Yixin Jiangdong: You will not die if you lose money in the cold winter, but you will die if your cash flow is cut off | bursaslot online, angka hongkong keluar, asiacasino 88 link alternatif

Jiang Dong, Executive Director/President of Yixin Group

In June this year, six months after landing on the Hong Kong Stock Exchange, Yixin Group made a strategic transformation. Used car trading, which was originally a key business to support valuation, was separated from the listed company system.

The reason for the split, according to Yixin President and Executive Director Jiang Dong, is mainly because the second-hand car business is in a long investment period. Losses at this stage will affect the financial performance of listed companies, and it will also prevent the second-hand car business from participating in the competition among mainstream used car e-commerce companies without any worries. Because "underwater" Guazi and Renrenche do not have the pressure of stock prices, they dare to spend money.

Yixin was founded in 2014. It is a direction for Bitauto to explore strategic transformation. It focused on automobile finance in the early days. Before the IPO, Yixin completed a total of three rounds of financing, many of which were endorsed by high-quality strategic capital, including Tencent, JD.com, Baidu, Bitauto, and SF Express founder Wang Wei.

Starting from auto finance, Yixin gradually expanded its business boundaries to second-hand car transactions, acquired Kanche second-hand cars, and integrated them with Yiche's original second-hand car business to form a new brand "Taoche". Whether the story from financial back-cutting to trading can be recognized by investors in the secondary market was once the biggest suspense before Yixin's IPO.

Half a year after Yixin, Uxin was also listed on the New York Stock Exchange. Neither Yixin nor Uxin's performance in the capital market is particularly optimistic. In addition to the two companies' own reasons, this year's capital environment may also have a great impact. The market value of technology companies in the secondary market has generally fallen by one-third.

In the economic downturn, new car sales, which serve as a "wind vane", have experienced a historic decline. However, Jiang Dong said that the impact on second-hand cars was limited. This is mainly because the number of new cars in China has remained above 20 million for many years, and a certain proportion of second-hand cars will inevitably be released during the replacement cycle. This trend is unstoppable. The ratio between new cars and used cars in the United States is 1:2.6, while in China it is 1:0.3. The market potential is huge.

Although the second-hand car industry has not experienced the expected explosion in the past few years, Jiang Dong believes that the structure of transactions has undergone significant changes. This year, used cars have transitioned from a seller's market to a buyer's market, which is an important signal. In the seller's market, the car dealer who controls the car source is the most critical factor in the transaction. In the buyer's market, the role of the Internet platform in diverting traffic for car dealers and improving the consumer experience is reflected.

Jiang Dong believes that Taoche, which was spun off from Yixin, can get rid of its constraints and better participate in the next competition. Along with this adjustment, Taoche will also have a round of market launch plans. Although he disagrees with the business philosophy of some peers who have no concept of cost at all, the brand’s focus on second-handThe value of low-frequency transactions in cars has become a consensus in the industry.

“We pay more attention to the balance between brand, revenue and cost.” Jiang Dong said.

The following is an excerpt from 36Kr’s exclusive interview with Yixin Executive Director and President Jiang Dong:

Split

36Kr: What strategic adjustments has Yixin made since its IPO at the end of last year?

Jiang Dong: When Yixin went public, our idea was to build an Internet trading platform that would extend from auto finance business to trading. So we acquired Kankanche and put Yiche used cars into the listed company system. But when we moved forward with our business this year, we found that second-hand cars were suffering particularly large losses, and we were unable to compete with mainstream second-hand cars within the listed company system. Because it has no worries and can spend whatever it wants.

So in June this year, we separated the second-hand car business and developed it independently. Keep the direct leasing and trading of new cars in Yixin, and promote the "Drive away" brand alone. Position “Che Tao” for second-hand cars.

36Kr: Why have used cars failed to get rid of losses over the years?

Jiang Dong: One is that marketing and brand building require a lot of advertising investment. Second, C2C transactions, including Uxin’s B2C, all face a problem. Business relies on people, and personnel costs are relatively high.

