Rebirth: I am in Jin-Cha-Ji

"How do we discuss the status issue?"

"The status of these enterprises within the socialist economic system directly determines the development of industry. After a factory is established, the raw materials needed for production and the sales of finished products must all be integrated into our socialist economic system. However, if the status of these enterprises within the socialist economic system is not clearly established, then these issues will be affected."

Under the current circumstances, the development of light industry cannot be achieved without being integrated into China's socialist economic system.

Just like a bicycle.

It's not like you can just invest money to open a bicycle factory and start producing bicycles, and then you'll thrive. If you don't have a bicycle factory, how will you source the raw materials and spare parts it needs? These things all need to be coordinated by the government. Just like steel and tires, they must be provided by state-owned enterprises; you simply can't buy them on the market. Steel wasn't too difficult to source before, but tires are the most challenging now. China's rubber supply is also extremely tight, requiring significant imports. Even imports can't meet domestic demand. Annual domestic demand for rubber is currently around 20 cubic tons, but China's annual production and imports only total around 15 tons.

Therefore, rubber is a very scarce commodity. You can’t get it just by wanting it.

That is to say, the current price of rubber in the world market is not high.

During the Korean War, the United States stockpiled vast quantities of natural rubber and imposed an embargo on its import to socialist countries. As a result, by the time the Korean War ended in 1952, the United States still had over one million tons of unsold natural rubber and a massive stockpile of synthetic rubber. However, since then, Southeast Asia had emerged from the shadow of World War II, and natural rubber production had been increasing. Furthermore, global synthetic rubber production was also rapidly increasing. As a result, global prices for both natural and synthetic rubber continued to decline, with prices in the Philippines being particularly depressed. Therefore, the United States could only turn a blind eye to socialist countries' purchases of natural rubber.

If it weren't for this, China's domestic rubber shortage would be even greater. The acquisition of rubber is subject to state regulation. Why is heavy industry considered the foundation of industry?

Just look at this and you will know.

Light industry developed on the basis of heavy industry. Without the support of heavy industry, light industry would not even be able to meet the demand for raw materials.

That's why Tao Zhu was asking about the status of these factories. Don't let them be treated differently once they open because they're Sino-foreign joint ventures, and won't get enough raw materials. How will Gongguang develop then?

Of course that's one point.

And sales.

Currently, the sales outlets in major cities across China are supply and marketing cooperatives. Industrial products like bicycles enter the market through these cooperatives. Therefore, if factories want to develop domestically, they must integrate into the socialist economic system.

"Old Zhou, what do you think?"

Wei Hongjun asked Mao Zemin, as he was responsible for supply and marketing. Mao Zemin thought for a moment and said, "If an industry with this type of ownership wants to integrate into our socialist economic system, it must accept one thing: domestic production targets. The state issues these targets, and industry must accept them like other state-owned enterprises and complete them."

In a planned economy, these larger enterprises all have production tasks.

If these Sino-foreign joint ventures in Guangdong wanted to enter the socialist economic system, they had to accept state production allocation. They were given production targets, and they had to complete them. Only by accepting state production targets would the government allocate the raw materials they needed.

Tao Zhu said: "This is as it should be. We will definitely be able to complete the national production task."

The British businessmen wanted to build a large bicycle factory.

Whatever production task the country has, it can be completed. However, Tao Zhu continued: "What if our production exceeds the national production task? Can these supply and marketing cooperatives sell it?"

Mao Zemin thought about it.

He was really considering this. Because many factories currently have production targets that, while leaving some room for maneuver, rarely exceed their production targets by much. On the contrary, many factories are unable to meet their production targets.

But the question Tao Zhu raised was also something that would happen in the future, so Mao Zemin needed to think about it carefully.

What is a production task? For example, if the government sets a target of producing one million bicycles this year, it will issue one million bicycle tickets, assign production tasks to bicycle vendors, and then the supply and marketing cooperatives will purchase bicycles from these vendors at a specified price.

These bikes are all fixed prices.

The supply and marketing cooperatives made profits from this inflow and outflow, and handed them over to the state as funds for the development of heavy industry.

This is the production task in the planned economy.

The government issues bicycle tickets for two reasons: one is that the market is currently in short supply and demand is insufficient, so the only way to control the market is to use tickets. The other reason is to monitor the national production situation at all times.

