Everyone knows that the new energy vehicle market is competitive and money-burning, but it is still shocking that it is so radical that it is involved in illegal fundraising cases.
On May 10 and 11, the illegal fund-raising case of Shanghai Beiguang Investment Management Co., Ltd. (hereinafter referred to as "Beiguang Investment") was heard in public at the first instance at the Shanghai Huangpu District People's Court. Zhou Min, the actual controller of Beiguang Investment, Zhu Jiang, the legal representative, and more than 30 middle and senior managers were charged with the crime of illegally absorbing public deposits.
According to Caixin, in this case, part of the funds raised illegally flowed into two new energy vehicle companies, Aiways and Wanxiang. At the same time, several investors quoted statements from the economic investigation department that the amount of money not paid at the time of the incident was more than 13 billion yuan, of which 4.5 billion yuan went to CCI Holdings, 6.3 billion yuan to Wanxiang, and 1.5 billion yuan to Aiways.
The two automobile companies involved are not unknown in the industry. Wanxiang Automobile is a long-established bus manufacturer, founded in 1985 and acquired by CCI Holdings in August 2017. Aiways is a long-established new energy vehicle brand, which has raised nine rounds of financing since its establishment in 2017, with investors including well-known companies such as CATL and Didi Chuxing.
Chen Xuanlin, a key figure in the case, is a second-generation entrepreneur born after 1985. He became the actual controller of CCI Holdings in September 2017, and was the chairman of Vientiane Automobile from 2017 to 2022. He served as the chairman of Aiways Automobile from July 2022 to November 2022. According to statements made by several investors during communications with the economic investigation department, he had fled overseas in November 2022.
In response to the illegal fundraising case, Phoenix.com’s Eye of the Storm called Aiways and Vientiane Auto, but the calls were not answered by press time. On the official website of Aiways, the phone numbers of experience centers in Beijing, Shanghai, Sichuan and other places were either unanswered or unavailable. A local Aiways store owner in Yunnan said, “Many stores are closed and there are no cars to sell.” A person close to Vientiane Auto said that Vientiane Auto is operating as usual and has not been affected by the storm.
How did the money burned by new car manufacturing lead to illegal fundraising?
How did new energy vehicle companies get involved in illegal fund-raising cases?
In this illegal fund-raising case, common industry practices were adopted, namely, registering with a "fake financial exchange", issuing fixed-income products, and promoting them to the general public through sales representatives, in order to illegally absorb public deposits in disguised form.
According to iQiyicha, BG Investment was established in 2015 and is headquartered in Shanghai. It is an equity asset management company under BG Holdings. In the recruitment software, BG Holdings' introduction mentioned that its focus areas include the new economic ecosystem, innovative industrial chain, and it is committed to green energy, general aviation, health care, etc.
According to Caixin, the case involved more than 30 billion yuan in illegal public deposits from June 2018 to November 2022, and more than 10 billion yuan was not paid at the time of the incident. In the introduction of some fixed-term bond products, the issuers are shown as Ai Chi Automobile, Wanxiang Automobile, Guangwei Holdings or affiliates of these three companies. The expected annualized rate of return is about 10%, and the minimum subscription amount is 500,000 yuan.
The reason why Aiways was involved is that new car manufacturing is too expensive.
It had a notable start, led by influential industry leaders. One of the co-founders, Fu Qiang, has served as a senior executive at FAW-Volkswagen, Skoda, Beijing Benz, Volvo and other brands. Co-founder and CEO Gu Feng was the CFO and financial director of SAIC Group. At the same time, it has also received investments from well-known companies such as CATL and Didi Chuxing.
However, the elimination competition for new car manufacturers is too cruel. The products launched by Aiways are not outstanding enough and the product categories are too few. There are only two models, U5 and U6. Only two thousand and three thousand units were sold in 2020 and 2021 respectively, and the performance in car manufacturing is mediocre.
Selling less, but burning more money. Aiways had net losses of 1.597 billion and 1.623 billion in 2020 and 2021, respectively. As of December 31, 2021, Aiways had only 54.64 million yuan in cash, but total debts amounted to 3.359 billion yuan.
