The Red Era: Starting from a Truck Driver

Chapter 290 It’s time to get down to business
In August 1980, the special zones were finally established. The following four cities were designated as special zones, which implemented the policy of reducing and exempting income tax and recruited both Sino-foreign joint ventures and independently operated enterprises.

Except for some specific commodities, export products produced in the Special Administrative Region are exempt from taxes. The only items subject to tax are tobacco and alcohol.

Jiang Cheng's food factory in Shenzhen produces meatballs that can be shipped to Hong Kong and Taiwan as long as the freight is paid. In addition, for those who come here to invest, the land is no different from being given away for free. The main purpose is to attract foreign investment to drive employment and increase foreign exchange income, and they have never thought about earning the money from land transfer fees.

In addition to Shenzhen, the other three special economic zones are Zhuhai, Shantou and Xiamen. They are all seaport cities, and it is also easy to transport goods from the Xiangjiang River.

However, Jiang Cheng did not plan to open factories in the other three cities, at least not food factories at the moment. His meatball sales channels were limited, and the domestic market was not yet open. The shelf life of this product alone was a big problem.

In China, except for some leaders who may have refrigerators at home, ordinary people don't even have refrigerators. Jiang Cheng's meatballs don't contain any preservatives or anything like that. If they are not refrigerated, they will go bad in a few days.

Therefore, one food factory in Shenzhen is enough for Jiang Cheng's production, but "Jiangdonglai" supermarkets still need to be opened in the other three cities.

It was not difficult to open a supermarket there, but the difficulty was that Jiang Cheng did not understand the policies of the Special Administrative Region at the beginning. He thought that he could trade freely in the Special Administrative Region and that he could do anything as long as he lived here and had money.

Unexpectedly, a problem arose as soon as I took over the food processing plant: tickets were still required to purchase food.

Of course, since they want to attract investment, they have naturally taken this issue into consideration. This led to the emergence of a unified purchase of grain by enterprises, that is, the amount of grain a company needs can be declared based on how many people it employs.

It’s not that you can buy as much as you want. If that were the case, Jiang Cheng wouldn’t be able to provide free meals.

Fortunately, Jiang Cheng is not a real Hong Konger, so he can buy food from Lichuan Farm. But in this case, it will be very troublesome for Jiangdonglai Supermarket to get rid of foreign exchange purchases.

Unless Jiangdonglai's food area, grain, oil, meat and so on all implement a high-price strategy, otherwise if Jiangdonglai wants to purchase things at a fair price, they only want foreign exchange. If they don't give foreign exchange, they may not sell even if you add money.

However, when purchasing with foreign currency, the domestic exchange rate is used, which is very disadvantageous.

Panxi Restaurant is the first restaurant across the Luohu Bridge from Hong Kong to Shenzhen. It is where most of the merchants coming here from Hong Kong have their first meal.

As for the businessmen who can invest in China from Hong Kong, there are few who can make money without doing anything. Most of them come here for tax exemption and land transfer fee exemption. Those who come here are basically people who want to build factories, and naturally they are also rich people.

But some Jiang merchants who came to visit had no food coupons, so they could only watch others eat. They had to go to Shenzhen and then go to the investment promotion unit to have a reception meal.

Even if they set up a factory, they had to verify the number of employees and issue a certificate to buy some food. And they could only buy food. Hong Kong merchants did not have food coupons, so they could only eat in the factory when they came to Shenzhen, and they still could not buy food in restaurants.

Jiang Cheng can use the food purchased from the reclamation farm to provide free meals for the factory and employees, which is considered a welfare. But if the food is sold to the supermarket that is about to open, without using food coupons and not selling at a high price, the food at the reclamation farm will definitely not be able to support it.

Selling grain at a high price went against Jiang Cheng's original intention. He did not set up Jiangdonglai for the purpose of making money, although he did make a lot of money in the traditional industry. In Hong Kong, apart from overseas orders, only real estate made more money than supermarkets.

Another is Hong Kong's financial industry, which also makes money quickly but is unstable. Shopping malls and supermarkets are a stable industry that is always in demand.

Even in the later Internet age, when online shopping and food delivery and errands have had a great impact on the physical industry, shopping malls and supermarkets are still holding up well.

After all, it is impossible to rely entirely on online shopping for daily shopping, and there is no quality assurance for online shopping.

Jiang Cheng was not willing to do a business that would lose money even if he had money, and he also did not want to delay the opening of the Jiangdonglai supermarket, so he decided to make some adjustments.

In recent years, most of my portable space has been used for fun, and it’s time to do some serious work.

The most powerful part of Hong Kong's "Jiang Dong Lai" is the purchasing department, because Hong Kong itself is a place where materials need to be imported. Basically, there are no resources to be developed. This is very relevant to the high prices in Hong Kong in later generations, where everything depends on imports.

