2003: Starting with Foreign Trade

Chapter 838 Settling in Jiangcheng
Monday, April 7th.

With the concentrated resumption of trading in individual stocks, the pressure on the Shanghai and Shenzhen stock markets increased sharply, and the three major indices opened lower. The Shanghai Composite Index plummeted by 8.48% in a single day, with a single-day drop of more than 340 points.

"1810 stocks hit their daily limit down, is this the second biggest drop this year?"

"Yes, the previous record for the biggest single-day drop was on June 26, with 2020 stocks affected. But today is much worse than that day, when there weren't many stocks suspended from trading."

That's right, the index wasn't this bad on June 26th, and there were more stocks hitting their daily limit up than today.

Even Weilai Shares, which is generally more resilient to declines, fell by more than 8% today, and Shanchi Technology unsurprisingly hit the daily limit down again.

"The price may still fall further. FlashTech should slow down its remaining buybacks and save as much as possible."

Although most stocks were at low points in 2015 in the long run, Midea's current market value fluctuates around 1500 billion, but its market value peaked at around 7000 billion after 2020.

Buying blue-chip stocks is never a bad investment, but during the technical bear market and frequent stock market crashes of 2015-2016, the declines were irrational, and there was no need to stubbornly buy expensive stocks.

FlashTech's minimum repurchase price was set at 15 yuan, and now it seems almost certain that the price will fall below 15 yuan.

In addition, due to the transfer agreement between Weilai Shares and Yingfeng Investment, Julang Engine cannot increase its holdings within six months, otherwise it would constitute short-swing trading. However, there are many ways to buy if you want to.

There are many ways to circumvent the rules, such as having senior executives increase their holdings or having Zhang Xupeng hold shares on their behalf. The key is whether you can bear the consequences of circumventing the rules.

However, there is no need to rush at the moment. The current share price of Weilai Co., Ltd. is still above 90 yuan. This round of decline will only drop to below 80 yuan at most, and the share price is still relatively stable.

Now that the downtrend has begun, there are always opportunities.

The sector that fell the most today was securities firms, presumably because the Ministry of Public Security's investigation into the China Securities Regulatory Commission and major securities firms uncovered something, and the national team is starting to clean house.

I'd heard in my past life that many people were arrested during the 2015 market rescue efforts, and those in white coats were just one of the more well-known examples.

Brokerage firms were the main targets of the crackdown, with personnel from both large and small firms being arrested, and leading brokerage firms being the hardest hit.

"Recently, I've told the company's employees to behave themselves and not to do anything reckless, especially not to touch the listed companies we control. Also, don't engage in insider trading with private accounts, otherwise I won't be able to protect you if something goes wrong."

"Okay, I'll keep a close eye on it. If I catch them, I'll deal with them seriously."

Cheng Linfeng has been reporting on his work much more frequently lately, coming to the top-floor office of the Flashpoint Building every few days.

Money is a powerful motivator. Although the staff at ByteDance's advertising platform earn very high incomes, this is not only reflected in comparisons with other industries, but is also the envy of their peers.

Because ByteDance's advertising platform has consistently performed very well since its inception.

They acquired a significant number of original shares of listed and unlisted companies in the primary market, and were even more successful in the secondary market. Although the A-share market is not easy to navigate, since 2007, several funds that invest in A-share equity have achieved good returns, and have made a fortune during the two bull markets.

US-based investment funds are the face of the company, with holdings in well-known technology companies such as Apple, Tesla, Google, Amazon, and Nvidia, which almost always puts the fund at the top of the performance list every year.

In the boss's words, ByteDance will no longer make any investments. It can make enough money just by maintaining these few US stock funds with a small number of staff, and that is indeed the case.

Every year, a few of these tech companies listed on the US stock market perform exceptionally well.

In addition, the company also has a Hong Kong stock fund, which holds shares in some excellent domestic companies listed in Hong Kong as well as several cornerstone companies in the Hong Kong stock market, and the overall returns are also quite good.

