Reborn as a Noble's Son-Chapter 759 - 715: Rejecting Japanese Capital_1

Chapter 759: Chapter 715: Rejecting Japanese Capital_1

The liabilities exceeded assets.

Nie Zhenbang could understand such situations. Like the case of Red Star Factory, this was not uncommon among various state-owned enterprises across the country.

Basically, they failed to grasp the pulse of the market economy. The products they produced had no market. The more they produced, the more they lost. The deeper the loss, the more it was like a bottomless pit, continuously draining funds, which instead led to a greater degree of loss. Not only did this pose a massive financial burden for local governments, but it also caused a lot of trouble for social stability.

Furthermore, these enterprises were financially chaotic. Even if there were to be restructuring or sales of the enterprise, few were willing to take over. Today’s private business owners are not fools. These enterprises not only have various problems, but they would also have to bear a lot of debt once taken over. This could severely hinder their own development.

Nie Zhenbang paused for a moment, then asked, “What’s the situation with the Dongying corporation that proposed to purchase Red Star Factory for one hundred million yuan? Why is there such a tremendous opposition from the factory’s workers? Could Comrade Chengdong explain this?”

In front of Nie Zhenbang, Lu Chengdong didn’t dare to hide anything. The matter of Red Star Factory had already escalated to the provincial government. On his way here, Lu Chengdong had exchanged opinions with Tang Bingquan.

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As Governor Nie was new to office and had encountered this issue, he would surely not stand by and watch. Otherwise, it would be a blow to Governor Nie’s reputation.

Lu quickly nodded, saying, “Governor, after the Tianfu City Municipal Committee proposed a plan to sell Red Star Factory as a whole, and obtained approval from the provincial government, we issued a tender notice to the public. Three companies visited us for inspections. After detailed inspections and understanding, two of them withdrew from the competition. Finally, the Toyo Mitsui Chemical Company expressed willingness to invest in the purchase. After several rounds of negotiations, Mitsui Chemicals proposed to make a cash investment of one hundred million yuan and assume 250 million in debt. They would take over all assets of Red Star Factory, but the investor would not be responsible for the arrangement of the existing workers. Furthermore, Sumitomo Corporation proposed to relocate out of the city and purchase new land in the development zone for new factories. Ultimately, we agreed to this plan. But due to the fierce opposition from Red Star Factory’s workers, this matter has been dragged on to avoid exacerbating the situation.”

After a moment of silence, Nie Zhenbang nodded and said, “Overall, looking at the situation you reported, the decision of the Tianfu City Municipal Committee and the City Government is correct. Red Star Factory brings a heavy burden to Tianfu City every year. Now, although no profit has been made, at least the burden has been rid of. So, this is understandable.”

Nie Zhenbang’s statement made Tang Bingquan and Lu Chengdong’s faces somewhat gloomy. Governor Nie’s words carried a veiled criticism of Tianfu City for disregarding the interests of the masses in order to rid itself of the burden.

Indeed, from an economic perspective, if Red Star Factory was not sold off, Tianfu City would have to bear the burden every year. It would be a pressure on the overall finance of the city. Now, if it was sold, although it still had to bear 250 million in debt, it was after all able to lighten its load.

However, that’s not how the account was calculated. If it was sold like this, the Toyo Mitsui Chemical Company not only did not suffer any loss, but also made a profit. This was completely like looting a burning house.

At this moment, Tang Bingquan shifted his buttocks slightly and respectfully said, “Governor, on certain issues, our Tianfu City Municipal Committee did indeed make errors of subjectivism. We did not consider the interests of the workers at Red Star Factory. We indeed acted rashly.”

Tang Bingquan’s attitude of self-punishment pleased Nie Zhenbang. At least, Tang Bingquan did not act arrogantly because Nie Zhenbang was new to office.

At this point, Nie Zhenbang clearly understood that he couldn’t be too pushy. Excess in everything is a fault. Some things can’t be accomplished all at once. In the complex matter of enterprise restructuring, things could only progress step by step. “Boiling a frog in warm water” was the correct approach.

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People are like that. If you respect me by an inch, I will respect you by a foot. Tang Bingquan put aside his arrogance. To think of Tang Bingquan doing this out of fear for him would be a big mistake. Tang Bingquan was also one of the standing committee members. If he were to do so, it would only irritate Tang Bingquan and could affect the progress of his work in Bashu Province.

After thinking about it, Nie Zhenbang waved his hand and said, “Comrade Bingquan, this is over self-deprecation. In terms of the Red Star Factory issue, overall, the reform of enterprise systems is correct. However, in terms of work implementation, I think it was hasty.”

Seeing the attentive demeanour of the two, Nie Zhenbang realized that he must demonstrate some ability in order to convince them.