Just when Aiways’ capital chain was about to break in 2021, Chen Xuanlin appeared, which also laid the hidden danger for its current predicament.
Although Chen Xuanlin has invested in Aiways since 2017, he is only one of many shareholders. At the end of 2021, when Aiways' capital chain was about to break, Chen Xuanlin injected a large amount of funds.
At that time, Shanghai Dongbai Industrial Group Co., Ltd. (hereinafter referred to as "Dongbai Industrial"), which was actually controlled by Chen Xuanlin, planned to increase the capital of Ai Chi Automobile by 2.5 billion yuan. Later, the media reported that the actual financing of 2.2975 billion yuan of the 2.5 billion yuan was in place, most of which was used to repay suppliers. The source of 1.41613 billion yuan of funds was the direct financing No. 1-8 of the "'Ai Chi Automobile' Direct Financing Plan Series Products" issued by Dongbai Industrial through "Beiguang Investment". This may be the 1.5 billion yuan of funds that flowed to Ai Chi Automobile out of the more than 10 billion yuan that was not redeemed when the illegal fundraising case of Beiguang Investment occurred.
The price of accepting this investment was that Chen Xuanlin replaced Fu Qiang as the chairman of Aiways. The core management team of Aiways also underwent a major reshuffle, with the "Guangwei Group" represented by Chen Xuanlin moving in.
The situation of Vientiane Auto is different from that of Aiways Auto.
Image source: Screenshot of Wanxiang Automobile's official website
Before Chen Xuanlin took control in 2017, Wanxiang Auto had not yet set its sights on the new energy vehicle track. After Chen Xuanlin took control, it focused on the research and development of new energy public transportation vehicles, and developed new products such as new energy logistics vehicles and sanitation vehicles. The funds involved in the Beiguang Investment case flowed into Wanxiang Auto, which may be more like a part of its daily operations.
According to a table of elements of the "Vanxiang Automobile Ruitu Targeted Financing Plan" previously prepared by Beijing Guangtou, the product issuer column is "Shanghai Wanxiang Automobile Manufacturing Co., Ltd.", the purpose of funds is shown as "intended to supplement the working capital of Wanxiang Automobile", and the repayment source shows that the first repayment source is the operating income of Wanxiang Automobile, and the second repayment source is the guarantee compensation of CCI Holdings.
An insider close to Wanxiang Auto told Phoenix.com's "Eye of the Storm" that Chen Xuanlin's operation of Wanxiang Auto was more like a fund operation in his opinion. Wanxiang Auto previously mainly produced buses, and the technical content of bus manufacturing was far less than that of passenger cars. For the market, the more valuable things for such companies are qualifications and land. Before Chen Xuanlin's acquisition in 2017, Wanxiang Auto only had the qualification to produce second-class chassis modified vehicles. Under Chen Xuanlin's operation, it later obtained the qualification to produce complete vehicles and new energy vehicles.
He revealed that Guangwei Holdings, as a shareholder of Vientiane Automobile, had a vice president in charge of Vientiane Automobile. Some of the vice presidents hired by Chen Xuanlin's Guangwei Holdings were former government officials and some were in the real estate industry. When Chen Xuanlin acquired Vientiane Automobile in 2017, he spent less than 600 million yuan. At the end of 2018 and the beginning of 2019, Chen Xuanlin was already seeking to sell the company. At that time, Baoneng Investment Group came to negotiate the acquisition, and Vientiane Automobile asked for 2 billion yuan, but the deal was not reached in the end.
Did they lose 100 million yuan in stock trading? The sudden collapse of a Zhejiang secret wealthy family
In 2017, Chen Xuanlin invested in Aiways and acquired Vientiane Auto to turn to new energy. It can be said that he has set his sights on the lively new energy track.
But, who is Chen Xuanlin?
This is a mysterious identity at present. In 2017, Chen Xuanlin accepted an exclusive interview with a magazine, and the cover title was "Chen Xuanlin: The Making of a Second-Generation Entrepreneur", but the report is hard to find on the Internet, and there is also little information showing the process of his father Chen Yong's rise to wealth.
