Sail across the sea

Chapter 533 Introducing an External Entity
"Both Fenglin Research Institute and Zeshan Metallurgical Research Institute have adopted the method of setting up an entity to generate revenue. Zeshan Research Institute's approach is even more aggressive. They encourage each research lab to find revenue-generating opportunities on its own, and once a project is mature, they set up a separate entity to carry it out. Currently, Zeshan Research Institute has seven or eight revenue-generating entities under its jurisdiction, with Zeshan Refining, which deals with rare earths, being just the largest one."

Gao Fan began to impart his experience to Cai Muqing. His idea was to replicate the model and help the Chemical Engineering Design Institute establish a subsidiary company specifically for generating revenue. He had ample experience in this area.

“If each research lab establishes its own entity, how will the revenue be distributed?” Cai Muqing asked.

Gao Fan said, "Zeyan Institute has set a rule, which is similar to the contract system in society. The majority of the profits are given to the institute, and the smaller portion is kept in the research lab. Within the research lab, the profits are distributed according to the size of the contribution. Those who contribute more receive more, while those who contribute less or no contribution only receive a minimum level."

Cai Muqing shook her head and said, "This method may not work in our design institute. We have some senior scholars in our design institute whose physical strength and energy cannot compare with those of the younger engineers. If we want to do this kind of revenue-generating work, they certainly can't handle much. However, if we only give them a guaranteed minimum when it comes to the final distribution, they will have objections."

Gao Fan said dismissively, "So what if they have objections? The principle is set: everyone is equal. What reason do they have to demand special treatment?"

Cai Muqing didn't know how to explain to Gao Fan. Zheng Linong said from the side, "Xiao Gao, don't underestimate the power of these old scholars. Some of them are even more senior than me. If they cause trouble, not only will Dean Cai be unable to handle it, but even I won't be able to handle it."

"Such a thing is true!" Gao Fan exclaimed in surprise.

Zheng Linong was a former vice minister and had considerable influence throughout the industrial system. When he went to inspect work in any province, the provincial leaders would accompany him.

How could a few senior engineers from the design institute have the ability to cause such a commotion that even Zheng Linong couldn't handle?

Seeing that Gao Fan was somewhat skeptical, Cai Muqing sighed and began to explain to him.

According to Cai Muqing, state-owned research institutions like chemical engineering design institutes often have some veteran experts. They are either those who stayed before the liberation or those who returned from abroad at the beginning of the liberation; they are the founding fathers of the design institute.

In the 50s, the country was extremely poor and lacked talent. These veteran experts were treasures back then, and many of them had been received by the older generation of leaders. Even today, they still have the ability to reach the highest levels of government.

If these people are dissatisfied with the work of the institute, taking it to the ministry would be considered relatively restrained. Dean Cai Muqing really doesn't dare to show any weakness to them.

"From what I remember, these old scholars should all be highly respected people, so how could they be so unreasonable?" Gao Fan asked.

Zheng Linong sneered, "Of course there are respected senior scholars, and quite a few of them. But there are also those who are disrespectful to their elders, and quite a few of them too."

Cai Muqing said, "Actually, it can't be said that these senior scholars are unreasonable. Sometimes, they just don't understand the work arrangements of the institute, so they will raise some opinions. Others have some practical difficulties of their own, such as their children not being very successful and needing them to earn money. As a result, these senior scholars are more sensitive to economic issues."

"I've never heard of such a thing at the Zeyan Institute," Gao Fan muttered.

He could understand this logic. Zeyan Institute was a small research institute located in a remote mountainous area. Experienced senior scholars certainly wouldn't stay in such a small place. Furthermore, if there were indeed a senior scholar willing to stay in such a place, he would definitely be the kind of person who was dedicated to their work and wouldn't make unreasonable demands regarding personal interests.

“That’s just how it is,” Cai Muqing said somewhat disheartened. “The personnel relationships in the institute are too complicated; one thing can have far-reaching consequences. Sometimes, it’s not that the senior scholars want to cause trouble, but rather that some people with ulterior motives deliberately stir up trouble in front of them. We know this is the case, but there’s nothing we can do. It’s just too difficult for us to do anything.”

Zheng Linong said, "Working in government offices often involves balancing relationships, which is different from the situation in your private enterprises." Gao Fan thought for a moment and said, "There is a solution to this problem."

"What method?" Cai Muqing asked.

Gao Fan said, "Since it's inconvenient for your institute's leaders to balance relationships, then let's simply hand over the task of balancing relationships to outsiders. For example, we can bring in an external entity as an intermediary."

"This entity signs a research agreement with the design institute, which then assigns engineers to conduct the research. The engineers' salaries are paid by the design institute, but their bonuses are paid by this entity. Ultimately, the entity decides who receives the bonuses and how much, and it has nothing to do with the design institute."

"If you old scholars are dissatisfied, let them talk to this entity. Foreign entities don't know who's a national treasure and who's trash. No matter how capable the old scholars are, they can't order a private company to give them money, can they?"

Cai Muqing asked, "If they can't control this external entity, they'll pass the pressure onto our institute's leadership. What will we do then if they demand the institute cancel its cooperation with this entity?"

Gao Fan laughed and said, "This entity can generate revenue for the design institute, which is related to the welfare of all employees. If these old guys dare to force the institute to cancel its cooperation with the entity, believe me, the institute's employees will beat them to a pulp first."

"That's okay..."

Cai Muqing imagined the scenario and was surprised to find that Gao Fan's statement made sense.

Taking someone's money is like killing their parents. The engineers in the design institute usually don't care about the institute's affairs, but when it comes to their income and benefits, they're not so easy to talk to.

Those few old scholars who like to take advantage of their seniority and act arrogantly in front of the institute leaders, if they really anger the public, they will probably have to back down.

The masses fear the leaders, the leaders fear the national treasures, and the national treasures fear the masses—that's roughly the kind of relationship.

"You mean, Canghai Chemical will be the one to build this entity?" Cai Muqing asked.

Gao Fan shook his head vigorously: "Dean Cai, even your institute leaders wouldn't dare to do something that offends people like this. I'm just a small business owner, how could I dare to do it? My Canghai Chemical Company still needs to make a living in the chemical industry. If we offend these old guys, aren't we cutting off our own path to survival?"

"So where are you planning to find a physical entity?"

"There's no rush. I think we can find it as long as we keep looking."

"Then please!"

(End of this chapter)