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After the people from the Qingdao investment promotion department left, Suning called the team into the conference room to discuss and compare the situations in the three cities.

Assistant Xiao Zhao posted a comparison table of data from the three cities on the whiteboard.

Su Ning stood in front of the whiteboard, holding a cup of tea, staring at the table for a long time.

The team members sat around the conference table, waiting for Suning to speak.

“Let’s go through them one by one.” Su Ning tapped the Beijing section on the whiteboard with his finger. “What are Beijing’s advantages? Government-business relations, business environment. Our roots are here, we have banking relationships, government relationships, and media relationships all here, making it convenient to do anything. But the disadvantages are also there—high land costs, and industrial land prices won’t come down. Moreover, Beijing’s industrial structure is already shifting towards high technology and finance, and its interest in large-scale manufacturing projects is declining year by year. It’s not that we can’t stay in Beijing, but it’s not cost-effective.”

Then Suning turned to the Dalian section: "Dalian's advantages are its port, heavy industry support, and its foundation as an old industrial base. Deputy Director Ma is right, exporting complete vehicles through Dalian Port does indeed reduce logistics costs. But Dalian's problem is that the overall economic environment in Northeast China has begun to decline, and its future market reach is questionable. Our cars, once manufactured, are not only for export, but more importantly, for the domestic market. The purchasing power in Northeast China is declining, which is a major problem."

He then pointed to the Qingdao section: "Qingdao's advantages are a more mature supply chain than Dalian, abundant labor resources, and the most supportive land policies, including zero-land-price support, which is a very valuable policy. Its disadvantage is that its government relations are not as strong as those in Beijing, so some things may not be as smooth to coordinate as in Beijing. But government relations can be built up gradually, while hard conditions such as land costs, supply chains, and labor cannot be changed."

He placed his teacup on the table, turned to face his team, and said, “We are now faced with three cards. Beijing is our relationship card, Dalian is our port card, and Qingdao is our industry card. What are your thoughts?”

Xiao Zhao was the first to speak: "President Su, I prefer Qingdao. We're in the manufacturing business, and supply chain and labor are real issues we face every day. The cost savings from zero land price are tangible. Although our government relations aren't as strong as in Beijing, they can still be used when there are major issues requiring coordination. But once land costs are locked in, it's a cost for decades, and we can't ignore that."

Another colleague in charge of finance chimed in: "Zhao is right. From a financial perspective, the Qingdao plan has the least financial pressure. Zero land price means a large amount less upfront investment, which can be used for equipment procurement and production line upgrades."

After hearing this, Su Ning didn't immediately respond, but instead asked, "What about Dalian? What do you think?"

Xiao Zhao thought for a moment and said, "Dalian Port is indeed good, but can our cars be exported on a large scale within three years? I don't think it's very realistic. In the early stages, the main market is still domestic, and the Northeast market is declining. We may not be able to reap the benefits of this port in the short term."

Suning nodded, remained silent for a moment, and then said, "You all prefer Qingdao?"

The group looked at each other and nodded.

Su Ning picked up his teacup and took a sip. "Let's not rush to make a decision. Let's do an on-site inspection first."

"clear."

……

Next, Suning began traveling around, conducting on-site inspections in Dalian and Qingdao.

He needs to see if these places are just making empty promises and to consider the location of the future mega-factory from all angles.

Back in Beijing, Suning once again compared the plans for the three cities over and over again.

Beijing's advantages include being the location of headquarters, having close government connections, and having fast approval processes, but land costs are high, and large-scale manufacturing is not the focus of Beijing's future development.

Dalian has a port and a strong foundation in heavy industry, but the overall economic environment in Northeast China has begun to decline.

Qingdao has a port, a supply chain base, cheaper land and labor, and its geographical location makes it convenient to radiate to Japan and South Korea.

At this time, Xiao Zhao made several copies of the investment promotion materials sent from Dalian and Qingdao and distributed them to the company's core team for review.

Deputy Director Ma from Dalian would call every two days to inquire about the progress, while Director Hou from Qingdao simply sent a liaison officer to Beijing to stay on-site, ready to supplement materials and benchmark against competitors at any time.

That day, Xiao Zhao walked into Suning's office with two newly released faxes: one was a list of additional preferential policies from Dalian, and the other was a list of parts suppliers from Qingdao.

