Feng Yu told Fu Guangzheng about the acquisition of the small machinery factories in the other areas of the province. Fu Guangzheng was very supportive of this idea.
He had also seen the financial reports of Bing City Machinery Company and knew that the spare parts amounted to a large portion of their operating cost. The technology of producing those parts was not high and does not need any unique materials or techniques. It was only very labor-intensive.
By acquiring those small factories, they could foster a good relationship with the Provincial Government and also get some benefits. Furthermore, Tai Hua Supermarket could purchase the two plots of land they wanted. They could build two commercial buildings there and secure the Bing City market. Even when Walmart and Carrefour were to enter Bing City, they would not be able to compete with Tai Hua Supermarket Corporation.
It was Tai Hua Supermarket Corporation’s dream to monopolize China’s supermarket industry. The company still does not have all the strategic locations or funds. Although Tai Hua Supermarkets’ sales were doing well, high cashflow was needed. They could get high loans from the banks, but they dare not claim that they had already monopolized the Chinese market.
If some of Tai Hua Supermarkets were to lose money, the impact on their brands would be significant. The consumers will lose confidence in Tai Hua Supermarket Corporation.
This was why Tai Hua Supermarket Corporation’s aim in the coming few years was to monopolize the 2nd tier and above cites. They want to prevent Carrefour and Walmart from getting the prime locations.
What Feng Yu did have helped Tai Hua Supermarket Corporation to control the Bing City market. He also showed Fu Guangzheng that he could use other ways of cooperation to get the support of the local governments.
As long as it was a win-win situation, the other party will not reject.
After Feng Yu left the Provincial Government, Xu Changyou called for a meeting to discuss this proposal. The other industries could wait, but the Machinery companies must be settled first.
After the mergers of the small factories, Bing City Machinery Company’s employees shot up. Their entire staffs amounted to more than 20,000. Bing City Machinery Company will be China’s biggest employer in the machinery industry.
The other big manufacturing plants like FAW, SAIC, YTO Group Corporation, etc. only had slightly more than 10,000 staffs. Bing City Machinery Company had become the biggest machinery manufacturer in China.
Xu Changyou could claim credit from his higher-ups from this fact alone. Of course. He had to pull this off first.
The next day, Xu Changyou called for a meeting with the whole province’s machinery factories’ heads. He wants to announce his decision.
During yesterday’s meeting with the Provincial Government leaders, there were some objections. They felt this proposal of privatizing state-owned enterprises was equivalent to selling away state-owned assets!
Many of these machinery factories were still making money. All they need were some minor changes, and everything will be fine. Why should they sell all the machinery factories to Bing City Machinery company? That company’s biggest shareholder was an individual.
Privatization of the state-owned enterprises was an issue that had been in discussion by the central government. Many people criticized that this was giving away the national assets.
Xu Changyou asked those officers who objected. Why was this move a loss for the government? Look at Bing City Machinery Company. If there were no other shareholders, new technologies, can they grow to their current scale? Their agriculture machinery products were the most advanced in China. Their motorcycles were selling very well. After the motorbikes, the company introduces cars. They had caught up with FAW and SAIC and will be overtaking them soon.
The taxes paid by this company was several times more than the former Bing City Machinery Factory. The company also provided employment for much more workers. Bing City’s stake in the company might be lesser, but the dividends from their shares were several times more than before.
Furthermore, the Central Government wants to implement Social Security Insurance. How can the Provincial Government implement this Social Security when so many companies could not afford it? Who is going to be responsible for this?
Selling those state-owned enterprises is not selling away those workers. Bing City Machinery Company is also not a private company. It is considered a joint venture. The Central Government is also encouraging more joint-venture companies. This way, all those companies can afford to pay the Social Security Insurance and also develop faster. The employees will also be able to receive higher wages. Why is this not a good thing?
Every worker is essential to the country. Those workers would be given a better life if those companies were sold. They will have more security in the future. What’s wrong with this proposal?
When the issue of Social Security Insurance was brought up, those that objects had nothing to retort. Xu Changyou’s proposal could really solve the Social Security Insurance of those state-owned enterprises.
If these state-owned enterprises paid for Social Security Insurance, the Provincial Government would be able to force other companies to pay. Look, those companies can pay for the Social Security Insurance, why is your factory not paying?
Now, many companies had grouped up to object to paying the social security insurance. They want the government to take care of retired workers and does not want to spend a single cent. This was the local government’s biggest headache.
This proposal would break up those groups, and the government would be able to achieve its target. If the governments could collect more Social Security Insurance premiums, it will be an achievement, and they will get more credit. Credits were given to the local government for achieving excellent results for the birth planning policy, let alone this policy that involves collecting money from the companies.
Xu Changyou was a domineering person. He immediately approved this proposal and stopped all those objections. He wants this proposal to be implemented quickly. The Provincial Government also had to come up with a plan to reorganize many industries in the whole province. The province must set up a few competitive companies to increase the economy.
The Provincial Government’s No. 2 was not happy. Xu Changyou had interfered with his work. But there was nothing he could do as Xu Changyou was the head of the whole Longjiang Province! Also, he had never thought of this idea.
There were not many objections for the mergers of the pharmaceutical factories, as the major shareholder of Bing City Pharmaceutical Enterprise was Bing City’s State-owned Assets Supervision and Administration Commission of the State Council.
But all the leaders never expect Xu Changyou to implement his plan so fast. He called all the related parties over for a meeting to announce the government’s decision.
The leaders of all the local government and factories objected to this proposal. The City Governments felt they would receive fewer taxes, and the factories’ leaders were worried that they would lose their positions. If the factories were acquired, will they still be the factories’ head? Can they still hold on to the authority?
“Why are you all still opposing this proposal after I list out all the benefits? Are you all opposing for the sake of opposing? I had made it clear on the taxes of the respective local government. The factories’ income will be much higher than before. Even though the percentage of tax had become lesser, it was only for a year. The tax income will be much more than before. Also, the workers’ salaries will be increased, and the issue of Social Security Insurance will be solved. All the local government will be able to get credit for implementing this policy successfully. You all will be able to use this example to press the rest of the companies to implement this policy. Is this a problem?” Xu Changyou banged the table and questioned them.
Xu Changyou knew that selling these state-owned enterprises away will affect the income of these local governments. Afterall these state-owned enterprises were a source of income for these governments. Some of these governments also made use of these enterprises to “clean” their accounts.
But merging these factories with Bing City Machinery Company would benefit the whole province as a whole. Even if Xu Changyou could not get his promotion from this merger, he had done something that helped everyone in the region.
“I am telling all of you for the last time. We are not discussing with you all. This is an order. The Provincial Government had reached an agreement with Bing City Machinery Company. The paperwork will be sent to the local governments after this meeting. Don’t blame me for punishing anyone who tries to stop this!”
