Who would still start a business seriously after being reborn?

Chapter 668 BBA
Cheng Yi stood in front of the world map in his office, his gaze sweeping across North America before finally settling on Europe. Pushing for the launch of in-car smartphones for Mercedes-Benz, BMW, and Audi was not a spur-of-the-moment decision, but a choice he had to make.

His plan is to have Enze Capital join forces with Mercedes-Benz, BMW, and Audi to establish a new company focused on in-car smartphones. This is the best way for them to bring their products to market and quickly build brand awareness at this stage.

Enze Capital provides funding, ARM provides automotive-grade verified chip architecture and design, Liangyan Technology provides capacitive touch solutions, Android provides the smart system, and the newly acquired and integrated European small and medium-sized semiconductor companies are responsible for producing supporting power management, RF, sensor and other special accessories.

Finally, Mercedes-Benz, BMW, and Audi—three brands symbolizing precision and luxury—endorse the final product by providing naming rights and quality assurance.

In 2006, launching an unknown mobile phone brand out of thin air to challenge the dominance of giants like Nokia and Motorola would be tantamount to throwing an egg against a rock.

Consumers need time to accept new brands, and establishing distribution channels is a lengthy and expensive process.

Most importantly, automotive-grade products are inherently very expensive, with prices comparable to the original Apple products. Without a strong endorsement, it's difficult to achieve rapid market penetration.

But Mercedes-Benz, BMW, and Audi are completely different. Their brands themselves signify high-end status. Tying a mobile phone to them can instantly elevate the product's positioning, naturally distinguishing it from mass-market consumer electronics.

In addition, the positioning of the first-generation smartphone was definitely the same as Apple's, requiring extremely high profits to recoup the R&D investment. Therefore, the price could not be too low. It can be said that the minimum price of an automotive-grade smartphone would be $500.

That's equivalent to the price of a laptop.

This product is targeted at high-end users, tech enthusiasts, and business people who pursue quality and status.

Consumers' trust in Mercedes-Benz, BMW, and Audi cars will also partially extend to the mobile phones branded by these brands.

When promotional materials mention using automotive-grade chips of the same standard as those used in the three sedans and undergoing reliability verification in extreme environments comparable to automotive testing, their persuasiveness far surpasses the self-promotion of a new company.

Most importantly, Mercedes-Benz, BMW, and Audi, as leaders in the European automotive industry, possess a large and mature supply chain system.

By collaborating with them, we can quickly mobilize European resources such as precision manufacturing, rapidly complete the process from blueprints to mass production, achieve the strategic goal of fully independent European production of all components, and firmly lock technological autonomy within Europe.

Establishing a joint venture is a way to leverage existing strengths and build a high-end smart device brand in Europe with the shortest time and the highest starting point, avoiding the long brand development period of starting from scratch.

If these three automakers make good use of their existing global channels, they will have the biggest and most irreplaceable advantage over any startup mobile phone company.

Traditional mobile phone manufacturers such as Nokia and Motorola need to invest heavily in building and maintaining a vast distribution network, retail stores, and partnerships with operators.

This is a heavy burden and a significant time cost for a newcomer.

However, the distribution channels for the three automakers are already in place.

The thousands of Mercedes-Benz, BMW, and Audi dealerships and brand centers worldwide are naturally the target customers of automotive-grade smartphones.

Displaying and selling mobile phones in prominent locations in these places allows for the most precise customer outreach.

For Mercedes owners, it's only natural to also buy a Mercedes-Benz phone that matches the brand's image.

In their past lives, Mercedes-Benz, BMW, and Audi also considered making mobile phones, but they had been de-industrialized for decades and started too late, so they no longer had the necessary conditions.

Moreover, due to various restrictions imposed by the United States, the IT industry has completely lost its share of Japan, Russia, Europe, and India.

Partnering with their channels is equivalent to skipping the channel development stage that all traditional mobile phone manufacturers must go through, and directly jumping into the final round to meet high-end users.

This is a devastating blow to the traditional mobile phone sales model.

