With the investment settled, Wang Zhanggui felt refreshed and then cautiously asked:
"Chairman Wang, may I inquire whether you intend to hold your BYD shares long-term or short-term...?"
This point was very important.
Private placements generally have a lock-up period, such as three months, six months, or one year.
However, Hong Kong stock lock-up period regulations only restrict controlling shareholders and cornerstone investors.
Controlling shareholders, naturally, hold more than 50% of the shares.
Wang Yi's investment in BYD shares totaled just over 10%, split between two accounts.
The first 2 billion Hong Kong dollars was invested by Xingyi Technology, and the subsequent 1.5 billion Hong Kong dollars was Wang Yi's personal investment.
It was far from 50% controlling stake.
Cornerstone investors are typically first-tier institutional investors, large enterprise groups, and renowned wealthy individuals or their affiliated companies.
For example, Buffett is a typical cornerstone investor.
But the current Wang Yi was far from Buffett and couldn't be considered one.
Moreover, cornerstone investors usually only have a three-month lock-up period, which wouldn't affect Wang Yi's partial reduction of holdings after three months.
Facing Wang Zhanggui's concerns, Wang Yi waved his hand:
"Don't worry, I am long-term optimistic about BYD, but 3.5 billion cannot remain tied up indefinitely. However, I can guarantee that I will only reduce a portion of my holdings when BYD is performing well. I will not reduce holdings when BYD is performing poorly! Xingyi Technology is just starting out and needs a lot of money, so I hope for your understanding."
"Understood, absolutely understood!"
Wang Zhanggui breathed a sigh of relief.
Wang Yi was not Buffett, nor was he excessively rich.
Being able to invest 3.5 billion in BYD was already a big help to BYD.
It was normal for Wang Yi to reduce a portion of his holdings when the market was favorable later, as Xingyi Technology's development also required significant capital.
Moreover, a partial reduction during favorable times means there are plenty of buyers, so there's no need to worry about a stock price crash.
As long as Wang Yi didn't reduce his holdings to dump shares during unfavorable times, that was fine.
Wang Yi continued:
"Furthermore, if Xingyi Technology makes money next year, and BYD happens to face negative news, I will consider increasing my stake to pull the stock price back up! I am long-term optimistic about BYD!"
Upon hearing this, Wang Zhanggui's eyes lit up:
"Chairman Wang, thank you, thank you very much!"
Neither Wang Yi nor Wang Zhanggui were optimistic about BYD's upcoming prospects.
The automotive industry was stagnant, government subsidies were canceled, and BYD's current profit had fallen by about 90% year-on-year compared to the same period last year, and it was expected to continue plummeting for a year.
Internal assessments projected a year-on-year profit drop of about 90% for the first quarter of next year.
Even with Wang Yi's order for 15 million batteries and anti-freeze batteries, which could boost some revenue, BYD's Q1 financial report next year wouldn't look much better.
After all, selling more anti-freeze batteries would require increasing production capacity, adding production lines, and investing in new factories... all of which demand significant capital!
After deducting these investments and R&D costs, the anti-freeze battery business's profit would not be high within a year.
BYD's key development areas, home appliances and computer businesses, would all fail next year, incurring only investment with no output.
The success of one small business could not compensate for the complete loss of two major businesses!
Coupled with the news of Buffett's cancer in April next year, BYD's stabilizing force would be shaken, causing panic in the industry!
Both institutions and retail investors would turn bearish and sell off on a large scale.
Adding to the woes, internal executive turmoil, resignations, and cash-outs at BYD made matters worse.
If that weren't enough, on May 26th next year, an E6 electric car would be rear-ended on the highway and catch fire, resulting in multiple fatalities...
This incident would raise public doubts about the quality and safety of the E6.
E6 sales would plummet, causing BYD's already low stock price to plunge again.
With so much heavy negative information, Wang Yi's investment and the minus-ten-degree anti-freeze battery business could not save BYD.
Therefore, Wang Yi decided to partially reduce Xingyi Technology's BYD shares at a high point in February next year when there was positive news, and disclose this outwardly, stating it was for Xingyi Technology's business expansion...
Coupled with the positive news in February, and the fact that Wang Yi did not reduce any of his BYD shares, indicating his optimism for BYD.
This small-scale reduction would not cause much impact.
