Chapter 269

Chapter 269

Zhou Tea is the largest automobile group in China.

It operates Zhou Toyota, a joint venture with Toyota, and owns five brands, including Zhou Tea.

Last year, it sold 2.7 million units in China alone, ranking first among Chinese brands.

As it is a Chinese domestic company, it is not well known in Korea, but in China, it is virtually no different than a national car.

Zhou tea used the huge capital accumulated from domestic sales to swallow up foreign companies.

The most famous example is the acquisition of Volvo Cars, which recently acquired a 10 percent stake in Daimler AG (Benz).

Here is not the end.

It is still actively conducting various M&As, such as investing in ride-sharing, car-sharing, and artificial intelligence startups in Hong Kong, the United States, and the United Kingdom, and acquiring London Taxi Company.

It is an open secret that a small company that made scooters just 20 years ago was able to grow so rapidly in a short period of time with the support of the Chinese government.

Well, as automobiles are a key industry, it is natural for the government to support them. If the Korean government had left it alone, could Eunsung Motors become a global company?

But even taking that into account, the growth of Zhou tea is astonishing.

The shares are listed on the Hong Kong Stock Exchange, with a current market capitalization of HK$350 billion. When converted, it amounts to about 50 trillion won. The stock has risen more than 80% in the past year alone.

I saw a short middle-aged man in front of me. He is Wang Yi-chang, vice president of Zhou Cha.

Chairman Zhou Kai does not leave Guangzhou, where his headquarters is located, and his external activities are mostly handled by Vice Chairman Wang Yi-Chang.

He joined after Zhou Cha started the automobile industry in earnest with the permission of the authorities, and has a history of serving as secretary of the Prince’s Party in the past. He is known to be close with high-ranking leaders, including President Zhang Pinghua, as the Crown Prince Party currently holds the power of the CCP. Therefore, there were many people saying that Vice Chairman Wang Yi-chang was more powerful than Chairman Zhou Kai.

Usually, when such a big man visits Korea, an article will appear in advance. But somehow, he quietly visited Korea with only a few attendants.

It was the day before that I was asked to meet. I decided to meet him because I thought I should listen to what he was talking about.

He wondered if he would ask Eli to interpret, but Vice Chairman Wang Yi-chang accompanied a Korean-Chinese entourage.

Having announced his name as Ryu Yi-shin, he knew how to speak a clean Seoul language, not a Yanbian dialect. Seriously, it would be quite elite to serve as Vice Chairman Zhou Cha.

Vice Chairman Wang Yi-chang greeted him and handed him a gift. I looked at it and saw that there was something like a big disc inside the box.

“It is a famous tea in Yunnan province.”

“Oh, thank you.”

It is said that expensive Pu-Yong cars cost tens of thousands of won each, and they come and go as bribes among politicians. Maybe it’s not like that?

* * *

After saying goodbye, we sat down in the conference room.

Over there is Vice Chairman Wang Yi-chang and his interpreter secretary, and this is me and Taek-gyu.

Vice Chairman Wang Yi Chang spoke his simple words in English, but he communicated his doctor mainly through an interpreter. Anyway, there was no problem with communication.

After a few compliments over coffee and tea, he brought up the subject.

“I know that Karos will launch an electric car within this year.”

Although Karos has only released two types of cars, it is considered to be the most advanced in the self-driving car competition. Perhaps because of that, the attention of the world has been focused on the electric car to be launched by Karos.

“That’s right.”

“As the CEO knows, for Karos to grow into a global company, it has to enter the Chinese market.”

China is a huge market that no company can give up on.

China has already surpassed the US GDP. GDP includes both production and consumption. As it is the country with the largest population in the world, it is understandable in a way.

So all global automakers are knocking on the door of the Chinese market.

“We pride ourselves on being the best partner for Karos and OTK Company.”

China’s auto tariffs are 25 percent. This means that if you make a car in a foreign country and send it to the Chinese market, the price will be 25 percent higher, excluding logistics costs.

Therefore, most automobile companies produce locally, and in this case, they must unconditionally form a joint venture with a local company.

Currently, in China, foreign ownership cannot exceed 50 percent by law. In the end, we have no choice but to cooperate with a local company 50/50 to cry and eat mustard.

There are no problems in the beginning. However, after a certain period of time, problems start to occur when local companies acquire the technology and know-how of global companies. Local companies are slowly raising their voices and collide with investment and management.

When decisions are made in a situation where they have the same stake, it is difficult to follow the will of either party. In addition, the Chinese court is on the side of the domestic company thoroughly when the problem becomes serious and a lawsuit must be filed with the court.

Nikola is also exporting with high tariffs instead of local production due to the joint venture problem. Even so, people who will buy it will buy it, but in terms of price competitiveness, it is inevitable.

“China and Korea have been friendly for a long time, and this is still the case today. I think OTK Company and Zhou Cha Group can do the same.”

Neighboring countries, such as Korea and Japan, Thailand and Vietnam, England and Ireland, Turkey and Greece, and France and Germany, tend to have bad relations with each other.

Compared to the above cases, relations between China and Korea are not so bad. Above all, China accounts for the largest share of Korea’s exports.

Vice Chairman Wang Yi-chang continued.

“The electric vehicle market in China has grown more than 50 times in the past five years, and now accounts for 40 percent of the global market share.”

In other words, 40 out of 100 electric vehicles are sold in China.

Even taking into account the Chinese population, this is a high number. It was no different than a figure that showed how much the Chinese government cares about this.

In fact, China is much more active than Korea in the spread of electric vehicles. Even automakers are compelled to sell a certain part of their sales as eco-friendly cars.

It is already a thing of the past to ridicule people who said it was made in China. In particular, when it comes to electric vehicles, Korea has an edge in technology.