The most important point, and the one that Cheng Yi fears the most, is technological sanctions.

The reason the United States opened up the mobile phone market in its previous life was not out of generosity, but to build a more sophisticated and covert system for exploitation.

American companies like Qualcomm have built extremely high ecosystem barriers by controlling communication technology patents and using powerful Snapdragon processors.

Almost all mobile phone manufacturers, including the later-emerging Chinese brands, have found it difficult to circumvent Qualcomm's patent wall and high-end chips.

While mobile phone manufacturers appear to dominate the global market, in reality, most of their profits are taken by Qualcomm through chip sales and exorbitant patent licensing fees.

They all became assembly plants and market channels for core American technology companies like Qualcomm, with the bulk of their hard-earned profits being taken by upstream suppliers.

Many mobile phone companies have profits in the single digits.

This is the division of labor in globalization led by the United States.

While opening up low-value-added, asset-heavy manufacturing and market competition, the government firmly controls the core, most profitable technologies and standards-setting rights.

If we want to completely bypass the US technology system and conduct independent research and development and production in all aspects, from communication standards to core processors to operating systems, the obstacles we will face will be unprecedented.

This is not just commercial competition, but will directly affect America's core strategic interests and technological hegemony.

At that time, the United States may resort to more than just market mechanisms; it may also employ extreme pressure through political, diplomatic, and even extraterritorial jurisdiction.

Cheng Yi has serious doubts about whether the EU can withstand such pressure, given its current political cohesion and strategic resolve in the face of the United States.

But as things stand, only the EU has the strength to confront this challenge.

By focusing on the niche market of in-vehicle smartphones instead of directly challenging the entire mobile phone market, and defining it as an extension of automotive electronic systems, the company can largely avoid direct conflict with existing mobile phone giants and provide a justification for potential criticism from the United States.

After all, their goal is to enhance the competitiveness and technological autonomy of the European automotive industry, which aligns with the EU's industrial policies.

By deeply linking the success of mobile phones with the prosperity of the European automotive industry, Mercedes-Benz, BMW, Audi, and the entire European automotive industry behind them have become a community of interests in this industry.

When the United States attempts to suppress it, it will face not just Enze Capital or a new mobile phone company, but the most politically influential industrial group in all of Europe.

This will undoubtedly greatly increase the decision-making costs for the United States.

By launching a car-mounted smartphone equipped with all-European technology, Europe can demonstrate to the United States its potential to innovate in the fields of mobile communications and smart devices. By letting the United States know that Europe is capable of building an alternative solution that is independent of core American technologies, the United States will be forced to show more cooperation in negotiations on technology standards, patent licensing, and market share.

Business is not always about confrontation.

Whether it's between countries or between companies, the relationship is more about mutual calculation, mutual exploitation, mutual cooperation, and mutual benefit.

Cheng Yi has secured so many resources for this new mobile phone company to ensure that it won't be hit too hard by the US when it emerges, or at least won't be completely crushed.

Once they weather the first wave of suppression and enter a protracted battle, the advantage will be theirs.

His advantage lies in his more than 20 years of knowledge.

If used properly, this kind of understanding can play a huge role at critical moments.

For example, they are now imposing restrictions on touchscreen orders from Apple and LG.

In their previous lives, LG launched the first capacitive touchscreen phone, and Apple launched the first smartphone.

But in this life, do they still want to start?

"You guys were starting before I was reborn, and you're still starting after I was reborn? Then what the hell was the point of my rebirth?" Cheng Yi chuckled with a touch of wicked humor as he lay back in his chair.

Previously, Enze Capital operated behind the scenes, making various acquisitions and investments in semiconductor companies. But now they can no longer hide, so it's time for Enze Capital's mysterious big boss to make his appearance.

Meanwhile, in a secluded meeting room provided by the Rothschild family in London.

Mike, president of Enze Capital, Dieter Zetsche, president of Mercedes-Benz Group, Norbert R., president of BMW Group, and Weyler, president of Audi Group, are giving their opinions on the upcoming BBA mobile communications company.

