Those Years When I Was Forced to Top the Forbes List

Chapter 158 Guide of Guides
nine thirty.

"boom!"

Two fireworks went off, and the flashes of lights from more than twenty newspapers lit up one after another. Chen Xuebing and District Chief Hong jointly held a large bottle of golden champagne and poured it down from the top of the glass tower.

Finance, like the wine at this moment, is distributed and poured from top to bottom.

"Thank you, District Chief Hong, for coming in person!"

Chen Xuebing handed the champagne bottle to a hostess and shook hands with the head of Yuzhong District with a big smile.

The applause was thunderous, and the investors were whispering among themselves, saying that this young Chen had connections, managing to get the district head to come over in person.

This district head is half a grade higher than the Secretary Lan whom Chen Xuebing met in Pengshui.

District Chief Hong nodded slowly and smiled:

"Running water never stagnates, and a door hinge never rusts—this is a good saying. However, your name, Long March Capital, is even better. The Long March is 25,000 li long, a long and arduous journey, but its path will endure. I hope you truly possess the spirit of not fearing difficulties and hardships, and together with thousands of enterprises in the Chinese market, bravely scale new heights!"

"must!"

Applause started again.

Chen Xuebing gestured towards the office area: "District Chief, let me take you in for a few minutes. I'll chat with everyone for a bit, and then we'll resume the meeting at 9:50."

District Chief Hong nodded, and the group followed Chen Xuebing inside.

Even Chen Xuebing was a little puzzled as to why District Chief Hong personally came to attend the opening ceremony.

They call it a study tour, but they're also going to hold a seminar.

As for what to study, what to investigate, and what to discuss, he knew nothing. Wu Zisheng only called to say that the district head's secretary had sent over some materials, saying that the higher authorities required the district to focus on studying them.

The document is titled "Interim Measures for the Administration of Venture Capital Enterprises".

Chen Xuebing was in Shenzhen at the time and was completely confused by the title. He felt it must be some kind of political task and could only tell Wu Zisheng to do everything according to the district's requirements.

He's been busy at the company since he arrived this morning, and he hasn't even looked at that document yet. He plans to make a quick run for it in these ten minutes or so, and then just say a few words in his speech to show that he values ​​it.

But what District Chief Hong said next left Chen Xuebing a little confused.

"No rush, let's get your business done first. The reason I'm here is to learn from your experience on how to set up an investment fund. Our district government has no experience either, so we're here to learn about the procedures. Last month, my leader and I went to Beijing for a seminar. The nation has entrusted Chongqing with the mission of becoming a western financial center. Because of this, my leader and I even went to Huaxia Fund and Guotai Fund to learn about financial knowledge. At the time, we were lamenting that all the 'old ten' fund companies were in Beijing, Shanghai, and Shenzhen, and that Chongqing's financial investment industry was still too backward. I didn't expect to learn so soon after returning that the first private equity fund in Southwest China has been established in our Yuzhong district! Excellent! Being a pioneer—that's the spirit of the people of Chongqing."

Chen Xuebing was full of questions, but since he hadn't looked at the document, he didn't dare to speak rashly for fear of answering the wrong question. So he could only humbly say:
"The top ten are all public funds, and they have more management experience. We are the newcomers in the market, and we should learn more from them."

"Haha, it's a good thing that you dare to eat fish!"

The two chatted and laughed as they followed Chen Xuebing into the office.

Chen Xuebing called for someone to make tea before hurriedly returning to the hall. He asked Wu Zisheng to bring over the documents, picked up a glass of champagne, and toasted with the investors while reviewing the documents.

Upon seeing this, Chen Xuebing finally understood why District Chief Hong was so serious.

It was even an official document with an official header.

It was a document jointly issued by the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Finance, and others, titled Document No. 39.

The preceding explanations were all about venture capital firms, and they were somewhat convoluted and complicated.

Venture capital firms, when expressed in English, are known to most people.

VC.

Such an official explanation is actually a bit confusing.

After reading through Part Four, "Policy Support for Venture Capital Firms," ​​Chen Xuebing finally understood.

National and local governments can establish venture capital guidance funds to support the establishment and development of venture capital firms through equity participation and the provision of financing guarantees.

Government-guided fund!

Upon seeing this, Chen Xuebing's mind lit up. He didn't bother with small talk with the investors and quickly returned to his office, asking questions as soon as he entered.

"District Chief Hong, is Chongqing going to establish an industry guidance fund?"

Seeing Chen Xuebing's excitement, District Chief Hong, who was sitting on the sofa smoking, turned to the side and said with some interest:
"What, you know?"

The secretary next to him frowned: "It's a venture capital guidance fund, not an industry guidance fund."

Chen Xuebing realized he had let something slip and coughed lightly.

These two words are indeed different.

Venture capital is aimed at small businesses.

Industry guidance fund—that's the name from later generations—that's a much larger concept.

