news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Text丨Lin Yuxiu Editor丨Bai Jin

Source: Zhengjingshe (ID: zhengjingshe)

(This article is about 5100 words)

[Observation of the "Automobile Elimination Contest" of Zhengjing Society, Part 11]

On July 2, when Zhang Xinghai, the current richest man in Chongqing and founder of Seres Group, announced that he had bought the "Wenjie" trademark and related patents from Huawei for 2.5 billion yuan, Yin Mingshan, the former richest man in Chongqing and founder of Lifan Group, was enjoying his old age in a nursing home in Yubei District, Chongqing.

Two Chongqing entrepreneurs, 25 years apart in age,Both of them emerged from Chongqing's industrial ecology and had many similarities in their development paths. However, when it came to the moment of industrial transformation, their development trajectories diverged in very different directions: Zhang Xinghai's SERES had qualified for the fierce automobile knockout competition after several twists and turns, while Yin Mingshan's Lifan Motors quickly fell into bankruptcy and reorganization early on, and was eventually acquired by a fund jointly established by Geely and Chongqing Liangjiang New Area.

Analysts from Zhengjingshe have found that life is really like a steel ball on a glass platform. You may be very hardcore, but what may change your rolling trajectory is likely to be an encounter and a change of mind.

1

At the same time "going to sea"

At the end of 1985, 47-year-old Yin Mingshan left Chongqing Publishing House and founded his first business entity, Chongqing Vocational Education Bookstore. It was called a bookstore, but in fact it was a bookseller who resold books.

His book business was very successful. The "10-cent Book Series for Middle School Students" he edited sold tens of millions of copies, earning him more than 600,000 yuan in one fell swoop. In the mid-1980s, 600,000 yuan was definitely a huge sum of money.

However, he soon became dissatisfied because he thought the ceiling of book sales was not high and the scale could not be expanded. He wanted to find a new industry to expand.

In the second year after Yin Mingshan founded the Vocational Education Bookstore, 23-year-old Zhang Xinghai and his two brothers Zhang Xingming and Zhang Xingli pooled 8,000 yuan to register a company called "Chongqing Ba County Phoenix Electrical Spring Factory", specializing in the production of springs for household appliances.

At that time, China was in the stage of rapid popularization of home appliances, but the springs needed for home appliances still needed to be imported in large quantities from abroad at high prices. For example, the square wire springs used in fully automatic washing machines were imported from Japan at a price of about 1 US dollar. In the summer of 1988, the square wire spring developed by Zhang Xinghai passed the professional certification of Shanchuan Machinery Factory. Then, he traveled all over the country with the springs he developed, and won a large market with an average price advantage of 1 yuan.

Later, he also became a supplier of seat springs for Changan Automobile.

2

Also choose to make accessories

People who are familiar with Yin Mingshan have a prominent impression of him - he likes to make trouble.

In 1992, Yin Mingshan, who had become the number one private bookseller in Chongqing, suddenly stopped his book business and switched to cigarettes and clothing. But he was not satisfied with either.

Chongqing is an important production base for motorcycles. It not only has complete vehicle manufacturing companies such as "Jialing" and "Jianshe", but also a large number of small companies that produce and sell motorcycle accessories and assemble and repair complete vehicles.

But one time, a motorcycle owner told Yin Mingshan that his factory needed hundreds of engines every month, and he could only either import them from Japan at a high price or buy them from Henan but the quality was very poor.

Yin Mingshan, who likes to follow trends, immediately realized that producing motorcycle engines would definitely be a big business.

So Yin Mingshan, then 54, rented a room in a rural area in the suburbs of Chongqing as a workshop and started making motorcycle parts. There was a sign at the door that read "Chongqing Hongda Vehicle Parts Research Institute", but it was actually just a small workshop with only 9 people and an area of ​​less than 40 square meters.

However, Yin Mingshan had big ambitions. He told his subordinates: "I must create an engine that is unique in China and the world."

He really did it. At first, he just bought Japanese engines and disassembled them to imitate them. At that time, there was a popular saying called "reverse research and development". But two years later, he developed the four-stroke 100-type engine, and then the 90 and 100-type electric start engines.

Analysts from Zhengjingshe noticed that coincidentally, after working in the spring industry for 10 years, Zhang Xinghai chose the accessories industry as his second growth curve.In November 1995, just three years after Yin Mingshan founded the "Chongqing Hongda Vehicle Parts Research Institute", Zhang Xinghai's spring factory was upgraded to "Chongqing Changan Shock Absorber Co., Ltd.", which mainly produces shock absorbers for motorcycles, microvans and power-assisted bicycles.

With the market advantages of Chongqing's motorcycle production base, Zhang Xinghai's motorcycle shock absorbers have ranked first in the industry in production and sales for 13 consecutive years.

