Reborn in 08, a heretical cultivator starting a business

Chapter 183 Turning the Tables: A Battle Between Two Cities! (Seeking Monthly Tickets)

"Chairman Wang helped us revitalize Xiaoya and alleviate the local government's financial burden. We will always remember this. We must support him no matter what."

Secretary Xu solemnly declared, "No matter how tight the industrial land quota is, we must provide Chairman Wang with 1500 mu of industrial land!"

"As for Lotus cars, we must investigate them thoroughly and consider them carefully before making a decision."

"Okay." Mayor Zhao breathed a sigh of relief.

With this attitude, things are fine; otherwise, it's truly disheartening!

"And I trust Chairman Wang."

Seeing Mayor Zhao's confident demeanor, Secretary Xu's heart skipped a beat:
"Do you think the Lotus car project is a huge disaster?"

"At least 70%!"

"Hiss!" Secretary Xu couldn't help but gasp.

Mayor Zhao is ten years younger than him, yet he has reached this position. His political awareness and intuition are far beyond those of ordinary people!
If it weren't for this, I wouldn't be in my current position.

One wrong step and you're at the end!
If even Mayor Zhao thinks so, then there's a high probability that there really is something wrong with Lotus Cars.

A thorough investigation is necessary!

Originally, Secretary Xu had 9% support for the Lotus car project.

But now, only 5% support remains.

Support for smart homes has increased from 70% to 90%.

Mayor Zhao spoke slowly, "The preliminary work on 'Eight Connections and One Platform' also needs to be expedited. Once we've completed the preparatory work and the investigation is complete, the signing and implementation will be finalized, and the future smart home project can begin construction as soon as possible."

"Yes, that's how it should be. We're pushing forward with all eight connections and leveling the land, and we're aiming to get half of it done by the end of the month so we can start some construction. We'll finish all eight connections and leveling the land in January."

“Okay, I’ll keep an eye on it myself,” Mayor Zhao said.

Although there were some mishaps along the way, the preparations were done in advance and completed ahead of schedule.

If the problem with Lotus cars is found, the 1500 acres of land will be quickly allocated to Chairman Wang, and he can start construction immediately!
This way, the production of future smart home products won't be delayed!
the other side.

Wang Junshan convened another high-level meeting:

"Just now, we received news that other companies are also eyeing 1500 acres of industrial land in Jeju."

"What?!" Everyone's expression changed drastically.
"The future smart home industrial park, which seemed like a sure thing, has encountered setbacks."

"This is how to do?"

Wang Junshan waved his hand: "Although the matter is not yet settled, it is highly likely that these 1500 mu of land will eventually belong to us."

The Lotus car project is riddled with problems.

If Jeju conducts a thorough investigation, they should be able to uncover some problems.

Wang Junshan remains confident about these 1500 mu of land.

Moreover, if Jeju Island doesn't double its policies by then, it will be difficult to negotiate.

As a Jeju native, I, Wang Junshan, should support Jeju's development.

But it's not something that can be summoned and dismissed at will!

If Jeju doesn't bleed money, there's no point in discussing this!
"But we won't fight Jeju to the death; we need to prepare for the worst!" Wang Junshan changed the subject:
"Isn't Ningbo very suitable for developing small household appliances such as washing machines? It's close to the port, and it's convenient to export to Southeast Asia."

"Chairman, do you mean to invest in Ningbo and build a future smart home industrial park?"

Tang Zhi nodded: "That's perfectly feasible. Cixi and Yuyao in Ningbo are the largest small appliance industrial clusters in China, accounting for 30% of the national production capacity. They not only have large and small twin-tub washing machine OEM clusters like Xinle and Handian, but also Fotile and Bull!"

"If we're developing smart home products, especially small appliances, Ningbo is a very suitable location. We can leverage the existing supply chains of Fotile and Bull!"

