Chapter 722 – Merger
Zhang Ruiqiang made up his mind very fast. It was not because he was more decisive than Secretary Xu. It was because Bing City’s population was only about 26% of the whole Longjiang province, but the tax income was more than 43% of the whole province!
This means that the rest of the cities in the provinces could not achieve what Bing City had achieved. Furthermore, Bing City was a designated planned city and had more independence than the rest of the cities. They could make a lot of decisions without interference by the Provincial Government or consulting the higher-ups.
Feng Yu said to let the companies increase their workers’ salaries to lower their resistances to social security insurance. This would increase the implementation of this policy. Bing City could use this method.
Bing City also could implement both the companies’ insurance and social security insurance together. After all, Bing City’s industries were growing faster than expected. They were already ahead of the rest of the cities in China.
Bing City Machinery Company, Bing City Pharmaceutical Enterprise, Bing City Aviation Factory, and even the textile mills were achieving outstanding results.
Bing City was developing at a fast pace, and the local government had more than enough funds.
But Secretary Xu could not make the decision. There were many regions in Longjiang province that were still in poverty. Many companies were still not doing well and were struggling to survive.
The taxes collected from those struggling companies were very little. If Secretary Xu followed Feng Yu’s method to pacify the workers and introduce the social security insurance policy, there would be more problems. The taxes paid by those companies will be much lower than before. Then the provincial government will not have sufficient funds for other projects.
To implement one policy at the expense of other projects? Can this even be considered a success?
The best solution was to increase the economy of the whole province as a whole. If everyone could earn more money, this will not be an issue. But this was harder than said.
When both Zhang Ruiqiang and Secretary Xu were deep in thoughts, Feng Yu was sipping on his tea casually. He had said too much and was getting thirsty.
Zhang Ruiqiang could tell Secretary Xu had difficulties if he were to follow Feng Yu’s suggestions. He wanted comfort Secretary Xu when he noticed Feng Yu drinking his tea happily. He remembered that this subject was brought up by Feng Yu and he should have the solution to Secretary Xu’s troubles?
You have the solution and don’t want to tell us? Do you really like to see us feeling troubled?
Zhang Ruiqiang cleared his throat. He was hinting to Feng Yu quickly tell them the solution.
“Feng Yu, since you mentioned this, then you should have a solution, right?”
“Yes. Just increase the income of those companies, and they will be able to increase the salaries of their workers.”
Damn. Stop stating the obvious. What I want to know is how do you increase the income of those companies?!
Feng Yu saw Zhang Ruiqiang’s angry expression and slowly said. “There is an easy solution. But I am not sure if Secretary Xu could pull it off. This solution will offend a lot of people, especially the other cites.”
Secretary Xu frowned and looked at Feng Yu. “I am not afraid of offending others. We can’t please everyone. As long as this solution is for the good of the people, that’s enough. But what do you mean by the other cities will be offended?”
The other cities should be happy if the income of those companies were increased. They will be able to receive more taxes from those companies and will be able to use those taxes for more projects. This will be part of their cities’ achievements. Why would they be offended?
Feng Yu did not give Secretary Xu an answer straight. He asked Secretary Xu back: “Secretary Xu, what do you think of my companies’ products? Why are my products making high profits and the consumers still prefer them?”
Secretary Xu thought for a while: “Is it because of the quality of your products or the designs? Or maybe it is because of the advertisements?”
“What you mentioned are all parts of the reason. For example, our humidifiers and bladeless fans. The exterior designs are not considered new and other brands had caught up with our product’s quality. Our products are still selling well after we lowered the frequency of our advertisements. Our selling prices are even higher than the other brands. Why?” Feng Yu continued asking.
Zhang Ruiqiang blurted out a word: “Branding!”
Feng Yu gave Zhang Ruiqiang an approving look: “That’s right. It’s the brand effect! I will explain what a brand effect is. It is considered the extension of a company’s value. Which is to say that the brand will increase the value of a product.”
Seeing Secretary Xu still could not fully understand what he was saying, Feng Yu thought for a while and gave an example: “If there is a product and I printed an imported label on the product, lots of people will be willing to buy the product even if I increase the price by 10%, 20% or even more. This is because people’s impression of imported goods is better than domestically produced products. Also, in China, there are lots of factories producing agriculture machinery other than Bing City Machinery Company. But for the same tractor, why Bing City Machinery Company can price it higher than other companies and still able to achieve better sales than them? If you were to compare both tractors, there is not much difference in the quality.”
“This is the effects of branding. Consumers know about our brand. They know that we are a could wide brand and have the best technologies in China. They also heard of our aftersales services. If you look at roast duck restaurants, why is Quanjude more expensive than Bianyifang Roast Duck restaurants? Bianyifang has a longer history than Quanjude, but because Quanjude roast ducks were featured in the national banquet. Many people do not even know that Bianyifang started out selling roast ducks. Even when the customers saw the roast ducks in the Bianyifang’s menu, they will not order it. But when customers step into Quanjude, they will surely order the roast ducks. Simply put it, in accounting, brand value is considered an intangible asset. It is the company’s asset, which lacks physical substance.”
Luckily Feng Yu had learned about these. If not, it will be hard to explain this to Secretary Xu. Feng Yu used examples and some economic jargons which confused Secretary Xu. At Secretary Xu’s age, he had never learned about all these in schools. Although he does not understand the words used by Feng Yu, he understood the examples.
Secretary Xu sighed in his heart. Feng Yu could become so successful, was not by luck. He was really knowledgeable. Secretary Xu had never heard of these things before. There were economists among his subordinates and advisors, and they also know about all these. They can even give a more in-depth explanation.
But they knew Secretary Xu would not be able to understand all these and did not mention about this knowledge. This was why Secretary Xu was impressed by what Feng Yu said.
“You are saying that we should ask those companies to build up their brands? How should they start? Advertisements?” Secretary Xu asked.
“Build up their brands? It is too troublesome, and there is not enough time. We already have a strong brand, why are we not using it?”
“We have a strong brand? What do you mean?”
Feng Yu laughed and said a word which was familiar to both Secretary Xu and Zhang Ruiqiang. “Merger!”