throughout the year. In one year, the two sides burned through 19 billion yuan, an average of 520 million yuan per day, and at its peak, it burned through tens of millions of yuan per day.

In addition, ride-hailing services have severely impacted taxi companies, which also face risks such as taxi strikes, local government orders to stop them, and apps being removed from app stores. Although the transportation department has not stopped them, these issues are still very troublesome for them to deal with.

Not only were the investors terrified of losing their huge investments, but even the founder himself was exhausted, both physically and mentally.

For investors, the biggest demand is a merger, as they no longer have to worry about the company going bankrupt. But for Chen Weixin, it might also be a relief.

"Decided?"

Tan Jincheng handed him a cup of tea and asked softly.

"Yes, it's decided. There will be a lot of things to do after the merger. First, we'll have to deal with the monopoly investigation, and then we'll have to fight for power and profits. It's better to cash out and leave."

Chen Weixin wasn't the only one who thought this way; Lü Chuanwei felt the same way. Everyone knew what the so-called co-CEOs were really all about—it was just a way to maintain morale.

What Chen Weixin said is only one aspect. After the two companies merge, the first issue they will face is layoffs.

If the competition stops and so many people are no longer needed, then layoffs are inevitable. This also happened when Youku and Tudou merged. Even though Kuaiche now holds a larger stake and has the opportunity to take control, Chen Weixin is still somewhat disheartened.

"Well, this situation is beyond our control now. Cashing out and leaving might not be the best option."

Tan Jincheng also felt a little sad. He knew the final outcome, but the two of them had indeed designed the Kuaidi APP seriously and tried every means to promote it. Tan Jincheng even lent them his ground promotion team.

In addition, he also provided a lot of advice when acquiring Bumblebee, which prevented Bumblebee from being snatched away by Chen Wei's underhanded tactics. Now Bumblebee has become the number one dedicated car for Express.

"Yeah, I wouldn't say the business failed. Anyway, after cashing out this round, I'm truly financially free now. I can do whatever I want from now on."

There was a hint of self-deprecation in those words, which Tan Jincheng could still tell.

"Haha, don't think like that. You still have a chance to compete for control of the company. I just think you and President Lü made the right choice."

"After you exit, you still have many options, such as starting a new business; besides, do you think there will be no competition after the merger?"

The idea of ​​competing companies gaining dominance is nothing more than a comforting statement.

The tree branch family is closer to Chen Wei, and Chen Wei is easier to control. As long as they can persuade Tencent, Chen Weixin and Lü Chuanwei will have no chance. With their family's strength, persuading Tencent is not a difficult task.

The reason why the express car didn't mention Liu Qing in the announcement is precisely because of this.

Chen Chuanxin laughed off Tan Jincheng's words of comfort, but he was somewhat interested in the topic Tan Jincheng brought up later.

Mr. Tan's predictions about the ride-hailing subsidy war have always been accurate. He also highly admires Chen Wei, a CEO who truly rose from the bottom and is indeed superior to him in many ways.

Unconventional methods, or rather, breaking the rules, are Chen Wei's true nature.

Take Yaoyao as an example. Back then, Yaoyao, the leader in the Beijing market, organized an event to promote its app. It spent money to invite many taxi drivers to participate in the event. However, Chen Wei, who found out about this, changed the signboard for scanning the QR code on the app.

The driver didn't know which company the app belonged to, and assumed it was arranged by someone from Yaoyao, so he downloaded it directly.

This is absolutely shameless! Yaoyao spent money on an event, but the app was downloaded as Didi. Yaoyao was furious when she found out, but there was nothing she could do.

This move resulted in Yaoyao losing a significant number of drivers.

Didi has many such underhanded tactics being promoted nationwide. Despite Tan Jincheng's warning, Didi Express is still unable to guard against them.

If we're talking about the most unruly among the internet upstarts, besides Wang Xin, it would be Chen Wei.

The two are actually good friends. What's even more interesting is that after Didi and Uber merged, Chen Wei approached Wang Xin again for investment. Wang Xin showed no interest in person, but then turned around and started his own ride-hailing business.

Although it didn't work out, it still scared Didi half to death at the time.

"You know all the usual troubles that come with a company merger. It's not something that can be dealt with in a day or two. You have a more upright personality, and you may not be able to do many things better than Chen Wei. Even if you have the power, you will still have a lot of troubles."

"Besides, do you think the subsidy war is over? Don't forget there's still Uber."

"Does Mr. Tan mean that after Uber enters China, the two companies will continue their subsidy war?"

"Just look at who's in Uber's management team. I estimate that Uber will enter China soon, or rather, it will enter China quickly before the new company has a stable foothold after the merger."

Tan Jincheng wrote a single character on the table with his tea. Currently, the largest ride-hailing app in the global market is Uber. Founded in 2009, Uber captured market share in over 200 cities across three continents in just four years.

