Chapter 47 Car-making: Build "China's No. 1 Car"

The listing of Brilliance made Yang Rong famous.But at that time, Jinbei Bus was nothing more than a subject of capital operation in his eyes. He didn't know much about the automobile industry, and he was not interested.What he wanted to do most at the time was to follow suit and get one domestic company after another to go public in the United States.Therefore, he held a high-profile seminar in Shanghai to promote Brilliance's overseas listing experience. As a result, the relevant ministries and commissions in Beijing were very unhappy when they learned about it, and issued a notice warning Brilliance that this move was "illegal".Yang Rong's dream of copying was shattered.

In fact, in 1991, when Yang Rong purchased Jinbei stock, China's auto industry was suffering a century of pain. On November 25 of this year, the only remaining domestically produced car in China, the "Shanghai" brand car, was announced to be discontinued.In the previous 1987, the "Hongqi" brand car had been discontinued.So far, the two major car brands after the founding of the People's Republic of China have all declared their demise.After hearing the news, many workers rushed to Anting from the urban area, vying to take photos with the last "Shanghai" brand car to bid farewell.At this sad moment, German Volkswagen’s investment in China has increased year by year. Its annual output of Santana cars is 60,000, which is close to the total output of "Shanghai" brand cars in the past 28 years. It has become the number one car in the Chinese market. brand.

The American "Business Weekly" commented in August 1991: "In 1990, Shanghai Volkswagen's after-tax profit exceeded Volkswagen's global profit target in one fell swoop. One of the reasons is that only under the conditions of a state-owned economy like China, a car Ordinary Volkswagen Santana sedans can only sell for 178,000 yuan, almost six times the world average price of this product.” In May 1991, relevant state departments decided to scrap 1.7 million vehicles manufactured before 1974 within the next four years. Old cars, the vast majority of domestic old cars are listed here.This is undoubtedly a great benefit for China's auto industry, but it is a pity that those old state-owned factories have no chance to share this big "cake". The South China Morning Post quoted an official from the Ministry of Materials as saying: "The government will provide financial help to agencies and enterprises to replace old vehicles with new ones, mainly produced in joint venture factories between China and the US, Japan, Germany and France."

Yang Rong, who has been fighting fiercely in the capital market for many years, soon realized that the automobile industry that he accidentally stepped into may be the most growing field in China.Just one year after the U.S. listing, Zhao Xiyou, who had been friends with Yang Rong, retired, and the Shenyang Municipal Government sold the state-owned shares to Changchun FAW in an attempt to stay on the big ship so that it could go to sea.However, after two or three years of operation, there has been little improvement.Since 1995, Yang Rong has taken over the management of Jinbei Bus as a major shareholder, and gradually shifted his energy to operating the business.At that time, the automobile industry was monopolized for many years, and all the major automobile manufacturers were hesitant to move forward.When Yang Rong really entered, this strategist with a clear and keen view of the overall situation quickly became a headache "subversive".

The main product of Jinbei Company is the "Haishi" brand passenger car.In this market, Changchun FAW's "Jiefang" brand van is undoubtedly a well-deserved "little bully" and is in the limelight.Yang Rong gathered all the best R&D personnel of the company and developed a new low-cost Hiace model specifically for the "Little Liberation".During this period, there was an anecdote that was very revealing of Yang Rong's temperament: Yang Rong went to Changchun to visit Geng Zhaojie, the chairman of FAW, and Geng Zhaojie treated him arrogantly, which made Yang Rong quite unhappy.After the new model of Sea Lion was designed, Yang Rong scrolled through the blueprints and went to Geng Zhaojie again, saying: "Once I sell this car, your little liberation will definitely fail. But I will definitely lose money when developing this car. I will produce it in a month." 500 units, with a discount of 5,000 units a year, you will give me 10,000 yuan for each car, a total of 50 million yuan, and I will sell you the license of this model. I will inform you of this situation now, if you do not Agree, I will do it my way." Geng Zhaojie had never seen such a person before, so he thought he must be crazy.After the new sea lion was launched on the market, it was welcomed by users in small and medium-sized cities and towns because of its novel shape, low price and flexible marketing methods.Only one year later, FAW's "little liberation" turned from profit to loss, and two years later, it was forced to withdraw from the competition.

In terms of business strategy, Yang Rong has broken the industry's "regulations" one by one.He highly respects a famous saying in "Sun Tzu's Art of War" - "If you know the changes, you will win, and if you stick to the rules, you will lose." Therefore, he often takes breaking the rules as the first essence of formulating strategies.Hiace Bus was the first to list the price in product advertisements, thereby eliminating the possibility of tampering among dealers; it was also the first to implement a national unified share discount, and dealers across the country regardless of distance or size, uniform discount percentage points, Put an end to the disadvantages of collusion between insiders and dealers for profit.In addition, Yang Rong also introduced the acceptance bill system in the financial industry into the automobile industry, and 60% of the company's total sales are in acceptance bills, which greatly reduces the occupation rate of working capital.

