1988: Back to the human world for a few years

Chapter 419: Trying Something New (2)

Students who have studied "A General History of World Economy" should all know that with the collapse of the Bretton Woods system, since the 70s, the strategies of European and American countries have gradually begun to shift towards "neo-mercantilism"... or more accurately, "resource mercantilism."

Its core idea is that resources are an irreplaceable component of measuring wealth and the right to survive, and the purpose of all economic activities is to obtain resources.

In addition to tapping domestic resources, foreign trade is the real source of resource wealth. Therefore, in order to make a country strong, it should try to achieve a net inflow of resources in trade.

Just like the core rule in "Red Alert 2", the more resources a country has, the richer and more powerful it will be. Therefore, when possible, the country should encourage resource imports at the cost of debt, and discourage or even restrict the import of goods with unequal resources, especially luxury goods... On the contrary, it will encourage the export of various high value-added goods to other countries.

Since the 70s, the world has gradually entered the technological age. Products such as automobiles, electrical appliances, precision instruments, large equipment, medicines, luxury goods, etc. have become the main export commodities of developed countries in Europe and the United States. In fact, you can also regard it as a concrete manifestation of this resource mercantilism.

The property rights financial transaction model is actually also based on the financial instruments and gameplay born out of resource mercantilism...even in later generations, many financial products are secondary/tertiary market products born out of this gameplay.

Of course, unlike the common property rights financial transactions in later generations that use real estate and ordinary assets as core value objects, the property rights financial transaction model with scarce natural resources as core value objects is undoubtedly much more valuable and attractive to the capital market. Otherwise, Mitsubishi Bank would not have taken the risk to intervene in this project in 1990.

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Well, back to the point, the so-called "property rights financial transaction model with scarce natural resources as the core value" can be explained in the most popular and easy-to-understand words:
A takes samples of the precious fruits produced in his field to B, hoping to borrow money, and then buys a hoe and a backpack to dig out all the precious fruits in the field. After selling all the fruits, he will pay back the money and pay you some interest.
B also thought these treasures were great, but it was a shame to only earn interest on such good things.
So B said to A: Although your stuff is good, it has not been dug out yet. What if it cannot be dug out? What if it is dug out but cannot be sold at a high price?
So, I can lend you money, but I can only lend you enough money to buy a hoe. You start digging first. Then we can become partners, I will pay you interest, and you can give me some of the profits after the things are sold. I will take the samples you give me to find some stupid clients, and if they like them, I will ask them to pay first, and then give them the treasure after you dig out the things. In this way, the risk of me lending money will be much smaller, and you can also use the money from those stupid clients to buy a backpack.

A thought about it, and although he felt that he should give more money, he was really short of money at the moment. Besides, it would be very troublesome to sell the things after digging them out by himself, and he might not be able to sell them all, or even get a good price. Now that B was willing to do it for him, that was a good thing, so he agreed.

When B saw A agreed, he immediately found C and told him that the treasures were all his. C was very satisfied with the treasures and said he was willing to pay in advance and give them to him after they were dug out.

B saw this and said, "Wait a minute, since you are so kind, why don't you join us and do it together?" You can claim some quotas and announce that you also have a share of the land that produces the precious lumps. Then, you can find the next buyer and follow the same method to sell these extra precious lumps to them. Then, you can increase the price and we can split the extra money 30-70, 70-30. Don't think I get too much. I am the only one who has these precious lumps. It's useless for you to find others.

C thought that such a good thing would surely be hard to sell, so it was a good idea. He agreed to it and found D, E, F, and G. He also boasted about the scarcity of the treasures and told them that the quantity was limited and that they could make an offer now and the highest bidder would win. No matter whether they had any use for these treasures or not, they would make a profit whether they resold them or kept them for appreciation... After a while, more people wanted to purchase the treasures, but the production of the treasures was limited. If they wanted to get them again, the price would not be the same as it is now.

D and E thought about it and refused, while F and G contemplated for a while and bought the spot of the precious child at a high price.

After a period of time, with the joint hype of B, C, F, and G, the price of the precious gem soared all the way. Not only did the price triple, but due to its scarcity, you might not be able to buy it even if you have money, and you often have to pay a higher price.

As a result, F and G regretted their decision and gritted their teeth to spend a large sum of money to buy some precious futures quotas, joined the speculation army, and then looked for the next buyer to take over.

