Return to 1958 and build a century-old giant

Chapter 964 Investing in Haier (Seeking monthly votes at the beginning of the month)

Before the 90s, there was basically a shortage of goods in mainland China because of the extreme scarcity of production capacity. Therefore, many kinds of goods could not be bought even if you had money.
That's why there's a rule in supply and marketing cooperatives that forbid hitting people—because there have actually been cases of sales clerks hitting customers.
Similarly, in this era, goods produced by factories, especially consumer goods, are basically not hard to sell, even if the quality is poor, there is no shortage of people who don't want them;
This is why industrial products were difficult to export in this era, and it also marks the beginning of a period when the quality of exported goods became higher.
Against this backdrop, Haier's factory smashing dozens of refrigerators over a minor cosmetic defect is quite an anomaly.

Zhang Ruimin said, "Actually, I had no choice but to do it, because if I didn't, the workers in the factory wouldn't care about quality at all."

Initially, I planned to sell products with quality issues to the workers cheaper, but more quality problems arose, so I had no choice but to smash them. It was better not to sell them at all than to continue like this.

“That makes sense,” Yang Wendong nodded and said.
It is said that capitalists would rather pour out milk and throw away unsold bread than give it away for free.

Little did they know that once such a loophole was opened, it would definitely affect normal business.
The same applies to factories. If defective products are sold cheaply to employees, then the number of such defective products will inevitably increase.
Human nature cannot withstand the test;
“Mr. Yang, it’s windy and sunny outside, let’s go inside first,” Director Shen said.

Yang Wendong looked at the sunlight around him and said, "Okay, but I'd like to go take a look at Haier's factory first. We can go to the office later."

Zhang Ruimin's expression changed, and he said, "Then please, Mr. Yang, and all the leaders."

At that moment, he immediately felt that he was in big trouble.

Today, it's not just Yang Wendong's side that's here; there are also many high-ranking officials from Qingdao City and even Shandong Province. Many of them are just standing in the back, but if any one of these people came to Haier alone on a normal day, he would have to treat them with great respect and courtesy.

Although he usually believed that his management of Haier was better than that of other factories, he was caught off guard by the sudden visit without any preparation. There must have been many internal problems, and even on the surface, there were many problems.

But now, there's no way to refuse.

But Zhang Ruimin was also a person with rich social experience, so he quickly introduced himself as he walked, using his linguistic charm to attract everyone's attention.

“Mr. Yang, distinguished leaders, the production line at my Haier factory is an assembly line that was imported from Italy a few years ago,” Zhang Ruimin explained, demonstrating his strong language skills.

Yang Wendong listened as he walked, and then came to a refrigerator display and asked, "Are your compressors from my subsidiary, Glory Company? Imported from Hong Kong?"

Although Honor Electronics is known globally for its gaming industry, it has also achieved considerable success in the home appliance sector, though relatively speaking, it is not as successful.

In terms of technology, apart from the picture tube for color TVs, other technologies have basically been mastered; the reason why Yang Wendong did not continue to work on the picture tube technology was because he knew that this industry had no future and no investment value.

Over the years, Honor's home appliances have developed quite well in Southeast Asia, South America, and the Middle East. They also have some market share in the United States thanks to Best Buy, but not so well in Europe.

This is unavoidable. In traditional industries, the old giants have already controlled the market, and without revolutionary changes, it is difficult for new industries to seize the market share that was once theirs.

Zhang Ruimin said, "No, the compressor was imported from Yanjing, which is also Glory's factory."

"Oh, I hadn't noticed." Yang Wendong genuinely wasn't quite sure.

Over the years, my focus on Honor has been on games, software, game consoles, and computers. For traditional home appliances, I usually just look at the sales and profits in the financial statements.
As for domestic investments, he knew that Honor had invested in a factory in Yanjing, but he didn't pay much attention to which ones.
Large companies often have this problem: the top executives at the top may not be fully aware of the details of some minor matters.

Zhang Ruimin quickly said, "The compressor factory of Glory Company in Yanjing produces compressors for refrigerators and air conditioners that are sold domestically. The quality is no worse than that of imported ones. This is very convenient for us inland companies."

"That's good too," Yang Wendong said with a smile. "It seems you're still my customer."

