2003: Starting with Foreign Trade

Chapter 859 Trip to the Mountain City
"SAIC has better access to information; our response was a bit slow."

The main focus of the cooperation between Dongfeng and Weilai is, of course, the joint development and procurement of power batteries. Weilai's Xuanwu battery series currently has a good overall market share and positive market feedback.

Currently, the Tesla Model S, which has the highest single-vehicle sales in the world, and the Model X, which can be considered a failure, both use Xuanwu batteries.

In addition, the upcoming 3D Pro will continue to be equipped with the Xuanwu battery system.

More and more car companies are using Xuanwu batteries. Among them, newly established new energy vehicle brands tend to purchase batteries from Weilai. Among traditional companies, SAIC is the most proactive in cooperating with Weilai.

Since its last investment in Horizon Robotics, SAIC has contacted Tan Jincheng several times. Currently, both parties are interested in establishing a joint venture, with the project still focusing on power batteries. In fact, the two parties have already entered the stage of negotiating their intentions.

They are indeed quite fast in this respect. Geely and Chery had previously expressed their intention to cooperate with Weilai to establish a joint venture, but then nothing happened.

"The fact that Volkswagen has been able to maintain its leading position in the domestic market for so long is definitely not just due to the Volkswagen brand. Even though Volkswagen is popular, it still requires their management capabilities. Without certain management capabilities, they certainly could not have achieved such success."

FAW, another partner of Volkswagen, is somewhat inferior in this regard.

Dongfeng's cooperation with Weilai has business considerations, but it is also closely related to the 13th Five-Year Plan for the automotive industry, which clearly puts forward the development goal of intelligent connected vehicles.

The so-called intelligent connected vehicles are simply intelligent driving in the common sense. The plan mentions that by 2020, the market penetration rate of L1 intelligent driving is 50%, and the market penetration rate of L2 intelligent driving is 10%.

In the domestic intelligent driving sector, Horizon Robotics, which just completed financing last year, is one of the hottest companies right now. SAIC's actions and market sensitivity are truly remarkable.

Dongfeng's strategic cooperation with Weilai also includes Horizon Robotics' intelligent driving system.

With the entry of the internet and venture capital, and the impact of new brands, the investment style in the automotive industry is becoming more and more like that of the internet: if you have it, I have to have it too, regardless of the results, I have to get one.

"Yes, the reason why SAIC has been able to maintain its leading position for so long is not only because of its first-mover advantage, but also because of its policy advantages."

On the plane to Chongqing, Tan Jincheng and Li Bing discussed cooperation with Dongfeng. Li Bing's Wenjie would also use Weilai's intelligent driving system. They were already in negotiations with Jianghuai, and the progress was going well.

Meanwhile, after finishing his trip to Jiangcheng, Tan Jincheng made a detour to Xiangcheng. This detour lasted until almost the end of February. The two met in Xiangcheng and flew to Shancheng together.

"The first name that comes to mind when people think of the 'master of imitation' in the automotive industry is Zhongtai, but Lifan and Shuanghuan are grandmasters in the imitation world. Zhongtai is still a junior in their eyes."

To make a large-scale business acquisition, a complete business investigation of a company is required. Tan Jincheng was greatly influenced by Shen Nanpeng in this regard and did a very professional job in this area.

Lifan's success is almost a history of the times, from producing engines and motorcycles, obtaining a car license in 2005, two years earlier than Great Wall Motors, to real estate, new energy, shared mobility, auto finance, and so on.

At almost every juncture, 78-year-old Mr. Yin has hit the mark perfectly. Starting a business in the last century was much more difficult than it is now, especially in a mountainous city. It must be said that Mr. Yin is not only highly capable, but also quite lucky.

"It's like short-term stock trading; every time he enters the market, he manages to catch the price surge. His luck is truly undeniable."

Lifan Motors' success stemmed from imitation, and imitation is the original sin. However, from an objective perspective, independent brands established at the end of the last century and the beginning of the new century, given the specific historical environment and low R&D capabilities, should not be overly condemned.

The first priority for a business is survival. If you can't even survive, talking about anything else is just nonsense. The problem is that he's too deeply poisoned by it. After tasting the sweetness of imitation, he's unwilling to come out.

Companies like Chery, Didi, Geely, and Great Wall have all engaged in copying and have faced numerous lawsuits. However, these companies were able to transform themselves in a timely manner after accumulating a certain amount of experience, which is the key to their success.

"Yes, it's not wrong to start a business by copying others, but it's wrong to be obsessed with copying. That's what's happening with Zhongtai now. They were founded earlier than you, but while you're all doing independent research and development, they're still obsessed with copying. They're destined to have no future."

"Hey, another reason is the quality issue. You must pay attention to quality when you manufacture cars in the future. Quality and safety are always the most core aspects of automobiles."

