Chapter 218: My Upper Limit Is $124, 360 and Huawei's Special

Cheng Congwu and Lei Yi were from the same hometown; both were small-town exam grinders who had climbed their way up step by step to high positions.

After finishing his graduate studies, he joined a state-owned enterprise, then jumped into business in '94, and after more than ten years of hard work, finally gained a firm foothold in the digital map field.

In fact, Gao De had three founders. Before Cheng Congwu took over as CEO, the one holding real power was the former CEO Hou Jun, but on the eve of the IPO, infighting among the three never stopped.

In the end, to make sure the company could go public smoothly, Hou Jun voluntarily stepped down from the CEO position.

Cheng Congwu successfully rose to the top, recruited a batch of professional executives through the open market, and sidelined the other founder as well.

Relying on his extremely tough tactics and interpersonal skills, he firmly secured his seat as CEO of Gao De.

But during the transition from PC internet to mobile internet, Gao De's development was far from satisfactory—like a herdsman entering the age of the ocean, possessing decent ability but with no place to use it.

From 2011 to 2012, Gao De Maps' stock price during this period hovered around $12 for a long time, and after the new year it even dropped to $11.4 per share.

To put it bluntly, Cheng Congwu was originally a financial investor, and his ability in business expansion was nothing remarkable.

At the very least, it could not meet Gao De Maps' current development needs.

So, when Liu Zhiping stepped forward and told him that Chen Yansen of Senlian Capital planned to make a strategic investment in or wholly acquire Gao De, Cheng Congwu agreed without the slightest hesitation.

Just as he was sizing up Chen Yansen, Chen Yansen was also secretly observing Cheng Congwu's expression and the subtle movements of his body.

"Stop standing around like posts, sit down and let's chat slowly."

Zhang Chaoyang pulled Cheng Congwu and Chen Yansen to sit down.

His assistant, very perceptive, walked out of the private room and signaled to the waiter that the dishes could be served.

As the original godfather of China's internet, he could even say without exaggeration: "I know the CEOs of all the Fortune 500 companies in Hua Country."

And the facts were indeed so!

Although on the surface he didn't have much interaction with Cheng Congwu, they all moved in Yanjing's business circle and had often gone out drinking together privately.

This was also exactly why Liu Zhiping had insisted on bringing him along.

"President Cheng, please sit!" Chen Yansen said with a smile.

Cheng Congwu gave a slight smile, sat down, and at the same time made sure to greet Liu Zhiping.

Investment and acquisition may look glamorous, but in essence the core process of the transaction is no different from buying groceries.

Chen Yansen wanted to buy low; Cheng Congwu wanted to sell high.

As long as a balance point satisfying both sides could be found, this deal would be considered done.

Gao Weilin and Song Yuncheng sat to Chen Yansen's left and right respectively, smiling throughout, and when there was no need for them to speak, neither uttered a word.

Before long, plate after plate of exquisite cold dishes were brought up.

As the middleman, Liu Zhiping took off his jacket, picked up a bottle of wine, and filled everyone's glasses.

"President Cheng, I imagine you should be clear on the purpose of Senlian Capital's visit. Regarding the sale of Gao De, I'd like to hear your thoughts."

After three rounds of drinks, Chen Yansen set down his glass and asked point-blank.

Currently, Gao De's three major shareholders were Hou Jun, Cheng Congwu, and Xiao Jun. If Cheng Congwu grew too greedy, he would bypass this man and go directly to Hou Jun and Xiao Jun to negotiate.

After all, the three had long since fallen out, and by shareholding ratio, Hou Jun was actually the largest shareholder.

Here it comes!

Cheng Congwu gave a start, realizing they had finally gotten to the main topic. Of course he had the idea of selling too—otherwise he wouldn't have come to the appointment.

"I have no objections. As long as President Chen's offer can move me, Gao De can proceed with the privatization and delisting at any time, and become a subsidiary of Senlian Capital."

Cheng Congwu shrugged and said indifferently.

Before mobile internet had entered its golden development period, although many entrepreneurs felt that PC internet would eventually fade, whether this decline and transition period would last five, ten, or twenty years—no one could say for sure.

But from Cheng Congwu's perspective, the B2B business (in-vehicle car navigation) was getting increasingly cutthroat, while the B2C business showed no signs of picking up. Rather than wasting time, it was better to cash out early.

One must understand that in 2012, electronic maps and navigation software were separate. The maps themselves were free, but the navigation function required payment.

Gao De's pricing was 50 yuan, Qiandu's was 30 yuan, and Careland's was as high as 108 yuan.

But what was the core of the internet model?

Free!

Therefore, whether it was Qiandu Maps or Gao De Maps, their performance in the B2C field was, all in all, hard to describe.

Most drivers preferred to use paper maps rather than pay for electronic navigation services.

"What price does President Cheng want?"

Chen Yansen smiled faintly and kicked the question back.