Xiao Zhao spread two documents on Suning's desk. "President Su, Dalian said they can reduce the supporting fees for industrial land by another 10%. Qingdao has listed all the parts factories within a 200-kilometer radius of them, even the bolt factories, it's more than 20 pages long."

Su Ning put down her pen, picked up the two documents, and flipped through them.

After reading it, he leaned back in his chair and suddenly laughed.

He tossed the documents onto the table, stood up, walked to the window, and looked down at the dusty streets of Beijing. "I'm not choosing anymore."

Xiao Zhao thought he had misheard: "Not choosing anymore?"

Su Ning turned around, leaned against the windowsill, and put his hands in his pockets. "Only children make choices. Adults want it all."

Xiao Zhao blinked: "Does 'wanting them all' mean... building factories in all three cities?"

Su Ning returned to his desk, picked up a pen, and wrote a few words on a sticky note. As he wrote, he said, "It's not three cities, it's two. The production base in Beijing will be located in Shunyi, close to headquarters for easy scheduling. It will mainly produce Qinglong brand sedans and Zhuque brand urban SUVs. These two models are our main products for individual consumers, with the highest technological content and the most sensitive brand image. They must be produced under the very nose of headquarters, and quality control cannot be flawed in the slightest. After these two brands are stable, we'll consider launching Baihu off-road vehicles and Xuanwu MPVs. The production lines can be shared, so there's no need to build a new factory."

"..." Xiao Zhao quickly wrote it down in his notebook.

Suning continued, "In Qingdao, we mainly produce commercial vehicles. Baize buses and Chongmingbird trucks are manufactured at our Qingdao base. Commercial vehicles are large and heavy, and transportation costs are an indispensable part of the total manufacturing cost. Qingdao has a port, so the buses and trucks produced can be loaded onto ships for export right away. Moreover, Qingdao has a complete industrial support system, and we can find suppliers locally for large components such as chassis, beams, and diesel engines, saving a lot of logistics costs."

After listening, Xiao Zhao stood there and went through Su Ning's words in his mind, then asked, "President Su, what are the arrangements for Dalian?"

Without looking up, Su Ning continued scribbling on the notepad: "Keep Dalian's policy for now, we'll talk about it later when production capacity is insufficient. Call Deputy Director Ma back, be polite, and say that China Automotive appreciates Dalian's attention and sincerity, but the current production capacity plan doesn't require a third base, and Dalian will be given priority when expanding production in the future. Also, tell them that if Dalian Port is willing to reserve a parking space for us under a long-term agreement, we can sign a three-year framework agreement first to prepare for future exports."

"Understood." Xiao Zhao nodded, made a few notes in his notebook, and turned to leave.

...The next day, Su Ning called everyone together for a meeting.

People from the legal department, investment department, and engineering department were all present, filling both sides of the long conference table.

Suning had a map of China projected onto the wall and used a laser pointer to draw two red circles on the locations of Shunyi District in Beijing and Huangdao District in Qingdao.

“The production bases are in these two places.” Suning pointed the laser pointer at the red circle in Shunyi. “Shunyi makes passenger cars.”

Then the focus shifted to Huangdao. "Huangdao is for commercial vehicles. The two bases have different standards. The Shunyi base is built to passenger vehicle standards, and all four major processes—stamping, welding, painting, and final assembly—are essential. The Huangdao base has final assembly lines for buses and trucks, along with welding and painting workshops. Stamped parts can be sourced from surrounding supporting factories."

The head of the engineering department flipped through the preliminary research materials in his hand, looked up and said, "President Su, if the two bases start construction at the same time, the pressure on project management will be enormous. Our engineering department's current manpower is a bit strained to oversee two large projects simultaneously."

Suning said, "No matter how much pressure we are under, we have to operate them simultaneously. Passenger vehicles and commercial vehicles are like two legs; if one is missing, we can't move steadily. If we don't have enough manpower, we'll recruit. We'll poach project managers with factory construction experience from outside, and the personnel must be in place within a month."

The head of the engineering department nodded and wrote it down in his notebook.

The investment department representative then raised their hand: "President Su, I've done the calculations. The combined investment scale of the two bases isn't enough to cover the profits from Mingju Real Estate alone. The initial land transfer fees, plus factory construction and equipment procurement, leave a significant funding gap."

