From one of China’s best car companies to bankruptcy and reorganization, what has Brilliance Auto experienced?

-1-

Brilliance’s story begins with the Golden Cup.

In October 1958, the Shenyang Municipal Government invested 1.8 million yuan to establish the Shenyang Automobile Manufacturing Factory, which was later renamed Shenyang Automobile Manufacturing Factory, and combined the local state-owned Second Machinery Factory, an automobile assembly plant, and a public-private partnership Minsheng Vehicle Parts Factory and others were merged. At that time, its main mission was to produce military modified vehicles.

In December of the same year, Shenyang Automobile Manufacturing Plant trial-produced three Julong brand 2.5-ton light-duty trucks based on the Soviet TA351 car. By the time production ceased in 1962, 534 vehicles were trial-produced and produced.

Through Julong brand cars, Shenyang Automobile's team has been tempered and formed the manufacturing capabilities of front/rear axles, gearboxes and engines.

In March 1966, Shenyang Automobile trial-produced nine CA131 3-ton light-duty trucks, but they were not mass-produced.

In 1970, the Liaoning Automobile Repair Factory, also located in Shenyang, produced 503 Julong SY130 cars using reciprocating engines. Later, Shenyang Automobile launched Liaoning No. 2 car based on Julong SY130. Liaoning Automobile Repair Factory was transformed into a professional automobile gear production factory and renamed Shenyang Automobile Gear Factory.

In 1971, Liaoning No. 2 was put into mass production, with 1,150 units produced the next year.

Two years later, in accordance with the unified plan of the Liaoning Provincial Machinery Industry Bureau, Shenyang Automobile trial-produced three prototype vehicles in March 1974 based on the BJ130 drawings. They were later improved into the SY132 light truck in 1975. It was put into production in June and 320 units were produced that year. Also in that year, Shenyang Automobile Manufacturing Plant became one of the designated manufacturers of light trucks in the country.

Later, Shenyang Automobile developed variant products including the SY132A and SY132D double-cab passenger and cargo vehicles, and also trial-produced the SY133 light truck.

In December 1981, SY132C and SY132D began to use the Jinbei brand trademark. This can be seen as the beginning of Jinbei Motors.

Two years later, these two cars won the Feilong Award for Outstanding New Products from the State Economic Commission. At the same time, in May 1985, Shenyang Automobile also won first place in the 25,000-kilometer reliability test of the 130 light-duty truck major manufacturers organized by China Automotive Industry Corporation.

It is worth mentioning that in 1982, the Shenyang Car Manufacturing Factory in Shenyang also began to use the Jinbei trademark to produce the SY622 light bus.

Later, Shenyang Automobile used Mitsubishi FCA cab technology and Isuzu N series chassis technology for modified design and launched the Jinbei SY1041 series of trucks.

In the late 1980s, in addition to SY1040 and SY1041, Shenyang Automobile's leading products also included SY1031SAH light trucks, SY6480, SY6474 light buses, SY5040 series special vehicles, etc.

In 1987, with Shenyang Automobile Manufacturing Factory and Shenyang Passenger Car Manufacturing Factory as the main body, Shenyang Agricultural Machinery Automobile Industry Bureau integrated dozens of affiliated enterprises and jointly launched it with China Construction Bank Shenyang Branch Trust Investment Company*** Jinbei Automobile Co., Ltd. was established, with Zhao Xiyou as chairman.

At that time, Jinbei Motors had scattered personnel, old equipment, and faced many problems. In order to raise funds and get out of the predicament, at the end of 1988, Zhao Xiyou thought of raising funds through the issuance of stocks. Jinbei also became the first joint-stock enterprise in the three northeastern provinces to be allowed to issue shares publicly.

However, after more than a year of operation, Jinbei only sold half of its shares and kept the remaining half.

While issuing shares, in 1989, Jinbei introduced the fourth-generation Toyota Hiace light bus in the form of CKD complete kit assembly, which gained market recognition. However, due to the impact of Japan's economic bubble, Jinbei's ability to make money from selling cars could not keep up with the rise of the yen, and the funds returned could not afford new parts.

Jinbei Motors is in a new dilemma.

-2-

At this time, the "savior" Yang Rong appeared.

What’s interesting is that the resume of such an influential figure has always been a mystery.

Yang Rong claims to be from Huizhou, Anhui Province. He graduated from Southwestern University of Finance and Economics and holds a doctorate in economics. He fought in Vietnam and was fatally wounded in 1988, but miraculously survived.

But according to media reports, Yang Rong was actually born in Beiguo Town, Jiangyin City, Jiangsu Province. His original name was Yang Yong and he had 4 brothers. After graduating from junior high school, he worked as a chef, then contracted to run a small store, and then worked for a Jiangyin foreign trade company. In 1989, he went to Shanghai to speculate in stocks. With his keen sense of capital and capable operation ability, he was appreciated by financial educator Xu Wentong.