Large conglomerates will enter the upstream of the industry chain through the supply chain. These upstream industries cannot only supply their own groups, but also need to participate in normal market competition.

Only in this way can internal corruption be avoided. Many companies' branches survive by relying on financial support from the head office, which is a very unsuccessful industrial chain.

A true industrial chain is one that inherently possesses competitive advantages, with upstream and downstream partners supporting each other and jointly capturing the market.
Unless they all become giants and are excluded by other competitors, like Dizi in the electric vehicle industry in the previous life, they should still maintain a cost advantage.

"I dare not accept such praise," Zhang Ruimin quickly replied.

Yang Wendong smiled and didn't say anything more. There was nothing interesting about this production line. He had seen a similar production line in Hong Kong 20 years ago.
Time flies, and I never imagined that I would see it again on the mainland 20 years later.

Yang Wendong then walked to a blackboard next to him and asked, "Is that a process card pasted over there, or is it a quality issue?"

Zhang Ruimin's expression changed, and he asked, "They are some factory rules, Mr. Yang. You don't need to look at those things."

"It's alright, the content isn't important. What's important is that you already have these things, which is very rare in mainland China," Yang Wendong said nonchalantly.
In an era where supply couldn't meet demand, Haier's focus on quality, regardless of its purpose, is one of the reasons for its future success.

Other merchants only think about making quick money. They ship the same rubbish products. Consumers usually don't have any major problems after receiving them, so they just have to put up with it.

In an era of scarcity, things were absurdly difficult, a stark contrast to the abundant resources of the mainland in his previous life. Zhang Ruimin didn't dare stop Yang Wendong and could only watch him walk to the blackboard.
Yang Wendong looked at some quality issues on the blackboard, including descriptions of internal quality and external appearance. Although they were rough, it was good enough that they were there.
However, a warning letter on the edge immediately caught his attention: "Employees are prohibited from urinating or defecating anywhere on the factory premises."

Yang Wendong was taken aback for a moment, then laughed and said nothing more, turning around and saying, "Let's go to the office."

In this era, factories are awesome, and workers are awesome too;
In Shanghai, countless university graduates choose to become factory workers rather than civil servants or police officers, which demonstrates the high social status of workers.
This is also an inevitable trend in social development. In this era, factories directly generate profits and scarce foreign exchange, so those working in factories naturally enjoy the best benefits. On the other hand, although the government has power, it is simply a place to spend money, so the treatment is naturally not good, unless one is a leader.

Until the real estate reforms of the late 90s, government land auction revenue surged, leading to a misalignment of wealth distribution across the country. This resulted in huge profits for the government itself, and civil servants naturally became the beneficiaries.
"Okay, this way please." Zhang Ruimin seemed to realize that Yang Wendong had seen something, and immediately felt a little embarrassed;
The other party arrived too quickly, and there were still many things that couldn't be cleared away. Fortunately, Yang Wendong didn't seem to care.

Upon entering the conference room of an office building in front of the factory, one could see yellowed walls, rusty windows, and not-so-transparent glass. Through the glass, one could see many mud houses outside.

Yang Wendong couldn't help but fall into memories. In his previous life, he was also born in the 80s, catching the tail end of the generation. He grew up in the countryside, and the style of the houses here was very similar.
"Mr. Yang?" Secretary Xiao Huang stepped forward and reminded him;
"Hmm," Yang Wendong put away his memories. Some tea had been prepared on the table. Yang Wendong picked up a cup, took a sip, and said, "Mr. Zhang, I was touched after reading about your smashing the refrigerator. I had a similar experience when I was starting my business in Hong Kong."
So, during this trip to the mainland, I thought I'd take a look around here. Also, I admire entrepreneurs like you, so I was thinking of exploring a collaboration. What do you say?

This is also true. As a time traveler, he knew that the products he launched, such as sticky notes, hooks, and suitcases, would be popular in the market.

No matter how well the design is done, the product still needs to be manufactured to a qualified standard. Even the best ideas cannot withstand quality accidents.

Even if Apple had experienced a quality issue with its flagship smartphone launched in 07, the entire Apple company would have been forced to shut down. Even if smartphones were to rise again, Apple would have simply been paving the way for those who came after.

