This article was originally posted to the Chinese auto portal Auto.163.com late last week, I put it into my bookmarks with the aim of translating it over the weekend, it didn’t happen of course but life did and I finally had a chance to translate it over lunch on Tuesday. Except the original article had been deleted from the Auto 163 site. Perhaps it cut to the bone too much and it was censored or simply removed, however the article was copied across blogs across China so it wasn’t too difficult to find but lots of information was missing from the copied articles, there were several pieces regarding looting and two safes that were plundered during the dealership rioting in the original document.
“..98, 99, 100, 101, 102, 103…” As the numbers increased Wang Chong Wei’s heart beat increased as well, with 193 ‘corpses’ on his forecourt the 20 year auto industry veteran claimed his heart was bleeding.
Wang Chong Wei believes that cars have a life a life, they bring joy to the owners but on September 15th 193 ‘souls’ were taken in a fire, a 165 of those cars belonged directly to Mr. Wang.
In 2001 Wang Chong Wei and his partners set up Qingdao Cai Gao Group, a company that was focused entirely on the fledgling Chinese auto industry, he noted that the Toyota Camry was selling well in China, then he learned that Guangzhou-Toyota were on the verge of producing the Camry in China, he rushed to hand in his application to become a Toyota dealer and by 2006 he was the first Guangzhou-Toyota dealer in Shandong province under the name of Rui He.
In 2008 Mr. Wang received special permission from Guangzhou Honda to set up a new dealership in Qingdao’s Economic Development zone in Huangdao, for the past four year it exceeded Guangzhou-Toyota’s sales expectations, in 2010 he opened a Guangzhou Toyota dealership next door, that year he was also ranked as the second best performing Guangzhou Honda dealership in China in terms of sales.
So why did he invest in three dealerships focused on Japanese brands? Mr. Wang explained that Toyota and Honda had unrivaled branding and strong product quality, although they failed to capture large market share he continues to believe that Chinese consumers have faith in Japanese brands. “In August and September this year we had strong sales” says Mr. Wang.
On September 14th Qingdao held its annual auto show and told his Toyota and Honda dealerships to go out and sell a minimum of 200 cars during the show period. The show started as per usual, but some people held a boycott Japanese goods event in the auto show halls, the shows organizers fearing for safety during the event ordered Japanese brands to be removed from the show. One of the dealership GM’s was quoted as saying: “We received a notice from the organizers but we wanted to stay, we could have sold more cars.” As the Toyota and Honda team were preparing to pull out on September 15th, they received calls from Huangdao, their dealerships had been attacked.
The dealerships managers knew that Toyota and Honda brands were possibly going to be target for an anti Japan march that was scheduled to happen in Huangdao, they prepared to have their windows smashed at worst and prepared in earnest, the dealerships weren’t even on the march route but protestors apparently diverged from the original route and descended on Toyota. Honda dealership GM Mr Shen Chun Xi was held up due to poor traffic, he kept in touch with people close to the protesting but by the time he arrived at the scene the protest had finished, the dealerships were engulfed in flames.
“If I was there when they were looting and smashing, I would have put up a struggle” says Mr. Shen, a tall and well built individual, he built the dealerships from the ground up and watched burn back to the ground. The factory wanted staff on the ground to take pictures, they had no choice but to lift up their arms and start taking photos with their cell phones.
A month after the event, Auto 163 visited the dealership, journalists described the scene as unreconizable as a dealership. Behind the heavy tarpaulins that covered the exterior, journalists found the barely recognizable carcasses of burnt out cars, their burnt husks scattered all over the floor. It could only be described as an automotive creation site.
Mr. Wang presented his losses to the government. 193 cars, 28 of which belonged to customers, came to a total of 46 million RMB, the building losses came to 33 million RMB, tools and office equipment came to 8 million RMB, the final tally came to 94 million RMB, with losses higher than his registered capital the insurance company were only ready to repay a small amount of the damages incurred. Basically, Mr. Wang had encountered a zero sum event that he did not prepare for.
Mr. Wang is faced with two options, on one hand he can apply for bankruptcy and right off the losses, his second option is to continue with his business, accept the losses and rebuild. After much thought, he chose the second option. Wang explained his choice: “These two business have more than 5000 customers, if we close down then we will have 5000 unhappy customers, we also have 160 employees that need to live and eat.”
Of the 193 cars lost on the day of madness, 28 cars belonged to consumers. One major issue for Mr. Wang over the past month is how to replace the cost, on October 16th sixteen of the car owners received new cars, the rest of the owners are waiting for their deliveries which are expected to come soon.
Mr. Wang has given his 160 employees time off whilst they rebuild, but salaries are cut to 70% of what they were previously, he also has to repay a 1.3 million RMB debt but due to the fire he is unable to repay and is currently renegotiating terms with his creditors. The local government is also assisting Mr. Wang rebuild, on October 18th he received note from local authorities that they will assist in rebuilding the ruined dealerships and are currently talking over responsibility. Mr. Shen remarked, “When we built the first dealership we spent 4 months, the second dealership was built in just a month.” with Qingdao entering winter they aim to have the dealership up and ready by the end of the year, otherwise if building gets delayed they will have to wait until after Chinese New Year.