After 40 years of car manufacturing in China, why was Li Shufu able to acquire Mercedes-Benz and Volvo?
In the summer of 1896, Li Hongzhang, a pasteur of the Qing Dynasty, was sent to Europe by Cixi after his defeat in the First Sino-Japanese War. Before this trip, Li Hongzhang's heart was full of doubts.
He is 74 years old, and he still has a pair of Nanmu coffins in his luggage, showing Zuo Zongtang's determination to carry the coffin to recover Xinjiang, and vowing to find out what the problem is. Is there still salvation in the Qing Dynasty?
However, when he crossed the ocean to Europe and saw the high-rise buildings there, he could not say a word. It feels like an African savage suddenly breaking into the civilized world, and the three views are completely turned upside down, and he has nothing to say except shock and disbelief.
In the end, he ordered only one batch of cannons from the Krupp Arsenal. You must know that at this time, the Qing Dynasty had been engaged in foreign affairs and set up factories for more than 30 years, and it was impossible to even make basic military supplies.
Five years later, Li Hongzhang passed away.
In 1903, three years after his death, the Ford Motor Company was officially founded. At the same time, auto giants Walter Chrysler, David Buick and others also flocked to Detroit, opening the era of the United States.
However, in Shanghai, China's busiest city, only five car license plates were issued this year. Ten years later, there are only a few hundred cars in China. Later, Germany's Volkswagen emerged in Wolfsburg, and Japan's Toyota was not far behind, using the Toyota production method to catch up.
China's Hongqi sedan was once the pride of the Chinese, but from production in 1956 to 1981, only 1,540 units were built, compared with the 3.98 million annual production of Ford of the same era.
However, this gap did not make the Chinese give up. On the contrary, Li Shufu dared to challenge and accept challenges. He stood up and shouted, "I dare." ”
He first swallowed the Volvo, then turned around and conquered the Mercedes. This former Taizhou cattle herder, self-made, only took 20 years to surpass the achievements of foreign brands for hundreds of years.
How did he do it?There are three core secrets: discernment, fearless courage, and firm pace. And these three tricks happen to be the key factors for the success of every grassroots entrepreneur.
Clause. 1. Discerning. Opportunity is only real when no one is aware of it. Successful entrepreneurs usually have a unique vision and can sense the arrival of the general trend in advance.
Li Shufu is such a model, the accumulation of primitive wealth before building a car depends on his sharp vision.
In 1982, when 19-year-old Li Shufu graduated from high school, he went to take his graduation photo and found that there was only one state-run photo studio in the local area, and his classmates complained repeatedly. However, Li Shufu saw a business opportunity, he found a relationship and worked as an apprentice for two months, then bought a camera and began to take pictures of people on the streets.
In a few months, he made hundreds of dollars. After having the money, Li Shufu had the idea of opening a photo studio. Although the rent is not expensive, the equipment is very expensive, a reflector costs more than a thousand yuan, which is equivalent to an ordinary person's salary for a year.
If it were someone else, they might choose to borrow money to buy equipment or continue to take wild photos. But Li Shufu did not choose these two paths, he began to study the principle of the equipment by himself, and then found a hardware master to help, only spent two yuan to buy materials, and successfully imitated a set of equipment, and the effect was almost the same as **.
In this way, he made a small fortune.
By chance, Li Shufu found a piece of information that the main ingredient of the apparent shadow liquid is silver bromide, and silver can be refined after simple chemical treatment, which is more profitable than photography.
As a result, Li Shufu began to specialize in heavy metal extraction, almost monopolizing the developer market in Taizhou. However, the developer was limited, and Li Shufu began to turn to collecting waste electrical appliances and refining the *** inside
Soon, he became a local 10,000 yuan household. However, the technical content of this industry was too low, and everyone began to imitate Li Shufu and lower prices for each other, so Li Shufu decisively gave up the industry and waited for the next opportunity to make money.
Li Shufu was once looking for business opportunities when he found a shoe factory processing parts for a refrigerator factory. He judged that there were two possibilities: first, the refrigerator factory may not be able to find other parts factories, and can only find shoe factories to cooperate.
Second, the market demand may increase suddenly, and the original parts factory cannot meet the demand, so it can only temporarily find shoe factories for help. In any case, this shows that the home appliance industry is in a high-profit stage where the supply exceeds demand, and the entry threshold is low and the profit is high.
So, Li Shufu and his brothers opened a parts factory, starting from the most untechnical special-shaped patches, and gradually involved in core equipment such as evaporators and condensers.
Li Shufu suffered a major business setback in the late 80s of the last century. At that time, there was the first overcapacity in China, a large number of industrial products backlog, the state began to carry out macroeconomic regulation and control of enterprises, only retained designated manufacturers, and all enterprises that did not enter the list were "shut down and transferred".
Li Shufu was unlucky and didn't make the list. In addition, at that time, the issue of "surname capital and surname society" was still being debated, and just a few years after the "Wenzhou Eight Kings" incident, many private entrepreneurs chose to donate their enterprises to the state in order to protect their lives.