After selling Fox Tao to Mama Ali and cashing out 12 billion in cash, aside from purchasing equity in Jingdongfang, investing in Sister Chengzi's Phone Factory No. 3, and Kuipao, he hadn't spent much money.

Sister Chengzi Tech had raised $1.35 billion from DST Capital, and Pinle had raised $300 million from Penguin—there was simply no need for Senlian Capital to keep putting money in.

So for Chen Yansen, the funds in his account were more than enough to buy Gao De.

Cheng Congwu narrowed his eyes slightly, glanced at Liu Zhiping and Zhang Chaoyang, thought for a moment, then opened his mouth and quoted a number: "$14."

This figure was both the price he was satisfied with psychologically, and at the same time something he could account for to the investors from Lighthouse Country.

Although the major shareholder held relatively greater say in the privatization process, the final outcome was not entirely decided by the major shareholder.

As long as minority shareholders and retail investors felt the privatization plan was unfair or unreasonable and harmed their interests, they could still file complaints with the regulatory association.

Take the future Jumei Youpin for example: its IPO price was $20 per share, but at delisting it was only willing to offer $7. Its first privatization application was rejected.

The second time it dropped from $7 to $2, and this time it succeeded.

It wasn't that Lighthouse Country's stock investors had suddenly become reasonable, but rather that Jumei Youpin's stock price had plunged so steeply that its market value had shrunk by 96%. If they didn't agree, the shares in their hands would all turn into waste paper.

Chen Yansen slightly furrowed his brow—this price was a 22.8% premium over the market price.

Yet his psychological price was below $13. Clearly, Cheng Congwu's demand had exceeded his upper limit.

"I'm sorry, President Cheng. Senlian's finance department, based on Gao De's revenue, profits, cash flow, market share, user data, and technical patents over the past three years, has conducted a comprehensive assessment. The most reasonable price should be $12, but to show our sincerity, I'm willing to raise the price to $12.4 per share."

Chen Yansen shook his head and directly rejected Cheng Congwu's quote.

"President Chen, Gao De Maps has great market potential and absolutely deserves the $14-per-share premium. Five years ago, Nokia acquired Navteq Maps for $8.1 billion. Although Gao De Maps' coverage area and user base can't compare with Navteq, its future market value will not be less than $5 billion."

Cheng Congwu frowned, suppressed his smile, and answered in a low voice.

He even brought up the case of Nokia acquiring NAVTEQ Maps, trying to persuade Chen Yansen.

"But after NAVTEQ was merged into HERE Maps, its current market value is only 1.37 billion US dollars—just 17% of the original acquisition offer. And HERE Maps covers 174 countries, with a total area exceeding 46 million kilometers. What about Gao De?"

Chen Yansen retorted casually.

Cheng Congwu was instantly at a loss for words; he hadn't expected Chen Yansen to know the market value of overseas competing products so well.

The talking points that should have been used to persuade Chen Yansen had instead turned around and stabbed into his own body.

"Whether it's financing or acquisition, price is the easiest issue to negotiate. As long as SenLian and Gao De both have the intention to cooperate, that's enough."

Liu Zhiping, afraid Cheng Congwu would lose face, laughed and tried to smooth things over.

This sentence was also a reminder to him: go back and think it over, offer a more reasonable price, and only then can cooperation be reached.

12.4 US dollars?

One dollar higher than the market price!

Cheng Congwu mulled it over for a while, then couldn't help but sigh. He quickly adjusted his mindset, raised his glass, and said: "President Chen, to be honest with you, the price of 12.4 US dollars per share is indeed below my expectations. I don't have the confidence to use this number to persuade the other two shareholders."

"12.4 US dollars isn't low. President Cheng might as well try lowering your expectations a bit."

Chen Yansen clinked glasses with him and said with a light smile.

He knew clearly in his heart that if they waited until the second half of 2013, when 3G networks began large-scale speed upgrades and price reductions, and after QianDu and Gao De Maps successively announced free strategies targeting low-end individual users, then trying to acquire at a low price would no longer be possible.

But there was still a year and a half left, so he wasn't worried at all.

Cheng Congwu's face tightened. He drained his drink in one gulp, then quickly changed the subject, bringing up gossip about Lei Yijun and Zhou Hongyi.

Clearly, after realizing the price couldn't be agreed upon in a short time, he decided to move the negotiation process to the formal meeting tomorrow.

"They didn't fight. Before I came, I had the driver take a loop around Chaoyang Park. Reporters, though, I saw plenty."

Zhang Chaoyang said with a grin.

"President Zhang, you don't know this—the two of them were right at the East Fifth Gate intersection of Chaoyang Park. When the patrol officers got there, those two guys had already gone off to a boxing gym."

Liu Zhiping burst out laughing, paused, and said: "Guess who won in the end?"

"It must be Zhou Hongyi. Small guy, explosive temper, definitely hits hard in a fight." Zhang Chaoyang thought for a moment, striking a pose of serious commentary.

Cheng Congwu already thought it was absurd enough that those two had arranged a fight, but he didn't expect Zhang Chaoyang and Liu Zhiping to also be placing bets.

