Hong Kong 1980: The Savage Era

Chapter 138 [Finally I can start]

"Most of the business we have snatched is ours, and a small part is from our peers." Luo Qixing pondered, "Those two companies should have some surplus production capacity, so we need to continue to snatch business."

"What conditions did Yulang International offer?" This was a normal business practice, and Luo Qihong didn't know what to say.

Others use normal business methods to do things, so he can only return the favor in the same way.

"The price is 8.5% off the market price, which is 15% cheaper. However, a very long contract period is required, and there is a high penalty fee." Luo Qixing said with a serious expression.

Luo Qihong smiled and said, "Have you calculated what price we can get to avoid losing money?"

The printing company is privately owned by the Luo family, and there is spare production capacity sitting idle, so it would be better to plot against Wong Yuk-long and vent their anger.

Even if there is a loss, his Luo family can afford it. Now it's just a little less profit, no big deal.

"6%, at least 6%, so that we won't lose money." Luo Qixing seemed to have already had an idea in mind.

Luo Qihong glanced at Luo Qixing. This big brother had made preparations in advance. "Then we will directly reduce it to 7% and sign long-term contracts with these customers with high liquidated damages."

"." Luo Qixing was silent for a while, and responded, "If we do this, other customers will also ask for a price reduction of 7%. What should we do then?"

"Lower prices, lower all prices! But we can set a threshold, a certain quantity that will account for 7%, and use the quantity to earn back the previous profits." Luo Qihong was also unwilling to see the printing company suffer losses, but with the example of Yulang International, lowering prices is only a matter of time.

"Then don't we have to purchase new equipment again?" Luo Qixing felt that such a move was too big and the company's funds would be exhausted.

"Brother, when doing business you must of course think about expanding the scale. If you just want to stick to it, you will only be eliminated by the market and eventually go bankrupt." Luo Qihong said seriously. The market has always been like this. If you don't change, you will only be eliminated.

"I'll give you 20 yuan later. First, pay the down payment for the equipment, and the rest will be a loan." Luo Qihong added, "Or we can raise the price of raw materials from suppliers, but this will easily cause resentment from our peers and put us in the same predicament as Yulang International."

"The price cut was initiated by Yulang International. We have a legitimate reason, and our peers have only complained about our business being snatched away from us," Luo Qixing said. "Raising the price of raw materials from suppliers will make us feel uncomfortable, so we'd better not do it."

Luo Qihong nodded. "Actually, it won't have much impact on us, but those small workshops will be in trouble."

"There's nothing we can do about it." Luo Qixing sighed. He finally understood why some bosses always said they had no choice.

"Then post a notice to purchase equipment and recruit employees as soon as possible." Luo Qihong said.

The events of Shengyun Printing and Shenzhen Bao Printing Company were just small-scale events, and the next events will be the "big scene".

In order to reap the greatest benefits, Luo Qihong sold the nearly completed southeast tenement building in Kowloon City to Siu On Real Estate Company for HK$1 million.

This transaction was not widely publicized. Firstly, the selling price of Paramount had already been decided, and secondly, Luo Qihong did not want people like Li Fusu to lose face and cause unhappiness to each other.

Paramount Company did not suffer any loss and made a profit of 130 million yuan on the Southeast Tanglou project, but it was not as much as Luo Qihong had expected.

The 1 million yuan was not paid in one lump sum, but in three months, and even the down payment of 9 million yuan had to be delayed.

Zhaoan Real Estate has been having some financial difficulties recently and needs to slow down a bit. In addition, Paramount is about to be sold, so Luo Qihong naturally has to put the interests of Zhaoan Real Estate first, rather than Paramount.

It is estimated that there will still be a profit of more than 3 million on this project, which is a considerable amount for Zhaoan Real Estate Company.

In the office of Zhaoan Real Estate Company

Luo Qihong was carefully sorting out the information. Zhaoan Real Estate Company had a debt of more than 1 million yuan. Its main properties currently include Lu Dao Building in Wan Chai and On Lok Yuen Building in Central. The asset value exceeded 3 million yuan, the debt ratio had exceeded 5%, and the market value was around 1 million yuan, not much different from the net asset value.

The plan for Zhaoan Real Estate Company to resolve part of its debts is already being implemented, namely, the "acquisition of Best Property Company". Once successful, Zhaoan Real Estate Company should be able to make a profit of tens of millions of yuan, resolve 20% to 30% of its debts, and its debt ratio will drop to around 45%.

The debt ratio of 45% is naturally still high. Since Zhaoan Real Estate Company generally will not recover funds from local cities, Luo Qihong does not want to hype Zhaoan Real Estate Company by strengthening Paramount Company and Hongpu Real Estate Company.

Raising funds or issuing shares is not an option for the time being as he is currently short of personal funds and will soon be in huge debts, which will only make Luo Qihong's personal situation even more difficult.

"It seems that I can only make money from the stock market. My personal debt will increase to 7.1 million yuan. Even if there is a takeover like Wharf Holdings, it will be difficult to pay off half of the debt." Luo Qihong feels "under great pressure."

However, the good news is that he is about to take over the "foundation" China Gas Company, and Luo Qihong will definitely have a place among the top 20 chaebols in Hong Kong in the future.

The China Gas Company has been controlled by Wheelock and Company for many years. As it is a British-owned enterprise, there must be many foreign senior executives within the company. Although there is the example of Li Kar-shing taking over Hutchison Whampoa, Luo Qihong is not Li Kar-shing. He does not have many talented people at hand, so it is not easy for him to control the China Gas Company.