Before this report disappeared, many articles quoted this report and mentioned that Chen Xuanlin was born in Taizhou, Zhejiang in 1987. His parents sent him to study accounting in the UK. In 2006, he returned to China at the age of 19 because he was optimistic about the domestic stock market. He persuaded his parents to borrow considerable funds to enter the stock market. In 2007, China ushered in a bull market, and the stock market soared to a historic high of more than 6,000 points. In just one year, Chen Xuanlin made a staggering fortune.
Chen Xuanlin Photo source: Internet
After that, in 2017, Chen Xuanlin had his own professional investment company "Guangwei Holdings", which spanned from stock speculation to industrial investment. The company profile of "Guangwei Holdings" on IT Juzi is that it focuses on pan-transportation development, and its main industrial companies are Wanxiang Automobile, Zhejiang Zhongtong Holdings, and Asia United Business Jet. In 2020, Chen Xuanlin's family ranked 173rd on the "2020 New Fortune 500 Rich List" with a net worth of 17.2 billion yuan.
Before the Beijing Broadcasting Investment incident broke, Chen Xuanlin, who had a number of titles, looked like a successful second-generation rich. The incident tore off the fig leaf of his radical expansion.
It is worth mentioning that after turning to industrial investment, Chen Xuanlin's stock trading experience is still big. According to media reports, in 2017, the names of Chen Xuanlin and his business partner Jiang Qiwei appeared on the list of the top ten circulating shareholders of cement stock "ST Lionhead". In that year, Chen Xuanlin bought a total of 5.215 million shares of ST Lionhead, and Jiang Qiwei bought 4.844 million shares of ST Lionhead. The total market value of the two's holdings was about 176.31 million yuan.
The stock experienced a surge and plunge from 2017 to 2018, falling from a high of 20 yuan to 5.34 yuan per share, but the two did not reduce their holdings after the big loss, and held on until Q1 2020, when Chen Xuanlin's holdings were worth only 31.5 million yuan and Jiang Qiwei's holdings were worth only 29.26 million yuan. The two roughly estimated that their losses exceeded 110 million yuan.
This business partner, Jiang Qiwei, may actually be Chen Xuanlin's mother. According to the Judgment Documents Network, in a financial loan contract dispute, when Chen Xuanlin's father, Chen Yong, became the person subject to execution, the real estate located in Wenling City jointly owned by him, the third party, Jiang Qiwei, and Chen Xuanlin was sealed. There are also media reports that Jiang Qiwei is Chen Yong's wife.
Chen Xuanlin’s parents are also present in his capital operations.
Other media reports mentioned that in 2017, Chen Yong borrowed nearly 200 million Hong Kong dollars from a Hong Kong company with a lending license, but did not repay the interest as agreed in the loan agreement in 2020. According to insiders, Chen Yong borrowed the money for his son Chen Xuanlin for business investment and operation.
After Chen Xuanlin was involved in the Beijing Broadcasting Investment incident, the business that Chen Yong had been planning for many years also fell apart.
Chen Yong has been the actual controller of Zhejiang Zhongtong Holding Group Co., Ltd. (hereinafter referred to as "Zhongtong Holding"), which was established in April 1998 with a registered capital of 650 million yuan. It was once the largest local automobile distribution group. According to the official website, the group has more than 30 companies and more than 2,000 employees. Its performance has been among the best in the automobile distribution industry in Zhejiang Province for many years. In 2012, it was also named one of the "Top 50 Dealer Groups in China's Automobile Distribution Industry".
In February 2023, shortly after the Beijing Guangtou explosion, Zhongtong Holdings publicly announced the closure of many dealerships, declaring a "broken capital chain." According to public information, Zhongtong Holdings once represented mainstream brands such as Maserati, Jaguar Land Rover, Audi, Buick, etc. in Taizhou, Shanghai, Shenzhen, Qingdao and other places, with more than 10 4S stores, all of which have been closed.
