Back to the teenage years

Chapter 596 What is there to fear? (Please subscribe and vote with monthly tickets)
Li Weimin's class was held in the second teaching building's lecture hall.

When Zhang Yunqi and Zhao Yihan arrived, the classroom, which could accommodate more than 200 people, was already packed with students from various economics departments, with even the aisles and back spaces filled with them.

The Second Teaching Building is a somewhat dark, Soviet-style building. The windows are shaded by huge plane trees and old locust trees. The weather is still quite cool at this time of year, and a cold wind whistles as you stand in the corridor. This shows how strong the determination of Xiangtan University students is to study hard and contribute to the modernization of the motherland.

Zhang Yunqi hasn't attended class for over half a month.

Last week, Zhao Yihan kept raving in his ear about how good and popular Li Weimin's class was, and how Li Weimin liked to analyze typical real-world cases, even using the restructuring of Jiangchuan Hongxing Electronics Factory as a classroom example. Zhang Yunqi was indeed quite curious, so he called the class monitor Zhou Dingchuan to save him two seats. But this honest but troublesome guy ended up in the first row, making him a sitting duck and a target for the teacher to call on at any time.

Professor Li Weimin is a middle-aged man in his forties, tall and thin with a long, narrow face, and wearing gold-rimmed glasses. He was formerly a student of Jiang Ruqin, making him their senior. He is a professor who returned from the Wharton School of the University of Pennsylvania and has recently started a new course at Xiangtan University called "Business Ethics and Entrepreneurial Spirit," which is very popular among students.

After Zhang Yunqi and Zhao Yihan sat down in the first row, they glanced around the lively classroom. Being among these young students made him feel like he was part of the youthful atmosphere of the campus and still a young person himself.

Not long after, Li Weimin finished setting up the projector, and a line of text slowly appeared on the screen: "Corporate Boundaries: The Two Masks of Social Responsibility".

Li Weimin looked up, his gaze sweeping across the dark classroom, and said, "Class, quiet down, class is starting now."

He didn't waste any time and went straight to the point: "Last week we discussed the ethical controversies in the reform of state-owned enterprises. Many students were quite emotional when they mentioned the issue of capitalists plundering state-owned assets. So this week we'll look at this issue from a different perspective."

He pressed a button on the remote control.

The screen switched to a scanned image of a yellowed newspaper.

The picture shows the front page of the March 1993 edition of the Rijin Daily: the signing ceremony for the investment project of the Jiangxinzhou Entertainment City by the famous Hong Kong businessman Liu Mingde. The scene was very grand, and Secretary Song Zijian and Vice Mayor Xu Kai were both present.

Quiet murmurs immediately filled the classroom.

Many students at Xiangtan University have either visited or heard of Jiangxinzhou, the first theme park in Jiangchuan. Its opening caused a sensation throughout the city. Tickets were incredibly expensive; a single visit could cost half a month's worth of food and five or six days' worth of hotel room fees, yet it was still packed with people.

Zhou Dingchuan said, "Boss Zhang, we went to this place together last year."

Zhang Yun nodded. It seemed that Li Weimin's biggest characteristic compared to the other old fogies in the school was that he didn't just read from the textbook, but kept up with current events and was good at creating hot topics to spark heated discussions. No wonder his classes were so popular.

Zhao Yihan looked quite curious and said, "You guys have been here before? Was it fun? I've never ridden a roller coaster before. I'm so old."

Zhang Yunqi laughed: "You'll know once you ask Ji Ling to go out and have fun this weekend."

Zhao Yihan pursed her lips and remained silent.

Pointing to the picture, Li Weimin on the podium said, "This entrepreneur is Mr. Liu Mingde, a Hong Kong businessman who was once awarded the title of 'Pioneer of Reform in Southern Hunan.' He came to Lijin in 1992 and, thanks to the city's investment promotion policies, successfully obtained the Lijin Jiangxinzhou Entertainment City project. The project was extremely popular after its opening and is now one of Lijin's landmarks. From these perspectives, the project has undoubtedly achieved great success, but..."

At this point, Li Weimin pressed the remote control again, and another photo appeared on the screen: a dilapidated shantytown with a huge "Demolish" character painted in red on the wall. In one corner of the photo, several elderly people squatted beside the ruins, looking extremely miserable.

Li Weimin said, “This is the original site of Jiangxinzhou, where 56 households of villagers, all fishermen and vegetable farmers, lived. After the Jiangxinzhou project was launched, they were required to move out within a month with extremely low compensation. On average, each household received about 10,000 yuan, and they lost their land and ancestral property that they depended on for survival forever.”

