Journey 1995:Non-Stop

Chapter 366 Tender Document Review
With everything in place, the bidding meeting of Jian'an Group was successfully held. Yan Hui, along with Wang Yongjun, arrived at the site with the bidding documents.

Unlike government bidding, the management here is not so strict, and it seems a bit noisy. However, quite a few people know Yan Hui, at least one-third of them, and many others also know Wang Yongjun.

"Among them, as far as I know, Mr. Zhao is a first-level agent, and it seems to be a steel mill in Hebei Province." Wang Yongjun knows a lot of people; he has been working on construction sites for many years.

"Just this one Level 1 agent?" Yan Hui asked, somewhat puzzled.

“I only know this one person; I haven’t met half of the others here,” Wang Yongjun explained.

Yan Hui nodded. Among half the people, there was only one level-one agent, which was really not a high proportion.

Currently, among the first-level agents, Yan Hui is one of the most powerful, because his background and money are clean. He can allocate all his money at will, and his capital is sufficient.

Besides Yan Hui, most of the first-level agents are jointly owned by multiple people, and some even have twenty or thirty shareholders who have come together to become first-level agents.

For example, a deal worth 3000 million might yield a profit of around 100 million. In Yan Hui's view, this means using 3000 million to earn 100 million, resulting in a profit margin of approximately 3.3% per deal.

Many other first-level agents are in this situation: they have about 500 million yuan of their own funds, and the remaining 2500 million yuan belongs to other people. Even if they have 30 million yuan, they can only earn 3000 million yuan, but they have to give away more than 100 yuan, and they can only earn about 70 yuan themselves.

Earning 500 from 30 million yields a profit margin of approximately 6%, which is actually higher than Yan Hui's.

However, this is a prerequisite for earning 100 million, which is equivalent to leveraging. If this deal can only earn 70, Yan Hui adjusts the profit margin from 3.3% to 2.3%, while the other person won't earn a single penny, because the promised 70 cannot be reduced; otherwise, who would be willing to put their money in and work with him?
Today's order means Yan Hui only made 3000 yuan out of 30 million yuan, a profit margin of 1%. Under these circumstances, other first-level agents may not make any money, since the cost of using capital is too high.

Yan Hui's financing cost is just a bank loan, with a monthly interest rate of less than 0.6%, which is much lower than those investment financings. Moreover, for this particular deal, Yan Hui doesn't need a loan at all; his loan quota is 20 million, which is currently only in the approval stage and has not yet been actually disbursed.

The 3000 million mentioned here is a metaphor. Today's order only requires 700 million per month, so other first-tier agents can still compete. Of course, other first-tier agents also need to consider the possibility of construction sites delaying payments for more than a month. Yan Hui's extreme profit margins leave other first-tier agents with no ability to withstand the risks.

Yan Hui wasn't "coerced"; he had no choice. First, this was his first contract, and he was determined to win it, even if it didn't make a profit. Second, it was a contract with Jian'an Group, and he couldn't let people think he had won it through other means.

If his price is similar to others, even if his service is actually better, people will still talk behind his back if he wins the bid.

He can only succeed by squeezing out costs. Once the prices of all companies are made public, he can win by relying on his absolute price advantage, and no one can say anything about it.

As several representatives from the construction and installation group emerged, the bidding personnel quieted down and began submitting their bids.

The process here is relatively simple. After submitting their bids, everyone waits at the door for the results. Then, they go in one by one to communicate, and after the communication, they disclose the prices of each company together, and then they directly select the bidder.

There was no secondary bidding process here, since it was the company's own funds, and they had the final say. While waiting outside, several people who knew Yan Hui came over to greet him: "Mr. Yan? I saw you just before you submitted your bids. I didn't expect it to be you! You're also participating in the steel bidding?"

"I just secured a first-tier agency, so I came to see if I could help out at the construction site." Yan Hui was fairly familiar with the person speaking, having eaten together before, so he explained.

This man is named Wang Jian. He was someone I knew from when I was making steel formwork. Yan Hui had bought steel formwork from him before.

"Huh?" Wang Jian exclaimed in surprise, "I've never heard of that! Which steel mill did Mr. Yan acquire a first-tier agency with?"

"Lai Steel".

As soon as Yan Hui said this, everyone around him looked over.

Some steel mills from other provinces are finding it difficult to sell in Shandong Province, making it easier to obtain first-tier distributorships. Currently, the most valuable first-tier distributorships in Jinan are those of Jinan Steel and Laiwu Steel. Everyone in the industry knows the other three besides Yan Hui; it's unexpected that another one has suddenly joined the ranks today without any prior announcement!
"Huh? Mr. Yan, you came all this way without warning! If I'd known you were coming, I wouldn't have come at all!" Wang Jian knew that Yan Hui had sold his steel formwork company to get into the chemical industry. "Your chemical business is really profitable!"

"It's alright. Chemical engineering isn't my main business, after all. I'm planning to go back to the construction site and do some work." Yan Hui said, both modestly and firmly.

On the one hand, it seemed as if he hadn't achieved anything in chemical engineering; on the other hand, it demonstrated his determination.

“President Yan, Old Wang is right. If we had known you had already secured the first-tier agency for Laiwu Steel, why would we have come here? This is our first order, right? We should at least give you some face!” another person said.

This man was the boss who had competed with Yan Hui for the steel formwork business before. His surname was Liu, and his assets were only around one million before. Yan Hui was not very familiar with him, but could only say that he looked familiar.

"Mr. Liu, it's been a long time! Since everyone has submitted bids, let's just follow the rules. This bid isn't very big, so let's compete fairly." Yan Hui didn't explain anything further.

"This isn't a big deal? Mr. Yan is definitely a big businessman!" Mr. Liu's tone was slightly skeptical. "In just two or three years, Mr. Yan's capabilities have increased many times over!"

"We'll see how things go." Yan Hui didn't respond further, gave a few simple words, and then started discussing the next project with Wang Yongjun.

Yan Hui has three projects to invest in recently. He's determined to win this one, and the other two have profit margins of over 3%, making them profitable projects. If he wins just one of these two projects, he basically won't need a loan, because these two projects are smaller, with monthly expenses of around five million.

Yan Hui has always been one of the best at calculating costs since he was in the timber business. Now that he has entered this low-profit industry, he is thriving.

Everyone waited outside for two or three hours, during which time many people went out to attend to other matters, and the bidding results were already in. The corporate bids weren't as complicated; the relevant person in charge called everyone in and began the procedures before the bids were announced.

(End of this chapter)