He also realized that this was still a trial method, possibly still in the exploratory stage, and its scale was probably not as large as he had imagined.

It seems I got a little too excited for nothing.

But then he changed his mind and smiled, saying, "The mindset of government venture capital is definitely different from that of private enterprises. It should prioritize industrial development, investing in excellent companies while also considering helping them integrate upstream and downstream operations, developing with a park-like approach. The term 'industry-guided' would be more appropriate."

"It's just my personal opinion, District Chief Hong, you don't need to worry about it," Chen Xuebing added cautiously.

District Chief Hong's eyes lit up when he heard this explanation.

"That's an interesting way of putting it!"

After saying that, he gradually started to laugh and put out the cigarette in his hand.

"Yes, yes, yes, that's the right way of thinking! Xiao Chen, it seems you really do have some valuable insights here!"

Upon hearing this, the secretary beside him fell silent, and the accompanying government office staff immediately took out their notebooks to write it down, afraid of missing this statement that the leader was interested in.

Seeing his interest, Chen Xuebing calmly sat down opposite him and asked, "District Chief, is the guidance fund something the city or the district is going to do?"

District Chief Hong waved his hand: "It's still in the research stage for now, and the official implementation of this document will be in March of next year."

After saying that, he thought Chen Xuebing seemed to know his stuff, pondered for a moment, and then said, "Currently, the cities that have confirmed the establishment of guidance funds are Suzhou Sino-Singapore Industrial Park, Beijing Haidian, and Shanghai Pudong. Whether Chongqing will establish one is still undecided. However, there are instructions from leaders that Chongqing is a key area in the west and should also find its own path, using government investment to promote investment and growth. Yuzhong has always been the financial core of Chongqing, so the task of demonstration and practice has fallen on Yuzhong. In the past month, I have visited several fund institutions and am also learning."

Chen Xuebing chuckled inwardly.

Even someone at District Chief Hong's level has times when he has to run himself ragged just for a single word from someone above him.

The most important thing is to find the right direction for development. What's the point of running around to fund research and studying compliance? Isn't it just to prove that you've put in the effort?
However, the other party had clearly been pondering this for a long time and wanted to hear their own insights.

Government-guided funds...the main source of funding for private equity funds in later generations, accounting for more than 70% of the total.

Also known as a fund of funds, a fund of funds, or FOF.

A government fund of funds typically starts at a scale of tens of billions of yuan. Even for listed companies, receiving investment from a government fund of funds is a significant positive.

Since the government-guided fund is still in the exploratory stage, and even District Chief Hong is still exploring, the mature approaches he has in mind might become the "guide" for the government-guided fund.

Guide of Guides.

GOG!

Thinking it over, he slowly organized his thoughts and offered some guidance.

“District Chief Hong, I think the higher-level leaders’ proposal of the guidance fund model at this time must be related to the ongoing share reform. With the stock market open, the channels for companies to go public and even the transfer of shares of already listed companies are smooth, so that the government can profit from investment.”

A single sentence can demonstrate one's level of expertise.

Chen Xuebing's casual judgment was one of the few clues that District Chief Hong had painstakingly sought.

District Chief Hong sat up straight and gave his secretary a look, signaling her to take notes.

Chen Xuebing's tone then turned negative.

"However, in my opinion, exploring within the area defined by the document may not be suitable for Chongqing's development direction."

"How should I put it?" District Chief Hong frowned, his emotions already being swayed by Chen Xuebing.

Concern leads to chaos.

The city has directly assigned him this key task from higher-level leaders, putting him under immense pressure.

"Chongqing is a manufacturing base and an inland shipping hub. It lacks the genes of the internet and emerging media, or what we call the TMT industry. Here, the booming industries are asset-heavy, and the VC venture capital model invests in the early stages, usually in Series A or B. Even if it invests in Series C, it is mostly follow-on investment, with the investment scale being tens of millions or hundreds of millions at most. Given Chongqing's investment environment, it is extremely difficult to find suitable investment targets."

"Simply put, Beijing, Shanghai, Guangzhou and Shenzhen are suitable for venture capital, and the IT talents needed by emerging industries are also concentrated there. Chongqing is not suitable for investing in these areas. I guess, just guessing, that's what the higher-ups meant when they said Chongqing needs to find its own path. So, if Chongqing wants to establish a guidance fund, it must break out of the framework of the documents."

“Hmm…” When the topic of heavy assets came up, District Chief Hong slowly leaned back on the sofa: “We cannot invest in real estate and infrastructure construction. We must invest in innovative enterprises. This principle is set in stone.”

"Of course," Chen Xuebing said with a smile. "Government-guided funds, to put it bluntly, are an exploration from land finance to equity finance. This shows that the country is worried about local governments relying too much on selling land for development. If so much money is spent on investment and it is still just about land, it would go against the original intention. Secondly, high-tech enterprises are the future, and government investment must have a long-term vision."

