Those Years When I Was Forced to Top the Forbes List

Chapter 361 Trip to Panzhihua Iron and Steel Group

"I'm not actually very familiar with them."

Cai Zhijian explained that he had met Li Ka-shing before, and Li Ka-shing had praised him. Now that he was competing with Huang Lai for shares in An's land, he didn't want to have anything to do with him.

“I know, don’t overthink it. I’m not asking you to find out any information, I’m just speculating from your work perspective in Hong Kong.”

Hong Kong businessmen have a completely different investment mindset from mainland businessmen. They act unpredictably, have an extreme arbitrage mentality, but are never in a hurry and do not use the maximum leverage. They pursue huge profits, but not the kind of huge profits from simple buying and selling, but a kind of huge profits with complex equity design.

Just like the Qinglongchang plot of land, Chen Xuebing obtained the Cheung Kong Development plan through connections; it was a thick document.

Cheung Kong Holdings pushed the government to revise the "Balizhuang-Qinglongchang Area Control Plan" to move the original freight railway line 400 meters east, freeing up 23 acres of green space on the west side of the plot. Then, it used a bonded exhibition center to obtain the policy label of the cross-border trade pilot zone, increased the plot ratio, converted 60% of the area into luxury goods warehousing, and applied for rental subsidies.

In Chen Xuebing's view, it's just about building a cheap storage area to hoard land, euphemistically calling it a luxury goods temperature-controlled storage area, developing the high-end consumer market, obtaining some tax-free qualifications, getting rental subsidies, and then selling it to others to turn into a luxury goods discount mall.

This is the "outlet" model.

The funding structure is also very complex, involving trust nesting, offshore bills from HSBC, and commercial acceptance bills that are discounted by Shenzhen Development Bank and then converted into domestic margin. Of these funds, less than 30% are self-owned funds, and the majority are cash converted from future accounts receivable guarantees and financing guarantees. Using this money for real estate investment is not in accordance with mainland law, and if there are problems with repayment, it will lead to lawsuits.

In technical terms, it's called risk exposure.

However, through a series of nested and transformed processes by professional institutions, it actually became compliant again.

These documents, once converted into contracts, are at least four or five times thicker than typical real estate investment contracts.

The complexity of his thinking was something Chen Xuebing could not have imagined without seeing the specific content.

“Well, I haven’t thought of any way, but General Manager Wu did provide an idea. He’s right next to me, I’ll have him talk to you about it,” Cai Zhijian said.

"Row."

The person on the other end of the phone quickly changed: "Mr. Chen, I found an investment case of Cheung Kong in Wuhan. They also drove out other competitors by buying land at high prices, and then sued the government through the protection clauses of the Foreign Investment Law to negotiate terms with the government. Although there are many restrictions on foreign investment, there are also many legal protections. For them, this is a space to back out."

"Oh," Chen Xuebing said, a little enlightened. "You mean, they acquire the land first, then go to court, and slowly negotiate with the government?"

At this point, a question arose again: "But the terms of breach of contract are quite clear this time. Chengdu has learned its lesson, with 100 million yuan tied up in auction deposits alone. So the government probably won't give us much leeway this time. Is there any room for negotiation?"

“No, no, no.” Wu Jiesi added, “We need to consider different cases. You said they’re unsure about the future of the real estate market. For that, they just need to use the lawsuit to control the time for maneuver. If land prices in Chengdu rise in the next year, they can withdraw the lawsuit, pay off the debt, and then resell the land. If land prices don’t rise, they can use the lawsuit to back out and return the land.”

Chen Xuebing suddenly understood.

They don't need to know in advance; they can take back their moves!
Wu Jiesi's voice continued: "According to Article 22 of the Foreign Investment Law, foreign investors can withdraw their investment under significant changes in the policy environment. Think about it, isn't the recent notice from the State Taxation Administration a significant policy change? This policy hasn't been forwarded or implemented in Sichuan yet, so they can refuse to pay and withdraw their auction deposit on the grounds of 'this concern.' Didn't this time stipulate that the land transfer fee must be paid within 15 days? To determine if they intend to do this, we only need to monitor their subsequent payment activities."

Chen Xuebing was so angry that he laughed.

No wonder, even though Cheung Kong's team was negotiating in Chengdu, they also sent Hutchison Whampoa to acquire the land. The two companies were negotiating and fighting at the same time, without interfering with each other!

He's using the policy, and so is the other side!
"Damn it, those troublemakers! I understand, thank you, Boss Wu!"

“I also have to thank you for bringing Mr. Cai over to help. Recently, Hopson Development Holdings has not been doing well, and it was Mr. Cai who helped me sort out a lot of relationships, which made the financing process go smoothly.”

