Why did Jiangsu Rugao invest several billion cars in succession?

category:Finance
 Why did Jiangsu Rugao invest several billion cars in succession?


Once the star of Chinas new forces of car making, sailin automobile fell into a halt.

Wang Xiaolin, the chairman of sailin automobile, who was accused of taking 6.6 billion state-owned assets with empty hands, fled far away from the United States and met Rugao City in Jiangsu Province. Like a luoshengmen, many questions still remain unsolved. With the closure of sailin factory, the freezing of accounts and the resignation of all employees, the future of the new energy automobile industry in Rugao City, Jiangsu Province is also shrouded in a layer of fog.

Chen Jianjun, Vice Minister of Publicity Department of Rugao municipal Party committee, admitted to China News Weekly that the lessons left by the sailin incident are Rugao on the surface, but not only Rugao, give a warning to the country, the surrounding counties should learn from it, and the higher authorities should also learn from it: we cant rush all the new energy vehicle projects, and we need to conduct more stringent audit on the qualifications of some companies.

Since 2009, China has launched the development strategy of new energy vehicles, and various supporting policies have been issued intensively. Since then, with the continuous heating up of subsidy policy, under the catalysis of policies and funds, the racetrack of new energy vehicles has been unprecedentedly crowded, and the projects of new energy vehicles with investment of more than 10 billion yuan have been launched one after another. For a time, new energy vehicles have become hot cakes for attracting investment from all over the world. Statistics show that from 2015 to the first half of 2017, more than 200 new energy vehicle production projects have been implemented in China, involving an investment amount of more than 100 billion yuan, and the production capacity is planned to reach 21.24 million units.

However, when it comes to 2019, the car market will be depressed and subsidies will decline. After the passion of the capital market has returned to rationality, Chinas new forces of car making have been caught in a big escape, the number of enterprises has dropped to about 40, and some places have fallen into an awkward predicament due to the impulse to build cars.

Li Jinyong, vice president of the automobile chamber of Commerce of the all China Federation of industry and commerce, told China News Weekly that the automobile industry is too attractive to local governments, which can stimulate the whole industry chain and pay the most taxes. On the one hand, the new energy vehicle projects have exploded or failed in succession; on the other hand, the local governments enthusiasm for investment in the automobile industry has not abated, sailin incident may not be the last one.

A brief history of car making in county level cities

Rugao, located in the north wing of the Yangtze River Delta, is a county-level city under the jurisdiction of Jiangsu Province. This small city with a population of about 1.42 million is a city of new energy automobile industry in Jiangsu Province.

In 2008, the international financial crisis broke out. In the face of the global shipping industry recession, photovoltaic industry continued to decline, and the biomedical industry was struggling, Rugao focused on the new energy vehicle industry, and looked forward to the development potential of the new energy vehicle industry, which could provide the economic growth momentum for Rugao. Chen Xiaodong, vice mayor of Nantong City and former Secretary of Rugao municipal Party committee, once said that Rugaos choice to develop new energy automobile industry was a strategic choice.

For Rugao, it is not easy to develop the new energy automobile industry. In 2010, Rugao successfully introduced the first new energy vehicle production enterprise land ark, and the curtain has been opened since then. As a major project in the 12th Five Year Plan of Jiangsu Province, the total investment of land Ark Project is planned to be 4 billion yuan, and the annual production scale of 200000 electric vehicles is expected to be formed.

However, the land ark did not obtain the production qualification at first. Liu Changli, general manager of Jiangsu land ark, once disclosed to the media that with the help of Rugao government, land ark acquired Rugao bus General Factory and obtained the production qualification of new energy large and medium-sized buses.

In August 2016, the first hydrogen economy demonstration city project of the United Nations Development Program in China was launched in Rugao, which became the United Nations hydrogen economy demonstration city. The hydrogen energy industry is regarded as another industry growth pole by Rugao City. Photographer / reporter Xu Dawei

The layout of Rugao new energy automobile industry is led by the land Ark Project. In 2012, Rugao was determined as the only new energy vehicle industrial base in Jiangsu Province by Jiangsu Provincial Economic and Information Commission, and Rugao began to make great progress in the field of new energy automobile industry.