District Chief Hong's gaze grew increasingly serious: "Your understanding of the policy... how old are you?"

He hadn't held out much hope today, and had only planned to hold a meeting and take a few photos. He never expected that the results of his month-long research in the north would be less insightful than a few words from the young man in front of him.

“District Chief, this is not the result of my research alone. My team is also seeking to develop the primary investment market. We have done research on the VC model, especially in Chongqing.”

Chen Xuebing leaned on the sofa, slightly crossed his legs, and adopted a composed posture.

"Oh..." District Chief Hong now felt it made sense, and the other party's image in his mind transformed into a leading elite team with advanced thinking. "So, in your opinion, what direction is suitable for investment in Chongqing?"

Chen Xuebing not only had a direction in mind, he even had specific targets.

In its previous life, Hefei started by investing heavily in a single company, and its equity-based fiscal model was extremely successful, leading to significant development.

——BOE.

Currently, they are the only domestic manufacturer with independent technology for TFT-LCD screens. In 02, they acquired the TFT-LCD business of Hyundai Display Technology Co., Ltd. (Hynix) of South Korea.

After introducing the technology, BOE built a 5th generation LCD panel production line in Yizhuang Economic and Technological Development Zone, Beijing.

This production line is only three years away from the completion and commissioning of the world's first 5th generation production line, making it highly competitive and fully qualified to break the price monopoly of Japan and South Korea.

The production line investment was too large, and the plan to raise funds through a Hong Kong listing failed. BJ quickly mobilized nine banks to provide support and loans.

As a result, the LCD panel market cooled down sharply in the second half of this year, and the 17-inch displays they had invested in at high prices saw their prices drop by half.

I almost couldn't repay the loan, and it was only with great difficulty that I managed to negotiate an extension.

They are currently seeking cooperation with the Shenzhen government to jointly launch the "Julong Plan," in which the Shenzhen government will lead the investment to help BOE build its 6th generation production line and drive the development of related industries in Shenzhen.

But what happened next was extremely dramatic.

In an attempt to curb BOE's development, Sharp of Japan went to Shenzhen to disrupt things, proposing that if Shenzhen would terminate the "Julong Plan," Sharp would help Shenzhen build a 7.5-generation production line with an investment of 280 billion yuan.

But Sharp had just signed an agreement with Shenzhen, then unilaterally tore it up and went to Shanghai, the next partner BOE had just found, to cause trouble.

BOE had no choice but to relocate to the southwest and establish a presence in Chengdu. To avoid further suppression, they opted to build a somewhat outdated 4.5-generation production line to produce small-screen products. This coincided with the development of smartphones, and the profits were quite good, allowing them to survive.

So they rekindled their dream of a 6th generation production line and chose Hefei from among countless medium and large cities.

Furthermore, at the very beginning of the cooperation, a crucial question was posed to Hefei: If Sharp were to cause trouble, how would the government handle it?

The Hefei government responded with four words: "Absolutely no wavering."

As expected, Sharp came back after the two parties started working together.

This time, Hefei finally became a steadfast investor in BOE, rejecting Sharp.

In 2008, Hefei's fiscal budget revenue was 301 billion yuan, but only 161 billion yuan belonged to the local government. The city emptied its coffers by contributing funds, land, and policies, investing 6 billion yuan and promising to provide a 60 billion yuan guarantee if social financing was unsuccessful, to help BOE build a 90th generation production line worth 175 billion yuan.

After the completion of the 6th generation line, it not only boosted the economic development of Hefei, but also produced the first 32-inch LCD screen in mainland China. BOE later built 8.5-generation and 10.5-generation production lines in Hefei, attracting a large number of upstream and downstream manufacturers to settle in Hefei. Moreover, the BOE shares held by the Hefei government investment platform had a floating profit of over 10 billion yuan at the historical high.

Having tasted success, the Hefei government subsequently invested in companies such as Changxin Memory, NIO, Jinghe, Corning, Visionox, and O-Film, transforming the city into a high-tech manufacturing base and establishing the Hefei model.

Chongqing is not part of the entire captivating story.

But when Chen Xuebing thought of this, he felt that this life was worthwhile.

"Dong dong."

Wu Zisheng opened the office door.

"District Chief Hong, Chairman, the meeting can begin in 10 minutes. I'll go tell the investors now that the ceremony is officially over?"

Chen Xuebing glanced at District Chief Hong: "What do you think? Should we have a meeting or just talk here?"

District Chief Hong hesitated for a moment, then changed his mind.

"Let's talk here, in a quieter place. Xiao Jiang, have the comrades from the Secretariat and the Conference Affairs Office wait a moment."

The secretary nodded, and the other two government office staff, upon hearing the words "be quiet," immediately stood up and tactfully left.

Chen Xuebing smiled.

"Mr. Wu, please take good care of the investors. The fund will officially close at 4 p.m., so let's try to secure what we can."

(End of this chapter)