Now, the four Liu brothers of the agricultural giant Hope Group took the initiative to find the relevant departments and wanted to donate the Hope Feed Factory to the state free of charge, but they were unsuccessful. However, Li Shufu succeeded.
Looking back, many of the companies that did not make the list that year, but persevered, have become giants in the industry like Hope Group. The world is impermanent, and fate plays tricks on people.
We can't help but ask, is Li Shufu lucky or unlucky?Grassroots entrepreneurs in China are often not highly educated, so once they have money, they will want to read more books and improve their cultural literacy.
However, those who read a lot of books, scoff at reading. After Li Shufu handed over the factory, he went to Shenzhen University to study Xi. However, the eyes of businessmen cannot be quiet, and they can always find business opportunities.
At that time, the dormitory assigned to Li Shufu by Shenzhen University was relatively old, and he felt that he should clean up after living here for a long time, so he went to the decoration market to buy materials.
Li Shufu found a business opportunity for magnesium aluminum curved plates, although it could not be produced domestically, and could only rely on imports and was expensive, but he did not give up, but saw the opportunity.
He believes that with the start of the domestic real estate market, the demand for decoration building materials will grow, and he has the ability to solve the problem of this technology. He believed that the first person to eat crabs could often get excess returns, so he decided to give it a go, dropped out of school and pressed all his net worth, and after one year and four months of hard work, he finally succeeded in developing the first magnesium aluminum curved plate in China.
In 1991, he sold more than 8 million in one quarter, 70 million in the second year, and 1 in the third year500 million. Li Shufu, who is less than 30 years old, has achieved financial freedom.
The secret of his success lies in having an eye for business opportunities and seizing great business opportunities from the small things. Nowadays, many people complain that there are fewer and fewer opportunities to make money, but in fact, it is their eyes that they do not see.
Those who see business opportunities often miss out on opportunities because they are hesitant and afraid of risk. Pessimists see the right thing, and optimists see success.
Discovering business opportunities is only the first step, and the most important thing is to have a brave heart, because many opportunities are fought for.
With the spirit of three dares, Li Shufu successfully opened up Geely's popularity. He dared to speak out, boldly challenged GM executives at the industry conference, and used eyeballs to increase the best rate.
At the same time, he also dared to practice, regardless of the obstruction of leaders and policies, insisted on building cars and accumulated experience from building motorcycles first. This is the key to his success.
Li Shufu is a person who has the courage to challenge, and he is determined to build a car. In the name of building motorcycles, he won 800 acres of land in Taizhou, but in fact it was planned according to the production standards of automobiles.
Unfamiliar with the technology, he bought some Mercedes-Benz and Toyota models, took them apart to imitate, and then bought parts from Hong Kong to assemble. In the end, he succeeded in creating the "Geely One".
However, when he took the car he built to the Provincial Machinery Department to apply for approval, he was refused. In desperation, he came up with a "crooked idea". He found that the production catalogue of passenger cars did not have strict requirements for sedans.
A passenger car is a hatchback without a butt. So, he found the cooperation of Deyang Prison, which has a bus directory, and invested 24 million yuan by himself, and the two sides set up a joint venture factory to manufacture buses in the name of the joint venture company.
However, he found that the factory was in prison, it was very difficult to get in and out, the workers were prisoners, and it was very difficult to train and manage the technology. Originally, he had planned to set up a branch office if the prison was not available, but the rules at the time made it clear that the branch could not use the directory, which made his plan very difficult.
Despite facing so many difficulties, Li Shufu still decided to build a car first and then **. In the end, he succeeded in building Geely's first batch car, the Haoqing 6360.
On August 8, 1988, he chose an auspicious day and held a celebration of Pride 6360. However, the invitation letter he sent to celebrities and leaders from all walks of life did not receive a response.
It was not until the arrival of Ye Rongbao, vice governor of Zhejiang Province, that this embarrassing situation was resolved. Geely's automobile manufacturing qualifications were not obtained until 10 days before China's accession to the WTO in 2001.
4.Don't be afraid of risk. Many people think that Geely's acquisition of Volvo is a big deal, but in fact, Li Shufu is the one who pays the most.
Li Shufu's acquisition of Volvo seems to have taken a big advantage, but it is actually a big gamble. At that time, Geely's annual turnover was only 4 billion, and the major shareholder behind Volvo was Ford, which had an annual turnover of more than 100 billion.
Geely, a Chinese brand that has just obtained the qualification of automobile production, has no money and no resources, and the acquisition of Volvo is undoubtedly a drama of "a poor boy marrying Bai Fumei".
However, the reality is that although Geely has a turnover of only 4 billion, it has a profit of up to 1 billion, while Volvo lost $1.5 billion in '08 and another $700 million in '09.
The acquisition of Volvo means that Li Shufu has gambled on his lifelong reputation and wealth, which is a real big gamble. In order to achieve Geely's long-term goals, Li Shufu decided to sacrifice short-term interests and gamble his life.
