Introduction
Bag holders rejoice, I am one of you! Ideanomics has been an interest of mine for the past few months as they fall into the NEV market something that my research focuses on. Ideanomics or IDEX has fallen under a lot of scrutinies over their business operations, with many traders unsure of what they actually do. In this Deep Dive, I will try to uncover the many mysteries of IDEX also with the enlisted the help of from other IDEX enthusiasts @stonkwolf & @mitch_dirty I hope this report will help answer questions of Ideanomics as shorts/bears and sketchy law firms have clouded many investors minds on what IDEX really is.
ln this Deep Dive I will attempt to answer the following questions:
Who is Bruno Wu (and his wife Yang Lan) and why he is important
What does Ideanomics do?
China’s New Energy Vehicles Market and its Subsidy Program
How China uses Blockchain technology
Breakdown of the May Investor slides/How Ideanomics uses Blockchain in China
Report Summary:
Ideanomics is a blockchain company based in New York that focuses on company operations in mainland China. IDEX leverages government subsidy funds to aid in the development of state-operated businesses and services into a transition into the electric vehicle market. IDEX is also working with its partners to transition China’s current fossil fuel system into a system that will support it’s New Energy Vehicle (NEV) infrastructure with the use of charging stations and advances in battery technology. Bruno Wu a Chinese media mogul is a pioneer in the blockchain movement in China and as China continues to grow its use of the technology I believe what IDEX is doing is only more relevant. With the extensions of government subsidy focused on state-controlled public transportation and commercial equipment (mining) The system, in which IDEX has setup will only grow over time as the Chinese NEV market grows into its goals.
Milestone completed by IDEX
It’s development and management of GT Dollar (used in Thailand in Malaysia worth $70 billion USD)
Signing a three years exclusive contract with China‘s biggest electric bus operator, National Transportation Capacity Co Ltd (NTS). Winning $24 Billion in government subsidies to start blockchain fund
Signing a 10-year agreement with the Mobile Energy Group (MEG) This group of state-owned companies will work toward this conversation of traditional vehicles into electric vehicles. Also, supply 5G and charging need to the market (upgrading China’s current infrastructure.)
Question #1: Who is Bruno Wu and why he is important?
Meet the Wu(s)
Executive Summary:
Bruno Wu and his wife Yang Lan are media moguls in China. Bruno Wu owns the rights of distribution to many American media studios to include Disney, Paramount Pictures, NBC Universal, Fox, and the A&E network. He acquired the distribution rights via his purchase of You On-Demand from Shane McMahon in 2015. The deal stated Bruno Wu would invest $10 million into You on Demand in exchange for all of the rights that Shane McMahon previously held and those rights are currently being held in Sun Seven Stars Investment Group (SSSIG) procession. SSSIG is the largest shareholder in Ideanomics and is privately controlled by Dr. Bruno Wu and his wife.
In 2018, Bruno Wu left Ideanomics as he was appointed Vice Chairman and Secretary-General of the National Committee for China U.S. relations. The NCUSCR’s mission stated on their website is this:
During Wu’s time at the NCUSCR, he worked with Henry Kissinger who was the special advisor to President Nixon. Henry Kissinger became the first high ranking American representative to visit the People’s Republic of China during his secret visit to Beijing in July 1971. Today even at 97 years old Kissinger travels to China to speak with President Xi about the trade relations between the US and China. Bruno Wu’s wife Yang Lan has had Kissinger on her talk show in China in which she is a mainstream personality. The NCUSCR is comprised of a board of directors that are prior US senators, CEO, and other captains of industry.
The NCUSCR releases annual reports that talk about the state of China-US trade concentrating on fair trade between the two nations. In 2017 the NCUSCR started a new initiative (just before Bruno Wu joined the NCUSCR) concentrating on Digital Economy. (blockchain)
The 2018 report also listed investments between the US and China.
Smartrick Observation:
The US invested- High Growth in China Autos
China invested in- High Growth in Transportation
Bruno Wu returned back to Ideanomics in the second half of 2018 and eventually took over as CEO.
(I will breakdown the flawed logic on this graph later)
About Yang Lan
Yang Lan (Wu’s wife) coined Chinese Oprah, is an accomplished media personality in China with her talk shows.
