Chapter 370 The whole story

Chapter 370 The whole story

Chapter 370 The whole story
Yu Xing didn't expect that he would hear about Valencia's business model when he came to see Xiaoying.

It sounds unreasonable, but it has been running for three years and has become bigger and stronger.

Valencia welcomed its new CEO Michael in 08, and immediately began to carry out what seemed to be "systematic" operations - Liu Wanying's evaluation of this was just these three words. In just the second year after taking office, he tried to increase the price after acquisition, and continued to replicate the operation after confirming that the route was feasible.

Yu Xing looked through the information Liu Wanying had initially compiled and discovered that last year, not only had it acquired the Lithuanian company AB Sanitas, it had also acquired the Swiss company PharmaSwiss, covering cardiovascular, central nervous system, and anti-infective drugs, mainly targeting the Eastern European market.

The drug price increases of these two companies have already been reflected this year, and perhaps because their position in the market is not monopolistic enough, the current increase is around 40%.

"Why didn't Europe increase that much?" Yu Xing asked, still pointing at the data in the document.

"It's not time yet." Liu Wanying said with a smile, "Looking at the price increase of Dow's drugs in 2009, it was a round of price increase every 6-12 months, so now you see that the two newly acquired companies are only 40%."

Yu Xing: “…”

What is systematic?

Liu Wanying added: "The first thing Valencia did after acquiring the company was to get rid of the original R&D department and then concentrate its resources on sales and price adjustment. Therefore, its market value in 2009 was 15 billion US dollars. Guess what it is now?"

Yu Xing hadn’t seen this in the documents just now. After a moment’s hesitation, he made a bold guess: “10 times? 150 billion US dollars?”

Liu Wanying simply announced the answer: "247 billion US dollars."

16 times!
Then, she quietly admired the astonishment on Boss Yu's face.

After a moment, Yu Xing laughed for no reason: "It's really a gold belt for murder and arson."

"The capital market recognizes this, as long as it can make money." Liu Wanying leaned back and frowned, "The question is, is it feasible to do this? Or, is there any room for us to make a move?"

This operation lasted for three years, from 2009 to 2012, and the market value increased 3 times.

Yu Xing understood what Xiaoying meant. It had been quite some time and the operation was still going on, and it seemed like he was operating within the rules.

He flipped through the materials in his hand and found that it was also a question about rules.

Valencia has still attracted the attention of US regulators. Last year, it was investigated by the US FTC and was required to divest some assets to maintain competition. However, judging from the major drug prices collected so far, there seems to be no effect.

Yu Xing asked: "Has it been investigated by the FTC? Has it been divested?"

"The FTC did not take strong measures after the investigation. I think this may bring more confidence to the capital market. They checked it and nothing happened." Liu Wanying thought, "I didn't find anything specific, only sporadic clues. It's probably that the product line with a very low market share was sold, which is considered to have met the FTC's requirements, but it will not affect its continued systematic operations."

She thought for a moment and continued, "Vanilla cut its R&D department, but used the R&D costs as an excuse to raise prices. I think this is also related to the complexity of the U.S. drug pricing system. There are issues with patent protection and market segmentation, which leaves room for Valencia to operate."

"I consulted professionals in the United States. After the pharmaceutical market is segmented, some of Valencia's drugs have no substitutes and may be regarded as independent markets, thus avoiding certain supervision."

"But what we are facing now is that Valencia's operation must have been conceived by the legal department, including the formal review by the US FTC. Even the investigation results and rectification have come out. What reason do we have to short it?"

Such a price increase seems wrong, but after the review, no major problems occurred, and the stock prices in the capital market also rose rapidly. The entry point of the price of manufactured drugs was not convincing and could not be used as a bargaining chip for short selling.

In this case, there is no point in Guo Shanfeng noticing the clues about Valeria.

Yu Xing poured more tea for Xiaoying and took a sip himself. He suddenly asked, "Why did the independent market evade regulation?"

Liu Wanying explained: "The antitrust law in the United States requires a 'relevant market' to evaluate monopoly behavior. Valencia defines its drugs as specific indications and dosage forms, rather than broader therapeutic areas, which narrows the market scope and can actually bargain with the FTC's monopoly investigation."

Yu Xing understood: "This is what a gangster is like with culture."