3

Building roads one after another

There was a rumor that "Hongda" was renamed "Lifan" because Yin Mingshan sold motorcycles to Honda's home country Japan in 2001 and was sued by Honda. This statement is questionable because when Yin Mingshan started to get involved in motorcycle manufacturing in 1997, the company's name was changed from "Chongqing Hongda Vehicle Parts Research Institute" to "Chongqing Lifan Industrial Co., Ltd."

It is said that Yin Mingshan's involvement in motorcycle manufacturing is related to Zuo Zongshen, the founder of Zongshen Motorcycle. Yin Mingshan's second wife is Chen Qiaofeng, and Chen Qiaofeng has a distant relative from her mother's side named Yuan Dexiu, whose husband is Zuo Zongshen. When Yin Mingshan founded Hongda Research Institute, Zuo Zongshen also participated in the investment.

However, Yin Mingshan soon proved that the disciple can really surpass the master. By 2001, his motorcycle engine production and sales volume had become the world's first, and the production and sales volume of motorcycle complete vehicles dominated the Chongqing motorcycle industry. That year, he also made it onto the Forbes rich list with a net worth of 520 million yuan, and was called the "Motorcycle King" by Forbes.

Until this point, Zhang Xinghai was still just a supporting role.In 2002, Zhang Xinghai, who was not satisfied with making accessories, wanted to follow Yin Mingshan's footsteps and get involved in motorcycle manufacturing, but a "motorcycle ban" from the administrative department shattered his plan. He had to find another way out.

4

At the same time, it turns to car manufacturing

Yin Mingshan's motorcycle career reached its peak in 2002. That year, the "motorcycle ban" that ruined Zhang Xinghai's "dream of building a motorcycle" also cut off Yin Mingshan's motorcycle "kingdom".

Yin Mingshan was determined to build cars. In 2003, Lifan Group spent 60 million yuan to acquire 80% of the shares of Chongqing Special Purpose Vehicle Manufacturing Plant, and obtained a commercial vehicle production qualification with a prefix of "6". "Chongqing Lifan Automobile Co., Ltd." was established. The "Lifan" automobile brand was born.

At that time, Li Shufu, who also started his business by producing motorcycles, was not optimistic about Yin Mingshan's future in car manufacturing. He even predicted: "How can Lifan make cars? What resource base does it have? Once the price war starts, it will be the first to collapse."

In December 2005, Yin Mingshan obtained the "7"-prefixed passenger car production qualification, becoming the fourth private enterprise to obtain the car production qualification after Geely, Chery and BYD. That year, Lifan's first car, Lifan 520, was unveiled at the German International Motor Show. In January of the following year, Lifan 520 was launched globally based on the sales network of Lifan motorcycles.

Everything seemed to be going smoothly. On November 25, 2010, Lifan was listed on the Shanghai Stock Exchange, marking the first time that a domestic private car company was listed on the A-share market.

Shortly thereafter, Yin Mingshan's family became the richest people in Chongqing with a book value of over 11 billion yuan.

However, analysts at Zhengjingshe noted that the listing seemed to be the most glorious moment for Yin Mingshan and her Lifan Group. After the listing, Lifan's performance began to decline, and car sales shrank year by year. From 2013 to 2017, Lifan could still sell more than 100,000 new cars each year, but in 2018 it suddenly plummeted by 45%, with only 58,200 cars sold; in 2019 it plummeted by 77.3%, with only 13,200 cars sold.

From 2002 to 2003, the capital that entered the automotive industry was far more than Yin Mingshan's Lifan. A large number of well-known companies at the time, such as Midea, AUX, Greencool, Bird, BYD, etc., also entered the automotive circle. Of course, there was also Zhang Xinghai, who was still unknown at the time.

In the same year that Yin Mingshan acquired the controlling stake in Chongqing Special Purpose Vehicle Manufacturing Plant, Zhang Xinghai took advantage of the opportunity of Dongfeng Motor looking for a new partner to produce microvans. He established a joint venture company, Dongfeng Yu'an, with Dongfeng for 50 million yuan in cash, assuming legacy debts and moving the factory to Shiyan, Hubei. He also acquired 50% of the shares and obtained the qualification to manufacture cars.

From then on, Zhang Xinghai's role began to increase, and his role began to exchange with Yin Mingshan step by step.

When Dongfeng Yu'an Automobile Company was first established in 2003, the Dongfeng Xiaokang brand microvans produced by Zhang Xinghai targeted the rural market and once shared the market with Wuling Hongguang and Changan Star.

In 2007, Chongqing Xiaokang Automobile Group Co., Ltd. was established.

In 2011, Xiaokang Motors was renamed Chongqing Xiaokang Industrial Group Co., Ltd. That year, the sales volume of Dongfeng Xiaokang minivans exceeded 1 million.