Chen Xuebing smiled and said, "Hopson Development is also on this list of tax pursuers. Its stock price has dropped a lot. The fine for Hopson Development is too high. There is probably no hope for a short-term rebound in its stock price. President Wu, you should finish your work as soon as possible and get out of this quagmire."

Hopson Development Holdings' tax recovery case involves hundreds of millions of dollars, and its stock price has fallen by more than 11% in the short term.

The financing system of listed companies is different from that of ordinary people's loans; it changes in real time.

If there is equity pledge loan in this situation, it may cause the bank to worry and chase the debt in advance. The stock price fluctuates greatly and may even hit the liquidation line. The bank's forced sale will cause the market value to collapse. Therefore, once the stock price fluctuates greatly, the bank will worry, external investors will question it, and the shareholders' meeting will also put pressure on it. Naturally, Wu Jiesi, the general manager, has to deal with these pressures.

Comparatively speaking, a company with an absolute controlling stake like Gu'an has at least 80% fewer hassles than other large companies with dispersed shareholdings.

"Hehe, Mr. Chen, the more difficult the situation, the more I need to overcome it before I can leave. You wouldn't want to hire an irresponsible manager, would you?"

Chen Xuebing wasn't shut up by those words: "It's okay. Past work performance is not used as a performance evaluation standard in our company. Although General Manager Cai is working for you, he won't score your current work performance."

"Haha, then I'd better get on good terms with President Cai!"

Wu Jiesi laughed loudly.

Chen Xuebing laughed and gave another deadline.

"Hurry up, Shanghai will be waiting for you in March after the New Year."

Time flies, and there's so much to do.

His sending Cai Zhijian to assist was a way for management to get to know each other better.

Wu Jiesi is currently both the CEO of Hopson Development Holdings and in the onboarding training period for the position of Vice President of the Board of Directors.

June 2, afternoon.

Research Institute of Panzhihua Iron and Steel Group, Xichang, Sichuan.

Chen Xuebing arrived in the morning and came from Panzhihua at noon.

Pangang is so large that it takes about half an hour to drive around the perimeter in the morning. After visiting the headquarters and several important factory areas, the whole morning was spent there.

Chen Xuebing was deeply moved by what he saw.

The 100,000 employees of Panzhihua Iron and Steel Group constitute a small society, with some families having four generations working at the company.

The once-mighty No. 2 Steel Plant (special steel plant) of Chongqing is nothing compared to this. Now, a single research institute in Xichang covers hundreds of acres, covered in greenery, and even resembles a university.

Its predecessor was the Anshan Iron and Steel Research Institute. In 64, it moved to Xichang, Sichuan, and was renamed the Panzhihua Iron and Steel Research Institute of the Ministry of Metallurgical Industry. In 2000, as one of the 242 national research institutes, it was transformed into a research institute under the Panzhihua Iron and Steel Group.

A research institute with over forty years of history reveals the profound heritage of a long-established enterprise.

The industries we visited today do not include the other two listed companies controlled by Panzhihua Iron & Steel Group.

In the research building, Chen Xuebing, Fan Zhengwei, Yu Zisu and their group walked from the rare earth extraction pilot line (a small-scale factory production line model) of Panzhihua Iron and Steel Group to the laboratory.

Next to the vanadium-titanium magnetite specimen was a composition table, with "REO (rare earth oxides) 0.8%" circled in red.

The sulfuric acid residue produced from the pilot production line is piled on a tray, displayed alongside purified rare earth samples. Dysprosium-iron alloy magnetic sheets are suspended from an electromagnetic frame, with "100kg" engraved on the anvil below.

As the electromagnetic rack was powered off, the anvil suddenly rose up to meet the falling magnetic plate, and they were firmly attracted together, as if they were being held and suspended by an invisible giant hand.

Chen Xuebing immediately led the applause, and the audience joined in.

The magnetic sheet made from rare earth slag can still hold a 100-kilogram anvil without falling over after the power is turned off, demonstrating the super properties of rare earth.

Permanent magnet.

These "waste refining products" now sell for $30 per kilogram.

A few years later, it can sell for thousands of dollars per kilogram, or millions of dollars per ton.

More than a decade later, it will be able to strangle the United States and Japan.

"Pangang people always say they're making steel, but actually you're making strategic materials! If this experimental preparation line can be developed into an industrial slag refining line and replace your old No. 3 blast furnace, Pangang will have a solid foundation in the rare earth industry," Chen Xuebing remarked.