"Most likely Lei Yijun. After all, Zhou Hongyi is nearsighted—smash his glasses first, and Old Zhou can only take a passive beating afterward."

Chen Yansen said with a mischievous grin.

"You went to the scene?" Liu Zhiping was slightly stunned and instinctively followed up.

The actual situation was pretty much exactly as Chen Yansen described.

Zhou Hongyi had practiced Tai Chi and judo, while Lei Yijun, relying on his long arms and legs, gave his opponent a brutal physical education lesson.

Gao Linwei and Song Yuncheng exchanged glances, barely holding back their laughter. Liu Zhiping's and Zhang Chaoyang's assistants weren't much better off either, each covering their mouths and chuckling.

This meal stretched from the afternoon onward.

Liu Zhiping turned his gaze to Chen Yansen, asking for his opinion.

Chen Yansen nodded, not refusing.

He saw through Liu Zhiping's intention. Since the other party wanted to go, he naturally had to give him face.

Meanwhile.

The moment Lei Yijun stepped through his front door, he hurriedly took ice cubes from the freezer and pressed them against his face.

"Damn, that bastard really hit dirty!"

Lei Yijun looked at himself in the mirror—his right cheek swollen and red, as if he'd come down with mumps, his face a full circle fatter—and couldn't help cursing under his breath.

Just then, the phone on the table suddenly rang.

Chen Yansen?

Lei Yijun glanced at the caller ID, but didn't think much of it. He pressed answer and said: "President Chen, what's up?"

"I'm in Yanjing. I've arranged to go to a bar tonight with Liu Zhiping, Zhang Chaoyang, and Cheng Congwu from Gao De to relax. President Lei, do you have time? Come join us."

Chen Yansen invited.

Looking like this, if I go, won't I just get laughed at?

Lei Yijun gave a wry smile and politely declined.

"President Lei, then I'll visit your company tomorrow." Chen Yansen said with a smile.

Lei Yijun actually wanted to say next time would be fine too, but when he heard Chen Yansen mention there was cooperation to discuss, he immediately nodded and agreed.

After saying that, Chen Yansen hung up the phone.

It wasn't that he wanted to see Lei Yijun make a fool of himself—he really did have cooperation he wanted to discuss with Xiaomi.

Sister Chengzi Phone Factory No. 3 would go into production next week. By then, the combined monthly capacity of Factories 1 through 3 would reach 6 million units.

But the total online sales of Sister Chengzi C1, C2, and D1 had, nearly twenty days after launch, dropped to an average of 130,000 units per day—a decline of over seventy percent compared to the sales pace of the first week.

Additionally, the No. 4 super factory in Luzhou was also in intense preparation. Once it entered the production stage, the total monthly capacity would exceed 10 million units.

Sister Chengzi Phone alone simply couldn't absorb such enormous capacity!

Therefore, Chen Yansen wanted to chat with Lei Yijun about snatching Xiaomi's phone OEM business away from Inventec.

Lei Yijun put down his phone and quietly mulled over Chen Yansen's purpose.

Between Xiaomi and Sister Chengzi Technologies, there had so far been only one licensing cooperation—a memory cleaning algorithm patent. But after the Sister Chengzi C2 launched, he had quickly picked up an important piece of information.

The patents Sister Chengzi Technologies licensed to Xiaomi, Meizu, and OPPO were version 1.0, while the more advanced algorithm cleaning technology had not been opened up to other friendly manufacturers.

Could it be that Chen Yansen had figured it out and was preparing to license patents to third-party phone manufacturers?

On the other side.

Zhou Hongyi returned to a villa within the Second Ring Road, his face covered in injuries. He'd made up his mind: he'd go to the company once his wounds had healed.

This Tai Chi is useless, and Judo is no good either!

As soon as they started in the afternoon, the two began throwing Wang Ba fists.

Zhou Hongyi's glasses were smashed instantly; at that moment, he could only see Lei Yijun's blurry figure, but luckily he landed a punch on the other guy, so he didn't come out worse off.

The grudge between the two was now thoroughly settled.

Sitting on the sofa and pondering for a long time, Zhou Hongyi suddenly stood up; he felt that Lei Yijun had not been wrong about one thing: he should not have sought out Haier, but should have gone to look at old communication industry brands like Huawei and ZTE.

Thinking of this, he dialed Yu Chendong's private mobile number.

After clarifying Zhou Hongyi's intentions, Yu Chendong did not think much about it and agreed to the cooperation request for the 360 exclusive phone.

Although Huawei was in a critical period of transformation, an exclusive phone was not impossible to make; just pick a sub-brand name, and that would do—it could make money without affecting Huawei's brand image.

The two hit it off immediately, and Zhou Hongyi took the opportunity to propose visiting Huawei.

Since he had already turned against Lei Yijun, Zhou Hongyi thought: the exclusive phone must be made, and the 360 phone must also be built!

(End of this chapter)