In November 2013, Kangdi electric vehicle project settled in Rugao, with a total investment of about 1.2 billion yuan. After completion, it will form an annual output of 100000 sets of key parts of new energy electric vehicles, and hopes to build a micro bus system that uses pure electric vehicles and provides time-sharing car rental services for citizens.

Wang Xiaoxiang, a new energy vehicle industry development consultant of Rugao Municipal Peoples government, told China News Weekly that Kangdi electric vehicles used to produce low-speed electric vehicles (commonly known as elderly walkers) and used lead-acid batteries instead of lithium batteries. Kangdi automobile wants to upgrade into a micro electric vehicle. Because it has no production qualification, it finds Geely as a backdoor. Geely wants to cooperate with Kangdi and use the brand of Kangdi because of the limitation of product series. After the two sides cooperated, they were eager to find a production base. They found Chen Xiaodong, then mayor of Rugao, and the three parties immediately agreed. In this way, Kangdi group, which mainly produced low-speed electric vehicles but did not have the qualification of automobile production, realized backdoor production in Rugao after being acquired by Geely Automobile.

In order to grasp the policy outlet of the new energy vehicle industry, Rugao established Rugao new energy vehicle demonstration, promotion and application leading group in 2014, with the then mayor Chen Xiaodong as the leader and Ma Jinhua as the Deputy group leader, member of the Standing Committee of the Municipal Committee and Deputy Secretary of the party working Committee of Rugao Economic and Technological Development Zone. According to people familiar with the matter, Ma Jinhua is the main promoter of Rugao new energy vehicle project.

However, the development of land ark and conti automobile project is not satisfactory. Land ark Jiangsu project has been questioned by public opinion because of illegal enclosure. Before, land ark only had bus production qualification. After obtaining the first new energy vehicle production license in the field of low-speed electric vehicles, land ark announced to enter the field of new energy passenger vehicles, but the plan has been in a stranded state.

Land ark initially estimated that after the completion and operation of the project in 2020, the annual production capacity of 200000 vehicles, the output value of 30 billion yuan, and the profit and tax of 7.5 billion yuan will become another flagship enterprise in Nantong. Today, however, the ark has been reduced to being auctioned by creditors. On the Alibaba auction website, the head office of Ping An Bank released a transfer of creditors rights of Jiangsu land ark new energy electric vehicle Co., Ltd. in June 2020, according to which, land ark still owes Ping An Bank 112.3 million yuan in principal and 1.257 million yuan in interest, and is unable to repay, so the company has stopped production at present. Due to the failure to recover the money, Ping An Bank is transferring 24% equity of Jiangsu land ark new energy electric vehicle Co., Ltd. and 280000 square meters of industrial land.

The asset selling point is described as follows: there are only 19 new energy vehicle production qualifications in China, with independent intellectual property rights in the core technology of electric vehicles. It is the first high-tech enterprise to independently engage in the research and development and production of core technology of electric vehicles, with products covering buses and logistics vehicles.

In the new energy vehicle fraud and compensation incident broke out in 2016, Kangdi electric vehicle was found to have serious fraud behavior. Since 2017, Kangdi group and its subsidiaries have been sued for arrears of payment for goods to suppliers, and the equity has been pledged and frozen. In May 2018, the national development and Reform Commission issued a notice requiring the Kangdi Jiangsu project to be rectified. It pointed out that the capital strength of Kangdi electric vehicle group, the investor of Kangdi Jiangsu project, was not strong, and the sales revenue and profit continued to decline in recent three years. In 2017, the asset liability ratio was as high as 83%, and the liability ratio of Kangdi Jiangsu was as high as 92.3%, requiring the rectification of the project.

In 2016, Pang Qingnians youth Automobile Co., Ltd. established the youth yaman vehicle production enterprise in Rugao Development Zone to produce hydrogen fuel logistics vehicles. In Rugaos eyes, hydrogen energy is another outlet. Three hydrogen fuel cell buses jointly developed by youth automobile and Baiyin energy were put on Rugao No. 102 bus line for operation. However, due to the lack of hydrogen energy and the difficulty of replenishing, the three hydrogen fuel vehicles were unable to generate enough electricity, so they had to stop and go. After only 20 days of operation, they were put on hold. The water hydrogen vehicle scam was finally broken, and the youth car was transformed from a guest of local governments into a hot potato.