"Ningbo has a very mature supply chain for injection molding, motors, and sheet metal, and its costs are 15% lower than those in Binhai City, making it the region with the lowest costs in the country!"

Li Ming wholeheartedly agreed: "That's right. Ningbo has a very mature supply chain, thriving related industries, and a large pool of skilled workers, resulting in lower labor costs. Therefore, outsourcing the production of the Little Duck twin-cylinder refrigerator to Xinle Electric Appliances is even cheaper than producing it ourselves!"

"There's also Ningbo Port, which ranks fourth globally in terms of throughput and has lower tariffs, making it suitable for import and export."

"In addition, Ningbo has launched a smart city pilot program, providing IoT companies with a 30% R&D subsidy, up to 10 million yuan, and a three-year rent-free period for bonded warehouses. However, its corporate income tax policy is not as good as Jeju's, which offers five years of tax exemption and five years of 50% tax reduction," Tang Zhi continued.
"There's also the issue of land prices. Industrial land in Jeju High-tech East Zone costs 30 yuan per mu, which is the most favorable price among provincial capital cities nationwide."

"In Ningbo, it costs 60 yuan per mu."

"Furthermore, in terms of R&D talent, Jeju has Lu Da University, which supplies more than 3000 engineers in computer science and microelectronics every year, which can fully support the R&D team for future smart homes."

"Ningbo doesn't have any 985 or 211 universities, so there's a shortage of talent in smart homes and the Internet of Things. We need to bring in engineers from Zhejiang University, which makes the cost of engineers 30% higher than in Jeju!"

"After all, Zhejiang University students either aim for Tsinghua or Peking University or study abroad, or go to first-tier cities to develop their careers, or stay in Hangzhou. Not many people are willing to go to Ningbo."

Listening to their conversation, Wang Junshan made a decision.

Both cities have their own merits.

Jeju has advantages in land prices, policies, and talent reserves.

Ningbo, on the other hand, has advantages in supply chain and port.

However, there is a serious shortage of talent.

As Tang Zhi said, people strive to rise higher, while water flows downhill.

If Zhejiang University were located in Ningbo, many Zhejiang University students would be willing to work in Ningbo.

But Zhejiang University is located in Hangzhou, so fewer people are willing to go to Ningbo. Even offering 30% more salary won't help.

Engineers' salaries are already high, and adding another 30% would mean that R&D costs would increase by 30%!

This is not a small number.

Wang Junshan wants to conduct research and development across the entire industry chain, so the research and development costs in any field will be high.

For example, with water purifiers, if you use RO membranes from Dow or Sehan directly, just like Xiaomi, and assemble them directly, the R&D costs are minimal, or even negligible.

However, if they develop their own RO membranes like Beijing OriginWater Technology Co., Ltd., the cost will be high, with an annual investment in the hundreds of millions.

Jeju Island is different; it has Luda University, which is very strong in computer science and microelectronics.

Moreover, being located in Jeju Island, where many graduates prefer to stay, it's entirely possible to recruit a sufficient number of R&D engineers.

It can only be said that both have their own merits.

"So, the question is whether to go to Ningbo or stay in Jeju."

Tang Zhi didn't know what to do either.

Wang Junshan laughed: "That's easy to do. With Future Smart Home's potential and investment scale, they'll be treated like royalty wherever they go. At worst, we can just split the Future Smart Home Industrial Park in two!"

Children make choices; adults want it all! Li Ming understood Wang Junshan's meaning: "That's settled then. If we want 1500 mu of industrial land all at once, such a large scale is indeed difficult. But if we split it up, acquiring seven or eight hundred mu in each city will be a piece of cake."

Wang Junshan nodded:

"The original 1500-mu Jeju Future Smart Home Industrial Park will be divided into two dual bases of 700-800 mu each, one in the south and one in the north."

"For the northern market, we can consider Jeju or Doseong to supply the northern market."

