Those Years When I Was Forced to Top the Forbes List

Chapter 197 Asset Securitization

(Image for reference only)
Coaster bus.

Wooden floor, a seven-person folding desk in the center.

Fabric sofas and chairs are placed on both sides, and a TV wall behind the head sofa plays a promotional video about Gree products.

Upon seeing the newcomer board, the people accompanying him immediately opened the partition door next to the TV wall, which led to a refrigerator and a simple tea room where water was boiled and tea was made.

Even standing after boarding, the bus still felt spacious.

Chen Xuebing instantly felt that this thing was much better than an MPV; it had more space and allowed for more creative modifications.

Only by taking this bus can we enjoy hot pot and sing songs on our way to Goose City.

It's cheap and easy to buy.

He called Xu Yunfeng about the Alphard MPV, and Xu Yunfeng said it was possible to buy one, but even FAW Toyota and GAC Toyota couldn't get their hands on it. He would have to order it from a trading company in Shanghai, which was the only 3C certified company in the country, and each vehicle would cost an extra 40 yuan.

The extra money they paid was enough to buy a Toyota Coaster.

"The air conditioners and appliances in the car are all from Gree," Dong Mingzhu said proudly as she got into the car.

Chen Xuebing smiled and pointed to the television.

"That's definitely not it."

He knew that Gree didn't make televisions.

Dong Mingzhu rolled her eyes at the nitpicker: "We make white goods, we won't touch televisions."

"White goods?" Chen Xuebing raised his eyebrows.

The Gree employee boiling water nearby explained with a smile:
"Air conditioners, refrigerators, washing machines, kitchen appliances, and bathroom fixtures—these durable and stable home appliances are called white goods. This market has brand accumulation and technological barriers. The appearance design is mainly simple, and the early designs were basically all white. Black home appliances are those that focus on entertainment experience, including TVs, audio-visual equipment, and game consoles. In the past, they were basically all black-cased to reduce screen reflection and prevent interference."

Chen Xuebing nodded upon hearing this, indicating that he understood.

"The black home appliance industry is iterating too fast. In addition to recognizing brands, the market also recognizes those visible and audible data, such as resolution, screen size, and audio-visual effects. If the technology updates are slow, the market will not buy it. The technology of white home appliances is invisible, so you have a first-mover advantage and it is easier to build a moat."

Dong Mingzhu tilted her head slightly: "The word 'moat' is quite good."

Chen Xuebing sat down with a smile: "If President Dong uses this word in the next meeting, I'll have to charge him a copyright fee."

Everyone laughed, except for Miss Dong, who had a long face.

Chen Xuebing then pointed to the TV wall and said, "Mayor Wu, is there anyone in Hefei making color TVs now?"

Mayor Wu, understanding the implied meaning, said: "With LCD screens, TV manufacturers will be more willing to come?"

At this moment, Dong Mingzhu finally spoke a fair word: "The LCD screen accounts for too high a proportion of the total cost of a TV. This is mainly because mainland TV manufacturers are smart. Over the years, they have reduced the cost of other components, resulting in a higher proportion of screen cost, almost two-thirds. Taiwanese companies have a very high proportion of computer screens, while Japanese and Korean screen manufacturers mainly focus on TVs. However, transporting screens is troublesome and they are easily damaged. Therefore, cost determines that it is more cost-effective to place TV production in coastal areas."

Chen Xuebing gave a thumbs-up in his heart; it's really great to have a professional lip double.

Upon hearing this, Mayor Wu's thinking expanded.

"With a screen, computer manufacturers will be willing to come here?"

“Of course.” Chen Xuebing continued, “Computer costs are concentrated in CPU, graphics card, screen, and memory, a typical semiconductor industry. Panel manufacturers are also semiconductor companies. TFT (thin-film transistor) and driver ICs are both semiconductors. The industry is highly interconnected. With BOE, Hefei has the potential to develop a semiconductor cluster. If Mr. Dong’s company is a luxury villa, then BOE is a master key. You can open whichever company you want with it.”

That's a brilliant analogy.

Hefei is best at opening other people's doors!
However, sometimes without a key, one has to climb in through a window.

Or just kick the door down.

During this period, the Hefei investment promotion team's first target was neighboring cities. They practically broke into and searched the entire Anhui province, including Bengbu Cigarette Factory, Anhui Railway Development Group, the First Design and Research Institute of Machinery Industry, and China Railway Express...

We've tried to persuade everyone we could.

They moved to Hefei.

Wuhu is dead, Bengbu can't hold on any longer, and the young men are cursing loudly.

With the provincial government backing them up, they still have confidence.

But you can't just barge into someone else's house like that.