Global internet companies are eyeing the Chinese market with great interest, and Uber is no exception.

In fact, Uber established a branch in Shanghai in November 2013 to test the waters of the business on a small scale. However, in order to avoid getting involved in competition, they focused on high-end business private car reception.

The uniforms and white gloves were all the same, and the cars were all Audis, BMWs, and Mercedes-Benzes, making it look very high-end, but the actual effect was not very ideal.

This is a cultural difference. Taxis in the US are very expensive, and you can compete with high-end taxis for a ride. But our taxi industry pursues good quality at a low price.

Wealthy people all own several luxury cars, and they also have official receptions arranged for business purposes. The market for taxis is extremely small, so they can't make much money from them.

In 2014, while Express and Didi were locked in a fierce battle, Uber was also trying to change its business strategy, but the results were still unsatisfactory.

There are also policy reasons for this. After several ride-hailing websites made too much noise, the Ministry of Transport clarified the operating model of private cars, but prohibited private cars from directly participating in the operation.

This hit Uber's Achilles' heel after changing its operational strategy. If Uber wants to stay in our market and compete with Didi in the same arena as its express car service, it has to change its strategy.

In addition, Shuzhi's family also has a daughter who is a senior executive at Uber, and she is Liu Qing's sister.

As the ones stalking the stalks, they will definitely push Uber to increase its investment in China and participate in the subsidy war.

"To be honest, the ride-hailing market can only be opened up by subsidies. If your ride is not cheaper than the other party, it is useless. Therefore, after Uber enters China, it will experience another subsidy war and continue to burn money."

"After burning through money, the result will still be the merger of the two companies. The same routine will be repeated as early as this year. If you are confident that you can do it again, then you can try to win it over."

Tan Jincheng's analysis left Chen Weixin speechless. He hadn't thought of this before, but he was a little frustrated that such a large company, despite their superior shareholding, couldn't gain control after the merger.

Feeling disheartened, he decided to come to Ningbo to clear his head and find his old buddies with whom he had struggled together to confide in them.

However, after careful consideration, he realized that Tan Jincheng's words made a lot of sense. This matter was not over yet. He had been directly involved in the entire negotiation process, and he knew much more about the details than Tan Jincheng.

Rather than saying it was the result of the combined efforts of various capital sources, it would be more accurate to say it was driven by the Shuzhi family alone.

Ali, Tencent, Zhongxin, Ping An, Sequoia Capital, Tiger Global Management, and many others all have VC firms and are closely related to them. Moreover, their reputation is currently very good.

Tan Jincheng knew some things based on later generations, but if you told someone in 2015 that they would do *that*, no one would believe you.

In 2015, most entrepreneurs and investors considered it an honor to be associated with the Liu family. Tan Jincheng had previously cooperated with them, but maintained a distant relationship in order not to offend them.

Although he has powerful backers, it would still be very troublesome if he really fell out with them.

I can't exactly tell others that I know their ultimate fate, can I?
"That's really how it is. Oh well, Mr. Tan, now that you mention it, letting go might not be such a bad thing."

"That's right, I'm also planning to sell our shares."

After the merger, Tan Jincheng's total shares in Express and the shares held on his behalf by Gaode were diluted to 1.24%, which would allow him to cash out several hundred million dollars. He doesn't plan to take any more of these shares now that he's had the chance.

Besides the issues that were openly discussed with Chen Weixin, the merged company also faced numerous other problems.

His biggest problem was his lack of attention to safety. A few years later, Didi's reputation deteriorated due to various accidents, but that wasn't his biggest problem.

What kind of behavior is it for an internet giant that holds the travel data of hundreds of millions of Chinese people to secretly go public in the US despite competition and regulatory opposition?
In ancient times, this would have meant the extermination of nine generations of one's family.

Just wait and see, the best is yet to come. From God's perspective, Chen Weixin and Lü Chuanxin's Express team's decision to cash out and leave is truly a smart choice.

After all, going public in the US is more like a plan orchestrated by capital and the "tree family" (a metaphor for a powerful, influential group), and even if they are in charge, they can't stop it.

In that case, a bad reputation will be left on them.

"Mr. Tan is leaving even with such a small shareholding?"

Chen Weixin was somewhat surprised. Juxing Engine, with only a small percentage of shares, couldn't even get into the board of directors and could only be considered a financial investor. It could have waited until the IPO to cash out.

Cashing out at this point would not be the highest possible market capitalization for the new company.

Of course, with Mr. Tan's capabilities, he wouldn't be short of that amount of money, but having it would have given him more opportunities to collaborate with the new company. I don't know why Mr. Tan gave it up like that.

“We’re short on cash lately. As you know, we bought a plot of land in Shanghai to build a building. This investment wasn’t part of our existing investment plan, so this is a good opportunity to cash out.”