Similar to the youth car water to hydrogen scam can have a market, which shows the local governments enthusiasm for introducing vehicle projects. Cao he, President of quanlian auto Investment Management Co., Ltd., told China News Weekly.

For Rugao, the new energy vehicle project has always been a great attraction. Everyone wants big projects! If a car project is completed, the GDP of the whole place will go up to a higher level. Wang Xiaoxiang told China News Weekly that for local governments, the automobile industry has a 1:7 theory to stimulate employment: that is, a position in an automobile company can drive seven jobs in automobile related industries.

Cui Dongshu, Secretary General of the national passenger car market information association, told China News Weekly that the core goal of local governments is to stimulate economic development, and to stimulate economic development, increment must be created, and a new energy vehicle project can have a good conceptual effect on the local government. Based on the calculation of a 200000 new energy vehicle, if the production capacity can reach 100000 units, it means that the project can generate 20 billion yuan of output value. For the government, the achievements are remarkable.

In 2002, Dongfeng Yueda Kia fell to Yancheng, Jiangsu Province, and quickly became the economic pillar of Yancheng. Relevant data show that in 15 years, Dongfeng Yueda Kia has achieved 455 billion yuan of business income, 43 billion yuan of tax revenue, more than 8000 direct employees and more than 30000 indirect employees. This makes many cities around envy.

If the local government wants to build a decent vehicle production base, it needs at least several billion yuan to drive the local automobile industry chain to gradually expand. Cao he said.

In fact, whether it is the introduction of Xiaopeng automobile in Zhaoqing, Weima automobile in Wenzhou, Zhejiang, or sailin automobile in Rugao, they are all local No.1 projects. Most of these new energy vehicle projects exist in the form of new energy automobile industrial park, and they are blooming everywhere.

According to the information disclosed on the official website of Rugao Economic and Technological Development Zone, Rugao new energy automobile industrial park was established in 2009, and has been successively approved as provincial new energy vehicle production base, new energy vehicle characteristic industrial cluster, new energy vehicle and parts Industrial Park, with a planning area of 20 square kilometers. The park has well-known new energy vehicle enterprises at home and abroad, such as land ark, jilicondi, Jinbei Rugao branch, Yingtian group and youth yaman, as well as nearly 30 supporting enterprises of new energy vehicles such as shuangqian tire, Baiyin energy, zehe new energy, longneng lithium battery, Yankang auto parts and Chuangyuan electrochemistry.

The goal of the industrial park is to achieve the goal of 8132 by 2020, that is, the annual production capacity of the whole vehicle will reach 800000 vehicles, the output value will reach 100 billion yuan, the number of enterprises with taxable sales of more than 10 billion yuan will reach 3, and the number of enterprises with the taxable sales of more than 10 billion yuan in the service industry will reach 2, so as to create the most competitive in China with new energy vehicle manufacturing as the leader, key parts industry cluster as the support and hydrogen fuel powered vehicles as the leader The new energy automobile industry base is to build a modern automobile industry city in Yangtze River Delta integrating automobile manufacturing, commerce, finance, culture, service and sports.

The introduction cost of vehicle project is high, which also means that the government faces a high risk of failure. From the land ark to the youth car and then to sailin automobile, the whole vehicle projects introduced by Rugao fell down one after another, completely falling into the quagmire of car making. At the beginning, the dream of building a modern automobile industrial city in the Yangtze River Delta has become increasingly dim.

The hidden worry of making cars to encircle the land

In order to attract the implementation of new energy vehicle projects, the local government makes every effort to give various preferential conditions. The investment promotion war around new energy vehicles is constantly staged in various places, and the competition is fierce. For example, Qingdao, Shandong Province will give a maximum reward of 100 million yuan to new vehicle enterprises with new energy. Xiaogan City in Hubei Province will give a one-time reward of 50 million yuan to the vehicle enterprises registered in the local production of new energy vehicles after they are put into operation.