In this process, as the real owner of the treasure, although A did not earn as much as B and C, but in the process of layer-by-layer premium circulation, relying on the original agreement with B, he still obtained much higher profits than digging out the treasure and selling it directly.

So, you see, like almost all financial products, this property rights financial transaction model is actually a game of pass the parcel in the capital market.

However, because the precious gem is a scarce resource and has a very strong use value, there are many more "flower receivers" in this game than in ordinary games. Even if the plate explodes and the price drops slightly, there will be people who will have to buy the thing because of the demand, and then start brewing the second round of the game...

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Obviously, after the National Cancer Center of the island nation and Shibata Laboratory of the University of Tokyo discovered the powerful anti-cancer effect of mulberry fungus in the mid-80s, mulberry fungus, which has a wide distribution but low wild yield, suddenly became an irreplaceable treasure in people's minds.

However, since the current domestic financial market is still in its infancy and a series of relevant policies have not yet been introduced, Yang Mo can only play the role of A in this game.

However, although he could only be A, relying on his later VC experience and the bargaining chip of "the world's first large-scale artificial imitation wild cultivation of poplar and Coriolus versicolor", he still forced to adjust some game details in this Coriolus versicolor property rights financial transaction project.

1. Adjustment of the supply chain model

With Yang Mo's insistence, Sankyo Co., Ltd. was taken out of the water, and its subsidiary SL Forestry Development Company had to adopt the "company + farmers" cooperation model, and successively invested in the establishment of more than 27 acres of demonstration bases for precious Chinese medicinal materials mainly based on poplar and mulberry fungus in 4000 villages including Zhenjia Village.

Similarly, according to Dahua’s rules, all such projects adopt a two-tier PPP model, with rural cooperatives established based on villages/village groups (in these cooperatives, Dahua, as the technology provider, holds a 7% stake, and local supply and marketing cooperatives responsible for the supply of basic materials and coordination of various tasks hold a 6% stake). Only then was a contract signed with SL Forestry Company.

Don't underestimate this point. It is equivalent to changing the role of these Coriolus versicolor cultivation bases from the original A to "A+C", which enables them to have considerable negotiating power in the subsequent process of introducing financial capital cooperation... You have to know that Sankyo Co., Ltd. is originally the leading pharmaceutical company in the island country, and anyone who has done futures knows what this means.

2. Fine-tuning of profit rules in the production process.

Originally, under the game of property rights financial transaction model, the upstream production enterprises could only obtain survival and production funds through loans at the beginning. If they wanted to truly reap profits, they had to wait until the Coriolus polypore was harvested, or until the Coriolus polypore was sold at a high price in the game of passing the parcel, and then cash out through equity transfer.

But after Yang Mo's A+C adjustment, villagers in 27 villages including Zhenjia Village can realize profits through land rent, working at the base and 20% dividends of the value of Coriolus versicolor assets (this kind of game will hold back the stock and then release futures orders one by one) even in the initial stage.

And after the dividends are distributed, the company can still enjoy a 20% dividend for the increased value of Coriolus versicolor until all the Coriolus versicolor is harvested and the transaction is terminated three years later.

In addition, due to the adoption of the "enterprise + farmer" model, SL Forestry Company signed a land transfer contract with the villagers with a fixed lease (30 yuan per mu/year, 15 years, increasing by 10% each year), and also signed a land acquisition contract or a joint defense and protection contract to share 20% of the mulberry fungus income.

Of course, with Yang Mo's insistence, these village cooperatives must also abide by the "three three three one" regulations (30% cash, 30% rural infrastructure construction, 30% investment funds, and 10% village public welfare) and further be involved in the management and reinvestment of 20% dividends... Dahua Company is a central enterprise after all. Since it has invested so much in this simulated wild Coriolus mushroom cultivation project and made such great concessions in interests, the village cooperatives must not only hand over the project management rights, but also follow some of their plans.

3. Exploration and game on pricing power of Coriolus versicolor
In order to ensure procedural justice and to avoid the impact and constraints that may arise from the gradual opening of the domestic financial market in the future, Yang Mo, together with the competent authorities of DZ City, took a different approach by pricing each old poplar tree in the village forests that was more than 20 years old, and issuing standing timber real estate certificates...Obviously, in addition to preventing certain human damage and at least providing compensation at the price, at some point in the future, if necessary, these old poplar trees could immediately be traded as individual standing timber through the real estate center.