At that time, another large order could be signed with BYD to stabilize the stock price.
The investment community and individual investors would also not panic.
By the time Buffett's cancer news broke in April and the subsequent 5.26 incident caused BYD shares to hit rock bottom, Wang Yi could then strongly enter the market and continue to increase his stake in BYD, which would instead boost the market and lift BYD's stock price.
Partially reducing holdings when the stock price is strong would have limited impact on BYD.
Strongly increasing holdings when the stock price is crashing would also earn BYD's gratitude, truly helping in its time of need.
Wang Yi bought stocks to make money, not to be a saint.
There was no need to deliberately avoid reducing holdings in February during a favorable period, knowing that the stock price would fall in April.
As for what the positive news in February was, Wang Yi couldn't recall.
He only remembered that in February next year, BYD's stock price rose to 25 Hong Kong dollars.
Now with Wang Yi's investment and large battery order, it might even surge to 30 Hong Kong dollars.
But the news of Buffett's cancer in April, coupled with sustained severe performance decline, would cause BYD's stock price to plummet again.
When the stabilizing force moves, heaven and earth collapse.
Such was Buffett's power!
As for the battery order payment, that was even easier to discuss.
To buy components from international giants like Qualcomm and Sony, Wang Yi had to pay in advance to book.
But with domestic suppliers like BYD, it didn't matter.
Paying upon delivery, or even quarterly payments, was the mark of a premium client!
In China, there were more monks than porridge, and mobile phone brands were the absolute priority customers.
Coupled with Wang Yi being a major shareholder of BYD, if BYD wasn't short on cash, Wang Yi could even pay semiannually.
But currently, BYD was short on cash, so paying within the month after delivery was better.
In the afternoon, Wang Yi accompanied Wang Zhanggui to visit BYD's battery factory and automobile factory.
Although it was still somewhat behind the electric vehicle giants of later generations, BYD had a promising future.
Besides its automotive, battery, and photovoltaic businesses, mobile phone contract manufacturing was also one of BYD's main businesses.
BYD Electronics had mobile phone contract manufacturing factories in Shenzhen City, Tianjin City, Huizhou City, India, Hungary, Romania, and other countries.
Many brands of mobile phones currently were manufactured by BYD.
For example, the Shenzhen City factory had an annual capacity of 20 million units!
If Xingyi phones experienced a surge in orders later, BYD could also be considered for contract manufacturing.
As for the factory promised by Director Qin, Wang Yi didn't know its capacity.
After returning to Beijing, he would have to visit Director Qin and ask for some more benefits!
After all, Wang Yi had poached so many semiconductor talents and elites from the empire and Taiwan, and was preparing to vigorously develop semiconductors, so he deserved some rewards, right?
As for what rewards he wanted, Wang Yi had already figured it out.
Money, he didn't lack.
Factories, he didn't lack either.
He wanted licenses!
Payment licenses!
The Central Bank approved the first batch of payment licenses in May 2011.
Wang Yi remembered that in his previous life, by 2015, the Central Bank had approved a total of 270 payment licenses in eight batches, and subsequently stopped approving new ones.
With three companies' payment licenses revoked, in the future, there would only be 267 licensed third-party payment companies in the market.
Therefore, the price of payment licenses had soared to astronomical levels.
For example, Meituan, to get a payment license and launch Meituan Pay, had to acquire the entire Qiandaibao company at a huge cost!
This was unavoidable.
If Wang Yi didn't act early and secure one of these 270 payment licenses, he would later have to, like Meituan, spend a considerable price to acquire a licensed company!
The current Meiyou Mall was already international, and he was also independently developing chips and investing heavily in semiconductor talent.
Wang Yi could certainly ask for a payment license.
This matter, if Wang Yi applied for it alone, would certainly be a long shot.
But with the Beijing Management Committee stepping in, there was a chance.
Wang Yi's influence was insufficient, but Beijing's influence was sufficient.
Who wouldn't want to support a local enterprise?
This was also why Wang Yi based the headquarters of his parent company, Xingyi Technology, in Beijing!
However, to get the Management Committee to step in, he also needed to demonstrate sufficient strength.
Unfortunately, Xingyi phones hadn't launched yet, so Wang Yi could only place a one-time order for 30 million chips.