Going out to rob someone isn't the right thing to do; attracting investment requires a pretext.

So they discussed it and concluded: Our Meiling Electric Appliances and Rongshida have had their glory days and have been leaders in the industry.

A new title has been given: Industrial Revitalization!
If this revival process can be expanded outwards, that would be excellent.

Screens, semiconductors, that's great.

Expanding outwards opens up a vast new horizon.

Mayor Wu was just starting to be interested when Dong Mingzhu poured cold water on his enthusiasm:
"The industry is good, but the key is profitability. The price of LCD screens has fluctuated from last year to today. LCD is not the only direction for panels. Changhong is currently in talks to acquire Orion of South Korea to make plasma TVs. Plasma TVs have higher brightness, better contrast and color vibrancy than LCD, but they are a bit more expensive. If they really succeed, foreign manufacturers may not be able to beat them. The one in our car is a plasma TV. Mayor Wu, take a look at the visual effect. Isn't it very vibrant?"

Changhong operates in both legitimate and illegitimate sectors of the home appliance industry, making it a competitor of Gree, which is quite familiar with them.

Mayor Wu was tempted again.

Okay, okay, this one is good too.

Chen Xuebing sneered: "Plasma is a mixture of gases. The basic technology is not semiconductor. At most, it is related to semiconductor processing and etching. Moreover, small screens are very difficult to make. They are basically all over 40 inches. Computers are not easy to make, mobile phones cannot be made, and only televisions can be made. It is not a universal key. In addition, Panasonic has acquired so many patents. It will be difficult for them to win."

When talking about screens, Chen Xuebing said he put in a lot of effort for his phone.

The fact that plasma screens cannot be used in mobile phones is also a key reason why he is not optimistic about them.

Dong Mingzhu immediately retorted: "Is it simple for LCD to win? There are dozens of manufacturers abroad, but only one in China."

"So, it's the only one left!!" Chen Xuebing sighed heavily. "Why are screens so expensive? They've got us strangled, and BOE is fighting alone. How can we not support them, Mayor!"

I was so touched by what she said that I almost wiped away my tears.

He has indeed been stuck before. If BOE had the ability to compete with Samsung, or even go toe-to-toe with LG, he wouldn't still be sending people around to contact screen manufacturers.

Even if it's a generation behind, I'll still support domestic products.

The key issue is that they're several generations apart; no matter how much you try to fool consumers, nobody will buy it.

Mayor Wu wasn't particularly moved.

But after thinking about it, he realized that he could use this reason to move China.

He clicked his tongue and flipped through Chen Xuebing's file.

"Your project has been approved?"

"Yes, Mr. Kan and I did it."

Mayor Wu chuckled: "President Chen, this is..."

"I don't think so. We talked, and they wanted me to work with Yufu Capital to manage this fund, but I declined. From my perspective, I still want to do this project well."

However, it is still necessary to elevate oneself.

Dong Mingzhu, who was standing next to her, began to feel a little alarmed when she heard this.

This young man isn't young at all!
Did he even refuse Chongqing?

Mayor Wu didn't question the fact that he could find out these things, but instead looked at the direction of the funds and sighed.

"Where are we going to get more than 13 billion? You promised the government how much financing they would get."

This number is not specified in the information.

Chen Xuebing left a loophole, intending to gradually raise the price and secure the best terms.

"The main source of funding is banks in both parties' locations. They have an advantage: government-guided fund projects. The central government provided 800 million yuan, and the remaining 2 billion yuan was matched by me. I matched 700 million yuan, reaching 3.5 billion yuan. We used this 3.5 billion yuan to make a one-to-one loan to BOE, and the rest of the process could be completed."

In reality, they didn't discuss the specific amount or method of allocation with him at all, because Mayor Huang announced the project's rejection on the first day of the meeting. This allocation method was just his rough calculation.

"You're entitled to 700 million? You have 700 million?" Mayor Wu questioned his financial capabilities.

Chen Xuebing smiled: "Bosera Funds has already agreed to raise 500 million yuan for me. You know Bosera, right? It's one of the institutions that cooperates with the National Social Security Fund... The remaining 200 million yuan is no problem for me."

That means 700 million has already been invested.

Mayor Wu was somewhat excited upon hearing this.

This is to help Hefei. To put it bluntly, even if no one helps them raise funds, they still need to attract investment. Such a large project was originally within their consideration.

Every penny earned reduces the pressure and makes the project more worthwhile.

Seven hundred million, and it can leverage several hundred million from banks, which is over a billion.

But judging from Chen Xuebing's tone, it seemed like he could still make a decision.

He immediately sighed.