In 2016, Xiaokang Shares officially entered the capital market, becoming the third A-share listed automobile company in Chongqing after Changan Automobile and Lifan Group.

After 2010, Yin Mingshan's Lifan Group began to decline significantly.

5

Failure in new energy

2016 was a milestone year for both Yin Mingshan and Zhang Xinghai.

That year, Zhang Xinghai sent his 27-year-old son Zhang Zhengping across the ocean to Silicon Valley on the west coast of the United States to establish a new energy vehicle company called SF MOTORS. Its mission was to use Tesla's technology to produce complete vehicles and then sell them to China.

SF MOTORS initially wanted to buy AC Propulsion, a California engineering company that produced the first generation of Tesla Roadster sports cars, but the acquisition proposal was not approved. Subsequently, it hired Martin Eberhard, one of the co-founders of Tesla, as a strategic advisor to the company. In 2017, SF MOTORS invested $33 million to buy InEVit, a battery system R&D and design company founded by Martin Eberhard after leaving Tesla, and also recruited his team.

At the same time, SF MOTORS also built a factory with a planned production capacity of 150,000 vehicles and an area of ​​800 acres. In March 2018, SF MOTORS released two pure electric concept cars, SF5 and SF7.

While Zhang Zhengping was planning SF MOTORS, Zhang Xinghai founded a car company called Jinkang New Energy in China. In January 2017, Jinkang New Energy obtained the qualification to produce new energy vehicles. In May 2018, Jinkang New Energy bought 100% of the shares of SF MOTORS from Xiaokang Shares, and the problem of SF's localization qualification was solved.

When SF was launched in China in July 2018, its Chinese name was set as “Jin Guo EV”, but the market response was mediocre, so it was renamed SERES. The name “Jin Kang Seres” came from this.

The "globalization" strategy designed by Zhang Xinghai at that time required extremely high investment but produced extremely low output, and even almost brought down Xiaokang Shares.

According to incomplete statistics, from 2016 when it entered the new energy vehicle industry to 2022 when it launched the Wenjie series of models, Xiaokang Shares successfully issued additional shares three times (failed once), with a total net fundraising amount of 13.573 billion yuan. The funds raised were mainly invested in new energy vehicle projects. Including 6 billion yuan in equity investment, nearly 10 billion yuan in R&D expenses, and nearly 4 billion yuan in capacity investment, Xiaokang Shares has invested at least 20 billion yuan in new energy vehicle projects in the six years since its listing.

However, great efforts may not always bring miracles. As of 2020, Seres SF had sold only 791 units in five years.

While Zhang Xinghai and his son were busy planning new energy vehicle projects at home and abroad, Yin Mingshan's Lifan Group was caught up in a new energy subsidy fraud scandal that was enough to deal a fatal blow to his business empire.

Yin Mingshan's road to car manufacturing just fulfilled Li Shufu's prediction:Without its own core technology, it is difficult to gain a foothold in the face of price wars with peers. As soon as Lifan Motors was born, it faced competition from Wang Chuanfu's F3, followed by Li Shufu's Geely Free Cruiser, King Kong, and Vision, Wei Jianjun's Haval CUV, and Yin Tongyao's Chery Fengyun 4th Generation and QQ. Therefore, although Lifan imitated and created original products at the same time, and maintained the rhythm of launching two new cars every year, its sales have not been ideal.

In 2013, Yin Mingshan decided to enter the new energy field, hoping to achieve overtaking through new energy.

In the first two years, things went exactly as Yin Mingshan had envisioned. In 2015, the sales of Lifan's two pure electric vehicles, the 620EV and 330EV, reached 14,900 units, ranking among the top domestic brands that year. That year, Lifan also formulated an ambitious i.Blue 1.0 new energy development strategy (Intelligent Blue Strategy), announcing that it would launch 21 new pure electric and hybrid products by 2020 and achieve a cumulative sales target of 500,000 new energy vehicles.

However, a decision by the Ministry of Finance in October 2016 completely changed Yin Mingshan's scenario. According to the "Decision of the Ministry of Finance on the Special Inspection of Subsidy Funds for the Promotion and Application of New Energy Vehicles of Chongqing Lifan Passenger Vehicle Co., Ltd." announced by Lifan Group, in February of that year, the inspection team of the Ministry of Finance investigated the fraud of subsidies nationwide and found that among the new energy vehicles of central government subsidies declared by Lifan Passenger Vehicle in 2015, a total of 2,395 vehicles did not meet the application conditions. In response, the Ministry of Finance decided not to subsidize the 2,395 new energy vehicles of Lifan Passenger Vehicle that did not meet the application conditions, and also cancelled Lifan Passenger Vehicle's qualification for the advance allocation of central government subsidies in 2016.

At that time, it was difficult to sell new energy vehicles without financial subsidies.

After 2017, Lifan’s car sales plummeted, and this was the direct reason.