This is already the fourth round of formal negotiations.

In the first three rounds, all parties were merely testing the waters and outlining plans, but today, a final decision must be made on the most crucial issue of equity distribution.

As the host and main technology provider, Mike broke the silence first, saying in a gentle tone: "The four of us actually share the same goal, which is to create an in-vehicle intelligent device that can define the future and consolidate and expand Europe's voice in the field of high-end mobile technology. In order to promote this efficiently, we must reach a consensus on the equity structure today."

He paused, then presented Enze Capital's proposal, saying, "Based on our previous agreement, Enze Capital will provide the core chip architecture, capacitive touch technology, and a £15 billion cash investment. You will each provide £10 billion in cash and open up your global sales channels."

"I propose the following shareholding structure for the new company, BBA Mobile Communications Co., Ltd.: 58% for our Enze Group, 17% for Mercedes-Benz Group, 14% for BMW Group, and 11% for Audi AG."

As soon as the proposal was announced, Dieter Zetsche's brows furrowed deeply.

He tapped the table lightly, his voice carrying the rigor and a hint of displeasure characteristic of Germans, and said, “Mr. Mike, frankly speaking, this ratio does not reflect the principle of fairness. Each of the three of us has invested £10 billion, and the total cash investment has already far exceeded that of Enze Capital. Moreover, we will also contribute our global channel network, which is of immeasurable value. According to the amount of investment and the degree of resource contribution, I think the equity should be set more evenly.”

Norbert immediately followed up, stating firmly, "Zeter is right. The brands and sales systems of Mercedes-Benz, BMW, and Audi are themselves a huge intangible asset. I believe that, based on equal cash investment and channel contributions, the equity ratio of our three companies should each reach at least 20% or more."

Weller nodded slightly and added, "That's right. The value of technology is important, but market recognition is equally crucial. Without our channel endorsement, even the best technology may not be able to play its due role."

The atmosphere in the meeting room instantly became tense.

Mike maintained a calm smile; he had anticipated this.

He responded calmly, "Mr. Zetsche, Mr. Norbert, Mr. Weller, I fully understand your positions. Your brands and channels are undoubtedly world-class."

He first gave his approval, then changed the subject and said, "However, please allow me to remind you of a few key points."

“The first thing I want to say is the irreplaceable nature of the technology.” Mike’s gaze swept over the three of them and he said, “ARM’s chip architecture, Liangyan Technology’s capacitive touch, and Android’s mobile operating system are the core competitiveness of this product. Without these, we are just talking about an ordinary mobile phone with Symbian system and a physical keyboard.”

“These three technologies are the result of Enze Capital’s years of hard work, investing more than £30 billion in real money and immeasurable strategic resources. They are unique and cannot be replicated.”

He emphasized the uniqueness and irreplaceability of his words, and slowly said, "Compared to technology, the value of your distribution channels is not irreplaceable."

"Of course, I admit that the three of you have powerful channels, but they are channels that serve car sales. Empowering the mobile phone business with them is just an extension of value and monetization of traffic, not building from scratch. This means that your marginal cost is very low, while our technology is a creation from scratch, bearing all the R&D risks and failure costs."

Mike stood up, lit a cigar, and said, "It's very simple for Enze Capital to find suitable channels. We own Global Vision, one of the world's top ten media outlets. As long as the product is excellent, we can quickly sell it to the world even through TV shopping."

"The reason we invited your three companies to join us is simply to let the European automotive industry embrace the internet and experience its charm." Mike exhaled a puff of smoke and said, "I've said my piece. You can decide for yourselves. This shareholding distribution is the limit we've given."

“This 58% is not owned by Enze Capital. We invested £15 billion, which only gives us a 25% stake. Android contributes its system and holds 15%, ARM contributes its chip technology and holds 8%, Liangyan contributes its touchscreen technology and holds 5%, and Momo Group contributes its Asian channels and holds 5%. I think this allocation plan is already perfect.”

(End of this chapter)