Extraordinary Genius
Chapter 826 - Crisis
Feng Yuregistered an investment company in New York and had an agreement withKirilenko. He will let Kirilenko be the partner of the company to form aUS-Russia joint-venture company, but Kirilenko has to sell all of his shares toTai Hua Trading a year later.
This is asmall favor, and Kirilenko agreed immediately. Anyway, he does not need tospend a cent.
Feng Yualso contacted Li Zekai and Fu Guangzheng. Li Zekai will use the Li Family"sconnection to register a trading company in Canada, and Fu Guangzheng will setup a company in Singapore.
Just likeKirilenko, Li Zekai, and Fu Guangzheng are registering the companies on behalf ofFeng Yu, and all the companies" shares will be sold to Tai Hua Trading one yearlater.
At thesame time, Li Jingwei invested more than half of Jianlibao"s fund into the plotof land in Guangzhou to start the construction of Jianlibao"s building.
Afterthat, Li Jingwei used the excuse of opening up the US market to transfer mostof the remaining funds into the Jianlibao US branch"s account. This move causedJianlibao to drag their distributors" payment.
But thiswas only Li Jingwei"s first step in his plan, and his second part of his planis starting.
LiJingwei told the City government"s leaders that the US branch company conductedmarket research and found tea beverages have a high demand in the US. ButJianlibao does not have tea beverages formula, and the best tea beveragemanufacturer in China is Lehaha Group.
So,Jianlibao should negotiate with Lehaha to purchase their tea beverage recipe.They will modify the recipe to produce a new type of tea beverage that willsuit the Americans" taste buds. This will surely increase the Jianlibao"sprofits.
When theCity government leaders heard that Jianlibao"s profits will increase, they gaveapproval. Anyway, it"s only a beverage formula.
But LiJingwei told the leaders that Jianlibao does not have money and needs the CityGovernment to make arrangements for Jianlibao to get a bank loan.
Theleaders were shocked. How come Jianlibao does not have money? Didn"t we approvea sum of the fund at the start of the year? The leaders soon found out thatJianlibao does not have any funds and still owe the distributors.
If it wasnot because of the fact the distributors had worked with Jianlibao for severalyears, they would have caused trouble for Jianlibao! If the distributors stoptheir distribution of Jianlibao, Jianlibao"s sales will come to a halt, and thecompany will be finished!
TheGovernment leaders start to investigate where did Jianlibao spend the money on.
Soonafter, the leaders found out about the plot of land in Guangzhou bought byJianlibao. There is nothing wrong with the purchase of the land parcel, but whydid you make the full payments for the project and materials when theconstruction just started? Shouldn"t the full payments be made after theproject is completed?
But themoney had been paid, and there was no way to get it back. The US branch officehad also taken away most of the remaining funds to open up the US market.Although the US market will bring in a lot of profits, no one knows when theprofits will be coming in!
Theleaders were upset over this and called Li Jingwei in for a scolding. You stillwant Jianlibao"s shares with what you did? Hmph! This Li Jingwei must be kickedout of Jianlibao!
LiJingwei starts to push for the purchase of Lehaha"s tea beverage formula. Ifnot, Jianlibao will not make it for the Summer peak period. But during thenegotiations with the banks for the loan, Li Jingwei purposely "accidentally"reveals that Jianlibao still owes all their distributors.
Uponhearing this, the banks refuse to approve the loan, especially Li Jingwei askedfor a loan of 500 million RMB!
Jianlibaois now in a dire situation, and the city government leaders were troubled.Jianlibao had done well last year and the company suddenly have insufficientfunds. But what Jianlibao said was right. With a new product, the company canget high profits from its sales in the US and Jianlibao will recover from toits peak.
At thistime, Lehaha"s Zhong Qingxian made a new proposal. Exchanging of shares.
Lehahaand Jianlibao will exchange some of their shares and will sell the formula toJianlibao first. Jianlibao can extend the payment for one year.
The CityLeaders hesitated as this will be selling Jianlibao"s shares away.
Li Jingweipersuaded the leader by a.n.a.lyzing the situation to them. Lehaha has lots offactories in China and has established distribution channels. After theyexchange shares, Jianlibao will have the chance to take over Lehaha"sdistribution networks.
Even ifJianlibao cannot take over the distribution channels, the city has nothing tolose. After some discussion, the City leaders agreed to this proposal.
Jianlibaoused 8% shares to exchange for Lehaha"s 6% shares. This is based on thevaluation of both companies. Jianlibao"s market value is lesser than Lehaha, asLehaha has more factories.
The Cityleaders also did not notice the valuation of Jianlibao"s new building wasvalued very low.
Aftergetting the formula, Jianlibao"s product development team start to developtheir new product. All they need to do was to turn the tea beverage into acarbonated tea drink and pa.s.s the US authorities" checks.
Butanother problem surfaced. Jianlibao does not have money, and they were still indebt. They can owe money in China, but not in the US.
The Cityleaders questioned Li Jingwei. The company had transferred a sum of money tothe US branch and why they do not have money?
LiJingwei"s reply was the money is for advertising. You all had complained thatJianlibao is not as big as other brands, and we decided to increase ourmarketing budget to expand our brand awareness.
Simply put, we have spent all the money!
The City leaders contacted a few banks forloans but were rejected. If the loan amount is too high, the banks will notapprove, and if they lower the loan amount, it will not be enough as thecompany still owes their distributors.
Around this time, Li Jingwei did somethingalarming. He stopped the salaries of Jianlibao"s employees to use the money forthe operating cost.
The workers, including the R&D staff,went on strike, and Li Jingwei personally went to meet the workers to pacifythem.
But even the influential Li Jingwei couldnot convince the staff to call off the strike. The City leaders had no choicebut to show up and promise the workers they will settle this.
But how can the city leaders settle thiscrisis? Although the City Government has money, the money had been allocated tothe various departments and projects. If they use the money for Jianlibao, itwill create problems in other areas.
Troubles came one after another. Thedistributors gathered at Sanshui to demand payments from Jianlibao by blockingthe factory and government"s entrance.
Owe money, pay money!
This is written on a big banner which ishanged on the government building"s main entrance. The city leaders were tooashamed to show their faces, and even the police could not chase thedistributors away!
What the city leaders did not expect wasthis incident was even reported in the papers!
When Feng Yu heard what happened at Jianlibao from Fu Guangzheng, he was stunned. He did not expect Li Jingwei to blow things up to this extent!