Chapter 826 - Crisis
Chapter 826 – Crisis
Feng Yu registered an investment company in New York and had an agreement with Kirilenko. He will let Kirilenko be the partner of the company to form a US-Russia joint-venture company, but Kirilenko has to sell all of his shares to Tai Hua Trading a year later.
This is a small favor, and Kirilenko agreed immediately. Anyway, he does not need to spend a cent.
Feng Yu also contacted Li Zekai and Fu Guangzheng. Li Zekai will use the Li Family’s connection to register a trading company in Canada, and Fu Guangzheng will set up a company in Singapore.
Just like Kirilenko, Li Zekai, and Fu Guangzheng are registering the companies on behalf of Feng Yu, and all the companies’ shares will be sold to Tai Hua Trading one year later.
At the same time, Li Jingwei invested more than half of Jianlibao’s fund into the plot of land in Guangzhou to start the construction of Jianlibao’s building.
After that, Li Jingwei used the excuse of opening up the US market to transfer most of the remaining funds into the Jianlibao US branch’s account. This move caused Jianlibao to drag their distributors’ payment.
But this was only Li Jingwei’s first step in his plan, and his second part of his plan is starting.
Li Jingwei told the City government’s leaders that the US branch company conducted market research and found tea beverages have a high demand in the US. But Jianlibao does not have tea beverages formula, and the best tea beverage manufacturer in China is Lehaha Group.
So, Jianlibao should negotiate with Lehaha to purchase their tea beverage recipe. They will modify the recipe to produce a new type of tea beverage that will suit the Americans’ taste buds. This will surely increase the Jianlibao’s profits.
When the City government leaders heard that Jianlibao’s profits will increase, they gave approval. Anyway, it’s only a beverage formula.
But Li Jingwei told the leaders that Jianlibao does not have money and needs the City Government to make arrangements for Jianlibao to get a bank loan.
The leaders were shocked. How come Jianlibao does not have money? Didn’t we approve a sum of the fund at the start of the year? The leaders soon found out that Jianlibao does not have any funds and still owe the distributors.
If it was not because of the fact the distributors had worked with Jianlibao for several years, they would have caused trouble for Jianlibao! If the distributors stop their distribution of Jianlibao, Jianlibao’s sales will come to a halt, and the company will be finished!
The Government leaders start to investigate where did Jianlibao spend the money on.
Soon after, the leaders found out about the plot of land in Guangzhou bought by Jianlibao. There is nothing wrong with the purchase of the land parcel, but why did you make the full payments for the project and materials when the construction just started? Shouldn’t the full payments be made after the project is completed?
But the money had been paid, and there was no way to get it back. The US branch office had also taken away most of the remaining funds to open up the US market. Although the US market will bring in a lot of profits, no one knows when the profits will be coming in!
The leaders were upset over this and called Li Jingwei in for a scolding. You still want Jianlibao’s shares with what you did? Hmph! This Li Jingwei must be kicked out of Jianlibao!
Li Jingwei starts to push for the purchase of Lehaha’s tea beverage formula. If not, Jianlibao will not make it for the Summer peak period. But during the negotiations with the banks for the loan, Li Jingwei purposely “accidentally” reveals that Jianlibao still owes all their distributors.
Upon hearing this, the banks refuse to approve the loan, especially Li Jingwei asked for a loan of 500 million RMB!
Jianlibao is now in a dire situation, and the city government leaders were troubled. Jianlibao had done well last year and the company suddenly have insufficient funds. But what Jianlibao said was right. With a new product, the company can get high profits from its sales in the US and Jianlibao will recover from to its peak.
At this time, Lehaha’s Zhong Qingxian made a new proposal. Exchanging of shares.
Lehaha and Jianlibao will exchange some of their shares and will sell the formula to Jianlibao first. Jianlibao can extend the payment for one year.
The City Leaders hesitated as this will be selling Jianlibao’s shares away.
Li Jingwei persuaded the leader by analyzing the situation to them. Lehaha has lots of factories in China and has established distribution channels. After they exchange shares, Jianlibao will have the chance to take over Lehaha’s distribution networks.
Even if Jianlibao cannot take over the distribution channels, the city has nothing to lose. After some discussion, the City leaders agreed to this proposal.
Jianlibao used 8% shares to exchange for Lehaha’s 6% shares. This is based on the valuation of both companies. Jianlibao’s market value is lesser than Lehaha, as Lehaha has more factories.
The City leaders also did not notice the valuation of Jianlibao’s new building was valued very low.
After getting the formula, Jianlibao’s product development team start to develop their new product. All they need to do was to turn the tea beverage into a carbonated tea drink and pass the US authorities’ checks.
But another problem surfaced. Jianlibao does not have money, and they were still in debt. They can owe money in China, but not in the US.
The City leaders questioned Li Jingwei. The company had transferred a sum of money to the US branch and why they do not have money?
Li Jingwei’s reply was the money is for advertising. You all had complained that Jianlibao is not as big as other brands, and we decided to increase our marketing budget to expand our brand awareness.
Simply put, we have spent all the money!
The City leaders contacted a few banks for loans but were rejected. If the loan amount is too high, the banks will not approve, and if they lower the loan amount, it will not be enough as the company still owes their distributors.
Around this time, Li Jingwei did something alarming. He stopped the salaries of Jianlibao’s employees to use the money for the operating cost.
The workers, including the R&D staff, went on strike, and Li Jingwei personally went to meet the workers to pacify them.
But even the influential Li Jingwei could not convince the staff to call off the strike. The City leaders had no choice but to show up and promise the workers they will settle this.
But how can the city leaders settle this crisis? Although the City Government has money, the money had been allocated to the various departments and projects. If they use the money for Jianlibao, it will create problems in other areas.
Troubles came one after another. The distributors gathered at Sanshui to demand payments from Jianlibao by blocking the factory and government’s entrance.
Owe money, pay money!
This is written on a big banner which is hanged on the government building’s main entrance. The city leaders were too ashamed to show their faces, and even the police could not chase the distributors away!
What the city leaders did not expect was this incident was even reported in the papers!
When Feng Yu heard what happened at Jianlibao from Fu Guangzheng, he was stunned. He did not expect Li Jingwei to blow things up to this extent!