He also acquired Weiru's baseband and poached Texas Instruments' R&D talents, laying out the semiconductor industry...
All of these were to demonstrate his strength.
Only this way could the Beijing Management Committee champion Wang Yi and apply for a payment license.
Of course, it wasn't enough yet.
He had to wait until BYD announced Xingyi Technology's 3.5 billion Hong Kong dollar investment in BYD!
That way, Wang Yi's influence would be even greater.
To put it plainly, private enterprises have their ways, state-owned enterprises have theirs, and the Management Committee has its own.
Wang Yi was studying and testing all these intricacies one by one.
Like the skyscraper in Jizhou, although it was expensive, without this project, Wang Yi wouldn't have been able to acquire the land for three surrounding large residential communities at a low price, let alone hoard it until the peak and make a whopping 60 billion yuan.
To be frank, it was Wang Yi's proposal to build a skyscraper in Jizhou that led Jizhou to grant Wang Yi real estate qualifications and so much low-priced residential land!
Don't say skyscrapers are useless; local governments need skyscrapers to showcase their strength.
Similarly, for the payment license, Wang Yi also had to put in more effort.
In the evening, Wang Yi had dinner with Wang Zhanggui and discussed BYD's business:
"Chairman Wang, BYD is currently developing diversely. Automobiles, battery energy storage, and photovoltaics are still the three core businesses. In addition, mobile phone contract manufacturing, laptop contract manufacturing, home appliances, and own-brand tablets and laptops are also key development areas for BYD!"
Watching Wang Zhanggui boast enthusiastically and spiritedly, Wang Yi sighed.
Indeed, with such ambitious ventures, it would be surprising if it succeeded.
Laptop contract manufacturing and mobile phone contract manufacturing were easy, purely profitable, and essentially wouldn't incur losses.
Even the invested factories and production lines could quickly recover costs as long as orders were in place.
However, own-brand tablets and computer businesses were difficult.
R&D alone, and brand operation, were major problems.
And the sales behind them were all expenses, whether they could recover costs was a question.
For example, BYD absorbed many teams from Amoi's IT division to conduct computer R&D.
But in the end, BYD computers were delayed indefinitely.
And BYD tablets, BYD home appliances... all went down the drain!
No wonder the current debt was over 30 billion yuan, and no wonder profit had dropped by 90% compared to the same period last year.
Seeing Wang Yi sigh, Wang Zhanggui's expression changed slightly, and he couldn't help but ask:
"Chairman Wang, you don't favor BYD's diversified development?"
Wang Yi smiled slightly:
"Do you want to hear the truth?"
"Yes, please enlighten me, Chairman Wang!"
Seeing Wang Zhanggui sincerely wanting to listen, Wang Yi slowly began:
"I admire BYD's ambition. However, diversified development, no matter which company attempts it, will fail. Your mobile phone contract manufacturing and computer contract manufacturing are doing well, but trying to get involved in own-brand tablets and computers is somewhat courting disaster."
"This..."
Wang Zhanggui was a bit unconvinced:
"Chairman Wang, BYD Electronics, besides ODM (contract manufacturing), can also produce many other things. For example, screens, lenses, batteries, etc. Therefore, by launching our own-brand computers and tablets, we can have a cost advantage over competitors!"
"True, BYD does have a cost advantage. But once you launch BYD computers and BYD tablets, it will conflict with your contract manufacturing clients like Lenovo and TCL. Do you think they will still let BYD continue to do contract manufacturing?"
"This..."
Wang Zhanggui fell silent, and after a long while, he said:
"Contract manufacturing will indeed be affected. But the freed-up capacity can be used to produce BYD computers and BYD tablets! Both these markets will grow rapidly in the future, and BYD should enter!"
Wang Yi laughed silently, no longer trying to persuade him.
Wang Zhanggui's ideals were full, but reality was stark.
How easy was it to build a computer brand?
If BYD computers took off, that would be fine; even without Lenovo's contract manufacturing orders, the idle capacity could be used to produce BYD computers.
But what if Lenovo's contract manufacturing orders disappeared, and BYD computers didn't take off either, leaving both sides empty-handed?
That would truly be the end.
A contract factory without orders meant pure losses!
Wang Yi sighed:
"As I said, this time I will not participate in BYD's decision-making. You just follow your own path; I am not optimistic about the current diversification. As for the future, let time prove everything."