"Everyone should be honest and honest. Nobody dislikes having more money, but some money shouldn't be taken. If you're itching to get your hands on it, you can play around with US or Hong Kong stocks. It's best to avoid domestic stocks, including yourselves."

To reiterate, with investments at their scale, it's impossible for every step to be completely clean. Minor issues are usually ignored and won't cause any significant impact.

However, if any mistakes are made during special periods, it will be used as an example to deter others, and even if it is found out later that you were wronged, it will be of no use.

Cheng Linfeng nodded: "Understood. We'll try to do less recently, since we don't have much usable cash in our securities account right now."

ByteDance's cash reserves certainly exceed this, but it's impossible for them to invest all their funds in the A-share market. In their overall investment strategy, the A-share secondary market is indeed the lowest priority.

If it weren't for the stock market crash, there would be no reason to pay so much attention to A-shares.

Historically, the ranking of top-performing stocks in the A-share market is basically based on their listing date. Companies that were listed earlier and have now become well-known enterprises tend to have seen significant price increases.

For example, Gree, which went public in 1996, and Fuyao, which went public in 1993, are well-known brands. The overall growth rate of Moutai is even lower than that of its peers Luzhou Laojiao and Fenjiu, which both went public in 1994.

Some companies that went public after the millennium were of good quality, such as Moutai, which went public in 2001, and Pien Tze Huang, which went public in 2003.

However, after the bull market in 2015, and especially after the implementation of the registration system, there were really not many high-quality companies newly listed on the A-share market.

"Alright, go ahead and get busy. From now on, we'll proceed as usual. Just keep an eye on FlashTech's stock price. If necessary, the company can also use some money to buy back FlashTech shares."

"Given the current market conditions, it's highly unlikely that the price of 15 yuan can be maintained. However, let's discuss this further after the start of next year, ideally with a six-month gap between our repurchase and the current situation."

The market rebound reached a high of 4184 points, and as far as I can recall, it has never exceeded that level again. The highest point of the index 15 years later should be around 3700 points.

It really is true that 4000 points is the starting point of a bull market.

Cheng Linfeng nodded: "Okay, I understand. I'll head back now."

The boss is targeting them. The national team has invested huge sums to rescue the market, and many people want to take a piece of the pie. People like them who know more about the inside story are indeed hard to resist the temptation.

To be honest, if the boss hadn't repeatedly reminded them and given all the employees a holiday, and if the boss hadn't kept a close eye on things after returning to China, they might have really been tempted to try shorting during the stock market crash in June and July.

This is not to say that they are particularly greedy, but rather that it is the inertia of their thinking brought about by their profession.

People who specialize in financial investment don't really have any sentiments or national boundaries. In their eyes, they only care about profits, and this is true even for ordinary professional stock investors.

However, if you want to succeed in China, you can't just focus on immediate profits.

The boss's actions this time were more or less a sacrifice of company interests to protect them; only by tying everyone's hands could they prevent mistakes from being made.

Of course, this is not without its benefits to the company. The boss himself, the two listed companies, and ByteDance's advertising platform have all gained a very good reputation during this market rescue, which has indirectly boosted the sales of the company's products.

Influenced by the good pre-order data of the first week, the EVora400 named Lotus was able to sell an average of 10 units per week for the next two weeks.

As of the early morning of July 27, a total of 54 EVora400s had been reserved during the three-week reservation period.

"Based on the current situation, we can expect to order about 60 vehicles in July. We cannot rule out the possibility of some people canceling their orders, but even if there are cancellations, this is still a month's production capacity of the Heysel factory."

After seeing Cheng Linfeng off, Tan Jincheng held a video conference with Li Xiang and Kimberly, who were in Yinghai, at the agreed time.

"In five months, Lotus's sales in China are very likely to reach more than 15% of global sales. Next year is a whole calendar year for marketing. As long as the quality of the cars does not have any problems and we provide good service, it is no problem for our sales in China to account for 30% of global sales."