Therefore, he was very worried about quality issues back then.

Zhang Ruimin asked, "How do we cooperate?"

"You know Jianlibao, right?" Yang Wendong suddenly asked;

Zhang Ruimin paused for a moment after hearing this, then replied, "I've heard of it. It's a company from Zhejiang Province that became popular all over the country last year. I've even tried it, but I'm probably too old for these kinds of drinks. However, I know that young people still really like them."

Yang Wendong said: "Yes, I invested in Jianlibao. I directly invested a sum of foreign exchange, about 300 million US dollars, and then arranged for a bank in Hong Kong to lend me 1000 million US dollars."
They also purchased a large amount of advanced equipment from Hong Kong and then mass-produced the goods so that they could deliver them to Shandong Province; otherwise, they simply wouldn't have had enough time to produce them.

"More than 1000 million US dollars?" Not only Zhang Ruimin, but other leaders in Shandong Province also changed their expressions when they heard this number;
It's important to know that Shandong Province's annual foreign exchange earnings target is less than ten million US dollars;
In this era, exports mainly relied on handicrafts and minerals. In the past two years, many Hong Kong companies have been earning foreign exchange in eastern Guangdong Province, but this has little to do with northern provinces like Guangdong.
Zhang Ruimin asked, "Mr. Yang, are you also interested in investing in Haier?"

Yang Wendong said, "Yes, I have this idea. In terms of cooperation, it can be similar to Jianlibao. I will purchase a portion of the equity in US dollars and then provide low-interest loans. This will help Haier replace its equipment with the latest global equipment and produce the most advanced refrigerators."

Upon hearing this, Zhang Ruimin's heart stirred. He was already troubled by the foreign exchange issue, but after thinking for a moment, he still asked, "Mr. Yang, your investment is easy to discuss, but if it's a loan, it will inevitably have to be repaid."

Haier manufactures refrigerators that are only sold domestically and don't earn foreign exchange. How will they repay this debt?

“You’re thinking quite far ahead,” Yang Wendong replied. “That’s certainly not a problem. I have a lot of retail businesses in Asia and America that can be used to sell all kinds of home appliances, including refrigerators.”

"Once your equipment is upgraded, the refrigerators you produce, if the price and quality are reasonable, can be exported for sale, which will naturally generate foreign exchange."

"Are you able to export refrigerators?" an official asked in surprise.
The other officials were also delighted. In this era, it was only when the country imported home appliances from abroad that the country did so. How could it be the other way around?

If these refrigerators could be exported, they would be industrial products, which would be a completely different matter.

Yang Wendong nodded and said, "Yes, but the premise is that you have to make refrigerators with a good price-performance ratio. Otherwise, even if I have the channels to ship them overseas, it probably won't work."

Although they have their own distribution channels, they are often fair. Even for their own products, they only provide some assistance. How well the products actually sell depends on the products themselves.
This is also to avoid a situation where one's own subsidiaries become dependent on one's own distribution channels;
Zhang Ruimin replied, "Mr. Yang, I welcome your investment, but I'm really not sure if we can produce refrigerators that can be exported. I need to do a lot of research."

Yang Wendong's suggestion was very appealing, but if they took the foreign exchange loan and couldn't repay it, it would be a huge problem if it reached the provincial or even central government level.

Yang Wendong smiled and said, "That's alright, I can invest first. We just need to focus on developing the domestic market. As for developing overseas markets and getting loans, you can decide based on your needs and understanding later."

From Zhang Ruimin's perspective, it's normal to be cautious. If Yang Wendong had faced the same situation 26 years ago, he would have been just as cautious.

While he is confident in Haier's future, he should not be too aggressive.
He's happy to invest now; he won't interfere much with Haier's future development. He'll lend Haier funds if they need them, and if they don't, that's fine too, since they're unlikely to be unable to repay.
As for quality issues, given Haier's past achievements, it shouldn't be a problem.

“In that case, I agree in principle, but we still need to discuss it internally,” Zhang Ruimin continued.

Yang Wendong said, "Okay, you can discuss it here. I'll leave two people behind, and you can notify them later."

PS: Requesting monthly votes at the beginning of the month.
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(End of this chapter)