Of course, the significance of pricing old poplar trees is not entirely for future preparations, but also has a direct significance at the moment. Since Coriolus versicolor is still in the mycelium germination stage, it is undoubtedly unrealistic to rely on these Coriolus versicolor that are not even the size of a fingernail to obtain sufficient loans from the outside world.

Therefore, after several rounds of negotiations, Mitsubishi Bank was willing to recognize the valuation of these old poplar trees by the competent authorities of DZ City. After SL Forestry provided a repurchase contract, Mitsubishi Bank would provide mortgage loans to the village cooperatives that owned these old poplar trees based on the market value method... In other words, after Yang Mo obtained a loan by mortgaging the property rights of Coriolus polyphylla, he obtained a second loan through these old poplar trees, which solved the problem of insufficient start-up funds for each village in one go.

Although the actual value of these old poplar trees lies in their use as the cultivation medium for Coriolus versicolor, which is in fact almost the same as mortgaging the property rights of Coriolus versicolor, banks have their own rules. If one does not exploit the existing loopholes, he would undoubtedly be no different from a fool.

Of course, as compensation, the insurance business of these old poplar trees was also entrusted to Mitsubishi Bank as an agent. Finally, a property and casualty insurance company from an island country came forward to insure these single standing trees, with an insurance amount of 4 yen per tree and an insurance premium rate of 1%… Although this premium seems normal, the insurance amount of 4 yen per tree is quite a rip-off. However, considering that Yang Mo’s side did gain a lot of benefits from Mitsubishi Bank, he did not care too much.

In addition, under Yang Mo's instruction, Dahua's Asset Preservation Department also set up an "International Phellinus Immaturus Price Tracking Group" to keep an eye on the transaction prices of various types of wild and artificial Phellinus Immaturus at home and abroad. At the same time, it also jointly established an "International Anti-Cancer Technology Tracking Group" with Sankyo Co., Ltd. to count the number of cancer patients in various countries and track the latest technological progress and application of anti-cancer drugs in various countries.

Anyone with a discerning eye can see that Yang Mo intends to leverage the irreplaceable role of Coriolus versicolor in fighting cancer, as well as the fact that he is the only base in the world that can cultivate simulated wild poplar and Coriolus versicolor on a large scale, to send a signal to the foreign capital community that "I can jump ship at any time."

You have to know that, although for some reasons, in the current Coriolus versicolor property rights financial transaction project, it is Mitsubishi Bank that plays the role of B.

But Mitsubishi Bank is more focused on the island market in this area. If Yang Mo feels that Mitsubishi Bank's internal valuation of these simulated wild poplar and mulberry fungus is unfair, then Yang Mo can look for banks in America, Britain, France, or even South Korea to replace Mitsubishi Bank... Everyone on earth knows that as long as there is enough interest driving force, even if a contract is signed, the capital world has many means to replace you in the secondary and tertiary markets. The worst that can happen is that you will just have to pay a higher price.

Of course, if it really doesn't work, Yang Mo can try to hype and reduce production at the same time to make Mitsubishi Bank uncomfortable... After all, the cultivation of simulated wild Phellinus is an agricultural project, and when signing contracts for agricultural projects, some exemption clauses caused by force majeure factors such as natural climate influences will be added. So, don't look at Yang Mo's current internal valuation of simulated wild Phellinus, especially Grade B Phellinus, at $75 per catty. But that's just because the game of passing the parcel has just begun and the hype has not officially started... If the hoarding and hype work begins, if Mitsubishi Bank still dares to give this kind of valuation, Yang Mo will definitely use the trick of "attacking halfway across the river" on it.

........................

It took more than half an hour for Yang Mo to explain to the old man what property rights finance is, what tricks are involved, and what actions and fine-tuning Dahua Company has done in this cooperation.

The old man was overwhelmed by what he heard. China now had almost no experience in financial capital operations. The only related things he had come into contact with were the Shenzhen Stock Exchange, which had just been established not long ago, and stocks and treasury bonds. Yang Mo told him a lot of unheard-of things, and at his age, he couldn't digest them all in a short time.

However, he still heard some things that Yang Mo deliberately did not explain, and looked at him with some confusion: "Xiao Yang, although I don't like this property rights financial transaction model, since these 27 villages including Zhenjia Village can successfully obtain loan funds for their construction and development, and the main battlefield of property rights financial transactions is in the island country, then I won't say much."