36Kr: How does Yixin do in the market?

Jiang Dong: Yixin Finance targets the financial needs of the C-side. The trading venues are in 4S stores, second-hand car trading markets, or comprehensive stores. They are relatively fixed and do not require too much market expenses.

We have not invested much in the second-hand car business this year. We only separated Taoche from the listed company system in June this year. Facing the current economic situation, the company also has a process of discussion and decision-making. We will definitely invest in it in the future because branding is very important for used car transactions. Guazi spends a lot of money to build its brand, which I think is justified.

36Kr: Why is the brand important to used cars?

Jiang Dong: Second-hand car trading is a very unreliable business in China. There is information asymmetry, and consumers think that the second-hand car market is just scalpers, with bald heads, big gold chains, and tattoos. We have conducted follow-up interviews with some clues before and found that 15 out of 30 of them did not buy a second-hand car because they bought a new car. When asked why they bought a new car instead of a second-hand car, most of them thought the water was too deep and were worried about being deceived. Therefore, credibility is still a crucial factor in second-hand car transactions.

36Kr: In the past few years, what impact has your advertising had on the market?

Jiang Dong: I think the growth rate of second-hand cars depends on many aspects, such as migration restrictions, consumer mentality, vehicle holding time, overall ownership, precipitation rate, and of course some brand factors. However, the influence of brands on consumers is a slow process. It is a long cycle and will not be effective so quickly. The continuity and effectiveness of advertising are still important and will bring premium prices in the future.

36Kr: The market cost of melon seeds and edamame has almost reached 2 billion, and Uxin has also reached the level of 1 billion. Will Yixin also invest on this scale?

Jiang Dong: If I had money, I would come up with 5 billion. But the problem is that China's primary market is not very optimistic. In winter, everyone’s first priority is to survive.

36Kr: What is the current capital environment like?

Jiang Dong: All VCs and PEs are looking at projects and then don’t invest. I saw a friend the other day, and I asked them how many months their cash flow would last, and he said one month. I said, what are you paying for? Sometimes borrowing money at high interest rates. Did I say the interest rate is 20%? He said 36%. It is relatively safe to maintain cash flow for 18 months in the future, and maintaining cash flow for December is the bottom line.

Barometer

36Kr: What do you think of the current economic cycle and its impact on the automobile industry?

Jiang Dong: The bubble will eventually burst. If it doesn’t burst in 2018, it will still be a question of whether it bursts in 2019. This year, consumption has plummeted since the Spring Festival. Car sales data statistically fell slightly, but we communicated with some 4S store groups and found a double-digit decline. Cars are a barometer of economics. Because they are expensive and consumption cannot be done, the expensive ones should be cut off first. You can rent a car, you can take Didi, there are many solutions.

36Kr: The dealer group seems to be particularly sad this year?

Jiang Dong: It has something to do with the strategy of the OEM. If you continue to reduce the volume, the OEM will not lose money, but you will. But there is nothing we can do. For new cars, OEMs are the makers of the rules of the game. Therefore, new car dealers will never become big because they cannot get pricing power. You can get pricing power for used cars.

36Kr: What impact will the decline in new cars have on second-hand cars?

Jiang Dong: Fortunately, China’s new car sales have remained at 20 million for many years. It has been seven years since China surpassed the United States to become the largest automobile market. I think new car sales may have hit a ceiling. Passenger car sales last year were 25 million units, and it is difficult to maintain an annual growth rate of 7%, 8%, or 10%.

But for used cars, it is not affected by the decline of the entire economy. As long as there are new car ownership, second-hand car transaction volume will definitely increase. The number of new cars in China is 200 million. If the normal precipitation rate is 8%, it would be 16 million. The annual replacement rate in the United States is 18%. Moreover, the proportion of new cars and second-hand cars in China is too low. The United States is almost 1:2.6, and China should be 1:0.3. It's a completely inverted ratio. So in theory, although the economy is not good, it will still grow because your foundation is too low.

