Reborn, back to a small county town to become a wealthy family

Chapter 725 An Alternative Win-Win Situation

Jiang Yuanshan walked along the side road for more than an hour before returning to the main topic.

"It's Tuesday today, and you're not in a hurry to go back to Shanghai. It seems you've already finished what you needed to do."

"more or less."

Luo Yang thought for a moment and said, "The company restructuring won't start until the end of this month. The futures market hasn't been doing much lately either. I was thinking of taking a vacation soon and going on a trip with Fanfan."

"Tourism. That's a good idea."

Jiang Yuanshan smiled and said, "Anyway, you're going to get your marriage certificate soon, so you can treat it as a honeymoon."

That's exactly what I was thinking.

Luo Yang said bluntly, "I still owe Fanfan a romantic proposal ceremony, so let's do it together during this vacation."

Hearing his son-in-law say that, Old Jiang showed an approving expression.

"If I'm not too busy this week, I'll postpone my return to Shanghai by a day or two."

Jiang Yuanshan paused for a moment before saying, "I'll help you organize a few gatherings and introduce you to two or three bank leaders. It's a win-win situation, I suppose."

"Leaders from several major banks?"

Luo Yang thought for a moment and said, "To be honest, I haven't really had much contact with people in the banking circle in Yang City. The only loan my current business has gotten from banks in Yang City is an interest-free loan under the high-tech industry support policy."

“Your businesses in Yangshi that are in operation are in very good financial condition, and those under construction are mostly funded by your own capital.”

Jiang Yuanshan clicked his tongue and said, "They're all green with envy."

"Does this indirectly prove that my investment in Yang City has been quite successful?"

Luo Yang joked in a relaxed mood, "If things really get into a complete mess, we'll probably have to beg and plead to get a loan."

"That's not the case."

Jiang Yuanshan said confidently, "I still have some influence in Yang City. I wouldn't dare say much, but borrowing a hundred million or two shouldn't be a big problem."

It's not about saving face; in the end, it's about Old Jiang's strong financial backing, which the bank trusts.

"Dad, I actually know a little bit about what you're saying."

Since his father-in-law had gone to such lengths, Luo Yang couldn't pretend to be confused anymore.

He said earnestly, "Actually, Zhengyang Group has been making substantial profits since the end of the year before last. The company's CFO also reminded me that I needed to do tax planning, and suggested taking out a loan at that time, but I suppressed it."

"I know the financial director you hired at the garment factory."

Jiang Yuanshan curled his lip and said, "A retired accountant who you rehired may not have much of a problem with bookkeeping, but he lacks the knowledge of modern corporate financial management systems and overall financial planning. What company expands entirely with its own funds? That's ridiculous!"

At this point, he had to give his son-in-law another lecture.

"Did you know that it's beneficial for a company to maintain an appropriate debt ratio?"

Jiang Yuanshan began his lecture by saying, "First of all, the interest on loans has a tax shield effect, which can reduce the tax burden on enterprises. Especially for a garment factory like yours with such high net profits, instead of worrying about tax planning every year, you might as well borrow more money. This is the most direct and straightforward method."

"But."

Luo Yang couldn't help but click his tongue and say, "I've always treated Zhengyang Group as a money bag, so I never thought about letting him get into debt or anything like that."

"Tsk, why would you think that?"

Jiang Yuanshan explained: "Debt can amplify the capital invested by shareholders in the company. The profits generated by this capital due to debt belong to the company's shareholders as compensation. Since the return on equity = profit / equity, these liabilities obviously increase profits without affecting equity, thereby increasing the return on shareholders."

Luo Yang is the sole shareholder of Zhengyang Group, so all the amplified capital effect generated by the debt and the resulting profits belong to him.

According to what Lao Jiang just said, when Shang Guozheng founded Fengshang Men's Wear, he didn't need the company's working capital at all. Given the operating conditions of Qingqing Garment Factory at the time, it would have been no problem to get a loan of 1 million yuan from the bank.

Furthermore, the increased access to bank loans has provided Fengshang Men's Wear with more abundant funds for its expansion.

Perhaps we won't even need to go to the point of opening up to distributors this year.
Jiang Yuanshan's words made Luo Yang start to think.

"There are many benefits to financing and borrowing money during the company's development process. For example, it reduces the company's agency costs. In an environment where companies operate on debt, management will face the pressure of repayment at any time. This may invisibly reduce the management's abuse of surplus cash, thereby curbing blind investment behavior."

