“American Factory” Conquers the Market and Hollywood Cao Dewang Heads to the Oscars

Cao Dewang once said, life is like a play, the world is big, the stage is high and low, each wonderful. He said he was just a general character, performing the stage in general. Perhaps he didn’t think that, just a year after the comments, the “glass king” was about to make his Hollywood debut. The American Factory, based on the narrative background of Fuyao Glass Industry Group Co., Ltd. (“Fuyao Group”), was nominated for the 92nd Academy Award for Best Documentary.

The factory owner, the hero behind the story, Cao Dewang, was also dubbed by netizens as the only Chinese this year to be shortlisted for the Oscars, and is believed to be the first Chinese entrepreneur to appear in Hollywood with his entries.

The 74-year-old, who was very calm before his trip, told First Financial that the trip was mainly in support of directors Steven Bognar and Julia Reichert, “who were too hard to shoot.” As for the result, I am a Buddhist and will not be excited or upset about winning or not, it is important to be the process. ”

1/4 U.S. cars use Fuyao glass

The “American plant” is located in Dayton, Ohio, in the rust belt of the Midwest, and was assembled by General Motors of the United States until 2008. The financial crisis hit the Detroit auto giant hard, shutting down the plant and laying off thousands of local workers.

In 2014, Cao Dewang transformed Fuyao Group’s first U.S. plant and its first flagship overseas plant into a 180,000-square-meter glass design and manufacturing plant on his big customer, GM’s former plant. The plant, which opened in 2015, now employs more than 2,300 people locally. After going into production in October 2016, it turned a profit in just one year, making it the world’s largest single car glass factory.

At present, Fuyao Group has four manufacturing facilities, two value-added service centers and a sales center in the United States. As of Last August, the group had invested about $1 billion in the U.S., employed nearly 3,000 workers, produced 4 million sets of autoglass a year at u.S. factories and one in four U.S. cars used Fuyao’s car glass, according to documents exclusively disclosed to First Financial by Fuyao.

“Several (U.S.) factories are competitive, profitable, and the U.S. business continues to grow well, and we have high hopes for them.” Cao Dewang, chairman of Fuyao Group, said in an interview with First Financial in New York that He also revealed that Fuyao Glass accounted for 30% of the market in the United States.

Fuyao Group’s mid-year report showed that from January to June 2019, Fuyao Glass USA Co., Ltd. had revenue of 1.91 billion yuan and a net profit of 150 million yuan. The company told First Financial that the financial data of Fuyao Glass USA Ltd. combined the financial sits at the Dayton and Illinois plants.

Customer bears 2/3 tariff costs

However, due to the complex international trade situation, Fuyao’s imports from China to the United States of america’s production materials are subject to tariffs, the original U.S. business’s financial performance can be better.

“Our profits will fall by tens of millions of dollars in 2019 as a result of higher tariffs. It’s my customers who pay two-thirds of the tariff, and if it’s all for me, I’ll be closed. Cao Dewang said.

Asked about Fuyao’s bargaining power in the context of the trade situation, he said that car companies to identify a fixed-point service provider will take years of time and cost, the trained suppliers will not be easily switched, so car companies are willing to bear some more tariff costs.

But Fuyao’s peers were not so lucky.

Cao Dewang said that Fuyao Group divided the industry 70% of the profits, many of their peers are losing money. Before the tariff swell, profit margins of other peers were around 10 per cent, the trade situation made business even worse, while the gross margin of Fuyao products was maintained at more than 30 per cent.

Fuyao Group’s mid-2019 gross margin of both its car glass and float glass was more than 34%.

What’s the secret of asking why the industry first? Cao Dewang slightly mysterious, “I do not know how to do, I am very capable of people, they help me to do.” ”

In the first half of last year, Fuyao Group continued to optimize the domestic and foreign market structure, domestic and foreign revenue ratio from 61.35 percent to 38.65 percent in 2018, optimized for the first half of 2019 51.74 percent to 48.26 percent, that is, the overseas market revenue share of more than 48 percent, the market structure further balanced. Increased resistance to regional risk.

Research and development of automotive-related products “winter”

The global car market, which is experiencing a cyclical downturn, may not be able to reverse the decline for nearly two years.

According to the German Association of Automobile Manufacturers (VDA), global car sales will fall by 4.1m to 80.1m units in 2019, down 5 per cent year-on-year, as a result of repeated trade conditions and the global economic slowdown, the biggest decline in the global auto industry since the 2008 and 2009 financial crises.

“Last year business was not good, money is hard to earn will affect consumption, especially consumer durables, so we look at this year’s auto motive car is relatively light. The autoindustry industry is not unique, and the prosperity of the industry requires prosperity in all walks of life. Coupled with the strong entry of new energy vehicles, consumers are watching. But he said Fuyao had been preparing for the winter three or four years ago and stressed that the transition should be implemented in good health.

Anticipating a decline in car sales, Fuyao decided to take back parts related to the glass of cars that had previously relied on procurement and develop new technologies to supplement the decline in the main product. Long-term planning is to keep upstream productmanufacturing in China, downstream to overseas companies, Fuyao in the United States, Mexico, Germany, Russia, Slovakia have set up plant layout, for Bentley, Mercedes-Benz, BMW, Audi, GM, Toyota, Volkswagen, Ford, Chrysler, Nissan, Honda, Hyundai, Fiat, Volvo, Land Rover and other world-renowned brands, as well as Chinese auto manufacturers to provide global OEM supporting services.

In China, two out of every three cars use Fuyao glass;

Musk is right to open a factory in China.

Cao Dewang’s U.S. plant and Tesla CEO Elon Musk’s China plant are both seen by the industry as a classic example of companies going out to sea.

In the same place, both companies that are bullish on the market continue to make additional investments.

Musk was lucky. At least without facing cultural conflicts and other issues, so to be able to increase the horsepower, from the factory to the car off-line, took less than a year, can be said to run out of Shanghai speed.

“Tesla’s speed of building in Shanghai is not possible in any country. Cao Dewang said.

“I hope Chinese remember this: it’s not you who have the money, it’s your tone that’s preserved.” (Previously poor and white, Chinese left with a hard-working spirit, can compete internationally. He also believes that Tesla’s entry into the Chinese market should be highly valued by the Chinese people, “you do not progress will be crushed by it.” ”

Will the world’s largest electric car maker and the world’s largest car glass maker shine a spark? Cao Dewang has now regained a hint of mystery, “we have a good relationship with Tesla.”