"But the question is... why did you choose Mitsubishi Bank? As far as I know, China does not have a franchise license to open its financial market to island countries, right?"

Yang Mo smiled and said, "Although China has not opened its financial market to the island countries, it has given special consideration to the banks in Hong Kong... Although Mitsubishi Bank is a commercial bank in the island countries, they also have branches in Hong Kong. Although the Mitsubishi Bank in Hong Kong has the word Mitsubishi in its name, it has started a localization strategy a long time ago, and many local Hong Kong investors also have shares in it."

Although Yang Mo did not elaborate, the old man immediately understood the key point and nodded: "That's right, Hong Kong is the financial center of Asia after all, and it's not many years away from the handover. The country must show its attitude."

After thinking for a while, the old man was still a little bit unwilling to give up: "But I still don't quite understand. Even if Coriolus versicolor is very scarce and valuable, even if the imitation wild poplar Coriolus versicolor you developed has great market potential, after all, the cultivation technology of imitation wild Coriolus versicolor is not very mature. Not only have you not cultivated Coriolus versicolor yet, there is no successful precedent for large-scale artificial cultivation of Coriolus versicolor... Why is Mitsubishi Bank willing to cooperate with you, and even made so many concessions?"

Yang Mo shrugged. "Mr. Zhao, you underestimate the fear of foreigners about cancer, and you also underestimate the popularity of Coriolus versicolor among Japanese people and even the wealthy people in Europe and America. Even if the efficacy of the imitation wild poplar Coriolus versicolor is not as good as the wild Coriolus versicolor, let alone the wild mulberry Coriolus versicolor, it should still be effective. For this kind of scarce resource with high value and high application scenarios, we took the initiative to find Mitsubishi Bank for cooperation. In fact, it can be regarded as their luck. It is reasonable for the other party to make appropriate concessions."

The old man glanced at him meaningfully, "Xiao Yang, although I don't know much about finance, I do know something... Imitation wild poplar mulberry is certainly a good thing, but you haven't grown it yet... Although capital is greedy, it also attaches great importance to risk control... You dare to cooperate in industrial financial transactions for a new project that you haven't even seen the shadow of. With such a large leverage, if you can't grow enough mulberry to deliver to them, then the loss they face is not small... So, is this normal?"

Hearing the doubts in the old man's words, Yang Mo smiled helplessly: "Mr. Zhao, I understand your concerns, but I want to say... you really think too much... Ye Changzhang and I are really not the kind of people who will do anything for paper data."

Yang Mo smacked his lips and suddenly said, "Mr. Zhao, do you know why I still chose Mitsubishi Bank, a bank that performs moderately in all aspects in Hong Kong, to cooperate with, even though Hong Kong has many strong international banks such as HSBC, Standard Chartered, Citibank, Hang Seng Bank, etc., which can also carry out property finance transaction business in a roundabout way? Even Wing Lung Bank, Nanyang Commercial Bank, Chiyou Bank, Shangshang Bank and other local and Southeast Asian banks in Hong Kong are not weak, and cooperation with them is undoubtedly more meaningful. "

The old man hummed softly: "Why?"

In fact, this is also one of the reasons why he is slightly dissatisfied with Yang Mo. As the island country was the first to start the ice-breaking journey, the economic relations between China and Japan are already the closest among all countries. Therefore, adding icing on the cake does not make much sense. State-owned enterprises like Dahua Company should give priority to cooperating with banks in the United States, Britain, Hong Kong, and Southeast Asia to play the role of adhesive.

Yang Mo naturally knew what the old man was thinking, and sighed softly: "Mr. Zhao, just as you said, although the imitation wild poplar Coriolus lindera has great potential, it is also a scarce resource at present; but after all, large-scale artificial cultivation is a new technology, and there is no precedent. It is also unknown how many of the Coriolus lindera we are cultivating will survive after three years;"

"So, apart from island commercial banks like Mitsubishi Bank, it is simply impossible for us to raise funds through the property finance transaction model, and to do so with sufficient initiative!"

Ok?
Is it necessary to use an island bank?
The old man who heard Yang Mo's subtext looked at him with confusion, and then woke up: "Xiao Yang, what do you mean...?"

