An open letter from HGC founder — Wendong Zhang to the Trucpal Community
Dear Trucpal community,
I am Wendong Zhang, the founder of HGC. I am glad to have the opportunity to share my experience and thoughts with the community.
I’m sure you’ve all gotten some initial insight into Trucpal, and in addition to the business vision we’ve shown through our public prospectus, I’d like to share the story behind it with you.
HGC is my third venture and the project that I have tried the most and explored the longest. After nearly 7 years of efforts, HGC is fortunate to combine the pioneering of SaaS system and the ecological incentive of STO in an innovative way to promote the supply chain participants of trucking industry to actively upgrade to the digitalization of industrial ecology.
In 1991 when I was still in college in Harbin, my father and brother raised funds to buy a transport truck, when it coincided with the holidays, the three of us together from Harbin to drive this truck through more than 3,000 kilometers back to my hometown in Fujian Province. Since then, my father and my brother became a member of the thousands of individual transporters in my hometown at that time, I also have some understanding of freight transport, but also one of the first thoughts of my love for the HGC business.
In 2010, I was invited by a friend to join a fund-invested truck refueling service company to participate in the preparation of the first provincial company. The company’s main business is to provide fueling procurement services for transport trucks. From the preparation to the business development process, I contacted hundreds of trucking company owners and truck drivers in the province, and in addition to providing services to them, I have been observing and thinking about how to manage this industry, which coincided with reading the biography of Marc Benioff,the Saleforce’s founder, “Behind the Cloud “, and from then on I had the idea of using SaaS system to serve trucking management. With more than 15 million trucks, 30 million employees, and $1.5 trillion in annual revenue and expenses, the freight industry must have a demand for SaaS, i.e., digitalization and refinement of industry management, which is also a major trend.
After more than two years of service and research in the freight industry, I felt that the idea of developing an IT system for the refined management of transport fleets and vehicles was relatively mature. After communicating with the owner of the company that he could not allocate resources to implement it, I decided to start my own business.
Since the start of the business at the end of 2013, the HGC project has undergone several major changes and upgrades.
In the early stage of our business, we not only developed our own IT system, but also set up a business company, recruited a ground marketing team, and invested directly in various businesses, from vehicle refueling services, truck sales, insurance services and financial services, to cargo transportation. While these operations yielded some results, the high costs incurred also forced the company to make strategic changes. During this time the company put together a comprehensive study of the trucking industry and published China’s first book on quantitative analysis of trucking operations, “The Profit Way in Transportation Fleets”, which was sold on Amazon. From then on, the strategic direction of Huicun Trucking became clearer, focusing on the data-based management of vehicle operations.
In 2016, the Chinese government adjusted its tax rules and the trucking industry was included in the tax adjustment. The focus of this tax rule adjustment is “tax control by invoice”, which means that all the company’s costs and expenses must be invoiced in compliance to be recorded in the accounts. Since the main force of trucking is individual drivers, they cannot provide invoices for freight charges, and it is not beneficial and troublesome to obtain invoices for expenses. When a company pays a driver, it needs an invoice from the driver, and individual drivers cannot provide invoices (in China, only companies can provide invoices), a contradiction that poses many risks to the freight industry. Companies have to spend money on invoices in order to get invoices for tax avoidance. Although false invoicing is illegal, trillions of dollars of false invoice transactions are happening every year. The Chinese Tax Administration is becoming stricter and stricter in regulating false invoicing.
Since 2018, we realize the dilemma of industrial tax compliance and the pressure of regulation, we combine the data management of vehicles with the digital realization of tax compliance, design and develop the intelligent account book of single-vehicle income and expenditure invoicing and taxation, i.e. Trucbook. while using Trucbook to achieve the independent bookkeeping and accounting management of the fleet for each vehicle and each individual driver, forming a “company and individual “The “digital transportation cooperative” of joint operation solves the invoicing problem and tax compliance problem of freight industry.
The cooperative not only solves the company’s fiscal compliance problems, but also increases the income of individual drivers.
The unfortunate Covid-19 epidemic in 2020 accelerated the digital upgrade in all industries, but even more so in the freight industry. The industry demand for digitalization from the original passive, wait and see to had to take the initiative to upgrade for first-mover advantage. At this time, after 5 years of research and development of the Huichuan car transport capacity ecological SaaS system at the right opportunity, so how to quickly deploy also became my main work, and the industry history lessons no longer allow burning money to expand.
How to expand cost effectively became the most important strategy I needed to adopt.
In 2018 and 2019, I had several in-depth conversation with the Magic Circle team and blockchain expert Mr.Meng Yan to discuss how the pass-through model can be applied in the ecology. We found that the biggest challenge in adoption was practitioners’ concerns about benefit distribution and data attribution, security management, and other concerns. Therefore, Hui Guan Che decided to adopt the compliance STO to raise capital and designed the Token-based ecological incentive model, so that all users in the ecology, including each cooperative operator, can get the corresponding Token incentive in the ecology through actual transactions and pulling new recommendations, etc., and become contributors and beneficiaries of ecological development.
The process of putting a new idea and model into practice and developing it to success is very long and difficult, full of challenges. This development process requires the persistent efforts of the team, the recognition and acceptance of users, and the support and help of partners. Industrial ecology digitalization is a trillion scale market, which needs to attract and help tens of thousands of traditional transportation companies to upgrade, and then drive millions of truck drivers to upgrade, and needs to attract cargo owners, product suppliers, and financial service providers to enter the ecology, and the fast and efficient promotion is the sharing of benefits and ecological autonomy brought by decentralization.
We have already started testing our brand new model. Starting from the second half of 2021, the Trucpal Ecology will achieve rapid growth from users to transaction volume, and is expected to reach $150 million in transaction volume in 2022 and over $1.5 billion in transaction volume in 2023. Along with 10 times faster expansion, our goal is to have 5,000 cooperatives in the ecology spread across all counties and towns in China by the end of 2025, serving over 2 million individual drivers and forming a symbiotic and autonomous decentralized ecosystem.
The success of the ecology is my greatest achievement and glory, we will always explore and improve the ecological development model, including efforts to evolve to Web3.0. I hope that the future Trucpal can develop into an efficient and prosperous ecosystem with user autonomy, where transaction costs become lower and lower and the ecology keeps growing naturally, including developers and investors can share the benefits of the expanding ecology.
Sincerely yours
Wendong Zhang
Founder of HGC/Trucpal
July 24th, 2022
HGC Official Website: https://trucpal.com
Twitter:@trucpal
Telegram:https://t.me/TrucpalCommunity