Yang Rong, who was not familiar with the automobile industry at first, had no burden or prejudice in management, so he came up with new tactics in the war.Since 1996, Shenyang Jinbei has made great strides all the way, and quickly became the leader in the domestic light bus market. Its annual sales have been growing at a rate of 50%, leading its peers and setting an industry record with a return on investment of 30%. It also increased year after year from 9,150 in 1995, and reached 60,000 in 2000.Yang Rong, despised by the industry as a "layman", has handed over a report card that makes all the experts in the industry feel ashamed.

After the initial victory, Yang Rong became more and more interested in the automobile industry.A small minibus market obviously couldn't satisfy him, so he quickly set his sights on the most fertile part of the industry: family cars. The late 1990s was a period of sudden change in China's consumer market. After the rapid growth of food and home appliances, the prosperous era of bulk durable consumer goods came.With the improvement of people's purchasing power and the encouragement of national policies, real estate and automobiles have become new consumption hotspots.Since 1996, the ownership of family cars has doubled year after year, and many experts have predicted that the era of family cars in China has come.By June 2000, the number of private cars in Beijing had reached 410,000, making it the first city in China where private cars surpassed official cars.Related to this, the phenomenon of huge profits in the auto industry has become apparent.Someone compares the price of cars in China and the United States. The price of a Volkswagen Beetle with the same performance in China is 3.36 times that of the United States, that of Buick is 2.36 times, and that of Toyota Corolla is 2.8 times.The astonishing huge profits undoubtedly mean that the auto industry has huge room for growth.

Although the market prospect is promising, the opportunity may not be great for Chinese automakers.Because the automobile industry is a heavy-duty industry with high technical content and very important economies of scale.After a century of fierce competition, a dozen or so multinational automobile companies from Germany, the United States and Japan have almost monopolized the technical discourse power and brand appeal of automobiles worldwide.In the Chinese market, the original "Hongqi" and "Shanghai" brand cars have been subtly eliminated.Li Anding, a reporter from Xinhua News Agency and a well-known auto watcher, once described the state of the domestic auto industry as "ridden with all kinds of diseases": scattered investment, poor development capabilities, high production costs, and an almost primitive sales and service system.He asserted that if China's auto industry cannot complete structural adjustment and reorganization through the raising of huge funds, the destruction of the entire army is by no means alarmist.It is precisely in this general environment that it is really difficult for a company with no experience in the field of family cars to try to snatch food from these big tigers.

However, Yang Rong did not believe in this evil.He proposed, "to manufacture Chinese cars with 100% intellectual property rights."As soon as this remark came out, industry leaders shook their heads one after another. Yang Rong's car manufacturing is not like other entrepreneurs who follow the steps step by step.He is China's leading capital operation master, and his mind and structure are of course very comparable.From the end of 1997, Yang Rong began to plan to introduce German technology and equipment to build a production line with an annual output of 100,000 cars. In March 1999, Brilliance took control of Shenhua Industrial, an old listed company in Shanghai, and changed its name to "Brilliance Group", which became an important capital platform for him to build the Brilliance Auto Empire. In October, "Brilliance China" was successfully listed on the Hong Kong Stock Exchange, issuing 19.58 million shares and raising funds of 650 million Hong Kong dollars.Yang Rong announced to the outside world: "Brilliance will spend 4 billion yuan in five years to build the Chinese people's own cars."