Chun Chun simply doesn't want to get involved in this mess. As for other collaborations, such as selling cars or partnering with Gaode Maps, Chun Chun will act as a partner or supplier.

In fact, the combined strength of these two companies is quite impressive, offering services such as private car services, ride-hailing, carpooling, chauffeur services, intercity train services, as well as carpooling and even bicycle services.

Finally, he even started manufacturing his own cars. If he hadn't had to secretly go public and had instead focused on steady development, his scale wouldn't have been inferior to Meituan, and he could even have rivaled the once-prosperous BA after its decline.

On February 15, Liu Qing stated in an interview with Economic Observer that the user data and financial statements of the two merged companies would be consolidated, and an integration office would be established specifically to handle the integration.

There will be a transition period of about six months between the two parties. The merged company will have about 3000 million taxi rides and will continue to cultivate the market.

"See? They're building up their own image."

Chen Weixin, who is still stranded in Ningbo, has come to terms with the situation and can remain calm in the face of such news. The new president has not yet been announced, yet he is already giving a media interview as a senior executive of the company.

"Haha, so why aren't you going home for the New Year or going to cash out your investments? What are you doing here with me?"

Today is the 27th of the twelfth lunar month, and factories across the country have gradually closed for the holidays. Tan Jincheng has been inspecting various factories and visiting employees who remain on duty these past few days. Chen Weixin has been very patient and followed Tan Jincheng wherever he went for the past two days.

He even joined Tan Jincheng in the dinner party for the employees who stayed behind, showing no restraint whatsoever.

"What are we people celebrating the New Year for? At most, we'll go home for a New Year's Eve dinner. I'd much rather learn more from President Tan. How about President Tan let me work at ByteDance Engine for a while? I don't want a salary."

Starting a business is too difficult; it's much more comfortable to do investment. Mr. Tan made over a billion US dollars in the ride-hailing industry, which is enough to build a building in Shanghai. He didn't spend a single penny of his own money.

As for cashing out and leaving, that's not something that can be done overnight. To maintain morale, he has to wait until the new company has gone through a six-month transition period before making any moves.

"Heh, I don't care. Come on over, I'm always welcome."

"Speaking of which, Mr. Tan, are you really that optimistic about the explosive growth of new energy vehicles this year? It seems like there hasn't been any change in deliveries in January."

Over the past few days, Chen Weixin observed that Tan Jincheng was unusually concerned about the new energy project, personally overseeing almost everything from power batteries to complete vehicles. He also heard from insiders that the marketing of the new model was personally planned by Mr. Tan.

This interest-free policy is too ruthless, catching other manufacturers off guard. Tesla is the most unfortunate, having only sold 120 vehicles in January, and its sales in February are even worse.

"The sales of the Maodou S will definitely continue to grow, but their market share is limited. Although the purchase tax is no longer applicable, its price still makes it a luxury car, and it certainly cannot be compared with ordinary family cars."

Tesla also announced its sales forecast for 2015 in January, with 5.5 vehicles in the global market and 1.5 vehicles in the domestic market, accounting for more than 27%, which shows the importance it attaches to the domestic market.

At present, this expectation seems a bit difficult to achieve.

Chen Weixin is right. The car market in January this year was not as hot as expected. There was a full month of transactions, and it coincided with New Year's Day. There were also many promotional activities from major car companies, but sales were not very good.

It's not just the newly popular new energy vehicles that are struggling to sell; even gasoline-powered cars are showing signs of slowing down, including the continuously growing SUV market.

If this trend continues, the so-called high growth seems to be coming to an end, and we'll be back to the state we were in a few years ago.

Ugh, I have a headache.

"As for what you said about no change from last year, that's true. Hopefully things will be better during the Lunar New Year."

The first quarter is never a peak sales season, but it can still give you some insight into the overall situation for the year. You can analyze the data to see which models have the potential to sell well and which models are not selling well.

Although the sales of Aion S and ES6 did not make much progress, it can be seen that they are still performing very well as new energy vehicles. In addition, there are still a large number of undelivered orders from last year, which will ensure the production capacity of Weilai's new energy vehicle business in the first half of this year.

The newly launched Aion Y, with its starting price below 10 yuan, has also been very popular, with pre-orders already exceeding 2000 units.

However, what surprised Tan Jincheng the most was the Yuechi A9. This mid-to-high-end gasoline car, with a starting price of over 20 yuan and a price that can exceed 30 yuan with optional extras, actually performed quite well.

As of February, we have received more than 200 pre-orders. At this rate, we could sell 3000 vehicles this year.

This is a seven-seater mid-to-large SUV! When did this kind of thing become popular in China?

In all honesty, Wei Laizhen was just testing the waters and had no plans to sell many vehicles. After all, it had been a long time since he had launched a new gasoline-powered model, and he had to give the market some explanation.

Throughout 2014, Weilai did not launch a single new car, which is one of the reasons they faced a lot of criticism.

(End of this chapter)