Evergrande’s acquisition of FF shares was included as a case, and was characterized as an overseas investment led by the Chinese government to obtain patented technologies in specific industries.

FF’s knife thrown at Evergrande “301” received

The dispute between Evergrande and Faraday Future (hereinafter referred to as “FF”) has recently seen a dramatic scene. On November 20, U.S. time, the Office of the United States Trade Representative (USTR) updated the "301 Investigation Report", and Evergrande's acquisition of FF shares was included as a case, and it was characterized as an overseas investment by an enterprise led by the Chinese government. to obtain industry-specific patented technologies.

According to Xinhua News Agency report, on November 22, Beijing time, Ministry of Commerce spokesperson Gao Feng said that China has noticed the recent update of the "301 Investigation" report by the United States and expresses serious concern about it. The report makes new groundless accusations against China, bases rumors and ignores facts, which is completely unacceptable to China.

Evergrande also told the 21st Century Business Herald that Evergrande’s investment in FF is a purely commercial act and has been submitted for approval in accordance with relevant legal procedures in the United States. Information provided by it shows that Evergrande Health submitted an application to the Committee on Foreign Investment in the United States (CFIUS) on March 9 this year and received formal approval from CFIUS on June 18. According to reporters, the main function of CFIUS is to review foreign investment transactions to ensure that such transactions will not affect U.S. national security. The "301 Investigation Report" updated by

writes, "After Evergrande paid US$800 million, a conflict occurred between FF and Evergrande. According to a press release issued by FF, the conflict was mainly because Evergrande delayed the payment and prevented FF from paying the amount." The purpose of obtaining other financing is to obtain control of FF and all intellectual property rights. "

Recently, FF disclosed the content of the lawsuit it filed in the California court in the United States and the previous arbitration documents of the Hong Kong International Arbitration Center, which detailed the disputes between Evergrande and FF. The beginning and end of the conflict. The reporter learned that the relationship between Evergrande and FF began to show cracks in August, and now it has basically broken down. FF’s current characterization of Evergrande is that it is a “stealer of control and intellectual property rights.”

An industry analyst living in the United States told the 21st Century Business Herald reporter that although the "301 investigation report" seems to be consistent with FF's accusations against Evergrande, FF may have been used by the US government this time. This will also lead to FF's situation becoming extremely embarrassing and in a dilemma.

The dispute over control and intellectual property rights has been nearly five months since

realized the shortage of FF funds in July. According to FF Vice President of Finance Michael Agosta during the arbitration, as of September 26, 2018, there was only US$18.1 million in cash left in FF’s bank account.

On November 12, Jia Yueting held a strategy meeting called "Faraday Future Evolutionary" in the United States. At the meeting, Jia Yueting told all FF employees that the primary reason for FF’s tight cash flow was Evergrande’s default. Jia Yueting also said that after September this year, he realized that Evergrande’s true purpose was to gain global control of FF. “The reason why Evergrande seized control of FF was to seize FF’s global intellectual property rights.” Matthias, the new R&D director of

FF, also said, “After the painful lessons and reflections of this crisis, we have clearly realized the real purpose of investors’ intention to seize control of FF and global intellectual property rights. We must not use the accumulated experience over the years to The core technological achievements fall so easily into Two days after the strategic meeting, more than 250 FF minority shareholders filed a class action lawsuit against Evergrande Health in the Los Angeles Superior Court, accusing Evergrande Health, Xia Haijun and Peng Jianjun of trying to obtain the property through fraud. Take FF control and core intellectual property rights.

It is reported that these shareholders who initiated the lawsuit are old employees who enjoy FF equity. In this regard, FF stated that this was a spontaneous act by shareholders and had nothing to do with the company. Evergrande responded on November 18 that it would take all necessary actions to defend the rights of the company and the company to protect the interests of the company and shareholders.

Currently, FF has submitted nearly 2,000 global patent applications, and nearly 400 have been approved. In the view of Jia Yueting and FF, Evergrande's role has been reversed. It has changed from the original "white knight" to the "barbarian at the door" coveting FF's core technology.

