Chapter 610 – How do you want to invest?
Feng Yu and Zhong Qingxian discussed their plans for Lehaha for a while, and Zhong Qingxian’s secretary came in and informed them that Li Dafu had arrived.
Feng Yu did not have an office in Hangzhou, so he asked Li Dafu to come to Lehaha. He can’t be going over to Li Dafu’s office. Lehaha office was still considered Feng Yu’s base.
Li Dafu knew that Feng Yu was Lehaha’s shareholder, but he does not know that he was the major shareholder. He greeted Zhong Qingxian first when he arrived. Both of them had met each other previously at the Zhejiang Business Association.
It was not known when it started. Businessmen from the same area will gather together to form a business association. They would work together and corporate against businessmen from other provinces.
But Feng Yu was not interested in taking part in these associations. What’s the use of hiding in one place and fighting against your own fellow men? If their target were the overseas market, then Feng Yu would be interested. These associations were only trying to protect their personal interest. These existed since ancient times. But disappeared and reappeared after the reformations.
This Zhejiang association was a joke to Feng Yu. These people felt proud to be a member, and they wanted to bring honor to the Zhejiang’s businessmen through this association.
After exchanging some pleasantries with Li Dafu, Zhong Qingxian left the meeting room. Only Feng Yu and Li Dafu remained. This concerned another company, and it was not appropriate for Zhong Qingxian to sit in the meeting.
“Manager Feng, you should know my purpose for meeting you. I wonder if I can still work with you to increase the status of our China’s automobile industry and let Songjiang Motors rise to a greater height?”
Feng Yu had asked Li Dafu if he was interested in creating the best Chinese automobile vehicles with him in the past. But Li Dafu rejected Feng Yu. Now, he can only say he wants to help Songjiang Motors to a greater height.
“So, you have considered about this? What about your company? You are not going to manage your company anymore?”
“I intend to let someone else manage my company for me, and I will go to Bing City Machinery Company to work. Will there be any problem?” Li Dafu asked. Many people held a high position in another company while owning businesses outside. But he was not sure if Feng Yu would agree to this.
“There is no problem. Are you going to be one of the normal management staff or do you want to own some shares?” Feng Yu asked.
If Li Dafu had agreed to Feng Yu in the past, Feng Yu would surely give him some shares. But now, if Li Dafu wants the stocks, he needs to buy them!
“Of course I want some shares of the company!” Li Dafu replied without any hesitations. Without the shares of the company, he has nothing to do with Songjiang Motors.
Feng Yu nodded: “Let me calculate for you. Bing City Machinery Company is currently worth about 4 billion RMB. How much money do you have? I can sell you some shares.”
Li Dafu’s jaws dropped. Did Feng Yu get the figures wrong? Bing City Machinery Company was worth 4 billion RMB now?!
“Manager Feng, Bing City Machinery Company is worth so much?”
“Let me tell you the breakdown. Our agriculture machinery’s brand and technology are the best in China and one of the tops in the world. I did not add to the brand value. Just the technologies, equipment, land and workers, were worth more than 1 billion RMB! If you count the brand value, it will worth more than 3 billion RMB!”
Feng Yu was feeling proud when he saw Li Dafu’s shocked expression. Others might think that branding was not necessary. But Feng Yu knew the value of branding.
“Also, our Songjiang Motorcycles is worth more than 1 billion. We are China’s top motorcycle, and we forecast our sales volume to be over 450,000 units this year!”
“Our investments in Songjiang Motors cars is also not a small sum. Currently, our cars have a good reputation and are exported to Europe. Just this business alone is worth more than 1 billion. I said 4 billion RMB is not including the brand value. If you include Bing City Machinery Company’s brand value, it is worth at least 6 billion RMB!”
Li Dafu was speechless. He thought he had managed his company well and had earned a fortune. He thought he could still afford to buy some shares in Bing City Machinery Company with his money, but it seems that even if he sells off his company, he would only afford to buy 2% of the shares. This was much lower than the 5% shares he expected!
“Manager Feng, can I just invest in Songjiang Motors cars?”
Feng Yu laughed: “Songjiang Motors have 5 factories and a research center. Which one do you want to invest? I had told you a lower value of the company to let you have the chance to own some shares. We still have not to recover our investments for our automobile business. Our company’s most profitable business is still the agriculture machinery, followed by motorcycles and the cars are the last!”
Li Dafu was stunned. Songjiang Motors cars were so famous in China, and their profits were the least? Agriculture machinery was so profitable?
Li Dafu does not understand the agriculture machinery industry. He had expected Songjiang Motors cars’ profits to be lesser than the motorcycles. But he never expects the agriculture machinery to be so profitable.
China was an agriculture country and claims to have more than 900 million farmers. How was it possible to have a lack of demand for agriculture machinery? Furthermore, Bing City Machinery Company’s facilities were from the former Soviet Union. Their products were cheap and durable. The technologies were the best in China and could even be considered one of the best in the world. The company does not need to worry about their sales. People were queuing up to order their agriculture machinery.
If Feng Yu had not increased the company’s spending in the R&D of the harvesters, tractors, etc. their profits would be higher.
If the agriculture machinery were good, there would be no shortage of buyers. Bing City Machinery Company’s agriculture machinery was the most famous in China. Farmers were willing to buy their machines just by looking at the brand!
Some technologies from the agriculture machinery could be used for motorcycles and cars. This will help the company to save some of the R&D funds. Also, China’s top tire manufacturer, bearings manufacturer, etc. were in Bing City. This also reduces cost significantly.
First Automobile Works was one of the shareholders for the tire company and bearings company. These companies were mainly supplying parts to FAW. But now, most of their orders were from Bing City Machinery Company. FAW’s management was pissed. However, they could not interfere with the companies’ operations. After all, Bing City Government held shares in those companies and FAW were in no position to interfere!
FAW had given many technologies to those companies and to FAW’s CEO, this was considered funding their enemy! If possible, he wants to fire his Deputy CEO, who suggested to invest in those spare parts companies in Bing City!
“Manager Li, how is it? Have you considered enough? How do you want to invest?”
Li Dafu’s face turns red. How can he invest? If he invested in only one factory and Feng Yu adjusted the operations model, he would lose all his investments. He can only invest in the main company.
Should he sell off his company? From the boss of a company to a minor shareholder who owns 1 to 2% shares? Was this really what he wants?