They were not naive children. Even though he was the Governor, he knew he couldn’t persuade them without presenting concrete evidence and reasoning.

“Firstly, you haven’t grasped or utilized the advantages of the Red Star Factory, leaving the Japanese businesses to take the lead.”

Nie Zhenbang said with a smile, “Gentlemen, let’s analyze the advantages of the Red Star Factory. The factory has almost four thousand retired and active employees, which is not a terrifying number. The factory itself is located on 600 acres of land within the third ring of Tianfu City. According to the city’s listed land price, this land is worth at least 150 million. If we were to develop it ourselves, considering the housing prices in the surrounding area of the Red Star Factory, we could make a profit of more than 200 million. That’s one advantage. The second advantage is that in recent years, the factory has invested nearly 200 million in technical transformation funds. Most of the equipment is mainstream. The depreciation of this could also bring about a value of around 150 million.”

Nie Zhenbang’s words made the two men nod in agreement. They admired his assessment, it was no surprise he was a young domestic economist. His estimates were extremely reliable.

“From an economic perspective, these 350 million assets have already balanced the capital invested by the Sumitomo Corporation. This is a conservative estimate. The actual data might be even more. You only need 40 million for 100 acres of industrial land in the development zone. Plus, the 250 million debt assumed by Sumitomo is guaranteed by the Tianfu City Municipal Committee, to be repaid over five years. That means that Sumitomo did not suffer any loss during the acquisition process. On the contrary, they have profited greatly.”

At this point, Nie Zhenbang felt a little disheartened. In the domestic scene, many local government officials only saw the burden and did not take other factors into consideration. It was a sad fact that they didn’t believe private or foreign capital would buy a loss-making business.

After pausing, Nie Zhenbang concluded, “In my opinion, the main reason for a company’s losses is difficulty cracking the market, not identifying key products, or not opening up sales channels. These issues can be adjusted and corrected. Given the current morale at the Red Star Factory, my suggestion is to temporarily halt interactions with Japanese enterprises, and deny their capital. Instead, let’s find a solution from within the Red Star Factory.”

His words stunned Tang Bingquan and Lu Chengdong. Before, Tianfu City had considered these ideas, but due to the complexity of the operation, they had been rejected without being proposed.

The two shared a glance, and Tang Bingquan spoke, “Governor, find a solution from within? Do you mean restructuring via stock ownership?”

Nie Zhenbang nodded, and then said, “I have not had much interaction with the employees of Red Star Factory. However, judging from the mood of the two worker representatives today, these people do care about the factory. The main issue is that the factory has taken too much burden upon itself. There are too many idle workers. Through stock restructuring, we could reduce the number of idle workers. Auction off the current land of Red Star Factory. Use the proceeds to repay part of the loan. Another part should be used to pay for the social security of the retired staff. Incorporating retired workers into the social security system would lighten the factory’s burden. Some funds should be used for new factory construction. As for the land, the Tianfu City Municipal Committee could transfer it in advance. In this way, once Red Star Factory becomes a collective stock company. Its aim would be to adapt to the needs of the market economy. If they dare to swallow this crab, there definitely would be talented people who can revitalize Red Star Factory. This would satisfy Red Star Factory’s workers. Also, the Tianfu City Municipal Committee would not need to bear this loan. It’s a win-win.”

Finally, Nie Zhenbang summarized, “Of course, this is just a preliminary idea of mine. There definitely will be numerous problems when truly implementing it. Whether there are factory workers willing to lead this initiative is also a question. I think it’s worth a shot. When the time comes, I will accompany you all to personally visit Red Star Factory. We can hold a field meeting at Tianfu City, and listen to the opinions of the factory workers.”

Although the two still had some doubts about Nie Zhenbang’s words, they could not help but admire his plan. When considered carefully, it indeed had strong potential for implementation.

At this moment, Tang Bingquan nodded and said, “Governor, as the saying goes, one’s reputation is never as good as one’s face. This time, your words have enlightened me. On behalf of all the workers at Red Star Factory, I would like to thank you sincerely for your attention and consideration. I enthusiastically welcome you to visit and guide our work at Red Star Factory.”

At this moment, Tang Bingquan’s words truly came from his heart. Even though Red Star Factory was under the jurisdiction of Tianfu City, having Nie Zhenbang, a skilled economist, participate was something Tang Bingquan rejoiced in. Judging from Nie Zhenbang’s style, he did not seem to be interested in taking credit for the achievements.

Nie Zhenbang laughed and said, “Secretary Bingquan, how about this – in three days, on Friday morning, let’s hold a Tianfu City field office meeting at Red Star Factory. I’ll come over then.” (To be continued. If you like this work, please support it on qidian.com. Your support is my greatest motivation.)