"Seven hundred million... We don't have any central government funds. How about 28 billion? That's a lot of money, we really don't have it."

Chen Xuebing cursed inwardly.

In your past life, your municipal government pulled in banks to raise 60 billion yuan for BOE! Later, when the money wasn't enough, they gave you another 30 billion yuan!
You managed to raise 90 billion, but you didn't even have 28 billion?!

Damn it, he's dishonest, this guy is so dishonest.

Fortunately, Chen Xuebing had already left himself plenty of leeway, so he calmly leaned back in his chair and smiled:

"The 700 million yuan in financing came with conditions. As the fund manager, I would handle the funds, including a 1.5% management fee on government-injected funds (excluding bank funds) and 20% of the government's total revenue. It's not impossible for me to provide more financing. What conditions could Hefei possibly offer?"

Mayor Wu immediately frowned.

According to his calculations, excluding banks, the government would have to pay 28 billion, plus a 1.5% management fee, which would amount to over 4000 million a year?
"Hiss... Management fees are a bit too high. A project takes two or three years, and your management fees are over 100 million."

“Management fees can be waived,” Chen Xuebing immediately said. “However, you have to offer higher returns, 25%, and I will decide the timing and method of exit.”

After saying that, he gave Kan Zhidong, who was standing next to him, a look.

Just be patient.

I will handle the management fee I promised you.

Kan Zhidong actually felt it was unwise to give up the hard returns, but this kid had bigger ambitions. He made a guaranteed return agreement with Lu Xiaochun, so he definitely wasn't after this management fee.

This is a high-stakes gamble.

Chen Xuebing provided the money; he only gained fame.

Those who had put up the money had already placed all their bets, so even someone as famous as him could only follow suit.

Mayor Wu's expression eased slightly upon hearing that the management fee could be waived, but then he uttered a puzzling question: "President Chen, since you're already here, give me the truth. How much can you actually offer?"

Come here.

Chen Xuebing wanted to laugh, "Why don't you say it's the New Year?"

Once you're here, you can always leave, right?

"Okay, I'll be honest, I can raise another 500 million, and I want a 30% return."

This.

The first 700 million, with a 25% return.

The next 500 million will yield a 5% return.

Mayor Wu really wanted to ask: Why don't you put up all 35 billion yuan, and the government will help you with the loan, and you only need half of the returns?

Or, could you just give me five percent, and only the remaining five hundred million?

Of course, that's the logic of a fool.

The logic of a smart person is: the other party had already set an anchor of 30 points from the beginning, and had prepared 12 billion in advance.

even more.

“12 billion is still not enough.” Mayor Wu began to feign poverty: “We really can’t come up with more than 2 billion. President Chen will probably have to think of a way.”

Chen Xuebing felt he couldn't back down any further.

If Hefei hadn't put all its efforts into finding solutions from the very beginning, it wouldn't have been able to handle any unforeseen circumstances once the investment exceeded the budget of 130 billion yuan.

He grinned and said, "Secretary Sun demolished 1200 million square meters of illegal buildings in the urban area last year, worth at least five or six billion yuan worth of land. You wouldn't be planning not to sell that land, would you?"

This is another economic calculation.

Most buildings in Hefei are low-rise, with an average floor area ratio of 2.5.

That's 480 million square meters of land, or 7200 mu.

Even if the land price is low, at 1200 yuan per square meter, it would be 80 yuan per mu.

5.76 billion.

In fact, 7200 mu were demolished, and there will be some left over.

In fact, according to his understanding, the demolition sites included, for example, the storefronts of the Industry and Commerce Bureau, the storefronts at the west gate of the Provincial Party Committee, the street-front shops in the bustling area of ​​the Trade Union, and 58 ownerless villas.
Secretary Sun is a ruthless man; he dismantled the "family assets" of all the commissions and departments.

These areas are not industrial sites, but genuine bustling commercial areas. After all, it's a provincial capital, so the land price here should be far higher than 1200 per square meter, or even several times higher.

Don't negotiate casually if you don't know the other party's bottom line. Chen Xuebing said it was worth five or six billion, but the land Hefei got was definitely worth more than that.

Mayor Wu was also aware of his "family assets," and felt somewhat guilty when they were mentioned, but feigning poverty was one of his traditional skills.

"Some of those plots of land will require compensation, and how can they be sold so quickly?"

"Hefei doesn't have any urban investment companies? If they can't sell, they must not know anything about mortgages, Mayor Wu. Besides being in finance, I also own a construction company."

A wise person doesn't need to beat around the bush.

After the tax-sharing system was implemented in 94, local government investment companies sprang up in various regions, all for the purpose of generating revenue from land sales.