On the official website of Zhejiang Merchants Asset Management Co., Ltd., in an announcement of the disposal of corporate debt assets in January 2024, Wenling Jinaoda Automobile Sales and Service Co., Ltd., which is actually controlled by Jiang Qiwei, was listed as owing 14.152 million yuan. The guarantors of this debt are Chen Yong, Jiang Qiwei, and Chen Xuanlin. The mortgage is the real estate owned by Zhongtong Holdings in Fanglin Village, Lunan Street, Luqiao District, Taizhou City. The building area is nearly 3,000 square meters and the land use right area is 3,271 square meters. The land is industrial land for transfer.
Involved in an illegal fund-raising case, should Aiways and Vientiane Auto be held responsible?
Currently, Aiways and Vientiane Auto are still on their respective operating tracks and both had plans to seek listing.
Recently, AIWAYS Europe was revealed to be signing a business merger agreement with Hudson Acquisition I Corp., a SPAC listed on NASDAQ, and is expected to be listed on the US stock market through a backdoor listing. AIWAYS may have given up the domestic market and turned to overseas markets. However, Zhang Xiang, a visiting professor at the Yellow River Science and Technology College, said that if the news of the merger agreement is true, AIWAYS will still face great challenges and risks, and now Chinese auto brands are also flocking to target overseas markets.
After Chen Xuanlin, Wanxiang Auto was taken over by businessman Chen Wei. A former Wanxiang Auto employee told Phoenix.com's "Eye of the Storm" that Chen Wei was from Yangzhou, Jiangsu, and had previously worked in the real estate industry, and had connections with Chen Xuanlin.
After Chen Wei took control of Wanxiang Auto, as early as July 2022, he acquired 32.3% of Kehua Holdings' shares by transferring shares and non-publicly issued shares from Kehua Holdings' shareholders, becoming the company's controlling shareholder and actual controller. It was speculated that he wanted to place Wanxiang Auto's assets into the listed company. However, in June 2023, according to Kehua Holdings' announcement, Chen Wei was suspected of manipulating the securities market, and the China Securities Regulatory Commission decided to file a case against him, and the equity acquisition event was terminated.
After the case was filed, there was no news about Chen Wei's current situation. Phoenix.com's "Eye of the Storm" searched the securities and futures regulations database system and found no administrative penalty decision related to Chen Wei.
The above-mentioned former Wanxiang Automobile employee introduced that Shanghai Wanxiang Automobile Manufacturing Co., Ltd. mainly produces new energy buses, and Jiangsu Wanxiang Automobile Manufacturing Co., Ltd. mainly produces logistics vehicles. After Chen Wei took actual control, he tilted resources towards Jiangsu Wanxiang Automobile and intensified the layout of logistics vehicle production.
At present, investors involved in the illegal fund-raising case of Beijing Guangtou are still suing to protect their rights. After the trial of the illegal fund-raising case of Beijing Guangtou on May 10 and 11, an insider said that some investors are still suing Shanghai Wanxiang Automobile Group Co., Ltd. for loan contract disputes in order to recover their investment funds. The case is still under trial.
So, in this case, will Aiways and Vientiane Auto be held responsible?
Lawyer Tang Chunlin, who focuses on the financial capital market, said that this depends on the objective facts and the evidence that can be retrieved.
Although the product information currently provided by investors involves Aiways and Vientiane Auto, and funds have indeed flowed to these two companies, evidence is first needed to show whether the fixed-income products were actually issued by these two companies, or whether others issued them in the name of the company without the company's knowledge.
He said that in this case, if Aiways and Vientiane did not participate in the fund-raising behavior, but only obtained funds from the fund-raisers, it would only be a civil loan or investment behavior. The party that obtains the funds has the obligation to return or refund the funds to the lender.
If the company is aware of it, then the issuer is a joint criminal participant in the illegal fund-raising crime. From a criminal perspective, at least the relevant new energy vehicle companies should bear criminal responsibility for illegal fund-raising, and the unit and the main person in charge should be punished. The main person in charge is defined as the person who plays the main decision-making and organizational role at the time of the incident, such as the chairman, legal person, senior management personnel involved at the time. And if the funds raised are not used as agreed, it may also constitute the crime of contract fraud and fund-raising fraud.
As of now, the case is still under trial.
(Original title: "Zhejiang's hidden tycoon involved in 10 billion yuan illegal fund-raising case! He may have fled overseas, and some funds flowed to two well-known car companies")