"We will make full use of engineers who graduated from Luda University and Binzhou University to build a research and development center. We will focus on emerging fields such as high-end drum washing machines, dishwashers, water purifiers, and air fryers, and build a comprehensive supply chain from scratch."

"In the south, Ningbo can be considered, making full use of its low supply chain costs and bonded import and export, focusing on industries such as top-loading washing machines, low-end front-loading washing machines, smart toothbrushes, and smart sockets."

Tang Zhi's eyes lit up: "This arrangement is the best. Dishwashers, water purifiers, air fryers, and high-end drum cookers are all new technologies and emerging products. The supply chains all need to be built. There is not much supply chain advantage in Ningbo. Placing them in Jeju can take advantage of Jeju's talent pool and save on R&D costs. It's just right."

"The technology for top-loading washing machines is very mature, and the technology for low-end front-loading washing machines is not very difficult either. Both can be located in Ningbo, making full use of Ningbo's low-cost supply chain advantages. Smart sockets can also take advantage of the industrial chain advantages that Bull has built in Ningbo."

Jiang Fan also chimed in, "Moreover, this layout, with one branch in the south and the other in the north, can radiate to the northern and southern markets respectively, which can greatly save on logistics costs."

"It will allow us to turn the tables, shifting from a passive to an active position and putting competitive pressure on Jeju and Ningbo!"

"Let them give us the best treatment, otherwise we can simply shift our production capacity to the other side!"

"Should we contact Ningbo directly?"

Wang Junshan waved his hand: "No need. Isn't there a Xinle Electric Appliances in Ningbo that produces two million twin-tub washing machines a year?"

“Aren’t we short of twin-tub washing machine production capacity? Let’s go and talk to them. If the price is right, we can directly acquire Xinle Electric Appliances.”

Tang Zhi immediately had a plan: "I'll go. I should be able to negotiate a very good price. Xinle mainly produces twin-cylinder engines, but their market share has been declining in recent years. If this continues, Xinle will inevitably go bankrupt in less than three years. However, they do OEM manufacturing, so they don't make much profit. They also don't have the money to upgrade to a fully automatic shifter."

"Instead of waiting until the year after next or the year after that, when we can't get any orders and Xinle Electric goes bankrupt, and the twin-cylinder production line can only be sold as scrap metal, which will be even less valuable, it's better to sell it to us now."

“Yes, let’s discuss it like this: divest the debt and try to get it for 7000 million!” Wang Junshan said.

"Can we really get this price?" Li Ming asked, somewhat incredulously.

Wang Junshan smiled faintly: "Sure. The Xinle Electrical Appliance Industrial Park is about 200 acres, but the land use rights have expired quite a bit, so its value is only about 4000 million."

"The depreciation of the twin-cylinder production line and the factory is only about 2000 million. Giving them 7000 million is not a small amount."

"Tell them that if they don't sell now, the twin-cylinder market will decline further, and Xinle won't get any twin-cylinder orders. Even at 5500 million yuan, no one will want it the year after next!"

"Let them calculate whether they can earn 1500 million in two years!"

Li Ming suddenly realized: "That makes sense. Xinle's peak annual production capacity was 200 million twin-tub washing machines, but now twin-tub washing machines are becoming less and less popular. Coupled with the economic crisis, Xinle's production capacity this year is probably not even half full."

"Even if we produce 80 twin-cylinder units a year, with a contract manufacturing fee of 50 yuan per unit, after deducting labor costs, we can only earn 15 yuan, and the net profit for the year would be only 1200 million yuan."

"Next year will be even worse, with the twin-cylinder market declining further, and even 800 million units will be difficult to achieve. As for the year after, without enough twin-cylinder orders, it will be good enough to break even, let alone make a profit."

"That's right, taking over Xinle is no problem at all. Let's move forward as soon as possible, and let Jeju see that we have more than one target!"