Seeing his son-in-law begin to think, Jiang Yuanshan naturally spoke even more enthusiastically.

"Furthermore, there's the efficiency of capital utilization. Companies with shorter operating cycles can typically convert products or services into cash flow more quickly. This means that the company's capital turnover is faster, and it can meet the needs of debt repayment by quickly collecting accounts receivable, reducing the interest burden caused by long-term debt."

"For example, companies with high profitability and short operating cycles typically have high profitability, enabling them to quickly generate sales revenue and profits. This allows them to take on more debt and repay it in a relatively short period of time."

"The return on capital will also be higher. If a company has a high return on capital, that is, a higher profit generated per unit of capital, then appropriately increasing debt financing investment can further improve the company's profitability."

In terms of theoretical level, especially basic knowledge, Jiang Yuanshan is far superior to Luo Yang.

"Dad, it seems I need to hire someone with a background in finance."

Luo Yang chuckled self-deprecatingly and said, "The CFO Jian Yueqin, whom I rehired a while ago, resigned. I tried my best to keep her, but now it seems like I'm the one who looks bad."

Are your businesses in Shanghai the same way?

Jiang Yuanshan didn't care about Jian Yueqin's story, but instead asked Luo Yang directly about the situation of the industries in Shanghai.

"That's not true."

Luo Yang spoke frankly: "In order not to affect the company's development speed, several companies have taken out loans from banks, and we plan to purchase a headquarters building in the next year or two. The funding gap is still quite large, and we need the help of banks."

"See, isn't this perfect?"

Jiang Yuanshan revealed an expression of certainty and said, "It has to be a big city like Shanghai. The financial managers hired by companies of a certain size have these basic qualities and can help the company do a more professional job in financial planning."

It can't be that magical, can it?

Kunpeng Technology took out a loan because its R&D investment was too large, resulting in the company not having enough funds in its accounts at the time.

Jiang Xiaobai took out a loan because it couldn't generate enough cash flow to acquire multiple distilleries through various channels.

The only exception was when Lemon CC was founded. Luo Shengtang actually had money in its accounts, but it considered borrowing 1 million yuan from the bank to develop a new milk tea brand. This is the benefit of corporate debt that Jiang Yuanshan mentioned.

As for the purchase of the headquarters building next...
They genuinely couldn't come up with that much cash flow.

Of course, even if they could come up with the money, they wouldn't pay the full amount, unless the CFO of Ling Shi Gong Group is an idiot.

"Whether you lend money or not, you need to get to know the leaders of these big banks."

Seeing Luo Yang lost in thought and silent, Jiang Yuanshan spoke again: "Didn't you tell me before that the later issues of the credit cooperatives would still be resolved in the market? You'll have to deal with these big banks sooner or later, and it will be much more difficult to come knocking on their door for help later?" Luo Yang had told his father-in-law about the plan to acquire the credit cooperatives.

When he visited the high-ranking official He in the city last time, he didn't try to use personal benefits to bind the leader or ask him to help him complete the acquisition of the credit cooperative. Instead, he hoped that the leader would go with the flow and let the credit cooperative be restructured and marketized through normal channels.

Once the credit cooperative completes its restructuring, Luo Yang will use market mechanisms to acquire the credit cooperative that has been transformed into a commercial bank.

Jiang Yuanshan and Luo Yang had analyzed the situation carefully and agreed that several major banks in the city would take a portion of the shares in the restructured credit cooperative, while the city's State-owned Assets Supervision and Administration Commission would retain a portion of the equity.

The remaining shares may have been divided up among some private owners.

Luo Yang wanted to acquire the restructured credit cooperatives on the market, but it was virtually impossible to buy the shares held by the State-owned Assets Supervision and Administration Commission. Therefore, he had no choice but to obtain sufficient shares from private business owners and major banks.

Therefore, the major banks in Yangshi are an obstacle he cannot avoid.

"Okay, Dad, you can arrange it as you see fit."

After thinking for a moment, Luo Yang agreed: "I originally planned to return to Shanghai tomorrow at noon, but since I have an important dinner party, I'll wait until Friday morning to leave."

My father-in-law helped organize the gathering, so there's no harm in staying to get to know him.

And just as Jiang Yuanshan said before, it's mutually beneficial.

