On the afternoon of June 19, the news that Qi Yumin, the former chairman of Brilliance Auto, was arrested by the Chaoyang City People’s Procuratorate ignited the market.
According to the Liaoning Supervision WeChat official account: “The People’s Procuratorate of Chaoyang City recently made a decision to arrest Qi Yumin on suspicion of bribery, embezzlement of public funds, and abuse of power by state-owned company personnel.”
The action was very fast. Qi Yumin was just expelled from the party four days ago.
Since last year, Qi Yumin and Brilliance Group have been embarrassed on all sides. The shortage of cash flow, the default of bank loans, trust and insurance fund debt plans, continued to explode, triggering more than 20 Brilliance creditors to collectively ask for opinions.
The Liaoning Provincial Government initiated judicial reorganization of Brilliance to solve the debt problem, but was unable to recover. On November 13, 2020, Brilliance Auto was filed for bankruptcy and reorganization by Gezhi Auto.
On the third day after being applied for reorganization, Brilliance Group confirmed that it has constituted a debt default amount of 6.5 billion yuan in total, and a total of 144 million yuan in overdue interest. According to the 2020 semi-annual report of Brilliance Group’s bonds, Brilliance has total assets of nearly 200 billion yuan and liabilities as high as 132.844 billion yuan.
In the six months since it was filed for bankruptcy and reorganization, so far, Brilliance Auto has not made any progress.
As the first company in China to go abroad and listed on the New York Stock Exchange, Brilliance Auto’s past is not unsatisfactory, but after a thousand sails, it is mentioned again, but only 130 billion debts and the light hidden by BMW are left. . Why did Brilliance fall into such a situation?
01 Yang Rong defeated
The rise of Brilliance is inseparable from the key figure Yang Rong. It gives the industry the impression that it has always been a long-sleeved dance in the capital market.
The history of Brilliance Automotive can be traced back to the state-owned Northeast Highway Administration Automobile Repair and Manufacturing Plant established in 1949.
In 1959, the renamed Shenyang Automobile Manufacturing Plant successfully trial-produced “Julong” trucks, which opened a new chapter in the production of automobiles by the eldest son of the Republic.
In 1988, Shenyang Jinbei Automobile, a large state-owned enterprise in Northeast China, tried to reform the shareholding system and issued preferred stocks worth 100 million yuan to the whole society at 100 yuan per share. However, the reform was hindered. In more than a year, less than 30,000 yuan was raised, and Jinbei Auto faces the risk of capital breakage.
At the critical moment, Yang Rong appeared. On July 22, 1991, he bought shares of Jinbei Auto for 46 million US dollars and became a major shareholder. Subsequently, the joint venture company Shenyang Jinbei Bus was formally established, with Yang Rong holding 25% of the shares.
Soon after, Yang Rong arranged a key share swap of 30 billion yuan, expanding the shareholding ratio to 51% and becoming the absolute controlling party of Jinbei Bus. Behind all this, it was for overseas listing. Then, Yang Rong registered a shell company for acquisitions in Bermuda, Brilliance China, as a financing tool for listing in New York.
In October 1992, Brilliance Auto was listed on the New York Stock Exchange and raised US$72 million, making it the first Chinese company to successfully go public on Wall Street.
Wall Street was a sensation. The Wall Street Journal said in its report: “This is a symbolic event. Perhaps starting today, China has truly integrated into the game of capitalism.”
The market is also bullish all the way. Brilliance Auto’s IPO price was US$16 per share at the time, and it is expected to issue 5 million common shares. But the stock order volume was as high as 60 million shares at one time, which was almost 12 times the issuance. 34 minutes after the opening, 870,000 shares were traded at $20 per share.
With strong capital operation capabilities, Yang Rong succeeded in creating a “Brilliance Auto” with at least 4 listed companies in New York, Hong Kong, Shanghai, and a large number of non-listed companies in the following ten years, with assets of 30 billion. Department” Empire. Brilliance China is the future of the “Brilliance Empire” in Yang Rong’s mind.
In 2000, when Brilliance China announced its results, its sales revenue was 6.3 billion yuan, the light bus market share was 60%, and its after-tax profit was a record 1.8 billion yuan, second only to Shanghai Volkswagen and FAW-Volkswagen in the automotive industry.
In 2002, Brilliance China’s first-generation Zhonghua sedan was officially launched. This mid-to-high-end sedan became the only self-owned brand model capable of challenging the joint venture mid-to-high-end sedan at that time.
For this car, Brilliance Group has invested a lot of money and resources, hired BMW designers, integrated a variety of exquisite craftsmanship from Japan and Germany, and even the chassis has been tuned by Porsche. This car paved the way for the future cooperation between Brilliance and BMW.
