Extraordinary Genius

Chapter 731 – Capital usage

Buy me a coffee or tip me on or .

Xu Changyou flipped the report in front of him. He wasreading every line and word seriously. He even read some sentences severaltimes. After half an hour, he raises his head.

“Did you write this report?”

Zhang Ruiqiang bowed slightly and replied: “It is written bymy secretary and I made some minor amendments. Many of the ideas, like lettingthe farms invest and contacting the distributors in advanced, and the ‘168’plan, stated in this proposal is from Feng Yu. We only amend it slightly.”

Xu Changyou was pleased with Zhang Ruiqiang. This was whathe likes about Zhang Ruiqiang. It was not because he was capable. Xu Changyouhad met many competent people in the government. Almost all the elites in Chinaat this time were in the government. He likes Zhang Ruiqiang because ZhangRuiqiang would also speak the truth and never claim another person’s credit.

This was an important character trait which much capablegovernment officer lacks.

Xu Changyou felt that someone with this character would notforget their initial aspiration even when they had climbed to the top. Theywill still think for the people, and this was why Xu Changyou groomed andsupported Zhang Ruiqiang.

“Your proposal mentioned that the total investment needed 10billion RMB and appeal to the Central Government for funding. We will raise theremaining amount. But why didn’t you state the proportion?”

“If I state the proportion, then I will ask for more fundfrom the Central Government. But Feng Yu reminded me that if the CentralGovernment funded most of this project, then this company will not be under theProvincial Government. It will fall directly under the Central Government. Wewill only get a small portion of the profits.”

Xu Changyou nodded. Setting up Beidacang Group was todevelop Longjiang province, and it was Longjiang province who came up with thisidea. They must not let the Central Government take it away from them.

“I still have one more question. We are asking the CentralGovernment for money. What if the Central Government wants a share in thecompany? How can we reject them?” Xu Changyou asked. If the Central Governmentinsist on getting a stake in this company, then they will have to hand oversome of the profits to them.

“The Central Government will be able to get a portion of theprofits from the Ministry of State Farms and Land Reclamation. This proposalmust be supported by the local government. Why will the Central Governmentleave us out? I am only worried that the Ministry of Agriculture will try toget the overall control of this company. We must make it clear that thiscompany is significant to us.”

“Are you saying that we should set up a Leadership Group?”This was what the Chinese Government usually do. A Leadership Group will dividethe responsibility to individual leaders and show others that the ProvincialGovernment takes a serious view in this company.

“No. This company will be a shareholding and will be listedin the future. We, Longjiang province, will be the biggest shareholder and weshould have the right to appoint the Chairman of this company.”

Xu Changyou thought Zhang Ruiqiang would want to be the headof the Leadership Group. But now, it seems like Zhang Ruiqiang intends to bethe Chairman of Beidacang Group?

“You want to take on this role?”

“No. I think you should be the first Chairman. You are themost suitable person.”

Xu Changyou was surprised. Let him be the Chairman? Hethought for a while. That’s right. If I become the Chairman, then who willcompete with him over the control of the company? Those qualified people in theCentral Government will not request to be transferred to Longjiang Province tocompete with him. This way, Longjiang Province will take over full control ofthe company.

“It is a good idea for me to be the Chairman. Then who doyou think should be the General Manager?”

If the leader is willing to discuss the appointment ofpersonnel with you, that means he treated you as his trusted aide.

“I think we should get someone in the agriculture industryto be the General Manager. We can also find someone good in business.”

“You don’t want to be the General Manager?” Xu Changyoulooked at Zhang Ruiqiang and asked.

“There is still a lot of work with Bing City. I don’t havethe energy to take on another role for the time being.” Zhang Ruiqiang did notsay he does not want to be the General Manager. He said that he doesn’t havethe means for the time being.

If Beidacang Group were set up successfully, the company wouldhave a bright future. It was also a place to make significant achievements.Zhang Ruiqiang will not give up taking on the role of the General Manager.

But Zhang Ruiqiang knew that it will be time and energy-consumingduring the start-up phase. If he were to concentrate on Beidacang Group, thenhe will not do an excellent job at managing Bing City. This was why he choseBing City first.

“Fine. If I am the Chairman of the company, we should beable to get some favorable policies and funding from the Central Government.But what if the fund given to us is not sufficient, and we cannot raise theremaining?”

“We can take bank loans and use the provincial government asguarantor. This should not be a problem.” Although the higher-ups had put astopped to such actions, but the local government still have many ways to goabout this regulation. Everything will be fine if the higher-ups close one eye.

“The issue of start-up capital is solved then. You mentionedthat every farm must set up a company. This will solve our initial shortage ofingredients. But the harvest belongs to the farmers and not the farm. Are tellingus to issue IOUs to those farmers?”

“They can operate like us and get loans from the banks topay for the crops. The farms will invest in their land area. The shares theyget will be a small percentage. The Provincial Government will hold more sharesof the company. If the farms could not get sufficient loans, then let them askthe Central Government for funding. I think the Ministry of State Farms andLand Reclamation will be able to find a solution for those farms. This is thesame for the woodlands or forest farms. But the forest farms can only use theforest where logging is allowed to invest. Those areas where logging isprohibited cannot be used to invest. This way, the Ministry of State Farms andLand Reclamation and State Forestry and Gra.s.sland Administration will berestricted by Beidacang group, which is the same as restricted by us.”

“From what you say, it seems that the Provincial Governmentdoes not need to come up with a lot of money.”

“Of course. We do not need to use a lot of our funds.Someone told me that good capital usage are like tying a white wolf with barehands. It operates the same way.” Zhang Ruiqiang had a weird expression on hisface when he said this. He thought about how that brat become wealthy suddenly.

“Tying a white wolf with bare hands? But we will be gettinga big loan from the bank and still have to repay the loan in the future.”

“Get listed, raise fund, and use the fund to pay the bankloan. We might even have some money left for faster growth after the loanrepayments.”

This strategy was what Feng Yu thought Zhang Ruiqiang. Takeloans to develop the company first. After the company was listed, use the fund topay the loans. Although the Provincial Government’s shares in the company willbe lowered, the company’s value will increase significantly. The value of theshares will also increase.

This company will still belong to the Province. This wasonly a simple way of capital usage, and the provincial government could getcontrol over a big company without using much capital.

If not enough funds were raised from the listing, Feng Yu iswilling to purchase some shares, or even invest directly into the company.

Zhang Ruiqiang was shocked when Feng Yu thought him aboutthis strategy. They could even raise capital this way, and it was even legal!

“Ok. I will call for a meeting in the afternoon, and youwill announce this plan at the meeting. We will mobilize everyone to make thisplan a success!”

Translator’s notes: This Chinese idiom ‘空手套白狼 istranslated as to tie a white wolf with bare hands. It means to gain somethingvaluable with worthless things or even nothing. I hope I get this translationright. If you all have a better translation for this idiom, or there is anequivalent English saying, let me know.

IOU

Forestry and Gra.s.sland Administration

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