The meal ended up being a bit flavorless.
But Wang Yi was also too lazy to persuade him further.
Wang Zhanggui insisted on making BYD computers, BYD tablets, BYD home appliances, and possibly even BYD mobile phones later!
His goal was to become an amalgamation of Mercedes-Benz + Apple + Lenovo + Haier.
Wang Yi couldn't dissuade him.
Only when everything was completely lost, with all capital gone, would he see reality clearly.
Only then would he recognize BYD's future core businesses and development direction, and only then would he listen to Wang Yi's words.
Without a disastrous failure for BYD, Wang Zhanggui wouldn't understand.
It was the same for any enterprise; once the technology tree was pointed in the wrong direction, it was over.
For example, in new energy, China and Europe and America were currently developing electric cars, while Japan was going all-in on hydrogen energy.
Even if they succeeded, China and Europe and America wouldn't let them succeed!
The reason was simple: most of the high-level patents for hydrogen energy were controlled by Japan.
And the most basic and difficult underlying technological breakthroughs for popularizing hydrogen energy were left to China and Europe and America to solve.
Once these most difficult and basic technologies were broken through by China and Europe and America, and hydrogen cars became widely popularized, Japanese companies could rely on their large number of high-level hydrogen energy technology patents to become the Qualcomm of the hydrogen car industry, bottlenecking others everywhere, collecting patent fees, and making huge profits.
How could China and Europe and America agree to that?
How could they be such patsies?
Thus, without any surprise, China and Europe and America all abandoned hydrogen cars and directly developed electric cars, letting Japan play with hydrogen energy on its own!
Then wait!
Wait until all of Japan's hydrogen energy patents expired, and then, China and Europe and America would start to develop hydrogen cars.
By then, Japan's hydrogen energy patents would not earn a cent.
The investments made over these years would likely all be lost.
Pointing the technology tree in the wrong direction had such severe consequences.
Of course, Japan's mistake was not just focusing on hydrogen, but also being too exclusive, only wanting to take advantage.
Similarly, BYD's technology tree, focusing on new energy and batteries, was enough.
If it were to distract itself with BYD computers, tablets, and home appliances, that would be taking a detour and cutting off its own contract manufacturing path.
Just like Qualcomm, to sell chips, they once famously announced they would never make phones.
So everyone bought their chips.
And Samsung, which made both chips and phones, resulted in Samsung chips only being used by Samsung itself and Meizu.
But Wang Yi understood these principles, which Wang Zhanggui did not yet grasp.
He would only listen after a disastrous failure.
Wang Yi could not persuade the current Wang Zhanggui.
Subsequently, Wang Zhanggui arranged for a driver to take Wang Yi to his hotel.
After washing up, Wang Yi received a call from Chen Chuanqing:
"Boss, I've almost finished surveying the down jacket factories you assigned me, and I've negotiated the acquisition prices for the factories."
Once November arrived, pure desire summer clothes would be unsellable nationwide, and autumn clothes would be unsellable in the north.
By December, autumn clothes would be unsellable even in the south.
Meiyou and Zhenyou's revenue would significantly decrease, possibly by as much as 90%.
At that time, they could only rely on tropical markets abroad.
The solution was to seize the opportunity to launch Meiyou down jackets and cotton coats, and Zhenyou down jackets and cotton coats, to replace the unsellable pure desire summer clothes and autumn clothes.
So, in early October, Wang Yi instructed Chen Chuanqing to investigate the down jacket market.
Now, there was finally a result.
"What's the outcome?"
Wang Yi asked.
"Boss, I've looked at both Shuchang City and Pinghu. Both areas are large in scale. The difference is that Shuchang City, driven by Bosideng, has formed a high-quality industrial cluster, and the quality is very good.
Pinghu, on the other hand, lacks a prominent leading brand and mostly focuses on OEM private labels, but the cost is lower. Down jackets that cost one to two thousand yuan in department stores can be found for one to two hundred in Pinghu. However, the quality is somewhat inferior to Shuchang City."
Wang Yi understood:
"So, for cost-effectiveness, Pinghu is better. For quality, Shuchang City is better."
The reason was simple: Bosideng, as the leading domestic down jacket brand, although not yet holding the absolute dominant position it would have ten years later in 2011, was still an industry leader, and its quality was top-notch.