"In addition, our sales volume in 2016 may reach around 2000 vehicles, so it's time to revise our plans."

Li Xiang and Kimberly on the other end of the video call also agreed with Tan Jincheng's opinion.

The five-year plan definitely needs to be accelerated.

"Does the boss mean to speed up the process of selecting a site and building a factory in the country?"

It has to be Li Xiang. Having followed the boss for so long, he is familiar with the boss's work style. Once he decides to start something, he will definitely get it done as quickly as possible.

"Yes, Michael, what do you think? Oh, by the way, Michael, I also want to congratulate you. Next fiscal year you'll be able to shed your reputation as the unluckiest CEO."

Kimberly shrugged helplessly at the camera. This stubborn old man was usually quite serious and couldn't quite keep up with Tan Jincheng's way of thinking.

However, he was indeed happy at that moment.

Regardless of what happens in the future, at least Lotus was turned around under his leadership.

“I agree with the boss’s opinion. If needed, I can fly to China.”

"Alright, since you both agree with my opinion, I'll get to work now. For the time being, your cooperation isn't needed, but please remember to cooperate if necessary."

"At the same time, I am also looking forward to your first trip to China, Michael. You have to believe me, once you get here, you won't question my criticism of your country's food."

"Haha, I'm really looking forward to it too. I need to get my visa sorted out quickly."

Li Xiang chimed in, "No problem, I can be your guide once we arrive in Zhongguo."

"Okay, then you guys go and take care of the board of directors. I'll handle things on my end."

Lotus is already undergoing corporate restructuring. After the restructuring is completed, Lotus will no longer belong to Proton, but will be one of the global subsidiaries of the Wynn Group, on par with Proton.

Lotus's current shareholders are quite simple: Wei Lai is the controlling shareholder, while the remaining 49% of the shares belong to the Malaysian Selai Automotive Group, which is actually the Malaysian State-owned Assets Supervision and Administration Commission.

With just two shareholders, it's a simple matter. The Malaysian State-Owned Enterprises Commission will not interfere with Tan Jincheng's restructuring of Lotus, nor will it interfere with any of Tan Jincheng's business decisions regarding Lotus. This was agreed upon before the acquisition and is written into the contract.

Simply put, the Malaysian State-Owned Enterprises Commission (SOE) can now only make financial investments in Lotus.

A 51% stake is just the first step. Tan Jincheng will undoubtedly continue to strengthen his control over Lotus, further increasing his shareholding to make Lotus a truly independent sub-brand. Without considering an IPO, Tan Jincheng wouldn't even mind owning 100% of Lotus.

Speaking of Lotus's strong sales in China, besides the boost from stock market investors, there is another reason.

"Experienced car enthusiasts may prefer the Lotus brand, but for new car enthusiasts, Lotus sounds better. These days, brands with a foreign name are more popular."

"This was a lucky accident. I never expected that the trademark would have this kind of effect."

"That's right. Speaking of which, Proton is really unlucky. They've been ripped off twice in China, even worse than Aston Martin being ripped off by Jia Yueting."

Lotus's trademarks are quite complex; it's not just the small Guangdong factory that held the trademark in the 1980s, but also a Young Lotus.

In 06, Proton wanted to enter the Chinese market and cooperated with Youngman Automobile to develop several models. However, they were seriously ripped off. Youngman Automobile never intended to seriously manufacture cars and took advantage of legal loopholes and information asymmetry to directly sell cars in China under the Youngman Lotus brand.

If you don't intend to build good cars, then the cars you build will naturally be mediocre, but consumers don't know that.

As a result, Lotus's reputation in China was damaged, and this situation lasted for six years, until 2012.

As a result, Proton, which had just jumped out of the pit, was tricked by Huatai again and fell into another pit. Fortunately, this time it was not too badly tricked and it jumped out quickly.

"Being scammed twice in a row really means the fault of the business operator; without a professional manager, it's impossible."