In the early 1990s, Yang Rong established Huabo Finance Company in Hong Kong. Its initial investor is Hainan Huayin International Trust and Investment Company, where Xu Wentong serves as chairman.

It is understood that the main business of Huabo Finance is fund lending, bond and stock trading. It is said that Yang Rong's first pot of gold was accumulated at this time.

At that time, many state-owned enterprises were facing an existential crisis due to institutional and mechanism problems. In Xu Wentong's view, it is difficult to revitalize these enterprises only by loosening management and financial blood transfusion, and the most important thing to rely on should be the capital market. Yang Rong deeply agreed.

In this context, Yang Rong began to contact Zhao Xiyou and bought almost all the remaining shares of Jinbei.

Yang Rong’s capital injection temporarily resolved the Jinbei crisis.

This is just the first step for Yang Rong.

In 1991, Shenyang Jinbei Bus Manufacturing Co., Ltd. was established as a joint venture between Hainan Huayin International Trust, Huabo Finance, Huayin Trust and Jinbei Motors, becoming the main production and operation entity of Jinbei Hiace and other light bus products. Among them, Jinbei Auto holds 60%, Huabo 25%, and Huayin 15%. One year later, Huayin transferred its shares to Huabo, and Yangrong thus obtained 40 shares of Shenyang Jinbei Bus.

At the same time, Yangrong also started operating in the capital market.

In May 1992, in order to be listed overseas, Huabo Finance, a subsidiary of Yangrong, jointly initiated the establishment of the China Financial Education Foundation with the Education Department of the Central Bank, China Finance Institute, and Huayin Trust. The registered capital of the foundation is 2.1 million yuan, of which Yang Rong contributed 2 million yuan and the Education Department of the Central Bank allocated 100,000 yuan.

In June, the China Financial Education Foundation established Brilliance China Automotive Holdings Co., Ltd. in Bermuda. All 40 shares of Shenyang Jinbei Bus held by Huabo were injected into this shell company established for listing.

Two months later, Yang Rong conducted a share swap on the grounds that "only 40% of the shares did not meet the conditions for independent listing in the United States", and expanded Brilliance's shareholding ratio in Shenyang Jinbei Bus to 51%, becoming a controlling shareholder. shareholder.

In July 1992, Jinbei Automobile Co., Ltd. was listed on the Shanghai Stock Exchange.

In October, Brilliance China was listed on the New York Stock Exchange, becoming the first Chinese company listed in the United States.

-3-

In November 1993, Shenyang Mayor Wu Disheng was killed in a plane crash in Israel; a month later, Jinbei Motors Chairman Zhao Xiyou retired due to illness. The departure of these two key figures broke the balance previously established by Jinbei. The new leaders transferred from the local government began to compete for control of Jinbei Bus, but they were unsuccessful.

In order to check and balance Yang Rong, in 1995, Jinbei Motors even transferred 51 shares to FAW Group at a symbolic price of 1.15 yuan, making it the controlling shareholder of Jinbei Motors, and the company name was also changed to FAW Jinbei Motors Co., Ltd. However, FAW still failed to really intervene in the Jinbei Bus business.

Under the leadership of Yang Rong, Shenyang Jinbei Bus grew rapidly and became the leader in the domestic light bus market in 1997. Annual sales increased at a rate of 50%, and sales surged from 9,150 units in 1995 to 60,000 vehicles in 2000.

In the early 1990s, the "Automotive Industry Policy" promulgated by the state began to encourage private purchases of cars. People who saw business opportunities flocked to the automobile manufacturing industry. Yangrong has also set its sights on the emerging market of family cars.

However, Jinbei does not have any experience in the field of car manufacturing.

Yangrong adopts a dual-track strategy, seeking overseas cooperation on the one hand, and engaging in independent research and development on the other.

In terms of external cooperation, Brilliance has cooperated with a number of international automobile companies.

1. Jointly established Jinbei General Motors Co., Ltd. with General Motors of the United States to produce S-10 pickup trucks, Trailblazer SUVs and other models;

2. Reached a cooperation intention with BMW and established a joint venture Produces BMW 3 Series and 5 Series sedans;

3. Takes over Sanjiang Renault, acquires 55% equity, plans to introduce Renault family economy car "Ganguo";

4. Acquires Shenyang Aerospace Mitsubishi, cooperate with Mitsubishi to produce car engines;

5. Cooperate with Toyota to develop economical cars;

6. Cooperate with Ford, the world's largest auto parts supplier*** Jointly develop the 491Q-ME gasoline engine;

7. Cooperate with the London Taxi Company in the United Kingdom to exclusively produce and sell the Austin Taxi TX1 in the Chinese market.

