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In October 1984, more than a year after Lemon Technology went public, Suning was reading a thick report in his top-floor office at the Santa Monica headquarters.

The CFO, Kevin, sat opposite him, with three folders spread out in front of him.

“Boss, we currently have $3.2 billion in cash in the account. With so much money sitting in the account, the management fees alone will amount to millions of dollars every year, and the capital efficiency is too low.” Kevin pointed to the report and said, “We need to find new investment opportunities.”

Suning closed the report: "I've considered it. We'll establish an independent investment company specializing in global industrial investments."

"What sectors should we invest in?"

“Three major directions,” Suning wrote on the whiteboard. “First, Chinese manufacturing. Second, global mining. Third, the energy industry.”

"Isn't that too broad a scope?" Kevin was a little worried. "We understand technology and semiconductors, but mining, energy... we're complete novices."

“So we need to find professionals,” Suning said. “You’ll be responsible for building the team and recruiting people. We can offer 150% of the market salary, with stock options on the side.”

One month later, Pacific Capital was incorporated in the Cayman Islands.

Suning serves as chairman, while Mark Thompson, an investment banker poached from Goldman Sachs, serves as CEO.

The initial capital was US$2 billion, all of which came from Lemon Technology's cash reserves.

The first board meeting was held in Hong Kong.

Mark reported on the preliminary plan: "We plan to establish four funds: a China Industry Fund, a Latin American Resources Fund, an Australian Mining Fund, and a Middle East Energy Fund. Each fund will have a scale of US$500 million, which will be invested over three years."

"What is the investment strategy?" Su Ning asked.

"China focuses on manufacturing, with key investments in electronic components, machinery processing, and chemical materials. Latin America focuses on copper and lithium mines. Australia invests in iron ore and coal mines. The Middle East invests in upstream and downstream oil industries."

"Expected returns?"

"Manufacturing funds are expected to return 15%-20% annualized. Mining and energy are more volatile, but in the long run, an annualized return of 12%-18% is not a problem."

What about risk control?

"Each investment in a single project shall not exceed 10% of the fund size to diversify risk. All projects must be controlled by a majority stake or at least 30% and have a seat on the board of directors."

"Okay." Suning approved the plan. "Where should we go for the first project?"

“Shenzhen, China,” Mark said. “They’re building a special economic zone there, with preferential policies and cheap labor. We’ve got our eye on a mold factory that’s on the verge of bankruptcy.”

"Alright! Let's test the waters first and see the specifics of China's policies."

November 1984, Luohu District, Shenzhen.

In a dilapidated mold factory, the owner, Lin Guodong, looked at the account books with a troubled expression.

The factory hasn't been able to pay wages for three months; the equipment is outdated, and orders are dwindling.

A delegation from Pacific Capital has arrived.

The team leader was Guan Wei, the investment director, a 40-year-old Hong Konger who could speak Mandarin and Cantonese.

“Mr. Lin, your factory equipment is too old.” Guan Wei shook his head after inspecting the production line. “They’re all Japanese machines from the 1960s. They’re not precise enough and their efficiency is low.”

“I know…” Lin Guodong sighed, “but I don’t have the money to replace the equipment. The bank won’t lend me money, saying I have no collateral.”

"What if Pacific Capital invests? How many shares are you willing to give up?"

"Any conditions are negotiable as long as the factory can be saved."

Negotiations were quickly reached: Pacific Capital would invest five million US dollars, taking a 70% stake. Of this, three million would be used to purchase new equipment, one million to repay debts, and one million as working capital.

Lin Guodong retained 30% of the shares and continued to serve as the factory manager.

After the contract was signed, the new equipment was shipped from Japan, and German engineers came to install and debug it.

Three months later, the factory was completely transformed.

Lin Guodong showed the new sample to Guan Wei: "Mr. Guan, look, the precision has reached 0.01 millimeters, which is ten times better than before! Electronics factories in Hong Kong have already inquired about the price."

Can orders sustain the factory?

"Not only can we keep them alive, but we also need to expand production," Lin Guodong said excitedly. "Sony and Panasonic's contract manufacturers have all asked us to make molds, and the orders are booked until June next year."

“Okay,” Guan Wei said. “Before the end of the year, we will invest an additional two million to open another production line.”

This is Pacific Capital's first project in China, and it is expected to recoup its investment within three years.

……

Meanwhile, the Latin American Resources Fund team went to Brazil.

The team was led by Carlos, a mining expert from Brazil who had worked at Vale for twenty years.

He discovered a small to medium-sized copper mine in Minas Gerais, where the original owner was preparing to sell it at a low price due to a broken cash flow.

“This mine has proven reserves of about 500,000 tons, with a grade of 1.2%, which isn’t high, but the mining conditions are good. It’s an open-pit mine, so the costs are low,” Carlos reported to Mark. “The asking price is $80 million, including the mining rights, equipment, and existing inventory.”

Is it worth investing in?

“It’s worth it. Copper is currently priced at $2,000 per ton. Once this mine is fully mined, it will be worth a billion dollars. Even after deducting costs, the profit will be considerable.”

"Then let's talk."