Luo Yang excels at this.

Just then, the Xishu Town tourism real estate project was about to acquire land, and the first phase of the project was about to be developed. The prototype of the urban complex project was also under construction. Both the investors and the local government were quite willing, which meant that the chances of the project being implemented were almost 100%.

These two real estate development projects need to be financed by banks, so isn't this a mutually beneficial arrangement with the banks?

Another company is Guangfan Electronics. After the merger, it is expanding its market in major cities across the country. The channels that previously went through for power banks and selfie sticks, which were the major telecommunications companies' stores, will be gradually withdrawn and replaced by directly operated specialty stores.

Setting up directly operated franchise stores nationwide, even just in major cities, requires a significant amount of capital.

Borrowing money from the bank at that time will facilitate the company's development and also benefit the bank.

At the dinner party, Luo Yang presented these three cakes, which I believe will surely satisfy the bank presidents.

That's what he thought, and that's what he told Jiang Yuanshan.

"You were able to figure this out in such a short time and offer to share the benefits. I believe the leaders of those big banks will appreciate your kindness."

After hearing his son-in-law's plan, Old Jiang smiled broadly and said, "I believe this favor will come in handy when we discuss acquiring the shares of the restructured credit cooperative in the future."

"Dad, actually, their acquisition of shares is just our speculation."

Luo Yang smiled and said, "But we can make this conjecture 100% true."

"you mean"

Jiang Yuanshan was shocked by his son-in-law's bold idea.

But if you calm down and think about it carefully, it is indeed possible.

It's simply a matter of what kind of benefits Luo Yang can offer. Of course, these benefits will be determined entirely through market mechanisms, and there will be no violations.

"Why not do something helpful, make some money, and achieve tangible results? What's impossible about that?"

Luo Yang's inspiration came from Jiang Yuanshan's guidance.

"Yangyang, this kind of thing..."

Old Jiang, being more thorough in his considerations, frowned as he pondered, saying, "It can't be mentioned at the dinner party; it can only be discussed in private, and the final result must be reached through tacit understanding."

Who knew that Luo Yang's audacity exceeded Jiang Yuanshan's expectations.

"Dad, this is what I think."

After organizing his thoughts for a moment, Luo Yang said, "The reason why there are different opinions among the team members is ultimately a matter of interests. Once Official He goes along with the tide and agrees to the other people's reform opinions and plans, the credit cooperative will smoothly become a commercial bank, and the benefits will go where they belong."

Jiang Yuanshan gradually went from being shocked to being thoughtful.

According to Luo Yang, once the credit cooperatives are reformed and marketized, they will no longer be so important.

If someone were to acquire shares of the new commercial bank at a premium through market mechanisms, it would be a win-win situation for everyone.

Because no one knows whether the credit cooperation system will be revived after the reform, and the newly established commercial banks are more likely to remain in a state of limbo, this phenomenon is actually bad for those who advocate the reform.

If any investors are willing to take over this business, then whatever the outcome, good or bad, will no longer be their responsibility.
"Why didn't I think of that?"

Jiang Yuanshan clapped his hands heavily and said with annoyance, "We still have too much of a businessman's mindset and haven't thought about factors outside of business."

After speaking, he looked at Luo Yang.

I didn't expect you to grow up so fast.

His tone was full of exclamation.

"Dad, I'm not as amazing as you think. It was just a series of coincidences."

Luo Yang quickly and modestly explained, "For me, the core asset of the credit cooperative is its license to do business in the mainland without restrictions. That's what I want. Other interests don't matter. If others want them, they can have them."

"Uh"

Jiang Yuanshan was slightly taken aback, then burst into laughter.

"No wonder you didn't prioritize registering a new bank in Hong Kong."

He remarked with considerable emotion, "It just goes to show that everyone pursues different interests. What others strive for is precisely what you don't care about, while what you relentlessly pursue is exactly what others don't care about."

Luo Yang smiled and replied, "Perhaps this can be considered a different kind of win-win situation?"

"Hahaha"

Jiang Yuanshan's laughter turned cheerful.

"I'll take a stake in the banking business."

After laughing, Old Jiang said to Luo Yang with great enthusiasm, "If you need a few shareholders, just let me know. I can't say more, but five or six shouldn't be a problem."

"Having a lot of money is not the standard."

Luo Yang added a meaningful sentence.

(End of this chapter)