Journey 1995:Non-Stop

Chapter 376 One Night

Currently, there is a significant information gap between Yan Hui and other first-level agents.

Everyone else thought that Yan Hui wanted to take one-third of the market share, so no one was willing to compete with him, which made no sense.

Everyone just thought Yan Hui was a bit crazy and mentally unstable, but no one said much more.

Let him go crazy.

Rumors of Yan Hui's aggressive pricing had already circulated before today, but after today, the rumors have spread far and wide.

When Yan Hui first won the bid from Jian'an Group, everyone assumed it was to reward the company. Later, when Yan Hui won two more bids, everyone thought he was trying to boost his qualifications so he could get government contracts in the future.

Now, people are finding it hard to understand why Yan Hui is still so ruthless in government bidding.

In 2008, Jinan's annual steel production capacity was 1100 million tons. There is no publicly available data on the amount of steel consumed, but Yan Hui estimates it to be between 400 million and 600 million tons.

The market is large enough that even if Yan Hui were to secure a share of 10 tons of steel annually, it wouldn't have a significant impact on the overall market, nor would he become a public enemy. Yan Hui is well aware of this. This is precisely why he entered this industry—the market capacity is substantial enough.

First-tier distributors don't represent the whole picture. For example, some car factories consume tens of thousands of tons of steel annually, and these factories order directly from steel mills. Besides these, there are numerous small steel mills whose first-tier distributors are smaller than Laiwu Steel's second-tier distributors.

In short, the market is huge, complex, and enviable.

In 2008, China's steel production capacity exceeded 500 million tons, with a total output value of around 2 trillion yuan!
It's important to understand that the polyurethane adhesive that Yan Hui is currently developing has a national market size of only a few billion yuan per year, which is less than one-thousandth of the market size for steel.

On the night Yan Hui participated in the bidding, many people in the industry were watching with amusement at his behavior.

During a dinner party, a first-tier agent surnamed Zhu, after drinking too much, said directly: "If we both win this bid, he supplies 15,000 tons, and I also supply 15,000 tons. If I pay 25 yuan more per ton than him, I can earn an extra 125 million yuan! We're doing the same work and delivering the same goods, and I'm making an extra 125 million yuan for free!"

"Mr. Zhu, isn't there something wrong with your account? 15000 multiplied by 25, isn't that about 40?" someone reminded him.

"Who cares how much it costs, whatever! Is 40 a small amount? Huh? You're telling me, is 40 a small amount? 40 is enough to buy a house! He just filled in that number randomly! He's such an amateur! I'm telling you, an amateur!" Mr. Zhu retorted somewhat unhappily.

“Mr. Zhu, you’re right,” the person who reminded him immediately flattered, “I just felt there was something wrong with this guy. What’s the point of him if he’s not making money?”

"He's still making a profit, but it's too little. I heard that this Mr. Yan used to be in the timber business, so he's probably used to the low profits in timber!" Mr. Zhu laughed heartily. "How can someone in the steel business not make money? Money is getting less and less valuable. Can't he even understand this simple logic?"

"It's normal to not know the rules when you're new to the business!" a group of people laughed. At that moment, Yan Hui was also attending a dinner party, entertaining a client from a car factory. For the past year or so, Yan Hui had averaged two dinner parties a week, almost always involving drinking. What was gratifying was that his clients were mostly from out of town. These people would automatically become a little timid upon hearing they were attending a dinner party in Shandong Province, and Yan Hui rarely forced them to drink; his drinking was more genuine, which actually earned him more goodwill from many clients.

Most people from other places don't actually like drinking parties in Shandong Province, but since men all want to say they can handle it, they've gradually come to accept it.

They drank until after 9 p.m., but no one had drunk too much. Yan Hui was still quite sober when he left. He asked Li Pengfei to take the client to the hotel, prepared some gifts for the client, and then took a taxi back to the company.

Heng Hui Chemical has no shortage of funds for building the office building, so construction is progressing rapidly. They're even working overtime at night, and it's already up to the third floor. The original plan was for the office building to be three stories high, and it was expected to be topped out by the end of April.

After the office building is topped out, Yan Hui will immediately begin construction of the second workshop, which will be similar in size to the first workshop. The second workshop is expected to be completed in early 2009.

As for the purpose of the second workshop, Yan Hui hasn't decided yet, because the research and development of the new polyurethane is still in a bottleneck period. Even if the research and development is successful, it will take at least two or three years from applying for a patent to entering the market. The new workshop is mainly for future planning. No matter what it is used for, having more fixed assets is always good, even if it is used to store steel.

Yan Hui's current steel trading is entirely based on floating prices, so he doesn't bear the risk of steel price fluctuations. However, in reality, Yan Hui has a significant advantage over other primary agents—he has brothers in Brazil.

In 2008, my country imported over 4 million tons of iron ore, with Australia, Brazil, and India being the top three importers. China's iron ore imports from Brazil have been quite successful in recent years, providing insights into the market. In other words, Yan Hui can deduce steel price trends from the fundamental trends in iron ore prices, thereby enabling him to act as a risk broker for steel products.

Don't assume that information flows smoothly in the internet age; this kind of information is not visible in the public domain.

Yan Hui had this idea before he became a steel agent. However, he only thought about it and set a requirement for himself: he would absolutely not participate in risk-based agency in the first year.

He will continue to monitor steel prices and keep a close eye on the situation with his boss.

He will also support his boss in developing foreign trade, so that his boss can have more influence and a higher standing in Brazil. Who knows, a single piece of information might be worth tens of millions in the future.

Yan Hui's assets are currently too fragile to withstand fluctuations, so he can't engage in risk-sharing arrangements. But next year will be different. If all goes well, his assets will start heading towards the 100 million mark next year, and he can easily withstand fluctuations of a few million.

Having drunk half a jin of baijiu tonight, Yan Hui found it difficult to handle his work. After working for a while, he became somewhat irritable, so he called Lingling and they strolled around the yard together.

From 2005 to now, this land has undergone nearly three years of construction and has been completely transformed. In the entire park, apart from buildings and walls, at least 30% of the area has been paved with cement, and other areas have been planted with garden shrubs and flowers, which have already sprouted this season.

The land in the area where Yan Hui plans to build the second workshop has been leveled twice and is about the size of a football field, so construction can begin at any time.

Multiple cameras were mounted on the high wall. As Yan Hui walked along the road, he saw two patrol teams. Everyone there knew Lingling well and greeted Yan Hui.

(End of this chapter)