Wang Junshan laughed and said, "Once we take Xinle, we'll have a 200-acre industrial park. NB City will naturally take the initiative to contact us and offer us a new industrial park. Let's negotiate as soon as possible and give Jeju a sense of crisis!"

"it is good!"

Tang Zhi took his team to Ningbo for an inspection that very day.

In just three days, everything was agreed upon: a total of 7000 million yuan was allocated to acquire Xinle Electric Appliances without assuming any debt.

Unfortunately, the market for twin-tub washing machines is declining rapidly, getting worse year by year.

As the dominant manufacturer of twin-cylinder engines, Xinle feels this most keenly.

In 2005-2006, Xinle's 200 million unit production capacity was simply not enough; they were completely overwhelmed with orders. Annual net profit exceeded 3000 million!

By 2007, things had taken a turn for the worse. With a production capacity of 200 million units, they only received orders for 120 million units, resulting in a net profit of only about 1800 million yuan.

This year is even worse; more than half of the production lines are empty, and the net profit is only around 1200 million.

It's easy to imagine what will happen next year; 800 million is the limit.

In 2010, it would be good if I could earn 300 million.

In 2011, there will definitely be serious losses!

Everyone knows that 2011 is the year twin-tub washing machines will be obsolete!

As for 2012, the total sales of twin-tub washing machines nationwide may not even reach 300 million units.

With an annual production capacity of 200 million units, Shin-Le is bound to go bankrupt!
But Xinle didn't have the money to upgrade to a pulsator.

A contract manufacturer with a net profit of less than 4% can't earn millions a year, so it's impossible for them to spend several million to upgrade their production line!

Seeing that the twin-tub washing machine market was declining and things were getting worse year by year, the owner and shareholders of Xinle figured that even if they worked themselves to the bone for the next two years, they could only earn 1000 million yuan.

At that time, the land will be worth 40 million, the twin-cylinder production line will only be sold as scrap metal, the factory will be worth 10 million, and the entire Xinle will only be worth 52 million.

Even with the 10 million profit for the next two years, it will only amount to 62 million.

Instead of doing that, it would be better to sell it to Future Technology now and cash out 7000 million directly.

At the very least, the twin-cylinder production line is still worth 1000 million in Future Technology's hands this year!
In fact, Xinle's boss and shareholders had long wanted to get out of this mess.

As for how Future Technology will handle the situation after taking over, that's none of Xinle's business.

As long as the twin-cylinder industrial park doesn't become a liability, that's fine.

Seemingly fearing that Wang Junshan might renege on his promise, Xinle fully cooperated, swiftly completed the transaction, and got everything settled.

The NB City State-owned Assets Supervision and Administration Commission also promised that the land leases could be renewed free of charge upon expiration.

Tang Zhi did not hesitate and quickly made arrangements:
All production capacity that was shut down will be fully utilized to produce Little Duck twin-tub washing machines!

Some of the third-party manufacturing orders have not yet been completed. We will continue to finish them and deliver them with high quality and quantity. The manufacturing fees for these orders have been allocated to Future Technology.

But once this wave is completed, we will no longer accept new OEM orders and will switch entirely to producing duckling twin-cylinder tanks!
We've been behind on orders for tens of thousands of Little Duck twin-tub washing machines these past few days, but with Xinle's production capacity, we can make up for it!

Ningbo warmly welcomes the arrival of future technologies.

Not only did Future Technology provide comprehensive support for its acquisition of Xinle Electric Appliances.

Furthermore, the mayor personally attended the signing ceremony and warmly invited Future Technology to invest in Ningbo!
Local media outlets also published a series of reports:

[Future Technology acquires Ningbo Xinle Electric Appliances, boosting twin-tub washing machine production capacity by 200 million units!]

The mayor personally attended the acquisition ceremony, suggesting that Future Technology may invest in Ningbo in the future.

Upon seeing these news reports, the leaders in Jeju Island panicked!

(End of this chapter)