However, Geely's strength at that time was limited, and Li Shufu only raised half of the money. In order to raise money, he searched for rich people all over the world, and finally even borrowed money from Ford. Fortunately, Ford borrowed, and Volvo's stock price rose more than ten times after it was acquired, and the money it makes every year has long since paid for itself.
But if it weren't for Li Shufu's courage to speak, do, and buy, today's Geely may not exist. Entrepreneurship is not only about discovering opportunities and acting bravely, but also about hard work.
Technology is needed to build a car, the quality of the car is not good, and the people will not pay for it if it is purely emotional. Li Shufu walked on two legs, solved technical problems, and finally achieved Geely's success.
Third, the pace of stepping. There used to be a popular joke about domestic cars, two cars collided together, and both sides violated traffic rules. When the driver of the black car found out that the other party was a Porsche, his heart was cold.
The driver of the white car also saw that the other party was a Land Rover and was a little excited. As a result, after they got out of the car and saw the truth, they looked at each other and smiled, and the atmosphere instantly eased. It turned out that the Zotye SR9 collided with the JAC Landwind X7.
Such things were common in the first few years of domestic cars, and Zotye was too crazy because of copying Porsche, and was called "Porsche" by people on the rivers and lakes. To understand these two things, we need to understand the background of Chinese car manufacturing.
In the early days of the founding of the People's Republic of China, China's industrial base was relatively weak. The first Liberation truck was built with the help of the Soviet Union. Later, we poured all our efforts into manufacturing Hongqi cars, but due to quality problems, we finally stopped production.
The complexity of automotive technology makes it impossible for us to learn without instruction. Therefore, the state decided to introduce foreign brands for joint venture production. As a result, joint venture brands such as Beijing Hyundai, BMW Brilliance, FAW-Volkswagen, FAW Toyota, and Dongfeng Nissan were born.
However, despite this, the pace of technology updates is still relatively slow. In the case of Santana, although the state decided to build a factory in cooperation with Volkswagen in 1979, it did not start until 1980.
This is not because the Germans are asking too much, but because our base is too poor. For example, at that time, there were only 6 indicators for car steering wheels in China, while Germany had 106.
Our manual assembly method can only assemble up to two cars a day, while Volkswagen's most modest factory can assemble 1,000 cars a day.
In 1983, the first Santana was finally produced, but the manufacturing process did not go well. Since we do not have a qualified parts factory, all parts can only be imported from Germany and then assembled in Shanghai.
As a result, it took $10,000 in foreign exchange to build a Santana. This is also the reason why a Santana could top a suite in Beijing back then. With the increase of joint ventures, domestic technology has also improved, but the core technology is still in the hands of foreign brands.
Therefore, the national brand can only be plagiarized at the beginning, otherwise it will not even be able to touch the door of car building. However, this strategy that relies on plagiarism is not a long-term solution, because without mastering the core technology, you can't go far.
In recent years, brands such as Porsche Tay, Land Rover JAC have almost disappeared, which speaks volumes about this problem. In order to solve this problem, the core lies in the cultivation of technical talents.
Li Shufu has invested a lot of resources in this regard.
Over the past 20 years, 10 educational institutions have been established, including a graduate school and a postdoctoral workstation for master's degrees. Geely University, Sanya University, Xiangtan Institute of Technology and other undergraduate colleges and universities are also our pride.
To date, we have trained 150,000 professionals in the industry who have made our innovation possible. In 2006, Geely's CVVT engine, the JL4G18, which took three years to develop, was officially put into production, marking our transition from an imitator to an innovator.
As soon as the Geely Emgrand equipped with JL4G18 was launched, it quickly became popular all over the country. To this day, the Emgrand series is still one of Geely's best-selling models. Education is a long-term work, and if we want to quickly surpass foreign brands, we must go out and stand on the shoulders of giants of European and American century-old industries.
Therefore, Li Shufu gambled his net worth and life to buy Volvo and Mercedes-Benz, behaved very calmly, and gave full management freedom and financial freedom. In order to be recognized by Volvo's technical personnel, on the basis of owning all the intellectual property rights of Volvo Cars, he did not directly intervene in the operation and management of Volvo, but took the initiative to pose as a student, humbly asked for advice, and did not force the other party to directly transfer technology.
Geely has even built a European joint R&D center in front of Volvo's home, so that everyone can share the research results. Mercedes-Benz is the same, with a collar option.
* Profit less when it rises, less loss when it loses, don't care about capital gains, just want to get brand and technical support. If you don't want small profits, you must have big plans. Probably in Li Shufu's heart, Geely's dream of building a car is far more than the present.
Li Shufu has been in business for 40 years and has been building cars for 20 years, witnessing the whole process of China's reform and opening up and the rise of domestic cars. With a pair of eyes that insight into business opportunities, a brave heart, and open legs, he first copied and then created, and then merger and acquisition, and found the best path to survive.
These three points are not only the embodiment of individual heroism, but also the result of the helpless choice of the times. But no matter how the business environment changes in the future, these three points are the best choice for every ordinary person who wants to jump from the bottom, because Li Shufu has already used them to break out.