In Hong Kong, you only hear about brands that are doing well, but you don’t see any special raw materials. For example, there is Wuchang rice in the Northeast, and coal mines in Shanxi. In Hong Kong, even if there are any special products, they are just finished products processed from imported materials.

If we talk about specialties, the various varieties of meatballs from Jiangdonglai are now specialties. Some Hong Kong people who often go overseas for business now buy some meatballs from Jiangdonglai when they return to Hong Kong. The ingredients are real and the taste is authentic.

Because of the shelf life issue and the underdeveloped international refrigerated transportation, you can’t eat these meatballs outside of Hong Kong.

However, in recent years, Hong Kong people doing business in Wandao no longer have to worry about this. The direct-operated restaurant of "Jiangdonglai" has opened in Wandao, and the business is pretty good.

To produce meatballs, a large amount of flour is needed. At the beginning, Jiang Cheng purchased it locally in Hong Kong, but the rice and flour in Hong Kong were purchased domestically.

Domestic grain prices actually have no advantage internationally. Hong Kong imports rice from China because there is no transportation cost and it can be transported directly by train.

Domestic flour costs less than 0.2 yuan per pound, and a ton costs more than 380 yuan. Rice costs 1.8 yuan per pound, and a ton costs 360 yuan.

Jiang Cheng asked the buyers to investigate the international rice prices. There is no need for on-site inspection to just check the prices, as the information can be found in many foreign trade companies.

The survey results show that if transportation costs are not taken into account, rice is actually very cheap in four countries in this era.

The cheapest is from India, but the quality of Indian rice is not very good, and the price is about US$130. According to the current domestic exchange rate, it is less than RMB 200.

The second is Thailand, which costs US$135 per ton. Even its cheap quality rice is better than that of other countries.

The remaining countries are the United States and Pakistan. Pakistan can be ruled out. The price is cheaper than in China, but it has no advantage compared with other countries. However, neighboring countries will buy rice from Pakistan. The transportation cost is not low in this era.

Take Thailand for example, the reasonable price is 200 RMB, which is 150 RMB cheaper than in China. But the fuel cost per ton of transportation, loading and unloading of goods, and the cost of warehouses for storing grain are equivalent to port fees.

In addition, sea freight generally has insurance costs, and the proportion is calculated based on the cost of the goods.

In summary, the cost of transporting each ton of rice from Thailand to China is more than 80 yuan. And this is for state-owned departments to purchase. If a private purchase is tax-free, there will be little profit after adding a tax. But even so, imported rice from Thailand is cheaper than domestic rice. Moreover, if Jiang Cheng goes to Thailand for a stroll, he can save more than 15 million yuan by renting a port warehouse there and buying 100,000 tons of rice.

Although it sounds like a lot, 15 million can only buy a luxury villa in Hong Kong. It may not even be possible to buy a top-class villa, let alone the star-rated hotel that Jiang Cheng built in Kowloon. Even the land cannot be purchased.

But there was no other way. Jiang Cheng still wanted a large amount of rice in his own space, so he only needed to buy it once. Even if he was willing to spend more than 10 million yuan, he would have to prepare a large number of warehouses to store it if he really wanted to transport it from Thailand.

If so much grain were transported into the country, many problems would arise, and storing it in space would be the most convenient way.

In addition to rice, meat and various grains and foods from other countries must be purchased. At present, it is not only grain that requires coupons in China. Without coupons, basically nothing can be bought in the special economic zones.

At present, we are able to attract many Hong Kong businessmen here because their industrial structure is different. They come here for the tax exemption for their businesses and the free land.

Finding domestic OEMs does not even require the cost of building a factory, but businessmen are profit-driven. If you build a factory in Shenzhen, in addition to the factory costs of hundreds of thousands, the wages of the workers recruited are only the wages of dozens of people in Hong Kong for a factory of hundreds of people.

Let me put it this way, currently building a factory and recruiting workers in Shenzhen costs not even one-tenth of the cost in Hong Kong.

For clothing, toys, and some assembled products, there is no need to worry about raw materials. But Jiang Cheng is in the retail industry, so the source of goods is very important.

If the sale is allowed, 100,000 tons of rice would not be enough for the four special economic zones. But just this thing that costs a few cents per pound would cost tens of millions. Grain is not just rice, but there are dozens of varieties.

Jiang Cheng calculated that if he really stocked up everything like this, it would not hurt Jiang Cheng's wealth. The value of houses in Hong Kong had skyrocketed more than ten times in recent years, and the rent alone was more than what he earned from selling meatballs, so he could not spend all the money.

In the early 1970s, when Jiang Cheng first arrived in Hong Kong, although everyone's monthly salary was only a few hundred yuan, a house of 200 to 300 square feet would only cost 20,000 to 30,000 yuan. If you worked hard for a few years and borrowed some money from friends, you could still afford a house.

But later on, the income of those workers could not keep up with the increase of housing prices, and many Hong Kong people could only rent houses. But the rent in Hong Kong was really not cheap. Jiang Cheng had to pay hundreds of yuan to rent such a bad place.