A provincial-level development zone in Jiangsu told China News Weekly that preferential policies on land and capital are similar to each other in attracting investment from all over the country, and there is not much flexible space for comprehensive rewards and subsidies, and only services can be provided. For large projects, the top leaders will personally lead the team to negotiate with each other. What they are fighting for is a combination of sincerity and one thing, one discussion. At that time, there were many competing for the sailin project, and the settlement conditions given by all parties were very attractive. In order to let sailin land, Rugao government also spared no effort.

Production qualification and land allocation are the core consideration criteria for the location of vehicle construction projects.

In 2015, the state began to carry out access management for new energy vehicle enterprises. The national development and Reform Commission issued the regulations on the management of newly built pure electric passenger vehicle enterprises. Only the vehicle enterprises that have passed the audit can obtain pure electric vehicle production qualification. After the regulations are issued, from 2016 to 2018, the production qualification of pure electric vehicles is like a golden key, which is a scarce resource. As of 2018, only 15 licenses have been issued by the state.

For the new automobile manufacturing forces, the production qualification of new energy vehicles is a quasi birth certificate. Without qualification, it means that the products cannot be launched. Zhong Shi, an automobile industry analyst, told China News Weekly that the aim of the state ministries and commissions is to set a high threshold for the production qualification of new energy vehicles. It is necessary to clean up the zombie enterprises with licenses. The original qualification will become the filter of the industry.

However, it has become a bargaining chip for the local government to attract investment by helping the new forces to obtain the qualification. Wang Xiaolin told China News Weekly that Rugao citys commitment to settle down at that time included providing automobile production qualification.

Land ark acquired the production qualification of new energy large and medium-sized buses through the governments help to merge local bus factories. In 2017, land ark obtained the 14th new energy passenger vehicle production qualification in China. At that time, the industry generally believed that the brand power of land ark was insufficient, even if passenger cars were launched, the production and sales volume would not be very high. The reason why the land ark can get a license is that it is likely to win the local government card.

Zhong Shi told China News Weekly that there is a game between the national ministries and local governments around the production qualification of electric vehicles. The high threshold affects the interests of the local government, in order to ensure that local manufacturers do not die, only to operate the shell.

Land is another chip for local governments to attract car projects. Whenever a new energy vehicle project is launched, horse racing is a common operation. Sailin automobile landed in Rugao, with a total land area of 2400 mu in phase III and 958 mu in phase I. The land Ark Project is planned to be 1200 mu, with 432.93 Mu occupied in the first phase.

Some media selected 16 new forces of car making and found that the project land of 8 enterprises is more than 1000 mu, and the land for other 8 projects is between 100 mu and 950 mu. And these large areas of land, many are sold below the market price.

Cui Dongshu told China News Weekly that the new forces of car making obtained a large amount of land at low prices through enclosure. Because of the rapid increase in land value, even if they cant make cars, they can also make profits by selling land at high prices.

Huatai Automobiles land game in Ordos, Inner Mongolia, is the most typical. Ordos has always been eager to introduce the automobile industry. For this resource-based city, industrial transformation is not easy. In order to attract projects, only land and coal mines can be paid.

At the price of 10000 yuan per mu, Huatai Automobile obtained 6000 mu of land and two coal mines presented by matching. When Chery Automobile landed in Ordos with an investment of 20 billion yuan, the government also equipped a 1.66 billion ton coal mine.

But on the other hand, Huatais car manufacturing business is unable to help the mud on the wall.. Huatais auto sales have been questioned by the industry as full of water. From 2008 to April 2011, the actual license plate number of Huatai Automobile in the Ministry of public security was 45000, while the data reported to CAAC was up to 183000, a difference of more than three times. In 2011, due to the long-term serious falsification of Huatais sales data, CAAC once refused to accept the reported data of Huatai Automobile, and its sales figures were replaced by 0.

Since February 2018, Huatai Automobile has been in arrears with employees wages, involving more than 1000 people. The latest announcement also shows that the total overdue amount of Huatais direct liabilities is 3.892 billion yuan, of which the litigation amount is 3.892 billion yuan.

Up to now, Huatai motor is still wrangling with the Ordos government over the property right dispute over the 6000 mu central urban land.