In the case of BID, its technological prowess is recognized by exporting electric buses to the world, including Jeju Island. Zhou Cha is also selling electric vehicles, and last year’s sales were 120,000 units. Volvo, acquired by Zhou Motors, also announced plans to launch all of its cars as eco-friendly vehicles within the next five years.

Looking at this, the Korean automobile market was nothing like the Galapagos. The biggest reason for this is, of course, the monopoly of Eunsung Motors. There is no need to take on a new challenge in a market where money can be made even if the existing business is good.

“The Chinese government is sparing no support for the goal of distributing 10 million electric vehicles within three years. Guangdong Province, where Zhou Tea is located, also promised to do its best to support if Karos builds a factory jointly with Zhou Tea.”

Seeing you say this, it seems that you have finished talking to some extent with the politicians. I don’t even think about the person who will give me the rice cake, but did you drink kimchi soup first?

I said carefully.

“There are many outstanding electric car makers in China. In comparison, we are not yet ready to enter China. We also want to be proactive in our business. That’s why it remains a privately held company.”

Vice Chairman Wang Yi-chang nodded.

“I know what you are worried about. The authorities are reviewing a plan to allow up to 70 percent of foreign companies’ shares in EV companies to foster the EV industry, and the law will be revised within this year at the earliest.”

Of course, China cannot simply change its policy.

“I understand that conditions such as technology transfer will follow.”

What are they aiming for? Autonomous driving technology or battery technology? Of course it will be both.

I shook my head.

“I need to think about it.”

Vice Chairman Wang Yi-chang suggested several conditions.

Free provision of factory site, guarantee of management rights, free provision of factory site, improvement of brand value, increase in sales volume, etc. What’s even better is that the joint venture’s investment will be loaned out at a near-zero interest rate.

In short, they will lay the red carpet, so you just have to come in.

It’s the best in terms of conditions. No automaker was able to enter the Chinese market under such generous conditions.

But there is no free lunch in the world.

No matter how much capital we have, compared to the Chinese government, it is a new start. What is ahead is technology, but if that technology is taken away one day, that is the end of it.

Persuasion continued, but I said that it was not yet the time to enter China. After almost half a day of persuasion, I did not give up, and Vice Chairman Wang Yi-chang’s expression hardened.

Eventually he got up. And he said something in a cold voice, and Ryu Yi-shin translated it.

“According to the old saying, ‘If a small country opposes a large country, it will lead to anger.’”

Is it intimidating?

Hearing this, I think it was a good thing to say no.

I laughed out loud.

“Translate as it is. This is America, and if I were an American, would I be able to say that?”

* * *

In the end, Vice Chairman Wang Yi-chang returned to China empty-handed.

Karos does not have a sales network in China and does not export, so what can he do there?

But soon after we met, something happened.

China mentioned the previous airbag recall, stating that Eunsung car’s exhaust gas manipulation was suspected, and ordered to suspend sales for several car models until results are available.

Eunseong, who had received a reservation in advance for a large-scale advertisement ahead of the launch of a new car in China, was embarrassed.

In addition, Seosung Electronics’ home appliance factory in Qingdao, China, has been shut down for reasons such as firefighting inspections.

Everyone reacted astonishingly to the sudden action of sanctions by the Chinese government. But even more frightening was the local reaction.

Businesses and local governments who read the atmosphere of the Chinese government postponed or canceled events related to Korea one after another.

In short, all Korean products on the main screen of internet shopping malls disappeared to the back page, and articles about Korean celebrities, dramas, and movies that were on the portal site also disappeared.

Taek-gyu asked.

“Eunsung Tea is said to be a joint venture with Beijing Tea in China? Then, wouldn’t Beijing cars also suffer damage?”

“They have their own brand, but… … .”

Of course, some losses cannot be avoided.

In a normal country, companies would immediately sue the government. However, Chinese companies did not cling to government policy, even though it was clear that they would suffer a loss. This, too, can be said to be a peculiarity of the country of China.(Read more @ wuxiax.com)

Since you can’t touch us directly, are you touching the related companies first?

“Is this okay?”

“If you have the power, you can do this.”

If South Korea had done a similar thing to Chinese companies operating in Korea, the Chinese government would immediately retaliate.

However, the Korean government did not find a proper solution. This is the difference between a country with power and a country without power.

I added a word.

“Still, you can’t say that you have power.”

Which country would trust and follow a country that says it is more powerful than the other country and does whatever it wants? This is why China can’t hear the sound of a great nation.

Rather, if you give a reason and formally impose sanctions, you can protest or file a complaint with the WTO. However, there is no answer if you procrastinate on the review of measures.

Various sanctions have had a negative impact on stock prices.

Shares of Suseong Electronics and Eunsung Motors, which have been on an upward trend since the announcement of the electric vehicle industrial complex plan, fell 3 percent and 5 percent, respectively, on the news that the Chinese government imposed sanctions.

As a countermeasure, Chairman Im Jin-yong came to our building.

Taehyung spoke again.

“By the way, OTK Company is an American company, and Carlos is an American company. So shouldn’t we also retaliate against American companies?”

However, American companies are not even touching a single hair, and are venting their anger against Korean companies.

Chairman Im Jin-yong said with a sad smile.

“Because then Ronald won’t stand still.”

After all, are Koreans happy?

Taek-gyu said it as if it was absurd.

“No, it’s not like you’re an asshole, you’re strong against the weak and weak against the strong? What kind of country is this?”

The retaliation did not end there.

I got a call from Yaomin, CEO of Tenwei, a logistics truck brokerage service in China.

[The authorities have issued an order to suspend business.]

This was also true of other startups that OTK Company invested in China.