The classroom fell silent.

Li Weimin has switched to the next chart, a diagram of the capital chain of Jiangxinzhou Entertainment City, which is full of complex arrows and numbers, marking the flow of bank loans, shareholder contributions, and pre-sale funds.

He highlighted several key moments, saying, "The total investment in the entertainment complex was 80 million, with an initial investment of 30 million. Mr. Liu Mingde actually invested 5 million, and he recovered his actual investment in a short period of time. The remaining investment came entirely from financial institutions and private financing. What's even more interesting is that at the end of 1995, just as the entertainment complex entered a period of stable profitability, Mr. Liu Mingde mortgaged it to a bank and borrowed 60 million to invest in another large project."

After this introduction, Li Weimin turned off the projector, turned to face the students, and smiled, saying, "This is the case we're going to discuss today. The topic is: If we understand corporate social responsibility as 'not passing on external costs in business operations,' then is the Jiangxinzhou project creating jobs and boosting the economy, or is it systematically passing on social costs?"

The classroom fell silent for a moment.

A boy in the second row raised his hand: "Professor, I think this issue can be viewed from two perspectives, and we can't simply label it emotionally. The demolition issue is a historical legacy, while Jiangxinzhou Entertainment City has indeed brought tax revenue and employment to the local area, and it is still a tourist attraction in Lijin. Undoubtedly, this project has a huge boosting effect on Lijin's entertainment and consumption industry."

As soon as he finished speaking, another girl chimed in, "I agree with this classmate's point of view. Businesses are not charities; profit is of course their top priority. The low compensation for those villagers is a problem with government pricing, not a matter of businesses passing on external costs during their operations. So businesses shouldn't be made to take the blame."

“But the companies are the beneficiaries.” At this point, Zhou Dingchuan stood up and offered a different opinion: “They profit from the policies for attracting investment, isn’t that exploiting loopholes? If social responsibility is only about not breaking the law, then the bottom line is too low! I want to refute the point made by that female student earlier. Can companies really remain completely uninvolved in the pricing mechanism for demolition compensation? When they tacitly approve or even promote the operation of these rules, they are already accomplices! They are embezzling state-owned assets!”

The debate at the scene gradually intensified.

There are many top students at Xiangtan University. After Zhou Dingchuan finished speaking, one after another, people stood up to express their opinions, and there were quite a few insightful answers.

The most combative of them all was Zhou Dingchuan. This guy, who used the library as his bed, had impressed Zhang Yunqi. Usually quiet and reserved, rarely uttering a word, he was now frequently standing up to speak and refute, his arguments rapid-fire, logically sound, and every sentence hitting the nail on the head. Zhao Yihan listened intently, her cheek in her hands, until Li Weimin interrupted the debate. Only then did she ask Zhang Yunqi, "Which side do you think is more reasonable?"

Zhang Yunqi chuckled and was about to speak when his phone rang. He opened it and saw a text message from Wang Guibing: "Xiangtai's stock price is currently up 0.8%. Also, Liu Mingde just went to the city and met with Xu Kai."

Zhang Yunqi was not surprised by either message. He put away his phone and said to Zhao Yihan, "Both make sense, but not much."

At that moment, Li Weimin's voice came from the podium: "The male student in the first row wearing a white shirt."

Following everyone's gaze, Zhang Yunqi looked left and right, and after confirming that he was being called, he stood up.

“Yes, it’s you.” Li Weimin smiled and said, “It seems this student has a different perspective. Why don’t you share it with everyone?”

Zhang Yunqi was starting to wonder if Li Weimin had heard his earlier complaint. Even though he was sitting right in the center of the first row, incredibly close to Li Weimin, his voice wasn't that loud.

Seeing Zhao Yihan pouting with a cute little face and a mischievous smile in her big eyes, Zhang Yunqi didn't intend to let this little brat be smug for long. After thinking for a moment, he said, "Professor, then I'll offer some immature opinions. Please forgive me and correct me if I'm wrong."

Zhang Yunqi went straight to the point: "I just feel that your topic, 'Understanding corporate social responsibility as 'not passing on external costs in business operations'...,' is too idealistic. Therefore, the answers given by the students just now were also idealistic. They seemed to make some sense, but they lacked practical reference value and were meaningless."

A commotion arose in the classroom, which Li Weimin suppressed with his hand. He stared at Zhang Yunqi and said, "Continue speaking."