This means that a house of more than 20 square meters would cost 40% of the average salary of Hong Kong residents in 1972. Therefore, it is common to see six or seven people living in one house in Hong Kong. If a person lives in a house of more than 20 square meters in Hong Kong, he is considered to be doing well.

Although the average salary in Hong Kong is now more than 3,000 yuan, the price of a house is often 200,000 or 300,000 yuan. It takes an average person at least seven or eight years to save money and buy a house. The key is that the price of the house is still rising in the past seven or eight years.

Therefore, in Hong Kong, if you don’t have any skills and just work, it is very difficult to buy a house by your own efforts. It requires the efforts of both husband and wife.

In fact, two years ago, Hong Kong also launched a new plan called "Home Ownership for All". The plan was formulated a long time ago, but this is for housing. After the plan came out, a batch of houses had to be built first. After the houses were built, it was officially launched.

Two years ago, many public housing units were put on sale. They were all small units, and each unit only cost around HKD120,000, which was half of the market price. Many people had to prove their credentials to buy them.

The first batch of houses were basically sold out as soon as they appeared. There was a lot of rigid demand in Hong Kong, and there were too many people from China in recent years. Teenage girls married Hong Kong men in their 40s and 50s just to have a house to live in.

When the first batch of houses came out, there were many frauds, and many people who did not meet the conditions also bought them. This also gave some scalpers a business opportunity, and those who had no money and conditions to buy were packaged by some scalpers and given some false information.

Then buy a house and rent it out to others, and it won’t take long to make back the money.

Jiang Cheng disdains to do that. He bought many finished houses in batches because he had no money before. Now, if you just want to rent out and earn rent, there is no need to buy houses deliberately. Because buying from others, no matter how cheap it is, you can't make money from the real estate developers themselves.

After Shenzhen became a special economic zone, a large number of outsiders came here almost every day. In August, Jiang Cheng arranged for people to go from Hong Kong to Shenzhen for negotiations and prepare to take over the processing plant in Shenzhen.

Those who are willing to stay will sign a new labor contract. Those who are not willing will leave. The production of meatballs does not require much technical content and is an assembly line model. The new recruits can basically operate it in half a day, so it is not a problem even if all of them are gone.

The factory manager and some of the leadership team at the factory proposed a Sino-Fragrant joint venture, thinking it was unnecessary, as they would still have to recruit domestic workers after taking over.

But Jiang Cheng likes to be the only one who has the final say in his industry. Even if the decision is wrong, he doesn't want others to interfere.

After more than a month of negotiations, under Jiang Cheng's arrangement and insistence, the management rights of the food factory were returned to Jiang Donglai. Because there was no other way, they could not occupy a factory without handing over the management rights.

On the one hand, the task order was given by Jiang Cheng, and on the other hand, the factory wages were paid by Jiang Donglai, and the processing materials also had to be purchased by Jiang Donglai.

If Jiangdonglai does not give orders, pay wages, or purchase materials, it will be useless for the factory's leadership team to occupy the factory. On the other hand, if this is really done, other overseas businessmen will not dare to invest after knowing it.

After taking over the factory, Jiang Cheng did not expect that the leadership team here would take away all the hundreds of employees in the factory, leaving none of them behind for him. They were taken to other Sino-foreign joint ventures, and those employees did not have a contract with Jiangdonglai in the first place, so they were not considered to be the real employees of Jiangdonglai.

After Shenzhen became a special economic zone, overseas merchants could operate independently. It was not just a simple OEM business, which attracted many Hong Kong merchants. The merchants who came here found that the wages of workers here were really cheap.

Many people lamented that the salary in China was the same 20 years ago, and it is still the same 20 years later. And 20 years ago, the salary in Hong Kong was actually the same as that in the mainland, but it was easier for ordinary people to find jobs in Hong Kong.

There are many factories, and some small bosses do not need a large factory building, a single-story factory building is enough. If the speed is fast, a single-story steel structure roof factory building can be built in two months.

For the merchants who came earlier, it was easy to recruit workers, dozens or hundreds of people, and they could recruit them in a few days. But as more and more merchants came to Shenzhen to build factories, some Hong Kong manufacturing industries began to truly relocate.

When recruiting workers was no longer a matter of just shouting and several people would follow you, Jiang Cheng knew that the wages of workers in Shenzhen were about to start rising.

As for the Jiangdonglai supermarket, thanks to the efforts of the members of the purchasing department, Jiang Cheng flew to several countries within a month and a half and managed to procure the conditions required to open it.

Jiangcheng was planning to open the store on National Day, and there were purchase limits on all fresh produce. Each person was only allowed to buy one pound of rice at a time. They would stop selling if they sold as much as they could in a day, and meat was also calculated based on how many ounces each person could buy.

Anyway, there are purchase limits, so it is impossible to buy more without tickets. If you can buy something and then queue up to buy it again, you are just lucky.

(End of this chapter)