Yang Lan was the first UNICEF ambassador from China (still holds the title)
She was a spoke at the closing ceremony of the 08 Bejing Olympics (also carried the torch), has had Ted talks, and primarily is involved in SSSIG and Grapevine operations.
Note: UNICEF just began to fund startups using blockchain technology as of 2020
Smartrick Verdict: Bruno Wu is a big deal in China
Question 1: Full Report
Sun Media Group (99-06)
In 1999 Chinese Billionaire, entertainment, and media pioneer Bruno Wu and his wife TV celebrity wife Ms. Yang Lan (coined Chinese Oprah) created the Sun Media group. The two media moguls would launch Sun TV the first Chinese historical and cultural channel in Greater China. The two used Yang Lan’s history as a long-running TV personality to launch t. Sun TV had an exclusive agreement with A+E Networks and adapted A&E’s historical and biographic content into Mandarin as well as producing its own Chinese programing.
In 2000, and 2001 Sun TV was selected as one of the world’s best small businesses by Forbes magazine However, over the next three years, Sun TV accumulated losses of more than HK$200 million ($25.64 million US dollars). In June 2003, Yang Lan announced she would be selling a 70% stake in Sun Media group subsidiary Sun TV to a mainland Chinese media group, and that she would be leaving the business.
In July 2005, Yang Lan and her husband Bruno Wu donated Sun Media Group's 51% interest to the non-profit organization Sun Culture Foundation in Hong Kong. Yang also resigned from all management positions, including her role as chairman of Sun Media Group.
Bruno Wu and Shanda Group (06-09)
In 2006 Bruno Wu transitions from Sun Media Group to become a director at Shanda Group. The firm’s main focus was on online gaming with its flagship games in The World of Legend and Magical Land. Shanda Group briefly was traded in the NASDAQ under the ticker SNDA and at the time was the largest IPO for a Chinese internet company in the United States market. Bruno Wu announced his departure of Shanda Group in 2009 around the same time the group received a cash offer of 2.33 billion from its CEO and key shareholders to take the company private once again with the transition being finalized in 2012 via JP Morgan acting as an advisor.
Shanda Group is still around today better known as Shanda group investment firm and in 2017 reported net assets worth $8 billion. View the Company timeline here.
You-On-Demand 2010-2015
Shane McMahon son of WWE founder Vince Machon is most known as “Shane O Mac” the former WWF/WWE star and promoter. A little known fact about Shane is his involvement in Chinese entertainment. Shane started the West Hartford, CT based You On-Demand in 2010, becoming this first nationwide video on demand platform in China. McMahon negotiated distribution agreements with the Chinese government, cable providers, and Hollywood studios to send content US-produced content to the land of the rising sun. The company aimed at providing buy at home movies to a country that purchased $6 billion annually in pirated DVDs and had signed up 18.2 million homes in China and hoped to expand to 30 million by the end of 2013.
The Billionaires Tag Team (Rebirth of Seven Suns Media Group) 2015-2019
2015
Bruno Wu and his Wife Yang Lan, filed with the SEC an SC-13D form claiming a 32.4% ownership of You On-Demand becoming the largest stakeholder. (This joint file of ownership also covered Wu’s privately held media companies see item 2 on 13D form) This $10 million strategic investment by Wu's Sun Seven Stars Media Group Limited exchanged licensing rights of all You On-Demand content for shares.
Hong Kong News Article about the Transaction
(Smartrick’s comment: Bruno Wu invested $10 million into You-on Demand for all of previously negotiated Hollywood content rights to his own SSS media group.)
2016
Bruno Wu was appointed Chairman of You On-Demand and quickly went to work on acquiring additional Hollywood distribution deals with companies to include including Disney, Paramount Pictures, NBC Universal, Twentieth Century Fox Television Distribution, Miramax, and a broad selection of the best content from Chinese filmmakers. In November of 2016 YOD declares a name change to WeCast Network in its Q3 filing with the SEC Revenues up 242% vs Q3 2015.
In the tail end of 2016 Bruno Wu's Sun Seven Stars to Establish a 3 Billion RMB ($437 Million USD) Holding Company to support the growth of WeCast’s Network. In the deal, Wu’s SSS would supply 67% of working capital into the holding company. Also, SSS pledged all of its current and any future WCST stock holdings to the Holding Company (to include all revenue generated from previously acquired Hollywood rights)
2017
WeCast focused on monetizing its Hollywood distribution deals via cloud-based B2B services establishing a consumer and supply chain management platform. WeCast aimed to establish the world's premier multimedia, social networking, and smart e-commerce-enabled network.