Yang Mo nodded: "That's right, the island country's financial market is now on the verge of collapse at any time... In order to stabilize the market, the island country's banks and capital circles must continue to deliver good news to the stock market, and then create one reservoir after another to absorb those crazy idle funds, so that this game of passing the parcel can continue... After all, artificial mulberry fungus is a scarce resource at present, and it is related to the topic of cancer that the island people are most concerned about. It is appropriate to use this as a gimmick to build a new capital reservoir."

"So, this is the main reason why Mitsubishi Bank is willing to cooperate with us in property rights financial transactions even though our artificial Coriolus versicolor has not been cultivated yet and the technology is not mature... They are not unaware of the various risks of immature cultivation technology, but they have no choice but to do so. Otherwise, without sufficient good news to support it, no one knows when the pharmaceutical sector of the island country's stock market will stagnate due to a large-scale stock sell-off, triggering a terrible chain reaction."

"In other words, whether we can cultivate enough simulated wild Coriolus versicolor as scheduled is not that important. What's important is... they can use this as a gimmick and create one favorable factor after another... As the saying goes, the dog pays for the wool, and the pig pays for it. There are many tricks in the financial capital market. As long as the framework is well designed, even if the Coriolus versicolor property rights financial transaction project goes wrong, Mitsubishi Bank will still make a lot of money."

The dog gets the wool, but the pig pays the bill?

Listening to this rather nonsensical metaphor, an inexplicable sense of familiarity arose in the old man's heart, and he began to ponder.

Seeing this, Yang Mo concluded: "Mr. Zhao, to be honest, this cooperation with Mitsubishi Bank is just an introduction. The understanding of resource mercantilism by island countries with scarce resources is definitely deeper than anyone else. Therefore, they have been constantly seeking foreign investment in recent years and gradually tend to pursue GNP;"

“In short, everyone takes what they want. The Texas region needs external capital and technology to upgrade and transform its industries;”

“Enterprises need sufficient funds to start projects and introduce advanced production lines;”

“People need sufficient money to buy goods and improve their lives;”

"As for the island countries... they need us to provide them with sufficient supplies to maintain the smooth operation of society, and they need us to provide them with resources of sufficient value to provide new growth points for their economy and business."

"At least from the current perspective, this deal is not a loss-making one... Therefore, in the next few years, Texas will continue to expand the scale of cooperation in this area and attract more capital from island countries, thereby rapidly improving the per capita GDP level of Texas residents and accelerating the reconstruction of the local economic format."

After helping Ye Tao and others to get milk in a very obscure but righteous manner, Yang Mo's expression became serious: "Of course, please rest assured, Mr. Zhao, as a member of a central enterprise, we can still control the scale of cooperation... If the island companies want to obtain high-value or scarce resources from us, they can. But the ownership of these resources will always be in our hands, and how much and at what price they sell will never be decided by them alone!"

The old man looked at Yang Mo deeply. He was a little disapproving at first, but when he thought of the tens of thousands of acres of authentic medicinal materials GAP planting base that Yang Mo had built using the same two-tier PPP model, he was choked up.

As far as he knew, of Yang Mo's tens of thousands of acres of authentic medicinal materials GAP planting bases, only less than 30% were jointly invested with Sankyo Co., Ltd.... and in this less than 30% GAP planting project, Sankyo Co., Ltd.'s shares were only about %, and it had no dominant power at all.

But even so, Yang Mo still took out over 100 million US dollars of investment from Sankyo Co., Ltd. to build a local pharmaceutical factory and related industrial chain.

This shows how ruthless this young man is in controlling the island country's enterprises and how harsh his conditions are.

In other words, if someone said "it will never be possible for island country companies to have the final say", it would most likely be a joke, but if this was said by Yang Mo, it would be extremely convincing... Apart from anything else, the underlying enterprise architecture constructed by the series of two-tier PPP models is enough to build a sufficiently strong and "alternative" firewall in most cases.

Thinking of this, the old man sighed for a while, then nodded with satisfaction: "Not bad! Not bad! You can learn from others' experience... You in Texas have done a great job in this regard!"

It has been nearly two days since the old man arrived in Texas, and it was only now that he heard a word of positive praise from him.

This made Ye Tao and the deputy monitor beside him ecstatic.

Great, this big guy finally expressed his opinion. As long as we work harder, Dezhou will be promoted to a prefecture-level city...

There is hope!

(End of this chapter)