36Kr: There is a saying that used cars have transformed from a seller’s market to a buyer’s market this year?

Jiang Dong: From the end of last year to the first half of this year, the entire second-hand car industry has transformed into a buyer's market. After your 200 million is piled up, some of it must be replaced. Second, consumption concepts may also be upgraded. The cars I bought in the past would have been driven for eight or ten years before being scrapped, but now the younger generation may often replace their cars.

36Kr: What impact will market changes have on second-hand car e-commerce?

Jiang Dong: In a seller's market, there is a problem with your Internet platform, because he (car dealer) can sell without you. He has a car, and cars are scarce. But when it turns into a buyer's market, you find that the role of the Internet platform is particularly obvious.

The same goes for consumers. When you're a seller's market, consumers never get a good experience. But when you enter the buyer's market, everyone pays more attention to brand integrity and service experience. After doing it well, I think the number of consumers will increase. Therefore, I think that the Internet platform occupies an increasingly higher proportion and controls the entrance to the entire transaction, which is inseparable from the transformation of the market from sellers to buyers.

Model battle

36Kr: What do you think of the melee and model battle among second-hand car e-commerce companies in recent years?

Jiang Dong: I think it’s pretty good. The entire industry needs this. 3. Five years ago, the only way to buy a second-hand car was to go to the trading market and get scammed by scalpers. The result of competition is that customers enjoy better experiences and more accurate information and services. No matter how you compete, you must eventually solve problem C and make consumers willing to buy cars from you. Whoever solves the problem wins. It doesn’t matter what C2B, B2C, or C2C.

36Kr: Guazi has recently transformed, from a C2C model to opening a store?

Jiang Dong: There are some successful C2C companies in the industry, such as Lianjia. The house cannot be moved, so the agent needs to show it. And cars are chattels, and you can keep them all in one place. Lianjia has opened 8,000 stores and employs tens of thousands of people. Why can real estate support an industry? Because the order price is expensive. The charge is 5,000 for a car and 50,000 for a house. Determined by the attributes of the industry and the magnitude of the assets, only this industry is suitable for C2C.

36Kr: So the transition to offline is the correct route?

Jiang Dong: I think it is a necessary transformation. It requires 100,000 people to do a 1 million 2C transaction. How to manage 100,000 people? How to deal with the problem of employee flying orders? But it is difficult to order from a store.

36Kr: What are the risks of the store model?

Jiang Dong: First of all, you have to have money to open a store. Second, after opening a store, you have to spend more money. Because we need to increase the storage capacity of the supply chain. If you open 50 stores and each store has an average inventory of 50 million, the inventory will be almost 2.5 billion. From store opening to inventory, 4 billion has been invested. You will find that this industry is a super capital-intensive industry.

Hoarding cars is a very big challenge in China. It is basically impossible for a loss-making company to get credit from a bank. He can't use leverage to solve supply chain problems, he can only use capital to solve them. I think it's a huge problem. Because you have at least 500-600 million US dollars, which you can’t touch in your car. Your money is limited. We are raising people and advertising here, and there is constant negative cash outflow. If you deposit funds into goods, you will have no money in two days.

36Kr: Using big data algorithms to price and collect cars more efficiently than traditional methods?

Jiang Dong: I think that is a false proposition. Gome Suning was doing very well when it opened its stores ten years ago, and there was no algorithm at that time. Big data always plays the role of icing on the cake, and it is your store operation capabilities that help you in times of need. Big data is not that magical. Experience can solve big data problems, but big data may not necessarily solve experience problems. No matter how well you do big data, I guess it’s useless if your employees are flying orders every day.

36Kr: Why can the CARMAX model be successful in the United States?

Jiang Dong: CARMAX pricing is indeed accurate. However, car transactions based in the United States are very transparent, and new car prices are relatively stable. Manheim auctions 9 million vehicles every year. For me, I don’t even need to look at CARMAX’s pricing. I just look at Manheim’s auction prices every day. That’s a very accurate price to B. Add five points to get to C.