Question Number 2: What does Ideanomics do?
Executive Summary:
In 2017 prior to Wu’s departure to the NCUSCR. The company had started its transition into the blockchain technology eventually rebranding to Seven Stars Cloud Group (SSC). During this transition phase SSC setup the following digital asset funds and Joint Ventures (JV) in blockchain technology
I-House (equity token)
Several crude oil-based tokens in the African and Chinese markets
Established blockchain-based funds aimed at converting China State transportation services to electric vehicles (will dive further into this later)
Smartrick Verdict:
Ideanomics or SSC (at the time) set up blockchain networks all over the globe based on saving the consumer money, creating a more efficient, safe way of doing business.
Question 2: full report
In June of 2017, WeCast announced a name change to Seven Stars Cloud Group (SSC) as the company continued to get more and more involved with BASE technology and infrastructure (Blockchain, Artificial Intelligence, Supply Chain & Exchanges) SSC’s first Joint Venture (JV) into this technology was licensing agreement to the Red Coin Platform which is a cryptocurrency exchange that managed equity tokens used in the real estate market in Asia. The use of equity or platform tokens in the real estate market today is common amongst Asian countries Japan, Korea, and China.
In December 2017 Bruno Wu issued a statement on SSC’s company vision
2018
GT Dollar
SSC in 2018 continued its march to acquire more business in the digital asset market establishing several crude oils based, index, ETF, GT Dollar* listing agreement with Singapore-based digital asset exchange Bitlim, HooXi, I-House, and more to include JV with companies in the UK and Africa.
*Note: GT Dollar is still being traded today on South Korean Exchange U8. Currently, GTB is traded at .0008 USD. According to Yahoo Finance in 2019 GTB was worth over 70 Billion USD (Currently Etherium is worth $42.5 Billion) Additionally South Korea is the first and only country in the world to adopt, legalize, and regulate cryptocurrencies.
Question 3: What is China’s New Energy Vehicles Market differ from the US and its Subsidy Program
Executive Summary:
China is the global leader in New Energy Vehicles led by their state-issued subsidies program. This program which launched in 2009 aimed to convert China’s dependency on fossil fuels to a new electrified program. Though the government has taken steps back in the program on the individual consumer side (Tesla cars do not qualify ) its focus on state-owned transportation (buses) and commercial vehicles. According to Han Ximin a Chinese new reporter, China has a goal to achieve 300,000 electric vehicles in China by the end of 2020 with 2/3 (200,000) of them being buses.
China recently extended its subsidy into 2023 primarily focusing on electric buses and commercial vehicles. China’s goal is to increase NEV sales by 2025 to 25% of China’s total car sales vs the US’s goal of 15% by 2025.
Total Global Sales by Country
Additional reading about China NEV market:
Question 4: How does China use Blockchain Technology?
Executive Summary:
Blockchain technology has been used in China for years. Over 500 blockchain projects have been registered with the government. These companies are mainly used as a cost-saving initiative for state-owned and state-backed projects. Project in blockchain includes disputes in courts, business invoicing, a shipment of maritime goods*, and the NEV market.
In April, China launched a National Blockchain Network in 100 Cities in which aims to reduce the costs of doing blockchain-based business by 80 percent. By the end of 2020, they hope to have nodes in 200 Chinese cities. Eventually, they believe it could become a global standard.
President Xi of China is a huge supporter of blockchain technology in China. Xi gave a speech in October 2019 stating China’s need to “seize the opportunities” presented by blockchain, in what appeared to be one of the first instances of a major world leader backing the tech. Currently, blockchain technology is at a need in China as the industry continues to grows
I’m posting this video again because of how important it is to the business plan of IDEX. I clipped it to start where the most relevant part of Bruno Wu’s interview.
Question 5: Breakdown of the May Investor slides
Executive Summary:
In this video Chairman Bruno Wu breaks down how IDEX’s blockchain technology aids in the innovation of China’s NEV market to include the conversion of state-owned vehicle services like buses, taxis, and heavy-duty trucks.