Yang Rong implements a dual-track parallel strategy in building its own brand.On the one hand, cultivate core R&D capabilities through entrusted design and self-rolling accumulation.Brilliance invested 100 million yuan to jointly establish Tsinghua University Automotive Engineering Development Research Institute with Tsinghua University, with Yang Rong as the chairman.On the other hand, he broke the conventional cooperation mode and sought cooperation with world-class automobile companies in different forms and contents in the context of China's application to join the WTO.He believes that China's auto industry currently has three development models: the first is joint venture; the second is licensed production and introduction; the third is independent development and global cooperation and division of labor.He said: "I am now studying the fourth type, which should be jointly developed with global auto experts, sharing resources and platforms, and dividing the market." Under the guidance of this strategic thinking, Brilliance has successively carried out extensive cooperation with five major international automobile companies, which Yang Rong proudly called "Five Golden Flowers": reached an agreement with BMW to jointly produce BMW's world-leading sales Good 3-series and 5-series sedans; jointly invested 230 million US dollars with GM to form a joint venture to produce Chevrolet trucks and SUVs; took over Sanjiang Renault in Xiaogan, Hubei, holding 55% of the shares, and planned to introduce Renault’s family-friendly economical car "Gan Fruit”; acquired Shenyang Aerospace Mitsubishi, and cooperated with Mitsubishi to produce car engines; cooperated with Toyota to develop Toyota economical cars suitable for the Chinese market.In addition, Brilliance has also jointly developed the 491Q-ME gasoline engine with Delphi, the world's largest auto parts supplier, and plans to equip it on Jinbei buses and pickup trucks. "Five Golden Flowers" made Brilliance stand with the giants from the very beginning.Surrounded by the "Golden Flowers", the research and development of cars with independent property rights is no longer behind closed doors: Yang Rong invites the world-renowned design master George Yarrow to preside over the model design, and the performance verification of the whole vehicle is carried out by the international authoritative organization - British MIRA company Tested and identified, stamping, welding, painting, and final assembly are all provided by world-renowned automobile equipment manufacturing companies, and the important assembly parts and accessories are supplied by internationally renowned automobile manufacturers.He named the new car the symbolic "Zhonghua" brand. In addition to building an industry and capital platform around automobiles, Yang Rong has also made frequent moves and set foot in other fields. In March 2001, he invested 410 million yuan to subscribe for 343 million shares of Guangdong Development Bank, and participated in the establishment of Minsheng Investment Credit Guarantee Co., Ltd. with 440 million yuan.In the same month, he was transferred 26.41% of the state shares of Zhongxi Pharmaceutical, a listed company, and became the company's largest shareholder. In this way, under the strong operation of Yang Rong, Brilliance stretched out many arms like a big octopus. Around 2001, Yang Rong created a huge "Brilliance Department" with a market value of 24.6 billion yuan.It has 5 listed companies, namely Brilliance Group, Brilliance Jinbei, and Zhongxi Pharmaceutical in the Mainland, Brilliance China in Hong Kong, and Brilliance Auto in New York.There are 158 affiliated companies in the department, including 138 holding companies.Brilliance has 8 automobile production lines and more than 10 complete automobile and parts factories, forming an unprecedented "financial-industrial" mixed business system in China's automobile industry.In Yang Rong's plan, the future Brilliance will be under a financial holding company, forming three major sectors of automobile, finance and infrastructure.Among them, automobiles account for 80% of the total output value. By 2010, the production and sales of 1.5 million vehicles, the operating income of 200 billion yuan, and the profit of 20 billion yuan will be realized.Undoubtedly, if this goal is realized, Brilliance will become the largest automobile company in China. It is difficult for people without imagination to understand the layout of Yang Rong.Yang Rong believes that for Brilliance, the most important competitor is time.Therefore, before the blowout of family car consumption in China and the start of the price war, it is necessary to build a huge and sustainable competitive manufacturing and R&D system.For this reason, between prudence and adventure, he chose the latter without hesitation. These practices of Yang Rong are tantamount to "deviant".The auto industry's aversion to financiers appears to be a tradition.As early as Henry Ford's autobiography, the auto giant said with certainty that financiers must be sidelined absolutely, "They didn't propose to install an engineer for the company, they wanted to install a financial director, and this is the business. Dangers of owning bankers. They think in terms of money. They think of factories as places where money is made, not goods. Their eyes are on money, not on the productivity of business." Old Ford thought stubbornly, " Bankers are not at all fit to direct industrial production, for reasons such as their special training and their own limited position."Of course, Yang Rong disagreed with these arguments.He told Niu Wenwen, editor-in-chief of "Chinese Entrepreneur", that an important obstacle for the so-called "children of the Eight Banners" who build cars for so many years is that experts run the factory and think in the right direction, and those who think in the opposite direction have no right to speak in the enterprise. In December 2000, the first generation of "Zhonghua" sedan rolled off the assembly line in Shenyang.At the grand off-line ceremony, Yang Rong excitedly held up a calligraphy of "China's No. 1 Car" to show his dream to the guests and reporters present.He declared: "By 2006, I, Brilliance, will be the only one on the beachhead of China's auto industry who dares to challenge foreign companies." At this moment, Yang Rong has become an image of a national car savior. His car dream has indeed inspired many enthusiastic Chinese people. For a rising country with a population of 1.3 billion, it is a great shame that it cannot produce a car of "Chinese blood".Brilliance's high-profile progress has won the respect of many people.A reporter interviewed Sun Min, the 65-year-old chairman of Jiangling Motors, and asked him which Chinese entrepreneur he admired the most. The veteran of the Chinese auto industry blurted out, "Yang Rong."After visiting Brilliance, Du Mai, the executive vice president of Renault of France, said to Yang Rong: "The world revolution starts from Paris, and the Chinese automobile revolution will start from you."