"I feel that there are loopholes in this set of supervision. I don't know if they can be filled in the future." Liu Wanying took a sip of tea. "But that has nothing to do with us. The question is still the same. Is there any room for evil short sellers to take advantage of this?"

It seems that there are loopholes, but their loopholes are supported by law and are subject to rule review. Even if subsequent legal changes no longer support them, that is a matter for the future.

Yu Xing thought about it carefully for a while, and suddenly realized something: "Valleyra's target is different from our previous direct scams, including Mitsubishi. Once Mitsubishi's engine fraud is exposed, fraud is fraud. Valleyra..."

Those targets such as Fenzhong and Huaxia Forest who had crossed the mountain and were shorting the enemy could just find the end of the thread and pull it directly, and the opponent would collapse.

Now Valencia has blatantly raised drug prices, and we don't know where to start.

"Yes, I noticed that, too. So, I was hesitant about whether to follow this line." Liu Wanying tapped the desk with her fingers. "It's not a sneaky company. It's a listed company that has been investigated by the FTC. The space under the independent market and patent protection seems unreasonable, but it may still be solid."

She looked at Boss Yu and asked him what he thought: "What do you think? Do you want to follow?"

Yu Xing smoked and thought about this matter.

After a while, he said seriously: "I think we can follow, but not with this kind of drug price increase."

Liu Wanying asked, "Well? It's just a question of drug prices."

"The issue of drug prices has been reviewed. According to the current law, there is no big problem. We can't make a fuss about it. At most, we can use it to spread public opinion. After all, this is the easiest to arouse public attention." Yu Xing said his thoughts, "However, I think Valencia will still have other problems, because its direction is problematic."

Liu Wanying was puzzled: "Guide?"

"Well, this is my feeling when I work on different projects." Yu Xing said seriously, "Do you think that when a CEO like Michael does this kind of radical operation of raising prices after an acquisition, will this company's radicalism be limited to this level?"

"Just like when I started Guiai.com, I managed to hire hundreds of employees in just a few months. If you include part-time college students, the number would be even higher. A normal company would not recruit so aggressively to expand."

"Later, the city manager in Beijing was found to have taken extra money privately, and Zhenai.com found out. It's hard to say that his greed wasn't the result of my rough management style."

"Don't I want to manage every city and every team? Do I want him to embezzle the company's money? Of course I don't want to, but how can I manage it alone? Counting in Zhong Zhiling and Lu Haiying, or even a few more reliable people, how can I manage a rapidly expanding team of hundreds or thousands of people?" "There is no other way. This must be done in a mechanism and it must take time. However, the strategy of Guiai.com is to expand rapidly in order to eventually polish the company into a product to sell. Since such a strategy has been set, all aspects are the result of the spread of the strategy and will not be limited to just one level."

Liu Wanying understood Mr. Yu's considerations, which were purely based on his experience in running the company.

Valencia's strategy is radical, so it is impossible for it to enjoy only the benefits of radicalism while locking in the disadvantages of radicalism.

In other words, price increase cannot be a breakthrough point, and this company must have other breakthrough points.

That breakthrough may have been unintentional, or it may have been intentional due to Valencia's systematic radicalism.

Liu Wanying was convinced: "Okay, since President Yu has spoken, let's check it out and examine the company's situation from all aspects."

Suddenly, she had an idea and said with a smile, "According to what you said, your 'honest car building' is quite interesting."

Yu Xing pretended to be reserved and said, "It's just a little bit of thinking and progress for the company."

Liu Wanying was amused.

Valencia was given case filing treatment at the peak, while Mitsubishi was close to being processed.

Unlike the aggressiveness of Valencia, Mitsubishi has been in decline for some time.

From discovering the problem of engine thermal efficiency to conducting different independent tests and then sorting out the situation, how Mitsubishi committed fraud has been revealed.

Yu Xing was quite confused before. If a company like Mitsubishi that sells cars overseas had falsified engine energy efficiency, how did it pass the inspections of different countries?

It's impossible to connect all the different countries.

Now the answer is very simple. Mitsubishi directly uses the American FTP-75 working standard instead of Japan's own JC08 standard.

Vehicle operating conditions refer to the operating conditions of a vehicle, including acceleration, steady speed driving, deceleration, etc. Different countries have formulated different test operating condition standards based on the actual vehicle usage conditions in their own regions to evaluate vehicle emissions and fuel economy.