In Mr. Zhongs opinion, the new forces of car building are eager to enclose the land, and there is another small Jiu Jiu: they hope to take advantage of the enthusiasm of the project just landed, so as to avoid the poor development of the project in the future, and the governments enthusiasm is not there, it will be difficult to obtain land again.

For the local government, due to the lack of land approval authority for a long time, the land has become the weight of arbitrage for manufacturers. Once the project is yellow, the local government has to face a lot of disputes about the land mess.

In July 2017, Huatai Automobile Tianjin factory assembly line. Figure / IC

Government becomes venture capital

In the future, it will be very good if three or five new car makers can survive. Li Jinyong, vice president of the automobile chamber of Commerce of the all China Federation of industry and commerce, predicted to China News Weekly that a reshuffle of the industry was inevitable.

However, the new forces of Chinas car making, which have been looking for money, are no longer favorite in the capital circle. The whole auto market is oversupply. With the decline of subsidies, some new forces of car making have exploded one after another. Many business models have been falsified. The capital market is also aware of the risks of the new energy vehicle industry, and the investment is becoming more rational and prudent. Zhang Wei, chairman of cornerstone capital, even said that there is no new energy car making enterprise in China worth investing in.

Investors compare the new power of investment in car making to gambling horse. With the acceleration of shuffling, the situation is gradually clear, and investors will only bet on the leaders. Wang Xiaoxiang, a consultant for the development of new energy automobile industry of Rugao municipal government, calls the new force of car making into the bureau the mouse in the bellows. It is difficult to get rid of the new force if it cant get financing.

If the new forces want to survive, they cannot do without the support of local governments. The local government has also developed from the traditional land and resources to real gold and silver support. In fact, the local government is becoming the biggest financing channel for the new forces of car making.

Zhong Shi, an analyst in the automobile industry, believes that it is precisely by taking advantage of the local governments urgent economic development mentality that the new forces of car making are bound up with state-owned assets and carry out risk sharing with the local government, which makes it difficult for the state-owned assets to withdraw once problems occur in the car making projects.

At the end of June this year, according to CCTV financial report, byton automobile, the representative of the new car making force, fell into business crisis and owed its employees salaries for four months. In addition, the rent of beitengs Shanghai office was removed in April, and Beijings office was removed on June 17. Recently, the Nanjing factory was shut down due to the lack of water and electricity.

Nanjing Economic and Technological Development Zone is also worried about the huge losses that byton may bring to the park, we are also afraid that we have invested tens of billions of yuan. Once it turns yellow, it will be a waste of water. Who will pay the debts? Not only this debt, but all the debts of the company Park Management Committee staff said in an interview with the media.

This makes the local government in the new energy vehicle project recruitment, in fact, become venture investors. A number of auto industry insiders told China News Weekly that it is difficult for local governments to identify the technical background of new car making forces, and speculators like sailin are hard to stop. More importantly, the local government often lacks the awareness of risk management and control, and the investigation of the project background is also a mere formality, which increases the risk of project explosion and loss of state-owned assets.

In order to control the risk of vehicle project, some local governments are also introducing risk control mechanism. When Shanghai introduced Tesla project, it signed a gambling agreement with it. Tesla gets loans in China at an annual rate of 3.9% and land at one tenth of the market price. The Shanghai municipal government requires Tesla Shanghai Super factory to pay taxes of 2.23 billion yuan per year from the end of 2023. If this condition cannot be met, the corresponding land must be returned. At the same time, Tesla has to invest 14.08 billion yuan of capital expenditure in five years.

More attention has been paid to the hand in hand between Weilai automobile and Hefei state-owned assets. People in the industry believe that Weilais financing is essentially a high performance gambling equity financing. According to the previous agreement, Weilai automobile and three strategic investors of state-owned assets, Hefei Construction, state investment and investment promotion and Anhui high-tech industry, invested more than 10 billion yuan in Weilai China in five times. This shows the careful and careful planning of state-owned investment in Hefei.

