Chapter 727: Chapter 731 – Capital usage

Xu Changyou flipped the report in front of him. He was reading every line and word seriously. He even read some sentences several times. After half an hour, he raises his head.

“Did you write this report?”

Zhang Ruiqiang bowed slightly and replied: “It is written by my secretary and I made some minor amendments. Many of the ideas, like letting the farms invest and contacting the distributors in advanced, and the ‘168’ plan, stated in this proposal is from Feng Yu. We only amend it slightly.”

Xu Changyou was pleased with Zhang Ruiqiang. This was what he likes about Zhang Ruiqiang. It was not because he was capable. Xu Changyou had met many competent people in the government. Almost all the elites in China at this time were in the government. He likes Zhang Ruiqiang because Zhang Ruiqiang would also speak the truth and never claim another person’s credit.

This was an important character trait which much capable government officer lacks.

Xu Changyou felt that someone with this character would not forget their initial aspiration even when they had climbed to the top. They will still think for the people, and this was why Xu Changyou groomed and supported Zhang Ruiqiang.

“Your proposal mentioned that the total investment needed 10 billion RMB and appeal to the Central Government for funding. We will raise the remaining amount. But why didn’t you state the proportion?”

“If I state the proportion, then I will ask for more fund from the Central Government. But Feng Yu reminded me that if the Central Government funded most of this project, then this company will not be under the Provincial Government. It will fall directly under the Central Government. We will only get a small portion of the profits.”

Xu Changyou nodded. Setting up Beidacang Group was to develop Longjiang province, and it was Longjiang province who came up with this idea. They must not let the Central Government take it away from them.

“I still have one more question. We are asking the Central Government for money. What if the Central Government wants a share in the company? How can we reject them?” Xu Changyou asked. If the Central Government insist on getting a stake in this company, then they will have to hand over some of the profits to them.

“The Central Government will be able to get a portion of the profits from the Ministry of State Farms and Land Reclamation. This proposal must be supported by the local government. Why will the Central Government leave us out? I am only worried that the Ministry of Agriculture will try to get the overall control of this company. We must make it clear that this company is significant to us.”

“Are you saying that we should set up a Leadership Group?” This was what the Chinese Government usually do. A Leadership Group will divide the responsibility to individual leaders and show others that the Provincial Government takes a serious view in this company.

“No. This company will be a shareholding and will be listed in the future. We, Longjiang province, will be the biggest shareholder and we should have the right to appoint the Chairman of this company.”

Xu Changyou thought Zhang Ruiqiang would want to be the head of the Leadership Group. But now, it seems like Zhang Ruiqiang intends to be the Chairman of Beidacang Group?

“You want to take on this role?”

“No. I think you should be the first Chairman. You are the most suitable person.”

Xu Changyou was surprised. Let him be the Chairman? He thought for a while. That’s right. If I become the Chairman, then who will compete with him over the control of the company? Those qualified people in the Central Government will not request to be transferred to Longjiang Province to compete with him. This way, Longjiang Province will take over full control of the company.

“It is a good idea for me to be the Chairman. Then who do you think should be the General Manager?”

If the leader is willing to discuss the appointment of personnel with you, that means he treated you as his trusted aide.

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“I think we should get someone in the agriculture industry to be the General Manager. We can also find someone good in business.”

“You don’t want to be the General Manager?” Xu Changyou looked at Zhang Ruiqiang and asked.

“There is still a lot of work with Bing City. I don’t have the energy to take on another role for the time being.” Zhang Ruiqiang did not say he does not want to be the General Manager. He said that he doesn’t have the means for the time being.

If Beidacang Group were set up successfully, the company would have a bright future. It was also a place to make significant achievements. Zhang Ruiqiang will not give up taking on the role of the General Manager.

But Zhang Ruiqiang knew that it will be time and energy-consuming during the start-up phase. If he were to concentrate on Beidacang Group, then he will not do an excellent job at managing Bing City. This was why he chose Bing City first.

“Fine. If I am the Chairman of the company, we should be able to get some favorable policies and funding from the Central Government. But what if the fund given to us is not sufficient, and we cannot raise the remaining?”

“We can take bank loans and use the provincial government as guarantor. This should not be a problem.” Although the higher-ups had put a stopped to such actions, but the local government still have many ways to go about this regulation. Everything will be fine if the higher-ups close one eye.

“The issue of start-up capital is solved then. You mentioned that every farm must set up a company. This will solve our initial shortage of ingredients. But the harvest belongs to the farmers and not the farm. Are telling us to issue IOUs to those farmers?”

“They can operate like us and get loans from the banks to pay for the crops. The farms will invest in their land area. The shares they get will be a small percentage. The Provincial Government will hold more shares of the company. If the farms could not get sufficient loans, then let them ask the Central Government for funding. I think the Ministry of State Farms and Land Reclamation will be able to find a solution for those farms. This is the same for the woodlands or forest farms. But the forest farms can only use the forest where logging is allowed to invest. Those areas where logging is prohibited cannot be used to invest. This way, the Ministry of State Farms and Land Reclamation and State Forestry and Grassland Administration will be restricted by Beidacang group, which is the same as restricted by us.”

“From what you say, it seems that the Provincial Government does not need to come up with a lot of money.”

“Of course. We do not need to use a lot of our funds. Someone told me that good capital usage are like tying a white wolf with bare hands. It operates the same way.” Zhang Ruiqiang had a weird expression on his face when he said this. He thought about how that brat become wealthy suddenly.

“Tying a white wolf with bare hands? But we will be getting a big loan from the bank and still have to repay the loan in the future.”

“Get listed, raise fund, and use the fund to pay the bank loan. We might even have some money left for faster growth after the loan repayments.”

This strategy was what Feng Yu thought Zhang Ruiqiang. Take loans to develop the company first. After the company was listed, use the fund to pay the loans. Although the Provincial Government’s shares in the company will be lowered, the company’s value will increase significantly. The value of the shares will also increase.

This company will still belong to the Province. This was only a simple way of capital usage, and the provincial government could get control over a big company without using much capital.

If not enough funds were raised from the listing, Feng Yu is willing to purchase some shares, or even invest directly into the company.

Zhang Ruiqiang was shocked when Feng Yu thought him about this strategy. They could even raise capital this way, and it was even legal!

“Ok. I will call for a meeting in the afternoon, and you will announce this plan at the meeting. We will mobilize everyone to make this plan a success!”

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