"It's easier said than done," sighed Fan Zhengwei, chairman of Panzhihua Iron and Steel Group. "The scale-up effect of the extraction tank will cause the rare earth recovery rate to plummet from 85% to below 60%. The key equipment, the centrifugal extractor, is manufactured by the French company Robalel, and the unit price of the equipment is close to 3 million US dollars. We can obtain support in terms of preparation technology, but we do not have a precision instrument factory to manufacture the equipment. There are also issues such as radioactive material treatment, sulfuric acid mist emissions, and slag yard land use. The cost of replacing the production line is very high. Just a 200-ton capacity industrial line would cost 600 million yuan. The construction cost of replacing the huge production line of the old No. 3 blast furnace is unimaginable. But if the production line is made smaller, 90% of the workers will have to be laid off. Two thousand workers for one furnace, two thousand families, and there are also mining quotas, export quotas, and industrial extraction technology. There are too many difficulties."

Chen Xuebing nodded slowly, his eyes noticing the nervous expression on the face of an old factory director who was accompanying him. He also knew how much turmoil would be caused underwater if the giant lake at Panzhihua Iron and Steel Group were to be dredged.

It's all about money.

But if you think it's just a matter of money, and that money can solve everything, then you're just like Zhao Kuo, who only talked about war on paper. People are not worried about scarcity but about inequality. The problems that would arise from the restructuring of a group of 100,000 people could fill a book with tens of millions of words.

“I know you will face many problems. I will try my best to help you solve the money problem and give you some market advice. The rest will have to be solved by your group’s leadership.”

That's all Chen Xuebing could say.

"That's already very good. We at Panzhihua Iron and Steel Group are very grateful to General Manager Chen for his sincere help."

Yu Zisu seemed more determined to reform. He gave Fan Zhengwei a wink, arranged for someone to bring the contract, and signed it first while Fan Zhengwei hesitated.

His rapid, flowing calligraphy gambled with his already limited political life.

He still has more than ten years until retirement, and he doesn't want to live a life of aimless drifting.

Fan Zhengwei thought about it for a moment, then stopped hesitating.

He has seven years left before retirement, but Panzhihua Iron and Steel Group's time is running out. Once merged into the other three major groups, it will be at the mercy of others, watching as its valuable assets are replaced by the worthless assets of other groups.

The management of Panzhihua Iron and Steel Group (Pangang) would also find it impossible to gain real power in other groups.

This is not malicious speculation; he would have done the same if he had acquired another company.

When Chen Xuebing saw the strategic cooperation agreement signed by the two group leaders handed to him, he was actually a little nervous. He had witnessed the hard work of 100,000 Panzhihua Iron and Steel Group employees that morning, and he was involved in the fate of 100,000 families. It was hard for him not to take it seriously.

But wherever he goes, he should bring confidence, not hesitation.

He chuckled and said, "Guan will participate in market decision-making and act as your advisor. You two don't need to worry about profits. However, I chose to sign the contract here today, and you should know where my determination lies. Once this move is made, there's no turning back."

Yu Zisu spoke first again: "President Chen, if you can lead our Panzhihua Iron and Steel Group to a profit of 3 billion yuan and successfully complete the restructuring of the listed company, we will immediately begin the acquisition of rare earth assets!"

That sounds firm, but we'll have to see the results.

Yu Zisu's attitude was actually more radical. He believed that the development direction of rare earths could be implemented immediately, and at least several small companies with rare earth refining technology could be absorbed first. However, the group's board of directors had their own concerns, and this was actually the result of a compromise among all parties.

Fan Zhengwei also took the opportunity to explain: "President Chen, our primary task is to survive. The rare earth industry involves the layoffs of many employees, and being acquired is the same. From the employees' perspective, this cooperation is actually exchanging one good result for another bad result."

Chen Xuebing chuckled.

"State-owned enterprises, oh state-owned enterprises, are burdened with too much baggage and have too short a vision. As a result of being swept along by the majority, the majority of people cannot live a good life. Since the leaders have a vision far beyond that of ordinary people, they should have the determination to break through obstacles. They should endure a few years of scorn in exchange for decades of remembrance."

Fan Zhengwei sighed, "Knowing is easy, doing is hard."

What I wanted to say turned into silence.

Chen Xuebing said frankly, "I think the two of you should work together on this matter, adjust the management team, and replace all the disobedient ones. Once the direction of reform is clear, the money will come soon. What you need is to work together as one and remove all those who are unwilling to work together. You should think about this matter first. Once Panzhihua Iron and Steel Group becomes profitable and has more confidence, I will have the opportunity to speak with the leaders of the State-owned Assets Supervision and Administration Commission and then help you put it forward."

Hearing Chen Xuebing's confident words, the two exchanged a glance and nodded simultaneously.

The middle-level leaders of Panzhihua Iron and Steel Group who were accompanying them were inwardly shocked. The office director looked around and quickly ran out to pour a cup of hot tea for the two leaders and Chairman Chen.

Panzhihua Iron and Steel Group is about to undergo a major transformation.

(End of this chapter)