Suning said, “Loans. We’ll negotiate with the banks separately for the two projects. The Shunyi project will use the assets of Mingju Beijing City as collateral, while the Huangdao project will use the newly registered car company as the main entity. Each project will go through its own credit channel. We still have a lot of room to maneuver in terms of credit lines with major banks in Beijing. Your investment department should come up with the loan plan this week, and I will personally go to negotiate with the banks next week.”

The person from the investment department said, "Understood."

After the division of labor was completed, the meeting adjourned.

Xiao Zhao stayed behind to tidy up the materials on the table. While tidying up, he couldn't help but sigh, "President Su, other car companies produce one car at a time. We haven't even built a single car yet, and we've already set up two production bases."

Suning put the laser pointer away in a drawer. "We build the factory first, use the qualifications first, and secure the brand first. Others install things one wheel at a time, but I build the frame first and then fill in the components. When the market takes off, we won't need to scramble at the last minute."

Xiao Zhao stacked the materials and held them in his arms, laughing as he said, "This car frame is really big."

Suning stood up and patted him on the shoulder: "Not much. Once the product line expands, two bases might not be enough. Let's go... get to work."

……

The news that China Automotive was going to build factories in two cities at the same time caused a stir in the industry.

It's not a small fry, it's a big fry.

What was the state of China's automotive industry in 1996?
Joint venture brands have just gained a foothold, and domestic independent brands can be counted on one hand. They are all tightening their belts and slowly working on one car model at a time. They are so careful with every penny when building a factory that they can't bear to part with a single cent.

What about Tianchao Auto? It was registered and established only a few days ago, hasn't produced a single car, and hasn't released a single design drawing to the public, yet it immediately wants to set up two production bases in Beijing and Qingdao at the same time.

That's not all. There are also reports from Dalian that Tianchao Automobile hasn't ruled out the possibility of building a third one in the future.

This is definitely not normal.

The first to react were not the media, but people in the automotive industry.

When the heads of several long-established state-owned automobile manufacturers met at an industry conference, they talked about this matter in private.

“Suning is good at real estate, but does he understand cars? Real estate is about high turnover: acquiring land, building, and selling houses, with quick returns. Car manufacturing is a manufacturing industry with a long upstream and downstream chain, high technical barriers, and a return cycle calculated in years. If you use the same methods as real estate to manufacture cars, nine out of ten will fail.”

"China Automotive is just making empty promises, using two production bases as a gimmick. They haven't even produced a single car, yet two bases are operating simultaneously? Isn't that ridiculous?"

Some people bluntly stated: "This could very well be a scheme to defraud loans, policies, and land. They register a car company, paint a picture of several brands, use the production base as a front to negotiate land concessions with the local government, and then use the land as collateral for loans. Whether they can actually build the cars is another matter; the priority is to acquire the land, get the money, and profit from the policies. This kind of thing has happened before."

These voices reached Qingdao and, as expected, elicited a reaction.

Director Hou of the Qingdao Investment Promotion Bureau has clearly cooled down his initial enthusiasm.

It wasn't that he didn't have a positive outlook on the Tianchao Auto project itself, but rather that he was directly suppressed by pressure from above and public opinion.

At a meeting, someone in Qingdao specifically mentioned Tianchao Automobile, saying that setting up factories in both Beijing and Qingdao for the same project seemed like a case of duplicate investment.

Moreover, not a single prototype has rolled off the production line yet, so how can we talk about simultaneously advancing the project at two bases?
What if it really is a case of land grabbing and subsidy fraud?
If the land in Qingdao is approved and the policies are issued, but the production lines are not built and the tax revenue is not seen, who will take responsibility?

Director Hou made a phone call to Beijing, and his assistant, Xiao Zhao, answered the phone.

Director Hou's tone was much more tentative and reserved than during their last meeting: "Assistant Zhao, our leaders want to see how far your company's prototype is progressing. Even just one prototype, having a real car on the table, would make it easier for us to report to our superiors. You're operating two bases simultaneously, and we haven't even seen a single wheel yet. Our approval process is stuck."

Assistant Xiao Zhao said, "Director Hou, I understand how you feel. Here's what I'll do: I'll pass on your message to General Manager Su, and he'll call you back as soon as he has any news."

...(End of this chapter)