In addition, Brilliance also invested 30 million yuan to jointly establish Hebei Zhongxing Automobile Manufacturing Co., Ltd. with Hebei Tianye, holding 60% of the shares.

In terms of independent research and development, Yang Rong invited George Yarrow, who has reached the top of his game, to preside over the vehicle design, and invited the British MIRA company, an international authoritative organization, to conduct vehicle performance verification, including stamping, welding, painting, and final assembly. Process equipment, parts, etc. also come from well-known manufacturers around the world.

With such large investment, in December 2000, the first-generation Zhonghua sedan officially rolled off the production line, becoming the only self-owned brand model capable of challenging joint venture mid- to high-end sedans at that time.

At that time, Yang Rong held up a calligraphy work of "China's No. 1 Car" and excitedly announced his dream: "By 2006, we will be the only company on the beachhead of China's automobile industry that dares to challenge foreign companies. , I am Brilliance."

A month later, the Shenyang Municipal Government awarded Yang Rong the title of "Honorary Citizen". At that ceremony, Yang Rong announced Brilliance's performance in 2000: sales revenue of nearly 7 billion yuan and after-tax profit of 1.8 billion yuan, ranking third in the Chinese auto market after Shanghai Volkswagen and FAW-Volkswagen.

-4-

Shortly after the China sedan rolled off the assembly line, Yang Rong discovered that the Mitsubishi engine was underpowered and did not match the China sedan. After Mitsubishi refused to update the technology, BMW took the lead and Yangrong began to contact the British Rover Motors to discuss an engine cooperation project.

Soon after, the negotiations between Yangrong and Rover were upgraded from engine cooperation to a full joint venture. In the end, the two parties reached an agreement to establish a joint venture. China invested in land, factories, etc., holding 51% of the shares; Rover invested in products, technology and equipment, and held 49% of the shares. After the joint venture, all Rover products will be produced in China. Products exported to Europe will use the Rover brand, while products in China and the Asia-Pacific region will use the Chinese brand. In addition, China will lend Rover 190 million pounds in cash to use for layoffs, factory relocation and new car research and development.

This kind of cooperation model is still yearned for by the industry.

However, Yang Rong made a fatal mistake - he decided to place the Rover project in Ningbo City, Zhejiang Province. This is a kind of betrayal for Shenyang, who has just experienced the "Muma" case.

At the same time, Brilliance’s ownership has always been confusing and unclear. To this end, Yang Rong designed an extremely complex "capital maze" and planned a "New Brilliance" with clear property rights.

However, things did not develop in the direction Yang Rong had deduced, and the property rights negotiations with Shenyang eventually broke down.

In March 2002, Brilliance and all its derivative companies were transferred to the Liaoning Provincial Government in one go.

In June, Yang Rong was dismissed from his post by the Brilliance Automotive Board of Directors; in October, Yang Rong was arrested, but by this time Yang Rong had already fled overseas.

The Yangrong case has also become a real case of "investing in Shanhaiguan is not enough".

Since then, after multiple equity changes, Brilliance Automobile Group has become a wholly state-owned company in Liaoning Province. Brilliance Automobile Group also quickly and comprehensively returned to Liaoning Province.

The Ningbo Rover project and Hubei Xiaogan Renault project were forcibly terminated, Jinbei General was integrated by Shanghai General, and the cooperation with the British Taxi Company was terminated halfway. In addition, Brilliance has also made large-scale adjustments to its parts suppliers. While abandoning many suppliers outside Liaoning Province, it also supports parts factories in Liaoning Province.

In the first year after Yang Rong left, Brilliance did not seem to be greatly affected.

In 2003, China Cars sold 25,000 cars and had a pre-tax profit of 20 million yuan.

However, by 2004, the situation took a turn for the worse, with Zhonghua sedan sales falling to 10,900 units and an operating loss of 600 million yuan; Jinbei Hiace sales dropped by 18%, losing its five-year-old light passenger sales championship.

Brilliance Auto Group is in chaos. From Yang Rong's departure to the end of 2005, the top management changed four times. When reporters went to Shenyang for interviews, they could not even find the office address of Brilliance's headquarters because the relevant departments did not know which department Brilliance Auto belonged to.

-5-

At the end of 2005, Brilliance's cumulative losses in the past three years reached 3.2 billion yuan, and the factory was almost suspended.

Corresponding to the poor financial situation are complex business and personnel relationships. The complex property rights relationships resulting from the transfer of private ownership to state ownership, the complex factional relationships resulting from multiple changes in leadership in a short period of time, and the large loss of outstanding talents have made this once prosperous company difficult to move forward.

