Replacement of coal for heavy truck companies in Ordos


The news of Chery's blasphemy of building 20 billion yuan to build a plant in Ordos, Inner Mongolia caused a lot of controversy in the industry. This will soon become the country's largest off-road vehicle investment project. It is particularly prominent under the name of “Hong Kong City” in Ordos. Before Chery, Huatai, ZTE, Jinggong heavy truck and other car companies have settled in Ordos. What makes the crowded cars so loved by Ordos and dares to cast such a huge bet?

Coal exchange projects

The reporter called Jin Yibo, assistant to Chery’s general manager. He said that Chery had only had contact with Ordos and he has not yet signed any agreement. Regarding the rumors of the 20 billion yuan in investment, Kim said that he was not clear.

Compared with Chery’s insensitivity, Erdos has made a high profile. "Chery's 20 billion yuan project" was printed on the local investment data, and some interested companies also received promotional materials. According to local media reports, in September last year, the leaders of Ordos City met with Yin Tongyue, chairman of Chery Automobile, to discuss the investment in Dongsheng District. In December, Inner Mongolia Autonomous Region President Battal personally met with Yin Tongyue and expressed that he hopes that Chery will accelerate the cooperation with Inner Mongolia and we will actively create conditions and services for Chery's development.

Chery used gold fields in Kaifeng, Dalian and other places. The total investment of Kaifeng Base is 2.6 billion yuan, and it is planned to build a microcar and light truck base with an annual output of 280,000 units. The Dalian Base will invest more than 2 billion yuan in the first phase. It has now officially commenced construction and will be completed approximately one year later. Jin Yibo said that Chery's preference is Dalian's advantage as a port city, and it plans to build it into an overseas model export base.

Compared with the advantages of consumption in Henan and logistics advantages in Dalian, Ordos does not have favorable conditions for the time, but it may become the largest area for Chery’s investment. From a geographical point of view, Erdos is slightly remote, with only a small airport, and transportation is inconvenient. After Huatai has settled here, there is no spare parts supplier willing to follow up and it still suffers from logistics. From the point of view of consumption potential, per capita GDP is said to surpass Ordos in Hong Kong, with luxury car consumption as the mainstream. Independent brands like Chery may not necessarily be favored by others.

So, what does Ordos rely on to attract car companies to “big throws”? A person in charge of parts and components companies that has had contact with the local investment promotion office told reporters: “Ordos has made it clear that foreign companies investing in the region can enjoy a 1:20 internal resource allocation. According to conventional understanding, it is an investment of 100 million yuan, that is, Auxiliary resources of 2 billion yuan can be obtained. For enterprises, the most attractive is nothing but the acquisition of ownership of coal resources."

He said that this is a way for the local government to rely on resources for development. Some large conglomerates entering the industry do not mind cross-industry and multi-industry operations, and they can use part of the coal resources free of charge. Once the transaction is successful, it will choose to operate in the form of coal companies owned by large enterprise groups. Of course, some enterprises that are difficult to obtain coal business qualifications will also choose to get a coal field first, which is equivalent to seizing the opportunity.

"Black gold strategy" value geometry

In Erdos, large companies including Yitai, Yili, Yihua, and Huieng are basically involved in the coal industry. Even the Ordos Group, which produces cashmere products, covers coal, metallurgy, and electricity. In recent years, a large number of auto companies have settled in Erdos, and it is hard to say that they were not attracted by the huge coal resource income. A person familiar with the situation told reporters: “Huatai obtained a coal field in Ordos four years ago and the return was not small.”

Huatai's predecessor was Shandong Rongcheng Automotive Refining Plant in 1991. In 2000, the Hengtong Group from Inner Mongolia entered and absolutely controlled. Hengtong Group started with building, and its founder Zhang Xiugen originated from the car modification. It can be said that Huatai's hometown is in Inner Mongolia, so it was the earliest time to enter Ordos. Although Huatai sold only 50,000 vehicles last year, the benefits obtained from its diversified industrial relations are far from being comparable to those of the automotive business. It is a company that makes a lot of money to make money.

In Ordos, the investment of foreign companies is not less than 4 billion yuan, and you can enjoy the coal quota. This strategy has attracted many large-scale investments, and has also made Ordos' "non-coal industry" rise to 30% in a few short years. Of course, this strategy also has drawbacks. The 4 billion yuan may not be too large for an auto manufacturer. However, for an accessory factory, it is a matter of cost. This is also the main reason why local parts and components have not kept pace.

An industry source stated that it is unlikely that Chery will directly participate in the coal industry. “In the past, coal has not risen to the status of strategic resources. Everyone can do coal business. Now that you have to develop coalfields, you must have deep-processing conversion projects and corresponding supporting facilities. It is not for you to be able to extract the land. Not to mention, With the tightening of national policies, local governments have no authority to approve coal management projects, and the risk is not small."

In the past, Ordos relied solely on coal resources. Although it invigorated the economy, it left a negative impression on the outside world. The introduction of the automobile industry by the government is an important step in the transformation of the city. However, due to geographical factors, it is difficult to attract foreign companies, so the allocation of coal resources as a strategy for attracting investment. "This strategy has indeed attracted many companies, but it also allows companies to find a way out. In my opinion, Chery's 20 billion yuan is not small, and the real investment can be much less than this."

As major auto companies settled in Ordos, the layout of a Motor City is also being formed. For Ordos, anxious for industrial upgrading, this is an opportunity that must be seized. However, under the background of national coal restructuring, the local coal resources have gradually lost their original charm. The “black gold” that once made countless people rich, will soon become a symbol.

"If you are aiming for 'black gold', it will be a bit of a misfortune. There are 20 billion yuan invested in Ordos, why not buy Volvo?"

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