Our recent piece (MIYOSHI: Electric-vehicle investment a potential growth driver) looked at Miyoshi's 15% investment in a light electric vehicle business in Fujian province. Here we shed some light on the Chinese entrepreneur who set it up.
Chen Yuming is the financier and entrepreneur behind Core Power, a light electric vehicle manufacturing business in Yongan city in Fujian province.
Over lunch recently, in the private room in the canteen of his factory, we asked him how he got to where he is.
His father was an electrical contractor in the 1990s, who had no issues with customer debt because, otherwise, the electricity supply would not be turned on, as the younger Mr Chen wryly noted.
On the job, the elder Mr Chen learned about the construction and real-estate business. In the late 1990s, with his own money and that raised from relatives, he started to develop properties on a small scale in Fujian.
Property sales were booming in China, and the Chens had no problem selling. They rolled the profits from one project into another in quick succession -- in other places such as Henan and Jiangsu.
In 2014, the property market's slowdown became more marked, leaving the big boys such as state-owned enterprises and listed companies dominating the market.
"Before that, I noticed that even some menial workers were already owning two properties. This looked like a bubble and the property boom didn't look sustainable," recalls Mr Chen Yuming.
Wealthy already through his property business, he thought of investing in mines, and checked out opportunities in Papua New Guinea and as far away as Mexico.
"I could have just parked my wealth in the bank and live on the interest. But I am a driven person, and I want to leave a legacy."
It was in Henan, where he had some property venture, that he noticed electric vehicles becoming popular.
"I realised a light electric vehicle is simple in construction compared to a normal petrol-driven car. It's a good and cheap replacement especially for motorcycles as it protects drivers from rain and sun. The electric vehicle business is being driven by growing demand, so it's getting easier to sell them."
Mr Chen decided that the southern regions of China would be his target markets as they were under-served, unlike the northern parts such as Henan.
He commissioned a feasibility study, which gave the thumbs-up to the venture.
In Nov 2013, he incorporated Core Power (Fujian) New Energy Automobile Co., Ltd, and engaged consultants to plan the construction of a factory to produce light electric vehicles.
The location: Cheap land in out-of-the-way Yongan city, about three hours drive on the highway from Xiamen city.
Core Power levelled the hilly parts of 30,000 sq m of land, the equivalent of about 50 football fields.
Core Power, in which Mr Chen then held a 80% stake and an unrelated party 20%, had full funding for the S$40 million capex.
In June 2016, Miyoshi announced it had entered into a JV agreement with Core Power and would take a 15% stake for S$8.8 million.
The consideration comprised S$3.6 million cash and a transfer to Core Power of Miyoshi's entire 55% stake in Green Galaxy valued at S$5.5 million.
Green Galaxy had earlier embarked on a greenfield project to develop electric vehicles in Jiangxi province but Miyoshi and its JV partner decided to abort it because of licensing issues.
Core Power sells cars through its wide network of 71 distributors in 13 provinces (Fujian, Hunan, Jiangxi, Henan, Shaanxi, Yunnan, Sichuan, Hubei, etc).
Still loss-making, Core Power has one big thing in its favour: A lack of competition in the southern part of China.
With Core Power off to a good start (2,200 cars sold in the first five months of this year), Miyoshi is keenly watching and cheering it on, with an objective of raising its stake when appropriate.
Miyoshi has an option to raise its stake up to 49% under a MOU signed between the two parties.
Watch our video for insights into Core Power's factory processes -->