In Tan Jincheng's view, a car is like a piece of iron encasing flesh. No matter how much you boast or market it, quality and safety are the most important things. You only have one life, and you can't joke about it.

Putting aside the issue of counterfeits, just how bad is Lifan's quality?
It's already 2016. Can you imagine the horrific incident where a Lifan sedan, which was driving normally, had its rear axle detach from Dongchuan?

It has simply set a new low for the quality of domestic cars. In Baidu's entries, almost all the news related to Lifan's quality is negative. It is a staunch member in the "five worst quality cars" and "ranking of the worst quality brands" compiled by major media websites.

Behind the "How is Lifan Motors?" question on Zhihu is a tearful accusation session. In the reviews on Autohome, most consumers' biggest complaints are about its quality.

People buy knock-off cars mainly because they're cheap, and they don't really care about quality issues. These consumers can usually overcome most problems. But if knock-off consumers can't stand the quality issues, then it's really not the knock-offs' fault.

It's pretty absurd that someone could become a car repair expert without any formal training after owning a car for only a year.

The various attacks that Xiangzi suffered in its early stages were largely due to Lifan. If Zhongtai is the first impression of counterfeit products, then Lifan is definitely the first impression of the worst quality among independent brands.

"Now is a good opportunity to acquire Lifan, but after the acquisition, we will also have to bear the negative news about their quality. It will probably take several years to change consumers' opinions. In addition, there will definitely be competitors who will use this to attack you in the future."

While enjoying the benefits of automotive qualifications, one must also bear the corresponding disadvantages. However, if JAC is used as an OEM, this problem is also unavoidable. In fact, the OEM that Xiaopeng found has a better reputation.

As for the car factory that Wei is interested in, there is no such problem. He only wants the land and equipment. After buying it, he will also invest funds to renovate it. There is no way to smear him.

Furthermore, the competition on the pickup truck track is relatively peaceful, and the smaller track also has its advantages.

"I understand. I'm already prepared for that. Anyway, it's all the same. As long as we keep up with the quality, these aren't big problems. The current issue is whether Mr. Yin is willing to sell and what the price will be."

The quality scandal isn't even a scandal for Lifan anymore; they've been indifferent to such things for years. But the new energy vehicle subsidy fraud scandal is giving them a real headache.

Quality issues are addressed to consumers, and in an immature market, one can turn a blind eye. However, being involved in a subsidy fraud scandal means facing higher-level regulatory agencies and risking the direct cancellation of subsidy eligibility.

"President Yin's attitude is indeed key. Whether to sell or not, and for how much, is up to him. But since he is willing to meet with us, it means there is room for negotiation."

The A-share market remained sluggish in February, and Lifan did indeed face various problems. However, as a listed company, Lifan's overall market value remained between 100 billion and 120 billion yuan.

Of course, this is the total market value of the entire Lifan Group, and the automobile business is only one part of it.

2016 was a pivotal year for Lifan. Shuanghuan, another master of knock-offs, had already filed for bankruptcy, while another king of knock-offs, Zhongtai, was thriving.

Although the Porsche-made car had not yet officially debuted at the auto show, it had already been released and received a lot of attention while being heavily criticized.

"But we're not in a hurry, we still have time. If the price is too high, we won't buy it. Yangzi Automobile doesn't necessarily need this factory."

The business environment in Chongqing is actually quite complex. If it weren't for the pickup truck market in Southwest China, Tan Jincheng wouldn't have been willing to invest and build a factory here. Not everyone has the financial backing of Chrysanthemum Factory.

This is a joint acquisition between the two companies, somewhat similar to a three-way trade in the NBA. Li Bing negotiated with Lifan to acquire its automotive business. After the acquisition is completed, Li Bing will move the factory and other usable equipment to Shanghai.

The factory buildings, land, and employees that could not be moved were taken over by Yangzi Automobile. Yangzi Automobile reinvested in and expanded production in Chongqing, establishing a production base in Southwest China.

If Li Bing were to acquire the factory and relocate the qualifications after the acquisition, he would still have to deal with the Chongqing government, and it's hard to say whether they would obstruct him.

Despite the various problems Lifan is facing now, they still sold tens of thousands of cars last year. For the local government of Chongqing, this is a significant automotive industry. Whether or not you are allowed to relocate is not solely up to Mr. Yin.

"That's true. Whether it's copying the design or the poor quality, it all boils down to speculation. You absolutely can't have a speculative mentality in the automotive industry. Of course, if you just want to put together a framework and then go public to make money, then disregard what I said."

Lifan's ability to accurately capitalize on industry trends is a major achievement in its business. However, its lack of perseverance, excessive speculation, and lack of dedication to core technologies, coupled with its single-minded pursuit of quick profits, have resulted in it being deeply trapped in its current predicament.