Zhang Yunqi spoke his mind without reservation: "In my view, no company can avoid passing on external costs. Let's broaden our perspective. Since China's reform and opening up, a large amount of foreign capital has poured into the mainland. Why did this happen? Because under the policy of attracting foreign investment, foreign companies can enjoy low land costs, labor costs, infrastructure costs, and financing costs in the mainland! That's why they were willing to come. This is an objective reality that no one can deny. In the early stages of manufacturing accumulation, more than a billion Chinese people had to pay the price!"

As soon as he finished speaking, the classroom fell silent.

Most of the people present were high-achieving students, and they knew that what Zhang Yunqi said reflected the current objective reality, which no one could deny.

Zhang Yunqi added, “Given the current market environment in China, what I’ve observed in Ritz is not that companies are not passing on external costs during their operations, but rather that internal costs have been externalized! I believe this is the economic issue that deserves in-depth study right now.”

Li Weimin laughed.

Despite being a renowned professor, Zhang Yunqi's argument was directly refuted in front of everyone, yet he didn't seem to lose face. He nodded and said, "Very interesting. You mentioned 'externalization of internal costs,' which is a crucial economic concept. This suggests that you believe the current business environment in Rita is completely biased towards business entities, lacking a fair and orderly market-based business environment, with most social costs borne by taxpayers. Your view is realistic yet pessimistic! So, I'd like to ask you a question: In the current business environment of Rita, if a company profits by exploiting loopholes in current investment attraction policies within the legal framework, such as acquiring land at low prices or using inflated mortgages, how do you view this method of shifting costs?"

Zhang Yunqi said, "First of all, I remember my classmate Zhou Dingchuan mentioned something earlier: the law is the bottom line, not the ceiling. This statement is absolutely correct, but in reality, if companies strictly adhere to ethical standards, they will inevitably be at a disadvantage in the competition. If others acquire land at low prices and build buildings, while you insist on full compensation, your costs will be much higher, your housing prices will not be competitive, and you will eventually go bankrupt and leave the project unfinished, resulting in employee unemployment and supplier debts. Aren't these new social costs?"

Zhang Yunqi said, "So Professor Li, I think the problem isn't with any particular company, but with the system. If the rules themselves encourage cost shifting, then all players will be forced to join the game! For example, some of the current investment attraction policies in Lijin, I even think that the essence of these policies is discriminatory avoidance, a de facto dual-track system! In this situation, it's meaningless to discuss corporate social responsibility and how to bear social costs."

"So what do you think we should do?"

"This question is beyond the scope of the curriculum."

"How to say?"

"This is a question that policymakers should consider. If I were a student, what I say here would be nothing more than superficial idealism before it is implemented. But if I were the operator of Jiangxinzhou Island, then I would be a beneficiary, and I would firmly uphold and support the city's investment promotion policies!"

“Okay, let’s assume you are the operating entity of Jiangxinzhou. You firmly uphold the city’s investment promotion policies and use these policies to transfer a large amount of social costs. Then how would you respond to accusations of the loss of state-owned assets?” Li Weimin continued, “Note that I don’t want public relations rhetoric, but rather a defense based on ethical considerations!”

This is a tricky question.

Zhao Yihan turned her head to look at the silent Zhang Yunqi, a hint of worry appearing in her blinking eyes.

Zhang Yunqi thought about it for a long time. He had indeed been seriously considering this issue, and had even thought about it many times over the years, because he had faced this situation before in the acquisition case of Jiangchuan Longjingyuan Canned Food Factory. After a long while, he said, "Professor Li, I don't think I will offer a defense."

"why?"

"Professor, your question makes me want to set aside the facts and talk about principles," Zhang Yunqi said. "Did the Jiangxinzhou Entertainment City project involve the loss of state-owned assets? Yes! But what we really need to define is whether there were any illegal or criminal activities involved in the process of the loss of state-owned assets. If there were, then my defense would be an attempt to exonerate myself from illegal or criminal activities. If not, justice will prevail, so what is there to fear?"

The classroom erupted in commotion again.

Some students at the scene agreed with Zhang Yunqi's point of view, but not many. Applause was sparse, and there was more uproar and whispering discussion. Most students obviously found it difficult to accept this cold-blooded factual argument. A student from the same department who knew a little about his identity sneered and complained: "Where the interests are, there the self-interest is."

Li Weimin gave Zhang Yunqi a deep look, then gestured for him to sit down: "Your insight is profound, and your views are very realistic. Please sit down."

******
P.S.: Guys, I wrote over 4,000 words today!
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