The Budget Law restricts local government borrowing, but land sales are slow and the government is in dire need of funds, so they brought in these "neighboring old men" to help the government mortgage land and take on debt in the name of enterprises.

Besides local government financing vehicles (LGFVs), various other financing platforms have emerged.

The money they borrowed is called off-balance-sheet debt.

Also known as implicit debt.

On the other hand, the government also knows that land is becoming increasingly valuable. Instead of selling it, they can use this method to obtain loans for infrastructure construction and attract investment. As the environment improves, land prices should rise.

Once the government has earned corporate tax revenue, repaid loans to urban investment companies, and land prices have risen, the land will still be in its hands, and it can be auctioned off at an opportune time.

With a thriving economy, land prices have been rising year by year, creating a virtuous cycle.

This issue falls within Chen Xuebing's area of ​​expertise.

However, Mayor Wu was not embarrassed at all when he was exposed: "Even if we borrowed money from the bank, we could not get this much money. Since you know, you know that the bank's valuation of the land is lower than the actual price, and the proportion is less than 70%. Moreover, you have seen our investment promotion situation. We are subsidizing many companies and have many expenses for investment promotion, etc. We urgently need money in many places."

This time, it was Chen Xuebing's turn to sigh.

"Mayor Wu, if we're going to undertake such a large project, we should go all in."

After thinking for a moment, he realized that Hefei's development had been rapid in the future, so taking on more debt wouldn't be too much of a burden. He then said, "I think you should talk to the China Development Bank about the project's loan. They are a policy bank and can support projects. As for the loan on the land you mortgaged, you should let a local bank take it over."

Mayor Wu asked, somewhat puzzled, "What do you mean?"

"ABS, asset securitization, you've heard of it, right?" Chen Xuebing explained slowly, regardless of whether he understood or not.

"It is the process of converting assets that can generate stable returns but lack liquidity into tradable securities."

“You mortgaged the land to the bank, but you didn’t sell it. So, are the land revenue rights still in your hands?”

"Land prices have risen quite a bit over the years, haven't they?"

“Make a table of revenue, optimize the structure, and create a revenue forecast. Then, ask the local bank to help sell this revenue forecast to customers, or even directly buy the forecast. You will receive the land revenue for the next few years at a discount in one lump sum, and the buyer will receive the remaining revenue.”

"In this way, the money you receive for a piece of land should not be 70%, but more than double."

Chen Xuebing casually described a set of rules, which shocked the people on the bus.

Can you still play like this? ?

However, the shock was limited.

After all, asset securitization is not uncommon, such as toll rights for highways. They were just shocked that land could be used in this way.

However, Mayor Wu's shock was not so simple.

Because: What a coincidence!
They've already decided to use this method.

Moreover, it was a result of a long period of research and verification conducted by a large group of experts invited by Secretary Sun.

This Mr. Chen, he just blurted it out casually?!

What use are those experts?

"Mr. Chen, how did you come up with this idea? What's your basis for it?"

"With a broader international perspective, it's easy to find the basis for your decisions. Just look in the US real estate market; I can provide you with a list of several companies."

Chen Xuebing waved his hand, not taking the idea seriously.

He has always used financial means to expand.

Financial instruments are not simply mortgage loans.

Taking asset securitization as an example, there are countless other methods that have emerged since.

The subprime mortgage crisis that triggered the US financial crisis was just one example. PPP projects, real estate investment trusts, and even the consumer finance model used by Ant Group to expand its business, as well as many other asset securitization cases in later generations, were all in his mind.

"The key is not the idea itself, but how to use it correctly."

Chen Xuebing raised his finger and spoke calmly:
"First, the approach must be correct. You should try to shift as much of the loan pressure as possible to the China Development Bank so that the local banks that listen to you will have the capacity to handle this securitization for you."

"Secondly, when making tables, you can't be greedy. You should only sell as much as you need. The right to the profits from the sales must always be shared with others. Capital has costs. This model is good in itself, but the problem is that there is a constant greed and repeated securitization, which is absolutely unacceptable."

third.

Everyone listened attentively, waiting for Chen Xuebing's third turn.

But it didn't come for a long time, and I felt a little uncomfortable as my breathing became suffocated.

After a long while, Chen Xuebing looked around at everyone with a half-smile.

"I'm not Mayor Wu, nor am I attending a government meeting. There's no need to force three major points and three minor points, is there? The most important ones are these two."

A sigh of relief.

My obsessive-compulsive disorder was almost cured.

Then, another burst of laughter erupted.

Mayor Wu shook his head with a slight sigh, then laughed heartily:
"Mr. Chen, there are truly hidden masters among ordinary people."

(End of this chapter)