6

The baton changes hands

Just when Zhang Xinghai's Xiaokang Shares was about to collapse due to the new energy vehicle project, Huawei's Yu Chengdong came riding on Hot Wheels.

Zhang Xinghai and Yu Chengdong are acquaintances. When Huawei's first motor came out in 2018, Zhang Xinghai's SERES was one of its customers.

In 2019, Huawei increased its investment in automotive projects, established a BU business, and set a development strategy of "not making cars, but focusing on ICT technology to help companies make good cars." In 2020, Yu Chengdong was appointed as the director of the IRB for smart terminals and smart car components, and later served as CEO of the Smart Car Solutions BU.

After Yu Chengdong took office, he looked for a partner for the Smart Car project, while Zhang Xinghai, who was in a desperate situation, urgently needed to find a large manufacturer that could empower his new energy vehicle technology. So, one day in 2020, the two came together.

Zhang Xinghai and Yu Chengdong were very satisfied with the results of their first meeting and the two decided to cooperate immediately.

In 2020, the first year of cooperation between SERES and Huawei, SERES launched the "SERES Huawei Smart Selection SF5". A year later, the M5, developed through in-depth cooperation between the two companies, was officially launched; in September and December 2023, the M7 and M9 were launched successively.

With the help of Wenjie, SERES not only came back to life, but also quickly became a rising star in the new car-making forces.In 2023, the sales volume of Wenjie reached 94,380 units, a year-on-year increase of more than 20%; in the fourth quarter of 2023, the sales volume of Wenjie series models reached 82,700 units, a month-on-month increase of 253%; in the first quarter of 2024, the entire Wenjie series sold 114,138 units, a year-on-year surge of 172%.

Due to the hot sales of Wenjie, in stark contrast to the sluggish downward trend of stock prices of old auto giants such as SAIC Group that were unwilling to give up their "souls", SERES' stock price began to rise steeply from more than 8 yuan per share in 2020 (before readjustment, the same below), and in March 2024 it reached a historical high of 106.66 yuan per share. So far, it is still at a high of 80 yuan per share, corresponding to a market value of more than 120 billion yuan.According to this calculation, the total net worth of Zhang Xinghai and his two brothers exceeds 80 billion yuan, surpassing the previous richest man in Chongqing, Jiang Rensheng of Zhifei Biological, to become the new richest man in Chongqing.

In 2020, when Zhang Xinghai and Huawei established a cooperative relationship, 82-year-old Yin Mingshan personally submitted a bankruptcy application to the court, and Lifan Group entered the bankruptcy reorganization procedure.

Due to the impact of the subsidy fraud, Lifan suffered losses for three consecutive years from 2016 to 2019, with the largest loss of 5 billion yuan in one year. Lifan tried to solve the debt problem by selling land, factories, and car manufacturing qualifications, including selling some factories to Ideal Auto, but to no avail. As of June 2020, Lifan Group's total liabilities reached 16.7 billion yuan, and its debt ratio reached 98.87%. Two months later, Lifan Group decided not to hold on any longer, and issued an announcement that its assets were insufficient to repay its due debts, and applied to the Fifth Intermediate People's Court of Chongqing for bankruptcy reorganization.

In December of the same year, Li Shufu, who had predicted that Lifan would be the first to be crushed by the price war, joined the company and Lifan was successfully restructured. After the restructuring, Lifan's business focus was still on motorcycles and motorcycle engines.

Analysts from Zhengjingshe noted that, in fact, Lifan Auto is just one of the car brands that have exited the stage of history as the last wave of car manufacturing craze gradually faded away.There is a long list of car brands that have withdrawn from the market during this period: Pride, Flying Tiger, Dawn, Camellia, Night Pearl, China Bullet, AUX, Meilu, Fuqi, New Yatu, Tongtian, Skylark, Luxgen, Brilliance Auto, Hainan Mazda, Nanjing Fiat, etc.

Regardless, Yin Mingshan's decision to quit completely still requires wisdom and courage. Zhang Xinghai, who is 25 years younger, was able to take over his position in Chongqing's automobile manufacturing industry because of his All In Huawei. He is now in the middle of a fierce automobile elimination competition. Looking to the future, it is only the middle of the game. How far he can go in the future remains to be seen. [Produced by Zhengjingshe]

Editor-in-charge | Tang Weiping · Editor | Du Hai · Bai Jin · Editorial | An An · Proofreading | Ran Ran

Disclaimer: The views in this article are for reference only and should not be used as investment advice. Investment is risky and you should be cautious when entering the market.

Friends who like the article please follow Zhengjingshe. We will continue to discover value and warn of risks.

To reprint any original article from Zhengjingshe, you must obtain authorization and keep the copyright information at the beginning and end of the article intact, otherwise it will be considered as infringement.