Because of Bosideng's presence, the entire Shuchang City had formed a high-end down jacket industrial cluster.
Pinghu, however, focused on private labeling; to put it plainly, most manufacturers didn't have their own brands and were contract manufacturers.
The contract manufacturing industry didn't pursue first-class quality; instead, it valued processing profits more, focusing on small profits but quick turnover!
In later generations, most low-priced down jackets on PDD were produced in Pinghu.
Chen Chuanqing agreed heartily:
"Yes, boss, Shuchang City is like the regular army. Pinghu is like scattered stars, everywhere, each doing their own private labels, and the costs are truly low! I found ten factories in each area, finally selecting three from each, and the prices are almost negotiated. It all depends on your decision. The detailed information has been sent to your email."
"Okay, I'll take a look first and reply to you in a moment."
Wang Yi opened his laptop and carefully reviewed the information.
The six contract factories all had good production capacity.
Wang Yi carefully considered and ultimately chose the largest factory in Shuchang City.
He also selected the best quality factory in Pinghu.
The Shuchang City factory, with its more refined craftsmanship, would produce Zhenyou down jackets, focusing on the high-end market.
The Pinghu factory, with good quality and higher cost-effectiveness, would produce Meiyou down jackets.
If the workmanship of the two brands didn't have much difference, it would actually be detrimental.
Wang Yi dialed Chen Chuanqing's number:
"Old Chen, you go negotiate the price for that factory in Pinghu and acquire it. I'll handle the one in Shuchang City! Then arrange production as soon as possible. As for the style design, I'll send it to your email later."
"Okay, boss."
Early on October 21st, Wang Yi headed straight for the airport.
Shuchang City didn't have an airport, so Wang Yi could only fly directly from Shenzhen City to Xishi, and then take a car to Shuchang City after landing.
To Wang Yi's surprise, when they landed in Xishi, the Shuchang City factory had already arranged a pick-up.
"Chairman Wang, hello, I'm Qi Hui, manager of Bingyun Down Jackets. My boss arranged for me to pick you up!"
A woman in her thirties, elegantly dressed, was waiting at the exit.
"You've worked hard,"
Wang Yi scrutinized the woman and nodded.
Her capable demeanor clearly showed she was a strong career woman.
"You're too kind, this is just my duty,"
Qi Hui smiled gently:
"Chairman Wang, please."
Getting into the car, the group headed straight for Shuchang City.
On the way, Wang Yi chatted with Qi Hui:
"Bingyun Garment Factory has a good scale, why is it being sold?"
Qi Hui sighed:
"It was a strategic positioning problem. Our boss wanted to create his own brand, so he established Bingyun Down Jackets."
"Our Bingyun's design, workmanship, and quality all aimed to match Bosideng, and our cost-effectiveness was higher than Bosideng."
"But unfortunately, it was useless! In Shuchang City, and even nationwide, people only recognized Bosideng, not Bingyun."
"The result was that if we didn't lower prices, we couldn't sell. So we had to lower prices, but once we did that, the brand was ruined and became a generic brand!"
"Even though our workmanship and materials were much better than those private label down jackets, it was still useless. In consumers' eyes, we were just a generic brand."
Wang Yi smiled:
"The result is that you use quality, materials, workmanship, and costs that benchmark Bosideng, but ultimately sell at prices similar to generic private labels!"
"Exactly, Chairman Wang, that's it!"
Qi Hui was very helpless:
"In a down jacket capital like Shuchang, generic down jackets sell cheaply, with little profit, relying entirely on small profits and quick turnover. Our Bingyun down jackets have high costs, and when sold at low prices, we end up running at a deficit and incurring heavy losses. Our boss had no choice but to give up."
"I see,"
Wang Yi understood.
Like Pinghu, among so many down jacket contract factories, didn't any want to create their own brand and become the next Bosideng?
Yes!
Of course, there were, and many!
But unfortunately, without exception, all these brands failed.
In the end, not only did they not become Bosideng, but they also bankrupted themselves.
Like Bingyun Down Jackets, once the price was lowered, it was immediately labeled as a generic brand...
For clothing, brand is the most important thing!
In the early 2000s, NanjiRen had a strong brand, with a set of thermal underwear selling for two to three hundred yuan.