Director of DCCI Internet Research Institute Liu Xingliang told the 21st Century Business Herald reporter that the United States included Evergrande’s investment in FF in the “301 Investigation Report” because Evergrande actually left a handle for the U.S. government. The investigation report quoted a press release from Evergrande, which stated, "Investing in FF is to bring the most advanced new energy technology to China and contribute to the transformation of China's automobile industry from a big country to a powerful one."

in Evergrande Group On the official website, the reporter saw a press release published on June 28 titled "Evergrande officially takes over FF and the world's top new energy vehicle technology lands in China." It does mention that "FF's world-leading new energy vehicle technology from the United States can be simultaneously applied in China, which is equivalent to Evergrande fully introducing the world's top new energy vehicle technology into China, which will help the transformation and upgrading of the Chinese automobile industry, enhance core competitiveness, and promote China's transformation from A big automobile country is moving towards a powerful automobile country. "

However, Evergrande believes that the company's entry into FF is just a strategic layout and a step for Evergrande to enter high technology. The above-mentioned news also mentioned that Evergrande stated at the beginning of the year that it would actively expand high-tech industries, focusing on new energy, artificial intelligence, robotics and other fields.

So when Evergrande invested in FF, was it to gain control and intellectual property rights? It can be seen from the announcement issued by Evergrande Health on June 25 that FF adopts an AB share structure. Each share held by FF’s original shareholders represented by Jia Yueting has 10 voting rights, while the shares held by Evergrande Each share has only 1 vote. This also means that although Evergrande has become FF's largest shareholder, Jia Yueting still has absolute voting rights.

It can be seen from this that Evergrande did not actually ask for more control at the beginning of the investment. As for the gambling agreement signed by both parties, it is also based on the premise that FF cannot achieve mass production of FF91 in the first quarter of 2019, so that Evergrande can obtain the reversal of voting rights.

From the perspective of Evergrande, there are two possibilities behind the gambling agreement: First, Evergrande believes that Jia Yueting cannot fulfill his mass production commitment, so it intends to seize FF through this agreement; second, because of Jia Yueting’s personal credibility issues, Evergrande You must protect your investment.

According to Jia Yueting's current judgment, Evergrande should be motivated by the first purpose. However, Jia Yueting should know better than anyone whether FF91 can be mass produced. If he knew that mass production was impossible, would he still sign the agreement? What's more, this explanation is contradictory to Evergrande's later agreement to sign the supplementary agreement with FF, because if Evergrande was just trying to seize power, then it could have just stood aside when FF encountered financial difficulties in July.

In July this year, FF proposed to ensure the mass production plan of FF91, which would require approximately US$663 million in funds before the end of the year. Therefore, FF asked Evergrande to pay the remaining funds in advance. On July 18, Evergrande, FF and Jia Yueting signed a supplementary agreement.

This time, Evergrande has issued a series of payment conditions, the most critical of which is that Evergrande must strengthen its control over FF China, and that Jia Yueting must transfer his FF equity and control over FF. This has also become the core content of the subsequent arbitration between the two parties.

proposed these conditions. Is Evergrande trying to "seize power" faster? First of all, it must be clear that the signing of this supplementary agreement must have been approved by the three parties, and Evergrande did not propose to transfer the equity to itself, but allowed Jia Yueting to choose the transferee.

In the arbitration letter, Evergrande mentioned the reasons for letting Jia Yueting give up control, including that Jia Yueting is a dishonest person subject to execution in China, and it is difficult for FF actually controlled by him to do business in China. Therefore, what Evergrande hopes is that Jia Yueting can truly hand over equity and control rights, but allows him to continue to serve as FF global CEO.

Jia Yueting mentioned in a recent speech that he never thought about giving up control of FF, but he still signed the agreement. Subsequently, Jia Yueting did resign as a director of FF-related companies and transferred all FF shares he held to his friend Lian Bossert. However, whether the agreement requires a nominal withdrawal or an actual withdrawal, Jia Yueting and Evergrande obviously have different understandings.

Is Jia Yueting giving up on the Chinese market?

A few days ago, Jia Yueting also announced a decision to return FF81 to the United States for production. "The goal of FF81 is to mass-produce FF91 in more than a year after mass production, and then introduce it to China in due course depending on the situation, return to our original strategic plan, and truly realize the Sino-US double home strategy."