In the same year, the joint venture between Brilliance and BMW was approved, and in May of the following year, the joint venture between Brilliance China and BMW Group—BMW Brilliance was formally established. And just as Brilliance is about to make another glorious occasion, the company has changed.
On March 11, 2002, the Ministry of Finance issued (2002) No. 5 Letter, affirming that all assets of Brilliance are owned by the state and directly allocated to the Liaoning Provincial Government. This became the fuse for Yang Rong to break with the Liaoning Provincial Government, and the equity dispute with Brilliance has become more and more troubled since then.
In May 2002, Yang Rong went to the United States quietly with his travel passport; in June, he sold all his 79.01 million shares of Brilliance China and was officially out.
After a series of equity disputes, Brilliance fell into a slump. In 2004, Brilliance China’s profit dropped from 1.8 billion yuan four years ago to 48.6 million yuan. The decline was so dramatic that it seemed like a world away.
In 2007, the board of directors of Brilliance Auto announced that Brilliance Auto was delisted from the New York Stock Exchange, ending its 15-year journey to the United States for listing.
02 Autonomously trapped
On December 29, 2005, Qi Yumin, then the deputy mayor of Dalian, suddenly received a notice from the Organization Department of the Liaoning Provincial Party Committee that he should report to the Provincial Party Committee the next day and take the post of chairman of Brilliance Automotive Group on the next day.
On the day of his tenure, there was a rare rain and snow in Shenyang. Qi Yumin, who originally planned to drive there, had to temporarily change to a train. On the way, he sent a text message to his sister: “I was in the rain and snow, with an indescribably complicated mood, and went to a strange city and a strange unit to do a strange job.”
Brilliance, which Qi Yumin took over, is on the verge of bankruptcy. At the end of 2005, Brilliance Group had accumulated losses of 3.2 billion yuan in the past three years, and the factory almost ceased production.
After taking office, one thing Qi Yumin did was to immediately blow up the rockery that Yang Rong had spent millions of dollars to build, and bid farewell to the past. At the same time, Brilliance and Rover and Renault stopped their projects; they sold their cooperation with GM to SAIC; and Yang Rong invested heavily in the Zhonghua car project. Qi Yumin changed his strategy and started a low-end route.
Qi Yumin swiftly launched a price war on the Zhonghua sedan. The only Zunchi model at that time was reduced to 110,000 for 130,000 and 140,000 for 170,000. The second new car, Junjie, which was launched soon, was directly priced at 100,000. Within. The price war has brought direct sales. In 2006, the total sales of Zhonghua cars exceeded 58,000.
According to China’s economic and information technology reports, Qi Yumin often chose Brilliance’s press conference location in the Great Hall of the People in those years. Many people think that Brilliance, including its own brand Zhonghua sedan, will rise within two or three years.
However, in 2009, Brilliance China suddenly announced that it would sell the Zhonghua sedan business to Brilliance Group for a price of 494 million yuan, and the funds obtained would be used in the joint venture between Qingbus and BMW.
The accusations were coming, and some people pointed out angrily that Brilliance China is abandoning China and advancing BMW. The reason is that Brilliance China has almost no right to speak in the cooperation with BMW.
In the few months when BMW Brilliance was first established in 2003, the company’s financial rights, administrative rights, and sales rights were all controlled by Brilliance. However, due to the lack of experience in operating high-end brands in Brilliance China, sales of BMW Brilliance were dismal in the first few years. According to the 2003 annual report of Brilliance China, BMW Brilliance lost 250 million yuan in half a year. According to data from China Association of Automobile Manufacturers from January to November 2004, BMW Brilliance continued to lose 349 million yuan.
In order to get BMW out of the trough as quickly as possible, Qi Yumin chose to repeatedly give in. In the following three years, BMW continued to seize power from Brilliance. In addition to financial rights, sales rights, marketing, advertising, brand communication, and channel management, BMW was all controlled by BMW. Take control.
The tilt to the joint venture sector has allowed BMW Brilliance to gradually open up the Chinese market, but the development of its own brands has gradually declined. For example, by changing technology in the market, Brilliance introduced BMW’s engine production line, but did not invest energy in research and development in terms of chassis, engines, gearboxes, etc. As a result, the three independent brands of Brilliance China, Huasong and Jinbei, which lack core technical support, are gradually at a disadvantage in market competition.
According to Benban Finance, the Brilliance Group currently has 6 vehicle manufacturers, 4 listed companies (Brilliance China, Shanghai Shenhua, Jinbei Auto, Xinchen China Power), in addition to more than 160 wholly-owned, holding and equity companies. Although the business involves parts, auto finance, new energy and other fields, its main revenue and profits still come from the manufacture and sales of complete vehicles.