At the negotiating table, Brazilian mine owner Fernando was adamant about his price: "Eighty million, not a penny less. I'm already in talks with three companies: Mitsui & Co. of Japan, BASF of Germany, and Chile's state-owned copper company."

Carlos remained calm: "Mr. Fernando, what terms did those three companies offer you?"

"They were all acquired with full payment, but the price was reduced to 75 million."

"Pacific Capital can provide 80 million, but it will be paid in installments: 30 million upon signing the contract, 30 million upon equipment acceptance, and 20 million after formal production."

Why pay in installments?

"To reduce risks, we need to ensure that there are no disputes over mining rights and that the equipment can operate normally."

Fernando thought for a moment: "Okay, but the installments must be paid off within one year."

"make a deal."

After the contract was signed, Carlos immediately sent engineers to the site.

Three months later, the copper mine resumed production, with a monthly output of 3,000 tons of copper concentrate.

The first batch of copper ore was shipped to Japan, and Pacific Capital recouped its first investment.

……

The head of the Australian mining fund is John McRae, an Australian who previously worked for Rio Tinto.

He found an opportunity in the Pilbara region of Western Australia: a medium-sized iron ore mine was up for sale because the original owner had passed away and his children were fighting over the inheritance.

“This mine has reserves of about 200 million tons, with a grade of 62%, which is very good,” John reported. “But there are two problems: First, the mine is far from the port, and a 150-kilometer railway needs to be built; second, a new port terminal needs to be built.”

"How much is the total investment required?"

"Three hundred million US dollars to buy mining rights, four hundred million US dollars to build railways and docks, a total of seven hundred million."

“Too many,” Mark shook his head. “A single investment cannot exceed five hundred million.”

“We can find partners,” John said. “I’ve already contacted Nippon Steel in Japan. They’re willing to offer $200 million for a ten-year priority purchasing right. We’ll offer $500 million, taking a 70% stake, and Nippon Steel will take 30%.”

"This plan is acceptable."

The negotiations went smoothly.

Pacific Capital invested 500 million and Nippon Steel invested 200 million to establish a joint venture.

The railway and the port started construction simultaneously and are expected to be put into operation in two years.

……

The Middle East energy fund is headed by Ali, a former Shell executive who is Lebanese and fluent in Arabic and English.

He established a trading company in Dubai, starting with oil trading.

“The oil fields in the Middle East are controlled by national oil companies, so we can’t get in,” Ali reported. “But we can do trade: buy oil from Saudi Arabia and the UAE and sell it to Asia.”

What about profit margins?

“You make one to two dollars per barrel. If you trade one million barrels a month, the profit would be one or two million dollars.”

"How much capital do you need?" "Fifty million US dollars in working capital will suffice. But we need to rent tankers and build oil storage facilities."

"approve."

Alibaba rented an office in Dubai and hired five traders.

In the first month, they traded 500,000 barrels and made a net profit of $800,000.

Three months later, he found a new opportunity: a tender for a production enhancement project in a small to medium-sized oil field in Kuwait.

“This oil field produces 30,000 barrels per day, and Kuwait Petroleum Corporation wants to increase it to 50,000 barrels per day, which requires investment in new technologies,” Ali said. “If we win the bid, we can get 30% of the profits from the increased production.”

What are the chances of winning the bid?

“We are partnering with Halliburton in the US; they have the technology, and we have the funding. Our chances of winning the bid are 70%.”

"Then let's vote."

The joint bid was successful.

Pacific Capital invested $100 million to acquire a 30% stake in any increased production from the oil field over the next ten years. The projected annual return is 20%.

……

In March 1985, six months after its establishment, Pacific Capital held its first formal board meeting.

The heads of the four funds gave their respective reports.

Guan Wei first reported on the situation of China's manufacturing industry: "The mold factory in Shenzhen is already profitable, with a monthly profit of US$300,000. We have also invested in four factories: a circuit board factory in Dongguan, an injection molding factory in Guangzhou, an electroplating factory in Shanghai, and a packaging material factory in Tianjin. The total investment is 120 million yuan, and we expect to start making a profit next year."

Carlos reports from Brazil: "The copper mine produces 3,000 tons per month, generating $6 million in revenue and approximately $2 million in profit at current prices. We have also inspected lithium mines in Chile and are currently in negotiations."

John's Report Australia: "Fifty kilometers of iron ore railway have been built, and the dock foundation has been completed. Production is expected to begin next June. Nippon Steel has already booked 50% of its production for the first five years."

Ali reports from the Middle East: "Oil trading is generating a stable monthly profit of 1.5 million. The Kuwaiti oil field project will begin increasing production next month. We are also in talks with Oman about a natural gas project."

Mark summarized: "The total investment is $18 billion, and the annual profit is expected to reach $300 to $400 million after three years, with an annualized return of 15%-18%. The efficiency of capital utilization is much higher than that of putting money in the bank."

Suning is very satisfied: "Continue to move forward. But remember three points: First, control risks, and each project must have an exit mechanism; second, comply with local laws and policies, especially environmental protection and social responsibility; third, cultivate local talent, and do not just use dispatched personnel."

"clear."