Those who fail to meet their production targets will be investigated for their failures. Units that exceed their targets will be commended. Furthermore, exceeding targets can increase factory profits.

But what to do with the excess quota?

In fact, it's difficult for light industry to exceed its targets. This is because the government allocates raw materials based on production orders. It's like a bicycle manufacturer: steel and tires are allocated based on the targets you need to meet. Even if they give you extra, it's only to account for production losses. Under such circumstances, how can you exceed your targets?

However, this is a Sino-foreign joint venture.

We can also process some incoming materials and allocate some of them to enter the domestic market.

"Goods within the production target have invoices, while goods outside the production target do not. Goods with invoices are sold at the custom price, while goods without invoices have to be priced higher. Planning is a guarantee, but goods outside the plan depend on demand."

Wei Hongjun mentioned this from the side.

As long as you're not using state-owned foreign exchange or using raw materials from the national plan, there's no need to delve into how you increase production. If you have the ability to obtain raw materials and produce more products, that's your skill.

If you have a ticket, the price is set by the government. If you don't have a ticket, you have to buy it with cash. Just like a bicycle now, if you have a ticket, it costs more than 100 yuan, but without a ticket, the price is doubled.

"Ah."

Mao Zemin nodded.

After thinking for a while, he said, "I need to go back and think about this issue carefully, and discuss it with other comrades. But one thing is certain, as long as the socialist economic system is not damaged, there will definitely be a market for the products produced. It is not the case that the extra products cannot be sold. Especially for cars, the market demand is very strong at present."

With Mao Zemin's guarantee, things became much easier.

Bicycles with tickets can be sold, and the supply and marketing cooperatives will also buy bicycles without tickets.

Tao Zhu continued, "The third issue is the settlement of foreign exchange for exports. Currently, all foreign exchange earned from imports and exports in my country is settled in a unified way. How about the foreign exchange for this new factory we want to build?"

"This must be subject to the overall interests of the country." Mao Zemin shook his head.

Mao Zemin understood what Tao Zhu meant.

This factory wanted to generate its own foreign exchange. But this was impossible. Especially now, China was severely short of foreign exchange. All foreign exchange had to be used to purchase machinery and equipment, as well as scarce industrial products.

It is impossible to give this power to these factories.

Once the work is delegated to the factories, they don't care about national strategy. They import whatever makes money. If nothing else, China is poor, but that doesn't mean everyone is poor.

There are still many rich people in China today.

There are a lot of people who can afford all kinds of luxury goods. Luxury goods have high profits, which will inevitably cause trading companies to waste foreign exchange.

Therefore, foreign exchange must be controlled by the state.

Tao Zhu nodded, not dwelling on the issue. He also thought it was impossible. So, Tao Zhu changed to the next question: "Fourth, the issue of shareholding management raised by the British businessman."

"I think this is acceptable. Since the shares are British investment, they have the power to dispose of them. However, when doing so, the Chinese government, state-owned enterprises, and collective enterprises have the right of first refusal. That is, if the British want to sell their shares, they must first consult us if we choose to do so, provided the price is the same. If we don't buy, they can sell them to someone else. Furthermore, the person they're selling to shouldn't be an enemy spy intent on sabotaging the company, and then we shouldn't interfere."

Wei Hongjun spoke.

In fact, this is acceptable.

Whether it's collaborating with British companies or purchasing from other businesses, there's really not much difference. Their capital needs to be able to flow in, but they also need to be able to exit. They need to be given the power to manage their shares. This will give them greater confidence and allow them to invest more boldly.

What the country lacks most now is funds.

As long as it does not destroy the current domestic socialist economic system, we should boldly introduce some funds for use.

Yao Yilin also said, "Our Ministry of Commerce is currently releasing a draft of the Company Law, which addresses the issue of subsidiary shareholding management. It also believes that both state-owned and collective enterprises should have the freedom to manage their shares based on price."

The Ministry of Commerce's first draft of the "Company Law" was decided after the Chairman visited Guangdong.

It was primarily designed to address cooperation issues between state-owned and collective enterprises. Enterprises and institutions are different. All institutions, including scientific research institutions, are funded by the state.

As the saying goes, you should listen to whoever gives you a job. These units are all supported by the state.

You do whatever the country tells you to do.