For example, the FTP-75 operating standard in the United States focuses on high-speed driving. Therefore, the engine runs in the high thermal efficiency range for a longer time, and the displayed thermal efficiency is higher. The Japanese JC08 standard is biased towards car usage scenarios in urban congestion, so the measured thermal efficiency is low.

As we all know, cars save fuel on highways but consume more fuel in city traffic jams. Mitsubishi uses the American fuel-efficiency data and applies it to Japan's fuel-efficiency standard test for the parameters of some of its engines.

Therefore, the US's testing of Mitsubishi engines is in compliance, and that is exactly the test result under the US operating standards.

However, according to current research, this matter has been going on for at least ten years. The reason why it has not been exposed is that there are differences in policies between different countries. The US EPA requires automakers to submit original data and conduct random inspections, but Japan requires companies to report voluntarily.

Mitsubishi's self-declaration is the parameter water content for more than ten years.

After reading Xiaoying's research report on Mitsubishi, Yu Xing touched the handwriting on it and sighed, "I'm afraid this is not just a problem of different standards. Mitsubishi also needs to do tests internally, and they must test everything. But it has been falsely reported for so many years. A group of people inside must have known about it and must be responsible for it."

Liu Wanying nodded slightly and said with a smile: "I suspect that after this research report is published, the boss of Mitsubishi may bow and resign."

A problem that has lasted for more than ten years will arouse public suspicion, and senior management must be held accountable.

Yu Xing re-read the final conclusion of Mitsubishi's research report. There are differences in standards between different countries, and there are loopholes in the requirements of different countries for car companies...

Well, he suddenly thought of Volkswagen's emissions scandal.

Yu Xing was not clear about whether Mitsubishi had committed engine fraud before, but he remembered that Volkswagen did commit emissions fraud.

By the same token, car companies of the size of Volkswagen and Mitsubishi will have their products undergo multiple tests. This is how Mitsubishi exploited the loophole, so what loophole did Volkswagen exploit?
Yu Xing put down the documents, lost in thought.

Things are getting better after the mountain peak. The Mitsubishi case has been settled. Volkswagen has problems but needs to be investigated. The Del Group, the company that President Xiong contributed to the transfer to the main board a long time ago, has also sorted out clues. In addition, Valencia has aggressively raised prices...

Yu Xing felt like he was about to commit a crazy crime over a mountain top.

He came back to his senses, smiled and said to Liu Wanying: "It's great to pass the mountain. We have made more progress than our Carbon Silicon Group."

Liu Wanying already knew that Boss Yu was going to bring LiDAR into Carbon Silicon Group. Upon hearing this, she said, "Guo Shanfeng will invest in your Carbon Silicon Group once he gets the money. Tsk, it seems that it's still unclear who owns Carbon Silicon Group."

She shook her head again and said as an investor: "I still think LiDAR is difficult to make. There is no application scenario for it. Will it be implemented in ten or twenty years? Isn't it too early?"

“It won’t take 20 years, but it will be implemented and developed within the next 10 years. Well, I’m afraid it will be less than 10 years.” Yu Xing said with emotion, “Technology is developing very fast. Just like we thought the PC era was very good, but in the mobile Internet era, a large number of things have emerged. This is the rolling tide of the times.”

Liu Wanying only felt that there were all kinds of scams in the rolling waves.

"Shareholder Liu, there is a ribbon-cutting ceremony in Lingang next Monday. Do you want to attend?" Yu Xing thought of a small matter, "the landing of Shenhang Mitsubishi."

Liu Wanying shook her head slightly: "No, we have to hide in the dark after crossing the mountain."

Yu Xing reminded: "It's a red falcon, it's a red falcon!"

Liu Wanying smiled and said, "I won't go then. I don't want to steal Mr. Yu's limelight."

Yu Xing didn't think it was a big deal, and it didn't matter whether he snatched it or not.

However, Lingang attached great importance to the landing of Shenhang Mitsubishi and the support from the ministry this time, and gave great courtesy to the founder of Carbon Silicon Group.

Since Carbon Silicon Group entered Lingang, not only Shenhang Mitsubishi, but nearly ten companies in the related supply chain have been established one after another. This is exactly the scenario that Lingang hoped for, and it also hopes that spending a lot of money on a horse's bones can be more resounding.

(End of this chapter)