Level 1:
In the video, Bruno Wu states that IDEX establishes blockchain (cryptocurrency) funds by providence approaching insurance companies and local government to pool money ( i.e. government subsidies) to establish a NEV fund. Since the funds are established to target state-owned business and state-owned vehicle fleets collecting funds in one central place is effective. IDEX sets aside 20-30% for future energy transition such as the conversion of fueling stations to energy recharging stations. See partnership with PetroChina and CATL
Level 2:
With the umbrella deal in place, IDEX can now approach banks and other lenders with a quality bid for additional financing if necessary. Since IDEX is targeting state ran industries and state ran manufacturers it becomes a win-win for all parties.
Level 3:
With financing secured IDEX approaches state own manufacturers to fulfill these fleet orders at a volume (wholesale) discount.
Level 4:
IDEX leverages continued business with state-owned operating partners securing repeat business to include after the sale energy sales. In which companies that aid in funding these blockchain networks will receive tokens, these tokens can use later for energy (charging stations) purchases at a discount.
Level 5:
As the business grows so does the need for energy and it leverages its partnerships with gas companies assisting them in the transition to electricity sales away from its traditional diesel sales. IDEX PR
This slide shows how IDEX capitalizes off setting up these funds and every opportunity IDEX has to dip into sales revenue generated by these blockchain funds.
Now that the 5 levels of IDEX proposed business have been broken down you can see where they got these numbers. The units in the slide above reflect the potential state own business need that will to be addressed in China’s quest for a full electric state.
Catalyst comment:
China initiated its 3 year Blue Skies Program in April 2020 which aimed at delivering the following:
Inner Mongolia: Plan to promote the application (adoption) of 100,000 new energy vehicles throughout the region. (IDEX PR)
Listen to CEO Alf Poor discuss company operations in mining trucks in Inner Mongolia (source CleanTech)
Shandong Province: All buses will be replaced with new energy vehicles by the end of 2020. The broader target is for the number of clean energy vehicles to reach 500,000 in 2022.
Jiangsu Province: Plans to promote the adoption of 250,000 clean energy vehicles. By the end of 2020, charging infrastructure to support 200,000 electric vehicles will be in place. Ideanomics' MEG is actively involved in this effort through its charging station initiative with PetroChina in Nanjing – a major city in Jiangsu province.
Guangdong Province: By the end of 2020, new energy buses in Guangdong will account for more than 75% of all buses, and all Pearl River Delta cities will commence electrification adoption plans in 2020. Taxis in the Pearl River Delta are mandated to use new energy vehicles, of which pure electric vehicles will account for no less than 80% and increase by 5 percentage points year by year. IDEX order
Hainan Province: Electrification of the entire island by 2030. Hainan has introduced legislation banning the sale of fossil fuel vehicles by 2030, to ensure the adoption of new energy vehicles within the island.
Sichuan Province: Legislation has been passed to ban fossil fuel trucks in city centers. The city of Chengdu has assumed a leadership role in the promotion and application of new energy vehicles in the logistics and distribution industries. From 2017, Chengdu phased in the gradual reduction of fossil fuel cargo vehicles into the city over three years. IDEX order w/ Unicorn, IDEX order 2
Guangxi: The promotion of all new passenger cars as new energy vehicles. All passenger vehicles in national scenic spots and national tourist attractions must use new energy vehicles, through either replacement or conversion. Municipalities, enterprises, public institutions, sanitation, logistics, postal, and airport commuting areas are mandated to all procure only electric vehicles as fleet renewals occur. IDEX order
Partnerships/things to look forwards to
Bruno Wu stated they have become their clearinghouse of operations in China (see video of Wu)
Treeletrik IPO - which hold partnerships with Hyundai
Additional orders/ establishing new NEV funds
A move into the US market as it gears up into a new NEV sales and infrastructure.
Smartrick Closing Comment:
I hope this helps you understand the business model surrounding IDEX they are not a car manufacturer. IDEX is a clearinghouse set on revolutionizing China’s NEV market by offering fleet discounts, upgrades to electric infrastructure, and providing energy to state-owned Chinese business. IDEX is trying to capitalize on one of the biggest new markets in electric cars. While using one of the newest and most exciting technologies in blockchain technology something the Chinese Government has publically endorsed as the future in China business.