However, things cannot always go so smoothly; risks and problems still exist.

Two months later, problems indeed began to emerge.

Brazil's newly appointed Minister of Mines immediately sent a note to Pacific Capital: "Mr. Carlos, foreign capital's control of Brazil's mineral resources is detrimental to the country's long-term development. All foreign-invested mining projects will be reviewed again."

Carlos urgently reported to Mark: "The minister's words were directed at us. There are voices in Brazil saying that Pacific Capital controls the copper mines and the profits are flowing overseas."

"How to deal with it?"

“I suggest doing three things: First, commit to reinvesting 20% ​​of the profits in Brazil; second, hire more local employees, as 80% of the mine workers are now Brazilian; and third, support community development by donating money to repair schools and hospitals.”

"approve."

The same problem has also emerged in Australia.

The union protested: "Pacific Capital is using Filipino workers to steal jobs from Australians!"

John explained, "We don't use Filipino workers; we use local Australian workers. It's just that there are Americans and Chinese in the management team."

"That won't do! Mining is a pillar industry of Australia and must be led by Australians!"

A compromise was finally reached: a commitment was made that Australians would make up no less than 50% of the management team and that 100% of the workers would be local.

The situation in the Middle East is relatively smooth, but Ali cautioned: "Boss, the political situation in the Middle East is complex, and the tense relationship between Saudi Arabia and Iran could affect oil trade. We need to diversify our risks and not rely solely on the Middle East."

“Then let’s explore new markets,” Mark instructed. “Nigeria and Angola in Africa also have oil; we can reach out to them.”

Seeing Pacific Capital operating smoothly, Suning was quite satisfied, feeling closer and closer to achieving financial freedom.

However, Suning's ambitions don't stop there. He harbors a huge ambition: to frantically absorb the resources of this instance world.

Knowing that his own spatial world also needed development, Suning had particularly high expectations, so swallowing up all the heavens was almost inevitable.

……

In June 1985, Pacific Capital adjusted its investment strategy.

Mark reported on the new plan: "First, reduce the proportion of investment in a single project and increase the number of projects. Second, focus investment on countries and regions that are 'politically safe'. Third, strengthen cooperation with Chinese state-owned enterprises to reduce political risks."

"How to do it exactly?"

“For example, in Australia, we no longer buy mines directly, but instead form joint ventures with local Australian companies, where we hold a small stake but provide capital and technology. In Brazil, we cooperate with the Brazilian National Mining Company. In China, we form joint ventures with local governments to build factories.”

How is the progress in China?

“Excellent.” Guan Wei quickly added, “Shenzhen mold factories have become industry benchmarks, and the municipal government wants to give us more land to build industrial parks. We plan to invest 30 million yuan to build an electronic components industrial park and attract ten supporting companies.”

"And what about the reward?"

“We do not directly operate the industrial park; we only collect rent and dividends. The expected annual return is 12%, but the risk is low and the return is stable.”

"Great! Keep it up."

By the end of 1985, Pacific Capital managed assets totaling US$2.5 billion.

The portfolio includes seven manufacturing plants in China, two mines in Brazil, one iron ore mine in Australia, three oil projects in the Middle East, and a dozen smaller investments.

The projected annual profit is $350 million, with a return of 14%.

At the board meeting, Suning put forward a long-term goal: "Within five years, Pacific Capital will become a top global industrial investment institution. Within ten years, it will manage assets worth US$10 billion."

“The goal is big,” Mark said. “We need more funding.”

“Lemon Technology will distribute dividends and generate new profits every year, which can be continuously injected with capital,” Suning said. “In addition, Pacific Capital can consider an independent listing in three years to raise funds from the capital market.”

"Listing location?"

“Hong Kong.” Suning had already planned for this. “Hong Kong is an international financial center and is close to mainland China. Listing there will not only attract international capital but also strengthen our relationship with China.”

"understand!"

"In addition, investment companies should also pay more attention to international port and terminal business. Now that the investment company is on the right track, it is time to expand its business."

"Yes, boss, I will submit a detailed plan as soon as possible."

After the meeting, Su Ning stood by the office window, looking down at the busy street below.

From a technology company to a global industrial investor.

This is a big leap, but the logic is clear: technology needs raw materials, manufacturing needs markets, and energy is the lifeblood of industry.

With these in hand, Lemon Technology will no longer be just a computer company.

It is a vast empire spanning technology, manufacturing, resources, and energy.

Although it's only just begun and every step is risky, this is the kind of vision he wants.

Don't be a follower, be a strategist; don't get bogged down in one race, aim for a foothold in all races.

Pacific Capital is a key step in this grand scheme.

How this move will turn out over the next ten years depends on its execution.

Fortunately, the team has been assembled, the funding has been secured, and the project has been launched.

All that's left is time and patience.

We await the fruits of these investments and the formation of these networks.

By then, Lemon Technology will no longer fear any storms.

Because its roots have been deeply embedded in the soil of the global economy.

From Silicon Valley chips to Shenzhen factories, to Brazil's mines, to Australia's iron ore deposits, to Middle Eastern oil fields...

This is a huge net, and he is the one who weaves and controls it.

...(End of chapter)