Chapter 723 – Decision
Zhang Ruiqiang and Secretary Xu looked at each other. Merger? What merger?
Zhang Ruiqiang was speechless as he looks at Feng Yu. This brat had stopped halfway again. Why can’t he just finish whatever he got to say at once?
“You should have thought about how to merge. Tell us about it.”
Feng Yu picked up his teacup and then place it back on the table. He had drunk all the tea. Zhang Ruiqiang was afraid that Feng Yu would call Secretary Xu’s secretary to pour tea for him. He immediately pushes his teacup towards Feng Yu: “I have not touched this cup of tea.”
Feng Yu picked it up and finishes all the tea. After that, he looked at Secretary Xu’s cup.
This was Secretary Xu’s office, and he was using his personal cup. How can he give it to Feng Yu? Secretary Xu immediately called for his secretary to brew two cups of tea.
Feng Yu was satisfied and said: “There are two forms of mergers. Firstly, consolidate all the small companies, dealing in the same industry, and merge them into a big company. This way, their assets, scale, etc. will increase. All their resources will be combined to introduce a brand. This company will be bigger, and it will be easier for them to market their brand. If the company becomes the biggest in China, it will increase the consumer’s trust in that brand. Of course, this will not happen overnight and needs time to see the effect.”
“The second solution was to make use of an established brand. All the other smaller companies in the same industry will merge with that established brand and become the company’s subsidiaries. Their products will use that established brand name. All the companies will see an increase in their profits, and it is much faster than the first method. You will be able to see the results in a short time.”
Zhang Ruiqiang frowned. “Are you trying to tell us to choose the second method? Are you thinking of merging all the machinery, pharmaceutical, and electronics companies with your companies?”
Feng Yu replied with a proud tone: “You want to let those almost bankrupt companies merge and become my companies’ subsidiaries? You must ask my companies’ employees and see if they are willing or not!”
Damn! Old Zhang is getting smarter. He can tell what I am thinking?
Feng Yu planned to let those small factories take on contracting jobs for his companies. Those small machinery factories might not be able to manufacture any good machines or engines. But they should not have a problem to produce some parts for the main factory.
Anyway, Bing City Machinery Company also had to buy many spare parts. The profits from producing spare parts were quite high too. If the cars and motorcycle spare parts were Songjiang brand, then those people who own Songjiang vehicles would surely pick Songjiang spare parts. Most people still prefer original parts.
This would lower Bing City Machinery Company’s production cost and increase the profits. It will also solve the Provincial Government’s headache.
It was the same for the electronic and pharmaceutical factories. As for the other products, those small companies can merge under the most popular brand. This way, they would be combining all their resources to increase the brand awareness of a single brand. It will be easier compared to those small companies trying to fight for themselves.
Just look at last year CCTV’s highest spender in advertising slots auctions, Confucius Distillery. This company had combined the resources of many small companies and market under a single brand. It was very effective, and their sales last year were excellent.
This year, Confucius Distillery had introduced a local Confucius Banquet Wine, and they were the highest bidder of CCTV advertising slots auctions. This wine was extremely popular, and they hit record sales.
Now, Confucius Banquet Wine was already exported to overseas. Many customers will order this brand of baijiu at restaurants as their first choice. Those bosses, who did not receive high education tends to prefer this brand because of their advertising slogan. Drink Confucius Banquet Wine and write the best essays!
Those bosses might not even be able to write a primary school essay!
This Confucius Banquet Wine was the product after some small distilleries merged. They merged and managed a single brand. Once this brand of alcohol becomes popular, all the distilleries were able to make money. This was better than each of them trying to market their own brands.
Secretary Xu was hesitating. What Feng Yu said seems to be true. But the most popular brands in Longjiang province were Bing City Machinery Company and Bing City Pharmaceutical Enterprise. Both were Feng Yu’s companies. Other than these two companies, no other companies’ brands were famous. There was another well-known brand, Tian Peng Pigs. This was not Feng Yu’s company……. It was Feng Yu’s father’s company!
That means if Feng Yu or his companies does not participate in this merger, then the Provincial Government will have to use the first method mentioned by Feng Yu? Merge the small companies to form a big company and introduces a brand?
However, it will be like what Feng Yu had said. It will succeed, but it will take a long time. Secretary Xu could not wait any longer.
Secretary Xu needs results. If he could not achieve outstanding results soon, he will be asked to retire to the back office.
Also, there was another issue. The implementation of this plan will take some time. If he chose the first method, he would be transferred away before he could see the results. What would happen to this plan after he was transferred away?
This was why all the government officials have to stay for at least a term. The shortest duration of a term was 2 years, and a full term was 5 years. This was for the government officials to have time to implement the changes they proposed.
But not all changes will have effects instantly.
“Manager Feng, I think Bing City Machinery Company can merge with some smaller machinery factories, or you can acquire them if you want.” Secretary Xu said.
Feng Yu shook his head: “Most of those machinery factories’ equipment are old, and do not have the technologies. The workers and leaders there are not very skilled too. Also, they are located in areas not easily accessible. It is not worth to acquire them. Furthermore, the local government will not be willing to sell them.”
“They will be willing to sell those factories. I can promise you.” Secretary Xu could climb to his current position was because he was a dominating person. If he were unable to control his subordinates, he would have been asked to retired a long time ago.
Secretary Xu needs those small companies to merge with an established brand. Even if those companies were to be acquired, it was fine. To him, it was the same. He would rather sell those struggling state-owned companies than to see them just trying to survive every month. Those companies would have better developments and higher profits if they were acquired by an established company. The Provincial Government would also be able to increase the tax income.
Most importantly, the Provincial Government would be able to implement the Social Security Insurance policy!
Secretary Xu finally understood why Feng Yu brought up the subject of Social Security Insurance. This policy was set by the Central Government and had to be fully implemented in the next phase. If Secretary Xu could introduce this policy successfully in Longjiang Province, ahead of others, he will get an opportunity to enter the Central Government to take charge of this policy.
Secretary Xu might not be promoted, but he will get to do the work of a Provincial-Ministerial level official. He will be satisfied.
What Feng Yu had said were all interlinked. No matter what Feng Yu’s motive was, his advice had given Secretary Xu hope. He could see his future career progression!