In addition, these counterfeit companies have a very negative impact on independent brands. By leveraging their overseas channels in the motorcycle market, they use the export tax rebate mechanism to dump their products abroad at extremely low prices.

Foreigners don't know about the quality or reputation, so when they see it's so cheap, they all rush to buy it. But in reality, this thing is just industrial waste, and the consequences are predictable.

The Southeast Asian motorcycle market used to be our domain, but we ended up losing it all because of this, which has led to foreigners' collective hostility towards domestic Chinese brands.

It can be said that companies like Lifan are the public enemy of independent brands. They make a fortune for themselves but leave a bad image for the collective, making it more difficult for other companies to develop overseas markets.

What is the first thing that first-tier domestic brands need to do when going global? It's to clean up their messes and disinfect their environment. The main reason why Weilai has not yet made a name for itself in the Southeast Asian market is the collective resistance to domestic brands in this region. This is a deep impression left over from the motorcycle era, and it is not so easy to erase.

During the export period of two-wheeled electric vehicles, Shanchi had to clean up their mess once, something Mr. Tan knows all too well. To be honest, if it weren't for other export partners like Xinri, Yadi, and Aima also having reliable quality, it's hard to say whether two-wheeled electric vehicles could have reopened the market in Southeast Asia.

Now, in the automobile export business, Wei Lai and his partners are facing the same problem again. From the perspective of the company's boss, he would love for such companies to disappear as soon as possible.

Copying is fine, making quick money is fine, but it's wrong to leave the blame to your competitors.

"President Tan, President Li, welcome to Chongqing."

At Jiangshan International Airport, Lifan attached great importance to the arrival of Tan Jincheng and Li Bing. President Mou Gang personally came to the airport to welcome them. Like Zhang Yong and Li Bing, Tan Jincheng was a professional manager.

Because his children were unwilling to take over the business, and Mr. Yin was already 78 years old, Lifan had to hire professional managers to run the company. Although Mr. Yin had gradually relinquished power, for Bimei, they were still a little short of switching between professional managers and family businesses.

In addition, not everyone belongs to Fang Hongbo.

"Hello, Mr. Mou, it's an honor to meet you."

This was Tan Jincheng's first time in the mountain city. The temperature in the mountain city at the end of February was not low, but due to the complex geographical environment, the perceived temperature was a bit lower than the actual temperature. After exchanging a few pleasantries at the airport, the three of them headed straight to Boss Yin's residence.

"Alright, I'll lead the way. How about you two ride in the same car with me?"

It was Tan Jincheng who suggested going to Boss Yin's residence. After thinking about it, Mou Gang agreed. He naturally knew why these two had come. As the company president and actual manager, no one knew the company's situation better than him.

If we can reach a cooperation agreement with these two individuals, especially with Tan Jincheng, it will be very beneficial for the company.

To be fair, aside from its less-than-stellar performance in the passenger car market, Lifan's other businesses are quite good. As the first privately-owned car company to go public, Lifan possesses a financial license that other car companies dream of.

In addition, they have also invested heavily in new energy. Last year, Lifan officially entered the new energy industry and built a large number of charging piles in Chongqing. No new energy vehicle company can avoid the business of charging piles.

Whether it's B2B or B2C, WILAY's sales in the new energy vehicle sector are solid. If a reporter can infiltrate Lifan, they can also infiltrate WILAY and BYD. Such high sales figures are bound to attract attention.

No problems were found. The actual sales volume has increased the demand for charging piles. If Lifan can form a cooperative relationship with Weilai, it will be complementary in terms of resource utilization, which will benefit the company.

In addition, both Mr. Yin and Mou Gang highly value Tan Jincheng's integration capabilities in the capital market. Looking back on the entrepreneurial career of this young man who is not yet 31 years old, whether it is Flash or Weilai, he has always been involved in acquisitions.

In the automotive industry, Tan Jincheng has the same reputation as Li Keqiang of Geely: the "white knight who takes over the bad guys." In fact, his reputation is even more widespread than Li Keqiang's. Tan Jincheng started from scratch by buying everything he owned.

From the shares of Zhongtai Beicang Company to Yangzi Automobile, Changfeng Automobile, Proton and Lotus, a series of domestic and foreign operations have resulted in several acquisitions that have caused a huge sensation.

The companies he acquired were all facing operational difficulties. However, this young man seemed to have some kind of magic. After acquiring them, he made a series of moves, getting rid of what needed to be let go and keeping what needed to be kept. Combined with independent research and development, he managed to revitalize the assets.

Yangzi Motors has maintained its position among the top five pickup truck manufacturers in China. The acquisition of Changfeng Motors marked the beginning of its rapid growth. Even the spun-off Changfeng Motors business has been revitalized in the past two years under the original founders.

Last year, Changfeng Motors' overall sales reached 9.38 vehicles. In addition to maintaining its advantage in procurement, the Cheetah series also sold very well in the passenger vehicle sector. Isn't that amazing?

