Chapter 717 – Getting listed?
“Manager Feng, all the contracts are signed. We have not missed out any employees.”
Li Mingde called Feng Yu to report on his progress. This was because, from January 1st this year, China’s Labour Law had been inforced. All companies must sign contracts with their employees and must contribute to the social security system.
When this law was announced, Feng Yu asked Li Mingde to quickly sign official contracts with all their employees. This was to prevent them from overthinking.
However, Li Mingde said there was no need for them to do so. Everyone in the company trust Feng Yu.
Feng Yu knew that Li Mingde was bootlicking, and all the employees trust Li Mingde more. But Feng Yu still insist Li Mingde complete the contract signings as soon as possible. He must also explain all the terms in the contract and must not hide anything from the employees.
The Machinery Company must also pay the social security for all the employees, including those at their branch factories, on time.
Li Mingde still does no know about the benefits of paying social security. The government will be taking care of all the retired employees instead of the company. This would help the company save lots of money.
Because this was the first year the law had started, those workers who were nearing retirement have the option of paying a lump sum and then still enjoy retirement funds. Of course, this lump sum payment to social security will be borne by the company and not the worker.
When Li Mingde announced this news, all the employees were overjoyed. Although they kept saying they trust the company and Li Mingde, all of them were still worried the company will not take care of them after their retirement.
Now, the country promises to take care of them, and they have no more worries.
Bing City Machinery Company was one of the fastest companies among all big enterprises to complete the contract signings. Some company’s leaders were still trying to delay. They wanted to wait until the end of the year. But they did not know that late payments can incur interest. The interest rates were the same as the banks. The business owners felt that they could have better use for this amount, and the returns will inevitably be higher than the interest incurred.
But Feng Yu’s companies do not need to do this. All of his companies had sufficient funds. If Bing City Machinery Company needs to get a bank loan, all the bank managers in Longjiang province will be queuing up at Li Mingde’s office and will try to give their best offer.
The past two years, the higher-ups had given high targets to the banks for giving out loans. To hit the target, banks simplified their loans procedures.
Now, the banks had completed the mission given to them by the higher-ups, and some banks had even loaned out more than the target. But now, the banks faced a series of problems. Many companies and individuals were unable to repay their loans!
The banks had lots of bad debts and cost the banks to suffered massive losses.
But if the banks loan money to Bing City Machinery Company, they do not need to worry. All of them knew how profitable Bing City Machinery Company was and their products were sold all over China and were even exported to Russia.
Even if Bing City Machinery Company could not repay their loans, the banks could also recover the debts from auctioning their assets. But Li Mingde rejected all the offers from the banks as the company does not need any loans.
If Bing City Machinery Company lack funds, Feng Yu could just inject some money into the company. Of course, the City will not agree to it as this will dilute their shares. This was a good company, and the City does not want their shares to be diluted. Another way was to list the company on the stock exchange.
Since the stock exchange was set up in China two years ago, there was an increase in the number of listed companies. These companies wanted to raise funds for their developments. One of the more successful company was Changhong.
Changhong was already listed, and Feng Yu knew that they share prices would skyrocket after they got listed. They amassed a substantial fund from the market and expanded their factories, R&D facilities, and marketing.
Currently, Changhong had become the leader in China’s domestic TV brands. No other companies could threaten them of this status in China.
The Provincial Leaders of where Changhong was located also start to promote Changhong. This was also considered the Province’s achievement. A company like Changhong had appeared in their province, and how can they not make use of this company?
But Feng Yu remembered that Changhong was only successful for these 2 to 3 years. The management of Changhong will be making a grave mistake soon and resulted in the company to go downhill.
Changhong was too confident of their 21-inch color TV and felt this will be mainstream TV in the market. Now, the 21-inch color TV might seem to be the mainstream TV and Changhong had China’s most advanced technology in this field. Their manufacturing cost was also the lowest compared to other foreign MNCs.
But in another 2 years, the TV will become bigger. 25 inches, 29 inches, 32 inches, 34 inches, and even 42 inches TVs start appearing in the market. All TV manufacturers start to manufacture bigger TV to meet market demand.
However, Changhong still insists on producing 21 inch TV and did not lower their production. As a result, their TVs were unsold and stuck in their warehouse.
This was the turning point of the company, and Changhong fell from being the domestic market leader to number 2. Their placing continues to drop to number 4, etc.
But now, all these still have not happened yet. Changhong was still able to make lots of profits for the next 3 years.
The local government was jealous of many companies’ success. They realized that companies do not need to get loans and could still be able to raise funds and develop quickly.
Also, after the company was listed, the company’s value would increase as the share prices increases. This way, a successful company will appear in the province or city governed by those local authorities. A company that was worth 100 million might become 300 million RMB after getting listed. The local authorities could brag to their higher-ups and try to get the credit.
Look, this listed XXX company was set up when I was in charge of the city. This company was only worth 100 million RMB, and now, it’s worth had increased by several folds. The higher-ups will think that this person was good at business. This was the time when the Chinese government emphasizes on the economy. The higher-ups will surely groom this person.
So, there were a large number of companies that were listed. Many of these companies did not even reach the minimum requirements of being listed. But this was not important as the local government will help them/ Furthermore, there were lots of loopholes in the laws. The number of companies getting listed on the stock market had increased by more than 10 times compared to the previous year.
Some of these listed companies had grown after being listed, and the investors all made money. But there were many companies whose shares did not move after they got listed. Some companies had raised a large sum from the stock market, but all their funds disappeared. The local government had taken the money away, or the companies’ leaders ran away with the money.
But no matter what, all the local government felt that getting the companies under their jurisdictions to be listed on the stock exchange was one way to show the higher-ups how successful they were. All the local governments wanted more listed companies to appear.
Li Mingde was also summoned by his leader for a talk. He wanted Bing City Machinery Company to be listed on the stock exchange!
This was also one of the reasons why Li Mingde called Feng Yu. He needed Feng Yu’s help.