The Malaysian State-Owned Enterprises Commission (SOE) has plenty of money, but while it might have been acceptable for them to personally lead and operate an automobile company in the early days of the last century, it certainly wouldn't work in today's highly market-driven world.

This is probably why they decided to hand over the management rights.

Have you ever seen our State-owned Assets Supervision and Administration Commission (SASAC) personally manage any company?
Jiangcheng.

A roadside hot dry noodles restaurant had its air conditioning blasting, so Tan Jincheng didn't feel a trace of the heat of one of China's four "furnace cities".

"You mentioned car-home connectivity in Foshan last time, didn't you say you'd contact me later to discuss it in detail? Why haven't I heard back?"

Lei Jun ate hot dry noodles while chatting casually with Tan Jincheng.

In retrospect, this roadside hot dry noodles incident seemed more like a publicity stunt. The people sitting in this small restaurant were either Tan Jincheng and Lei Jun's entourage or staff members of the Jiangcheng City government.

Oh, and there are reporters too, but not a single real customer.

The shop owner stood anxiously behind the cashier.

"We're busy, and this isn't urgent. Your technical reserves aren't enough right now, and our own capabilities are also limited."

Tan Jincheng arrived in Jiangcheng at the end of August, while Lei Busi came to Jiangcheng University to participate in an event; he was a graduate of Jiangcheng University.

The two of them happened to be in the same place, which led to this meeting, which was also arranged by the Jiangcheng City Government and Jiangcheng University.

Over the course of a month, A-shares continued their sharp decline, with the index falling to a low of around 2800 points. The three major indices showed three large bearish candlesticks on the monthly chart, and individual stocks experienced pullbacks of over 40%, all of which revealed the dire situation of these three months.

However, Tan Jincheng no longer cared about these things. In August, he traveled all over the country to inspect and promote Lotus's domestic launch.

They visited all the first-tier cities and well-known provincial capitals in China, but left Wuhan for last, in order to make the biggest splash.

Jiangcheng had long intended to bring Wei over, but it seemed that Wei's main body had no chance of coming.

We simply couldn't compete with Luzhou.

If you can't get the main body of the Weilai, then the sub-brand is also a good option, especially since it's a luxury brand. It has generated a lot of buzz from last month until its official delivery on the 24th of this month.

Formerly one of the three major luxury sports car brands, it was the first luxury sports car in China to be delivered simultaneously with the rest of the world, and one of the top brands owned by domestic enterprises.

The sensation caused by the delivery of the Lotus EVOra400 in China is no less than when Geely acquired Volvo.

To put it simply, on August 24, the day Lotus was delivered, the three major indices of the Shanghai and Shenzhen stock exchanges plunged in the afternoon, with only 15 stocks rising and nearly 2200 stocks hitting their daily limit down.

Half an hour before the market closed, scenes of the Weilai 4S store delivering Lotus cars were circulating on the internet.

The first batch of car owners who received their sports cars posted delivery records online, and there were many people going to various stores for test drives. Even the test drives of the Weilai ES6 required queuing.

Car reviewers and follow-up reports from news media single-handedly pulled Weilai shares back up from a drop of over 8% to the flat price in the last half hour of trading.

In the 5-minute rapid increase ranking, Weilai's rapid rise was astonishing. In the final three minutes of the opening auction, Weilai even turned from the flat price into a positive one.

Among the 15 stocks that rose in the two markets, there was one giant with a market capitalization of over 100 billion yuan, which attracted much attention.

Those unfamiliar with stocks might find this absurd—it's just the delivery of a new car, and while it may sell well, it's not exactly a major positive development. However, experienced stock market investors know that this is perfectly normal in the A-share market.

Even during the three months of continuous stock market crashes, any company with even the slightest bit of positive news could see its stock price surge to the daily limit.

Lei Jun was speechless: "You are Xiaomi's second largest shareholder, one of our own. How can you look down on yourself? Our technology isn't that bad, okay?"