In the view of industry insiders, Hefei venture capital Weilai automobile provides another operation idea for traditional government capital investment. The introduction of potential stocks such as Weilai automobile in Hefei is equivalent to introducing a potential industry growth pole for itself in the automobile industry, and also purchasing a set of engines for the upstream and downstream of its automobile industry. The bet on agreement is similar to the Curse of the project, which is equivalent to the configuration of a set of insurance mechanism.

Experts believe that there are many irregularities in the investment implementation process of some local governments, and the impulsive political performance and lack of binding power system magnify the risks of the project, so more careful system design is needed for follow-up.

New hoop curse

Jiangxi Province was criticized by the national development and Reform Commission for its overheated investment in new energy vehicles.

Jiangxis new energy automobile industry has the highest investment enthusiasm in China, but its capacity utilization rate is significantly lower than the national average level. According to relevant data statistics, among the 18 new energy vehicle investment plans introduced in Jiangxi Province from 2015 to June 2017, 7 of them did not have any commencement information after they announced the signing of the contract, while more than half of the 11 projects started were not completed on schedule.

Ren Wanfu, an automobile industry analyst, said in an interview with the media that the investment boom in new energy vehicles is not unique to Jiangxi Province. Some cities without any basis of automobile industry chain hope to build high-rise buildings on the ground, resulting in many chaos of blind investment promotion. However, the development of the automobile industry can not be achieved overnight. The sound industrial chain and talent reserve need to be accumulated for a long time. Once the project investment fails, it will be more difficult for the local government to deal with the aftermath.

Most of the new car makers died on the beach, but the local government still has to clean up the chicken feathers. In addition to debt and employee pay, another problem for local governments is how to deal with idle land. Chen Jianjun, deputy director of the Publicity Department of Rugao municipal Party committee, told China News Weekly that the sailin auto project involves more than 900 mu of land, and Rugao will do its best to minimize the losses. The same hard to start the Ranger Huzhou automobile factory, also left a large area of land.

According to Zhong Shi, an auto analyst, local governments generally invest in land and factory buildings, which speculators cant take with them. If the project fails, the land and plant resources can be used for other purposes, and the losses in this respect will not be too heavy. Cui Dongshu told China News Weekly that after the project exploded, it was the banks who really became the catcher. The money invested by the government came from the banks, which would become the invisible bad debts of the banks

In order to put a new curse on all localities and avoid frequent new energy vehicle explosion, the regulations on investment management of automobile industry will be implemented from January 10, 2019. Regulations on investment management of automobile industry sets many thresholds for new energy vehicle manufacturing forces to enter the market. Among them, the requirements are as follows: in the provinces where new independent pure electric vehicle enterprise investment projects are located, the utilization rate of automobile production capacity in the last two years is higher than the industry average level of the same product category; the existing investment projects of independent pure electric vehicle enterprises with the same product category have been completed and the annual output reaches the construction scale.

Jia Xinguang, chief analyst of China automotive industry consulting and Development Corporation, told China Newsweek that the national development and Reform Commission has delegated the approval power of new energy vehicle projects to the provincial level, and requires that the capacity utilization rate of new energy vehicle projects must meet the standard, which makes the provincial government strengthen the quantity control and pay attention to balance. In addition, local governments should pay more attention to the feasibility of the project. In the past, the local governments attitude towards the project was that the more the better, now the provincial government often chooses to support one or two key projects. Now if one project is yellow, the NDRC is likely to cut off all the others. Jia said. Many experts suggest that after the authority of qualification approval is delegated to local governments, local governments need to strengthen the supervision and early warning of new energy vehicle production capacity. Source: China News Weekly, author: Xu Dawei, Su Jiede, editor in charge: Wang Xiaowu_ NF

Jia Xinguang, chief analyst of China automotive industry consulting and Development Corporation, told China Newsweek that the national development and Reform Commission has delegated the approval power of new energy vehicle projects to the provincial level, and requires that the capacity utilization rate of new energy vehicle projects must meet the standard, which makes the provincial government strengthen the quantity control and pay attention to balance.

In addition, local governments should pay more attention to the feasibility of the project. In the past, the local governments attitude towards the project was that the more the better, now the provincial government often chooses to support one or two key projects. Now if one project is yellow, the NDRC is likely to cut off all the others. Jia said.