Extraordinary Genius
chapter-717

Extraordinary GeniusChapter 717 – Getting listed?

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“Manager Feng, all the contracts are signed. We have notmissed out any employees.”

Li Mingde called Feng Yu to report on his progress. This wasbecause, from January 1st this year, China’s Labour Law had beeninforced. All companies must sign contracts with their employees and mustcontribute to the social security system.

When this law was announced, Feng Yu asked Li Mingde toquickly sign official contracts with all their employees. This was to preventthem from overthinking.

However, Li Mingde said there was no need for them to do so.Everyone in the company trust Feng Yu.

Feng Yu knew that Li Mingde was bootlicking, and all theemployees trust Li Mingde more. But Feng Yu still insist Li Mingde complete thecontract signings as soon as possible. He must also explain all the terms inthe contract and must not hide anything from the employees.

The Machinery Company must also pay the social security forall the employees, including those at their branch factories, on time.

Li Mingde still does no know about the benefits of payingsocial security. The government will be taking care of all the retiredemployees instead of the company. This would help the company save lots ofmoney.

Because this was the first year the law had started, thoseworkers who were nearing retirement have the option of paying a lump sum andthen still enjoy retirement funds. Of course, this lump sum payment to socialsecurity will be borne by the company and not the worker.

When Li Mingde announced this news, all the employees wereoverjoyed. Although they kept saying they trust the company and Li Mingde, allof them were still worried the company will not take care of them after theirretirement.

Now, the country promises to take care of them, and theyhave no more worries.

Bing City Machinery Company was one of the fastest companiesamong all big enterprises to complete the contract signings. Some company’sleaders were still trying to delay. They wanted to wait until the end of the year.But they did not know that late payments can incur interest. The interest rateswere the same as the banks. The business owners felt that they could havebetter use for this amount, and the returns will inevitably be higher than theinterest incurred.

But Feng Yu’s companies do not need to do this. All of hiscompanies had sufficient funds. If Bing City Machinery Company needs to get abank loan, all the bank managers in Longjiang province will be queuing up at LiMingde’s office and will try to give their best offer.

The past two years, the higher-ups had given high targets tothe banks for giving out loans. To hit the target, banks simplified their loansprocedures.

Now, the banks had completed the mission given to them bythe higher-ups, and some banks had even loaned out more than the target. Butnow, the banks faced a series of problems. Many companies and individuals wereunable to repay their loans!

The banks had lots of bad debts and cost the banks to sufferedmassive losses.

But if the banks loan money to Bing City Machinery Company,they do not need to worry. All of them knew how profitable Bing City MachineryCompany was and their products were sold all over China and were even exportedto Russia.

Even if Bing City Machinery Company could not repay theirloans, the banks could also recover the debts from auctioning their assets. ButLi Mingde rejected all the offers from the banks as the company does not needany loans.

If Bing City Machinery Company lack funds, Feng Yu couldjust inject some money into the company. Of course, the City will not agree toit as this will dilute their shares. This was a good company, and the City doesnot want their shares to be diluted. Another way was to list the company on thestock exchange.

Since the stock exchange was set up in China two years ago,there was an increase in the number of listed companies. These companies wantedto raise funds for their developments. One of the more successful company wasChanghong.

Changhong was already listed, and Feng Yu knew that theyshare prices would skyrocket after they got listed. They amassed a substantialfund from the market and expanded their factories, R&D facilities, andmarketing.

Currently, Changhong had become the leader in China’s domesticTV brands. No other companies could threaten them of this status in China.

The Provincial Leaders of where Changhong was located alsostart to promote Changhong. This was also considered the Province’sachievement. A company like Changhong had appeared in their province, and howcan they not make use of this company?

But Feng Yu remembered that Changhong was only successfulfor these 2 to 3 years. The management of Changhong will be making a gravemistake soon and resulted in the company to go downhill.

Changhong was too confident of their 21-inch color TV andfelt this will be mainstream TV in the market. Now, the 21-inch color TV mightseem to be the mainstream TV and Changhong had China’s most advanced technologyin this field. Their manufacturing cost was also the lowest compared to otherforeign MNCs.

But in another 2 years, the TV will become bigger. 25inches, 29 inches, 32 inches, 34 inches, and even 42 inches TVs start appearingin the market. All TV manufacturers start to manufacture bigger TV to meetmarket demand.

However, Changhong still insists on producing 21 inch TV anddid not lower their production. As a result, their TVs were unsold and stuck intheir warehouse.

This was the turning point of the company, and Changhongfell from being the domestic market leader to number 2. Their placing continuesto drop to number 4, etc.

But now, all these still have not happened yet. Changhongwas still able to make lots of profits for the next 3 years.

The local government was jealous of many companies’ success.They realized that companies do not need to get loans and could still be ableto raise funds and develop quickly.

Also, after the company was listed, the company’s valuewould increase as the share prices increases. This way, a successful companywill appear in the province or city governed by those local authorities. Acompany that was worth 100 million might become 300 million RMB after gettinglisted. The local authorities could brag to their higher-ups and try to get thecredit.

Look, this listed XXX company was set up when I was in chargeof the city. This company was only worth 100 million RMB, and now, it’s worthhad increased by several folds. The higher-ups will think that this person wasgood at business. This was the time when the Chinese government emphasizes on theeconomy. The higher-ups will surely groom this person.

So, there were a large number of companies that were listed.Many of these companies did not even reach the minimum requirements of beinglisted. But this was not important as the local government will help them/Furthermore, there were lots of loopholes in the laws. The number of companiesgetting listed on the stock market had increased by more than 10 times comparedto the previous year.

Some of these listed companies had grown after being listed,and the investors all made money. But there were many companies whose sharesdid not move after they got listed. Some companies had raised a large sum fromthe stock market, but all their funds disappeared. The local government had takenthe money away, or the companies’ leaders ran away with the money.

But no matter what, all the local government felt thatgetting the companies under their jurisdictions to be listed on the stockexchange was one way to show the higher-ups how successful they were. All thelocal governments wanted more listed companies to appear.

Li Mingde was also summoned by his leader for a talk. Hewanted Bing City Machinery Company to be listed on the stock exchange!

This was also one of the reasons why Li Mingde called FengYu. He needed Feng Yu’s help.

Translator’s notes:

Labour Contract Law of the People's Republic of China

https://en.wikipedia.org/wiki/Labour_Contract_Law_of_the_People's_Republic_of_China

Changhong

https://en.wikipedia.org/wiki/Changhong

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