But the current NanjiRen sells licenses everywhere, allowing other small factories to private label, which has also damaged its brand.
Now a set can only sell for dozens of yuan...
Brand is easy to ruin, difficult to build.
However, Bingyun's situation perfectly suited Wang Yi's taste.
Currently, Wang Yi had the Meiyou and Zhenyou dual brands, and what he lacked was a factory like Bingyun, whose quality and workmanship benchmarked Bosideng!
An hour later, they arrived in Shuchang City, and the car stopped in front of a hotel.
"Chairman Wang, it's just about dinner time. Our boss has booked a banquet, please don't mind."
"Thank you for the trouble."
Inside the restaurant, a dark-skinned middle-aged man was already waiting at the entrance.
Seeing Wang Yi approach, he quickly stepped forward and grasped Wang Yi's hand:
"Chairman Wang, hello, I am Gu Zhaoxi, the owner of Bingyun Down Jackets."
"Hello, Mr. Gu."
"Quickly, please come in!"
"Thank you."
But when Wang Yi entered the room, he was stunned.
Gu Zhaoxi had arranged three women to pour drinks and prepared a whole case of Maotai.
Wang Yi chuckled wryly:
"Mr. Gu, are you trying to get me drunk?"
Gu Zhaoxi quickly waved his hand:
"No, I... I just heard that you all drink heavily, so..."
Wang Yi was speechless.
Alcohol culture was truly harmful!
If it were another old boss from Lu Province, this business deal wouldn't be settled without two months of discussions and ten heavy drinking sessions.
But for Wang Yi, he really wasn't in the mood.
Alcohol culture was played by those born in the 60s and 70s; many born in the 90s really didn't buy into it.
Of course, in the future, many born in the 80s and 90s, entering the workplace, also started to adopt this practice.
After all, the current workplace was still dominated by those born in the 60s and 70s, and one had to play by their rules!
But when those born in the 90s take charge, everyone drinking milk tea or cola when discussing business won't be a problem.
Wang Yi waved his hand:
"Ask them to clear it away. Let's have some food, chat a bit, and then go see the factory. That will be fine."
"This..."
Gu Zhaoxi was stunned.
He hadn't dealt with customers from Lu Province often, but he had never seen anyone so straightforward, almost to the point of being casual!
Wang Yi always arranged for thorough investigations before negotiations.
For factories like those in Changshu, Chen Chuanqing and his team had investigated for over ten days.
They even had internal information, and after comprehensive assessment, they reported three factories to Wang Yi.
Wang Yi then selected the best among them, choosing Bingyun Garment Factory.
Putting in more effort during the initial investigation meant that once the investigation was complete, price negotiations could be more direct, without needing to drag on for two months and ten heavy drinking sessions to settle.
If that were the case, winter would probably be over.
"Clear it away, no need for such fuss,"
Wang Yi said with a smile.
"Okay, Chairman Wang, I'll listen to you!"
Gu Zhaoxi waved his hand, and the women pouring drinks all withdrew.
Wang Yi only drank some tea and ate some food at noon, chatting with Gu Zhaoxi about the market conditions in Shuchang City and information about Bosideng.
Inspecting the factory in the afternoon was important, and he couldn't let drinking delay it.
After the meal, Wang Yi followed Gu Zhaoxi to the Bingyun Down Jacket Garment Factory.
At this time, the Bingyun Down Jacket Garment Factory was in the midst of producing down jackets.
Although they were operating at a loss, winter was approaching, and they couldn't stop production, as that would incur even greater losses.
They still produced a little, selling whatever they could.
After all, selling a factory wasn't something that could happen overnight with a suitable buyer.
Wang Yi walked and paused, carefully examining every detail of the production line.
From time to time, he picked up a few newly-off-the-line products and inspected them closely.
It had to be said that the quality of Bingyun down jackets was truly first-class, not much worse than Bosideng or Canada Goose.
It was just that the brand was small, couldn't sell well if priced expensively, and became a generic brand if priced low.
As for hiring spokespersons... such a small factory, with limited funds, couldn't afford it.
But in the current market, where traffic is king and hype is king, it was no longer an era where solid quality alone could make a brand stand out!
Wang Yi observed for a long time, and a decision formed in his mind: this factory could be acquired!
(End of Chapter)