Therefore, Luo Qihong had already discussed the issue of whether to keep or leave personnel during the negotiation with Li Fushu that day. The staff members who were confirmed to be taken away now included secretary Cheng Jianshen, information integration manager Su Qishan, two property department managers Kang Wenyi and Zhao Kai, and 11 junior staff members. This was Luo Qihong's entire team at Paramount, accounting for a quarter of the Paramount's staff.

Of course, some of these people are unwilling to work for China Gas Company, but Zhaoan Real Estate Company can also provide some staff for this purpose, and the total number will not exceed 30 people.

Facing the China Gas Company with hundreds of employees, this number of people is really not enough, but this is the result of Luo Qihong's best effort.

The only solution now is to win over a group of people and suppress another group within the China Gas Company. Maybe things will be much better by this time next year.

There are still 11 months until the "Iron Lady Wrestling" next year, but the debt of Zhaoan Real Estate Company plus personal debt is close to 9 million yuan, and Luo Qihong also needs to save a sum of cash in advance for the "big crash" period, which is really too difficult.

This plunge will last for two years, and Zhaoan Real Estate Company's current rent will only decrease, even to 2% of the current level, so it will not be able to achieve much.

The relationship between the stock market and local markets is intricately linked. If local markets decline, real estate stocks on the stock market will certainly not fare well, and the financial sector will also be hit hard.

However, Luo Qihong remembered that Liu Luanxiong's Aigo Company was listed in 83 and was sought after by many investors, so there must be some hope for industrial stocks.

But it won’t be too good, because real estate and finance are the pillar industries of Hong Kong.

Most of Luo Qihong's funds come from the stock market and local markets. If he cannot make a profit from them, it would be like breaking the legs of an ordinary person, and both individuals and companies will suffer heavy losses.

Therefore, Luo Qihong needs to find two other businesses to replace the stock market and real estate as sources of funds, even if the amount of funds is far less than that of the stock market and real estate.

Hong Kong's domestic demand will not change much in the next few years, and will mainly rely on exports and transshipments. For example, Liu Luanxiong's Aimego exports classical fans to South America and Europe.

"It seems that we can only do trade or export business such as electronics and food." Luo Qihong said with a sigh.

In Luo Qihong's impression, Hong Kong's trade has been controlled by a few big trading companies, such as Jardine Matheson, Hang Cheong Company, and Li & Fung, while other trading companies are just trying to get a piece of the pie.

However, the trading sector is much larger than the electronics sector, and the profits are also much more substantial.

Therefore, Luo Qihong immediately summoned Su Qishan and asked him to start collecting information on Hong Kong's three industries: trade, industry, and food, with special attention paid to large enterprises.

Su Qishan was naturally shocked that they were actually starting to enter other industries.

Su Qishan knew that other industries were more treacherous than the real estate industry, but he felt that with hundreds of millions of dollars in funds in his hands, it was uncertain whether Luo Qihong could carve out a path in these industries.

Meeting Room, Wheelock House, Central
Luo Qihong, Li Fushu, John Madden, and Zhang Yuliang (a major shareholder of Wheelock Company) sat together in the conference room, and John Madden, as the chairman of the board of directors of Wheelock Company, sat at the head seat.

Zhang Yuliang was born into the Zhang Zhushan family. He was originally a western medicine agent. He started to enter the real estate industry in the 60s. His family owns large properties in Mid-Levels, Causeway Bay and other places. The Federal Building and International Building that are on sale are the representative building properties of his family.

The Zhang Zhushan family is very low-key, and can even be called the most low-key Chinese family in Hong Kong. Their family assets are probably worth tens of billions of yuan, which is no less than the market value of Wheelock Group. They are a very wealthy family.

Zhang Yuliang is a stingy person by nature and style. He has never been generous to himself, let alone his family members.

"You two should have read the acquisition plan I submitted. Based on the current share price of 11.2 yuan, with a 2% premium, that is, 13.5 yuan, Wheelock Holdings will hold 31% of the shares of China Gas Company, which requires 8 million yuan in capital," Luo Qihong said with a smile.

Negotiations are all about bargaining, and no one reveals their cards right from the start.

"Mr. Luo, we at CR Land have no intention of selling our shares in China Gas Company. We only came to you because of Mr. Li's face. Besides, the price you offered is too low and not attractive at all," Zhang Yuliang said when he saw John Madden didn't say anything.

Luo Qihong glanced at Li Fushu and said with a smile, "Since Mr. Zhang thinks the price is too low, then I'll raise it a bit. How about a 3% premium?"

At this time, John Madden spoke up, "3% is still low. As we all know, Towngas is an extremely high-quality industry, comparable to Hong Kong Electric Company and China Light and Power Group. It is the only company in Hong Kong that specializes in towngas and natural gas. I think we need to pay an 8% premium."

8% premium!
This offer shocked Luo Qihong. If he wanted to acquire the company at this price, he would need to pay 12 billion yuan in cash.

"Mr. Madden, this price is really too expensive. How about I increase it by 1%, making the total premium 4%?" Luo Qihong quickly lowered the price.

Li Fushu helped persuade them, "Mr. Ma Deng, Mr. Zhang, an 8% premium is indeed a bit expensive. Mr. Luo really wants to acquire China Gas Company, but he does not have so much money, and the Bank of East Asia cannot lend such a large sum of money."

John Madden and Zhang Yuliang looked at each other, and John Madden said, "Okay, for Mr. Li's sake, let's pay a 7% premium."

Seeing this, Luo Qihong could only come up with a second plan, "I know that Wheelock has been rapidly expanding in the shipping industry recently and needs a lot of capital. How about offering a 31% premium for the 45% equity of China Gas Company, and I will help Wheelock acquire some properties at a premium?"

(End of this chapter)