The acquisition by Changfeng Group in 2008 is now often cited as a classic business case study. The acquisition enabled Flash Technology to go public through a reverse takeover, Weilai Automobile to be reborn, and Changfeng Cheetah and Yangzi Automobile to make a comeback from the brink of disaster, achieving four goals at once.

"Is this Mr. Tan's first time visiting Chongqing?"

The acquisition was made by Wenjie Auto, but Lifan's top management clearly valued Tan Jincheng more; the reason is simple: one is a one-off deal, while the other offers the opportunity for long-term cooperation.

Li Bing didn't care. Although he had been an entrepreneur for many years and was considered a veteran in the internet industry, his business was limited in size and the market was niche. Moreover, he was a newcomer to the automotive industry, so it was normal for him not to be taken seriously.

But it doesn't matter, as long as it succeeds.

"Yes, this is my first time in Chongqing. Mr. Mou, please tell us about the local delicacies."

"Speaking of food, our mountain city has a lot to say, but I wonder if President Tan and President Li can handle spicy food?"

Tan Jincheng and Li Bing exchanged a glance, and Li Bing replied with a smile, "Mr. Tan and I are both from Yicheng, but we've lived in Jiangsu and Zhejiang for a long time. We can eat a little spicy food, but not much. Mr. Mou, please don't make it too spicy."

Mou Gang readily replied, "No problem, I'll make the arrangements tonight."

The terrain of the mountain city was indeed very complicated. The three of them chatted and laughed along the way, and Tan Jincheng kept an eye on the road conditions during their conversation.

"With such complicated road conditions, it's really difficult to drive if you're not skilled or have a good sense of direction. Driving in this mountain city is quite challenging."

"Indeed, the road conditions in the mountain city are quite interesting."

No one talked about work along the way. It's true that Mou Gang is a manager of the company, but he is not the actual controller. He can make decisions on normal business dealings, but selling the company's current core business is something that Boss Yin has to decide.

The car slowly drove into the mansion, and the thin Mr. Yin stood at the door to greet the guests he was meeting for the first time.

Tan Jincheng and Li Bing opened the car door together and quickly walked out the door.

"Hello, Mr. Yin. It's a pleasure to meet you. I apologize for bothering you."

This 78-year-old man has a legendary life. Tan Jincheng was just born when he officially started his business, and he was already 47 years old at the time. Starting from buying and selling books, he became the largest private bookseller in the mountain city in seven years.

In 1985, although the reform and opening up had already begun, there was still a great deal of debate about private enterprises, especially in the southwest region where the mindset was relatively rigid.

With a wave of his hand, Lai Yiu-fai handed two gift bags to Tan Kam-ching and Li Bing, which were gifts they had prepared for the old man.

Boss Yin smiled, his accent clearly visible: "Why are you being so polite? Come on in, it's a bit chilly outside."

Although he is 78 years old, Mr. Yin is still in very good spirits and speaks with a strong voice.

Besides motorcycles, what Chinese people remember most about Lifan is probably football. This old man was once very passionate about football.

Of course, there are also business considerations. Before the mobile internet became popular, starting a football club would give a company exposure similar to how you can frequently make it to the trending topics now.

Don't think it's bad, and don't think it's expensive. It's very effective for businesses, and for consumers, especially male consumers, many well-known companies were learned about through football.

As the former richest man in Chongqing, Mr. Yin's mansion was so luxurious that even worldly people like Tan Jincheng and Li Bing were amazed. It has to be said that people who can switch industries and play football are not bad at enjoying life.

Oh, and his son too. This young master, who's quite famous online, was one of the first Tesla Model S owners. He really loves cars, and his life is certainly exciting.

Tan Jincheng wanted to meet this young master. In his imagination, what kind of person would a 40-year-old dare to race cars?
"After returning home for two days after the Spring Festival, we talked about car manufacturing. We also talked about how our biggest dream when we went out to work was to save money to buy a Lifan motorcycle back home."

When asked about the purpose of his trip, Li Bing used this method to begin, while Tan Jincheng remained silent, quietly listening with his teacup in hand.

Li Bing's words were not an exaggeration. Lifan motorcycles were indeed very popular in the last century, and their quality was much better than that of their cars. Especially in the early days, they were popular all over the country.

To be honest, if Lifan had focused on its core business like Zongshen, transformed into the high-end motorcycle market, and adopted a contraction strategy instead of venturing into the new energy vehicle industry, it wouldn't be facing the current crisis.

Lifan Motors' sales plummeted in January, and the scandal-ridden listed company is destined to suffer losses this year. It all started when this old man met an investment expert.

I wonder what he thinks about selling the group's car business? After all, this is just the beginning of Lifan's crisis, and things are far from being unsolvable.

(End of this chapter)