For example, some research institutes originally studied crops in high-altitude areas. But the country needs people to study crops in hot climates. In this case, these research institutes can be directly transferred to a different research direction.

Because they themselves are fed by the government. But enterprises are different.

Beyond the initial state investment, enterprises are ultimately responsible for their own profits and losses. Don't assume that during the planned economy era, enterprises had no profit requirements. That's not the case. Even then, enterprises were responsible for their own profits and losses. Although they adhered to state production plans, if the government required you to produce 100 units for 100 yuan, but you only produced 100 units for 200 yuan, the government would investigate why this happened.

Enterprises strive for profits, and officials achieve political achievements. Furthermore, only when enterprises are profitable can they improve workers' welfare. Wealthy industrial enterprises can build housing for workers, provide good industrial hospitals, and factory schools, and even find excuses to distribute rice, grain, and oil to workers. Therefore, factories during the planned economy era were profit-driven.

Therefore, the cooperation between enterprises is different from the cooperation between government agencies.

After visiting Guangdong, the Chairman understood that China must have a "Company Law." This doesn't mean that completing socialist reform will transform China's economy into a homogenous economy, with all enterprises operating under the same ownership structure. On the contrary, even after socialist transformation, China will still have a vast array of enterprises with varying ownership structures.

This raises a question: How can the interests of these companies be guaranteed?

This is why the Ministry of Commerce is currently discussing the "Draft Company Law".

Yao Yilin introduced some contents of the "Draft Company Law".

Guangdong is home to the largest number of enterprises of various ownership structures, and therefore has the most ideas about "Company Law."

He expressed a lot of opinions, which Yao Yilin took very seriously.

Record all the opinions expressed by Luo Qirong, Tao Zhu and others.

After finishing the discussion on "Company Law," Tao Zhu continued, "The fifth question is about the salaries of British employees. How will the salaries of those sent by the British businessmen be calculated? Will it be based on the model we previously provided to the Soviet experts?"

"This won't work."

Mao Zemin shook his head.

He said, "This type of Sino-foreign joint venture is inherently controversial. If the wages of the people sent by the British are much higher than our workers, it will have a very negative impact. The Soviet experts are different from them. Soviet experts are not from the factory, they are consultants we invite to help us with management and production. So they receive expert fees, which are completely separate from our own workers' wages. But if the people sent by the British are from the factory, they are staff members of the factory. It is impossible for them to be special."

"Correct."

Wei Hongjun also supported Mao Zemin.

They come to participate in factory management and financial audits, and are considered factory staff. The factory pays them according to their salary levels.

“But these people were paid very well where they came from.”

"That's the British business's business. Since they've established the factory, they can't favor one employee over another. If the British business is willing to raise wages for everyone, then we can support that."

Wei Hongjun shook his head.

Sino-foreign joint ventures established in the new China must not follow the example of old China, where foreign workers earned dozens or even tens of times more than their Chinese counterparts.

This is not possible.

Since it is a factory, the same wage standards must be implemented.

As for the lack of wages caused by coming to China, that is something that the British businessmen need to solve themselves. They can offer them high wages.

We must persist in this regard.

If we don't insist on this, problems will arise. As the saying goes, "It's not the lack of wealth that's worrying, but the inequality of distribution." New China is now in a period of overthrowing the three major obstacles of the old society, and the people of the country are welcoming the new society with high spirits and building a new China. If, in a Sino-foreign joint venture, the salaries of foreign employees are significantly higher than those of Chinese employees, who knows what kind of waves will arise.

Wei Hongjun needs to consider the overall situation.

These Sino-foreign joint ventures are just beginning to develop. Don't let this kind of thing discourage you.

Seeing Wei Hongjun and Mao Zemin's resolute attitude, Tao Zhu nodded. Then he said, "The sixth question is about taxation. How should the country treat these Sino-foreign joint ventures? Should there be targeted provisions regarding taxation?"

Wei Hongjun looked at Mao Zemin.

Mao Zemin frowned and said, "The Ministry of Finance hasn't discussed this issue separately. But in my opinion, the more new things like this emerge, the less special treatment they should receive. We should tax these enterprises in the same way as we tax domestic light industrial plants. However, I need to go back and discuss the details with other comrades."

“I think this idea is correct.”

Wei Hongjun supported Mao Zemin's idea.