Under such circumstances, Qi Yumin took over Brilliance.

Previously, Qi Yumin served as the deputy mayor of Dalian City, and before that he served as the chairman and general manager of Dalian Heavy Industry Hoisting Group Co., Ltd. He has more than 20 years of corporate management experience and government work experience.

Faced with Huachen’s serious illness, Qi Yumin took a strong dose of medicine.

First, promote upstream. Ten days after taking office, Qi Yumin went south to Guangzhou, met with the CEO of Guangfa Bank, and successfully obtained a loan of 300 million yuan. After that, he borrowed another 700 million yuan from many banks. With the money, Brilliance paid off debts owed to parts suppliers and paid arrears to employees.

Immediately afterwards, Qi Yumin launched a price war.

We launched a "diving" price reduction on the slow-selling Zhongchi sedan. The 130,000 yuan version was reduced to 110,000 yuan, and the 170,000 yuan version was reduced to 130,000 yuan. At the same time, Qi Yumin quickly launched the second sedan Zhonghua Junjie, priced at less than 100,000 yuan.

In the joint venture sector, Qi Yumin delegated power to BMW Brilliance, giving all finance, sales, etc. to BMW.

These measures have enabled Brilliance to achieve growth in both its independent and joint venture sectors in the short term. In 2007, Brilliance Automobile Group's vehicle sales exceeded 300,000 units, with sales revenue exceeding 40 billion yuan, turning losses into profits in one fell swoop.

That year, Qi Yumin's prestige reached its peak. Also in that year, Brilliance China delisted from the New York Stock Exchange.

But this kind of operation also laid the foundation for Brilliance's long-term development.

Brilliance, under the leadership of Qi Yumin, places less emphasis on independent research and development and more on technology integration. He hopes to use the mature technology of foreign car companies to develop new cars instead of establishing his own forward research and development system.

Qi Yumin once said in an interview, “I dream of having a product whose chassis is tuned by Porsche; its shape, interior and exterior decoration are made in Italy; and its engine is a collaboration with BMW. Once the three major resources are integrated, will a good car be produced? ”

This kind of thinking makes Brilliance Auto waste time when other Chinese car companies are trying to create a positive R&D system. He also gradually lost in the fierce competition in the future.

-6-

Due to the lack of core technology, the market shares of Brilliance China and Jinbei began to shrink in 2013. As the profit cow of Brilliance, Brilliance has relied on BMW Brilliance for blood transfusions for a long time.

From 2015 to 2019, the net profits contributed by BMW Brilliance were 3.82 billion, 3.99 billion, 5.23 billion, 6.24 billion and 7.62 billion respectively.

If the net profit of BMW Brilliance is deducted, Brilliance is actually losing money: a loss of 316 million in 2016, a loss of 862 million in 2017, and a loss of 424 million in 2018.

The dilemma of the independent sector is evident.

This kind of blood transfusion is obviously not a long-term solution. In October 2018, BMW issued a statement stating that the BMW Group planned to acquire 25 shares of the BMW Brilliance joint venture for 3.6 billion euros, and the transaction would be completed in 2022. This means that by 2022, Brilliance Group’s shareholding ratio in BMW Brilliance will drop to 25. By then, Brilliance Group's profits are bound to decline sharply.

Brilliance’s independent sector is also helping itself. In 2017, Brilliance Jinbei transferred 49% of its equity and debt to Renault of France for 1 yuan and established Brilliance Renault Jinbei Automobile Co., Ltd., which received a transfusion in terms of technology, products, and funds.

But Brilliance Group is in financial crisis.

Data show that as of the first quarter of 2020, Brilliance’s cumulative liabilities reached 122.675 billion yuan.

From April to May 2020, Brilliance China became the person subject to execution 13 times;

In the first half of the year, Brilliance China’s cumulative sales were only 3,186 vehicles; in August, Brilliance China employees began to take holidays Rotation;

In October, Brilliance Auto Group failed to pay off its 1 billion yuan private placement bond upon maturity, resulting in a substantial breach of contract; previously, multiple tranches of bonds issued by Brilliance had fallen sharply.

On November 16, Brilliance Group issued an announcement confirming that at present, Brilliance Group has defaulted on debt of 6.5 billion yuan and overdue interest of 144 million yuan. Due to financial constraints, the credit extension approval was not completed, resulting in the inability to repay the debt.

On November 20, Brilliance Group officially entered bankruptcy and reorganization procedures.

However, according to news, the current bankruptcy and reorganization only involves Brilliance’s independent sector and will not affect joint venture brands.

On December 4, Qi Yumin, the former chairman of Brilliance Automobile Group, was suspected of serious violations of disciplines and laws and was subject to review and investigation.

This news is quite interesting.

This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.