"Implementing Sino-US dual home games" , is a strategy proposed by Jia Yueting when he founded FF in the United States in 2014. When Evergrande took a stake in FF, FF also made it clear that the FF91 would be produced in the United States, while other subsequent models would be produced in China.

html On August 14, Evergrande Faraday Future Smart Car (China) Group was officially unveiled at the Guangzhou Evergrande Center. This is also the main operating entity of FF in China. According to the announcement issued by Evergrande Health on the same day, Evergrande Faraday Future Smart Vehicle (China) Group will be fully responsible for FF’s technology research and development and all production and operation management in China.

At the same time, FF has also formulated a long-term strategic plan: in the next ten years, it will build five major R&D and production bases in East China, West China, South China, North China and Central China. The target is that the annual production capacity plan will reach 5 million in ten years. vehicle.

However, these plans are all based on sufficient funds. At present, there is a question mark whether the FF91 can be mass-produced smoothly, let alone subsequent models. The reason why Jia Yueting proposed to transfer FF81 production back to the United States seems to be sending a signal to avoid the Chinese market.

Is Jia Yueting going to give up the "China and the United States dual home court" strategy? The answer is obviously no. For any car company, the Chinese market is hugely attractive. FF's competitor Tesla has already begun building factories in China, so how can FF be willing to give up.

But the actual situation is that it is not easy for FF to enter the Chinese market. As we all know, in December 2017, Jia Yueting was listed as a person subject to execution for breach of trust because his personal and LeTV debt issues had not been resolved and his other assets had been confiscated. He himself was stranded in the United States and refused to return to China. At the same time, FF China’s foreign exchange account was also frozen.

Today, LeTV, which Jia Yueting abandoned in China, is on the verge of delisting. His personal credit has gone bankrupt. It is almost impossible for FF controlled by him to develop business in China. When

was in arbitration with FF, Evergrande’s lawyer Baker McKenzie stated that he had received a letter from the local government department. In the letter, the government department requested Evergrande to provide further information to evaluate and verify whether Jia Yueting is the ultimate controller of FF China. The department also proposed that Jia Yueting, as the person subject to breach of trust, would serve as FF's global CEO, which would have a serious negative impact on FF's plan to develop its business in China, and recommended that FF shareholders replace the CEO.

In addition, Evergrande tried to communicate with relevant financial institutions in China, hoping to lift the freeze on FF China's foreign exchange accounts, but the financial institutions did not agree because they had many doubts about Jia Yueting and FF.

It has been two full months since September 26, and the US$18.1 million on FF's account may not be much left. Although the Hong Kong Arbitration Center approved FF’s emergency rescue application, allowing it to raise financing of up to US$500 million, so far, FF’s “savior” has not yet appeared.

Jia Yueting said recently, "Due to Evergrande Health's unilateral serious breach of contract, FF has terminated any agreement with Evergrande Health. This means that FF can truly break away from the constraints, develop independently, and obtain independent decisions based on the needs of the company's development stage. Financing and IPO rights. "

He also announced FF's financing plan: FF will complete the first phase of round A+ financing of approximately US$500 million before the first quarter of 2019; complete the Pre-IPO round of financing of US$700 million before the end of 2019; officially launch in 2020 Independent IPO in the United States.

But this is all based on the premise of "survival". Whether FF can obtain new investment now is the key. What's more, Jia Yueting's unilateral proposal to terminate any agreement with Evergrande Health is legally valid and questionable. After all, at the same time he said this, FF filed for emergency arbitration with the Hong Kong International Arbitration Center, requesting the release of Evergrande’s asset mortgage on FF.

It is not yet known whether the "301 Investigation Report" will bring about a turn for the better for FF.However, a person who has had contact with FF told reporters that regardless of FF's voluntariness or not, the "301 Investigation Report" has put Jia Yueting and FF on the opposite side of the relevant parties. If FF uses this to get rid of Evergrande or even obtain funds, then it may be more difficult for FF to enter the Chinese market.

In short, there is not much time left for Jia Yueting.

(Editor: Wang Qingyu)