36Kr: Renrenche has recently tried to open a store. They have cooperated with Didi. What will the future look like?

Jiang Dong: Second-hand car trading is a big enough market. In fact, you don’t needto rely on a platform at all. After relying on the platform, your business direction will undergo some strategic deviations. The platform provides you with sales volume, but the resources you need to support the platform are not as simple as you think.

Everyone is doing finance

36krypton：GoSince the beginning of this year, everyone has been trying to do new car finance. How is it going now?

Jiang Dong: In the United States, the leasing ratio is still quite high, but the United States is a real leasing company with many high-quality customers. In China, more than 90% of those with a 10% down payment are customers who cannot afford to pay. This is completely different from the United States, which may cause some asset quality problems.

Their core problem is that he is not here to lie, but his ability to pay may be too poor, and the default rate will increase in the future. P2P's 60% interest rate and 20% non-performing rate are very profitable. Your interest rates are 16%, 17%, 18%, and your costs may be 10 to 11%. Your defective rate cannot be too high.

36Kr: How has the auto finance industry developed in recent years?

Jiang Dong: I startedpaying attention to second-hand car finance in 2013. Our interest rate for second-hand car loans is 18.88%, and there is not a penny of rebate. In order to sell cars, the car dealer wants to kneel down and beg us to provide him with finance. In just three or four years, there were 10 finance people kneeling in front of every car dealer. In the past few years, finance has been overheated because everyone found that all transactions are loss-making and only finance makes money.

36Kr: After Uxin went public, everyone said that finance accounted for a relatively high proportion, a bit like Yixin?

Jiang Dong: I think we should be more realistic and live in the present. You see, all transactions are losses, while finance is a profit. But the problem with finance is that you may be able to make profits, but you can't solve the cash flow problem. Your profit is settled with a loan cycle of 24 or 36 periods, but your transaction and advertising expenses, and your cash outflow are one-time.

For a company's operations, cash flow is more important than profit. Loss will not make a company die, or die slowly, but cash flow will make it die quickly.

36Kr: The models of Taoche and Uxin are similar. How to optimize them?

Jiang Dong: We think Uxin is doing pretty well. Uxin is a role model. I admire the spirit of Internet companies that dare to fight hard and dare to try and make mistakes. But I also strongly disagree with the business method that has no concept of cost at all. I come from a traditional industry, and we pay more attention to the balance between brand, revenue and cost.

My request for them is to improve human efficiency. I don’t want you to make money, but it must be balanced. If there is a balance, the first thing is to control personnel and improve human efficiency. We will not spread 10,000 people across the country. What kind of business do I need? 10,000 people. I don’t think this is worth it. We must constantly improve human efficiency, increase lead conversion rate, and increase financial penetration rate.

36Kr: In the past few years, second-hand car e-commerce has been booming. Why does it feel that the whole market is still very fragile?

Jiang Dong: I think it is unrealistic for this market to explode. But you find that the entire market and everyone's redistribution have undergone earth-shaking changes. The increase in volume may not be obvious, but the volume that originally belonged to the second-hand car trading market has been taken away by the platform.

36Kr: Is the amount taken away by online platforms large?

Jiang Dong: Very big. The car dealer was sad. Platforms like Uxin have little impact because Uxin empowers car dealers. But things like Guazi and Renrenche are revolutionary, so their influence will be greater. Including Taoche, used car home, and more and more information publishing platforms are online. The natural advantage of attracting customers in the second-hand car market is gradually disappearing.

36Kr: When will the inflection point of the used car industry return?

Jiang Dong: It’s hard to say. like 10 yearsEveryone saidbefore that the prime time for used cars has come, but it hasn’t come in 10 years. Or how do you define the prime time for second-hand cars, explosive growth, 20 million, 30 million, equal to new cars? I don't think it's realistic either. However, the business structure of used cars has changed. Market dominance has become store dominance and Internet platform dominance. This is what is happening in reality.

[Source: 36krypton]