"Haha, don't misunderstand, I didn't mean that, it's just that there's really no rush right now."

"However, there are two things I need to discuss with you. Let's find some time tonight to talk about them."

Lei Jun seemed a little distracted: "In what way?"

Tan Jincheng looked around and lowered his voice, saying, "There's an investment, and another cooperation plan."

The collaboration plan naturally involves Xiaomi designing a phone for Weilai. The previous collaboration with Xiaomi wasn't a true Weilai brand phone; it was just an experiment.

Xiaomi will handle the design, while Tan Jincheng plans to outsource the manufacturing to Luxshare Precision, which is also one of its major shareholders. This Apple supply chain company is practically the domestic version of Foxconn, with manufacturing capabilities no weaker than BYD.

Upon hearing the word "investment," Lei Jun's eyes lit up: "Investment?"

Mr. Tan has not personally invested for a long time. His last investment should be traced back to ByteDance, an internet company that was not favored by capital at the time. Now it has become an immeasurable force in the internet industry, with a valuation of more than $20 billion.

An investment project that allows Mr. Tan to personally participate must be no small project.

"Well, it's not convenient to talk about investment now. Let's discuss it tonight. Let's take care of business first."

Lei Jun was itching to talk, but he knew it wasn't the right time to discuss it in detail, so he could only nod.

He came with a mission, too.

"Eat faster. Speaking of which, there are really a lot of delicious foods in Jiangcheng. You always say you like the lively atmosphere, and Jiangcheng is just as good at it. In addition, the city is very competitive. So don't be picky, just put Lotus here with us."

"What you said is all correct, but let's take a look first. After all, it's the first luxury sports car brand in our country. It's always good to take a look."

This Niu Leather Sandalwood Brocade is truly something to brag about. Although it has lost its former glory, the Weilai Group has greatly improved in terms of both competitiveness and brand image after acquiring the Lotus brand and technology.

Geely's cars are getting better and better, and their designs are increasingly reflecting their own family design language, which is undoubtedly thanks to their ownership of Volvo.

To some extent, the good performance of Weilai's stock price during the recent stock market crash was largely due to the expectations brought by the acquisition of Lotus. Otherwise, given the performance of the car market in the first half of this year, before the power battery business had fully taken off, Weilai's valuation could not have remained stable at over 1700 billion yuan.

Even if they are the leaders in the new energy vehicle industry, it is not enough to support this valuation.

Lei Buss, mimicking Tan Jincheng, whispered, "Stop pretending, no need to look. I know your personality well enough. If I were to look carefully, would you be running all over the country in this sweltering heat?"

Tan Jincheng smiled; chatting with smart people is so easy.

Lei Jun, who is equally adept at marketing, could hardly fail to see through Tan Jincheng's intentions.

What he said wasn't wrong. Tan Jincheng's personality is more about decisiveness. He will make a decision as soon as he sees a good opportunity, and he often doesn't care how much policy subsidy the local government will give.

In the long run, you'll make a profit anyway.

Seeing that Tan Jincheng remained silent, Lei Bus was even more convinced of his judgment. He had worked with this amazing young man for a long time and had a certain understanding of both of them.

On August 31, 2015, after a four-day inspection, Tan Jincheng, president of Weilai Group, signed a memorandum of understanding with the Jiangcheng Municipal Government, and Lotus Global Smart Factory was officially established in Jiangcheng Economic and Technological Development Zone.

According to the agreement, the Lotus Jiangcheng factory will cover an area of ​​1526 acres and has a planned total investment of 50 billion yuan. Once completed, the Lotus Jiangcheng smart factory will be the world's first factory to be planned, designed and built using 3D digital technology.

The planned Lotus factory will take 12 months to complete and is scheduled to be put into operation in September 2016.

"Thanks, but I have no choice but to accept this favor."

"You're too kind, it's not at all."

"Then let's talk about your collaboration and investment."

(End of this chapter)