Journey 1995:Non-Stop

Chapter 382 Tiles
When a company is on the rise, it must find ways to expand; otherwise, everyone will lose their energy and enter an irreversible period of lethargy, making it even more difficult to achieve anything.

Today's chemical industry can be said to be able to rest easy for the next three years, but in order to continue to develop, it must continue to break through new technologies and also have a sales team that can fight tough battles.

Urban construction in Jinan is in full swing. In April, the interior of one of the city's iconic department stores was emptied, and the final demolition work began. New plans are in place for this area, and many are eager to participate in the next round of bidding.

Yan Hui's current capital utilization is basically at its limit, and he has no capacity to take on new steel trading projects. The initial steel contract with Jian'an Group has been completed, and Yan Hui recently won another contract, keeping the steel supply at around 1 tons per month. Now that the chemical company has some money in its accounts, Yan Hui has used it to repay a 500 million yuan loan.

For Yan Hui, producing around 10,000 tons a month is no longer that difficult; his influence in the region has reached that level. The construction sites and government agencies he knows can basically sustain his current supply. However, taking it a step further won't be easy; he can only wait for new opportunities.

Those familiar with banking know that Yan Hui's method of borrowing and repaying money can increase a company's valuation, allowing it to borrow more in the future if its cash flow is good.

Yan Hui took a day off and, with Zhou Ping and Chen Jian's driver taking him to Linzi, wanted to further investigate the ceramics project.

This time, things are different from a few years ago.

At that time, Yan Hui and Wang Zongbo came with Zhou Ping to visit. At lunchtime, everyone ate at the cafeteria, and President Zhou even came over to take a look, which was considered as giving Zhou Ping face.

This time, General Manager Zhou booked a banquet at a local hotel and had it delivered to the factory canteen. As soon as Yan Hui arrived, he was given a meal.

There were two people from Mr. Zhou's side: Mr. Zhou and his financial manager, Wang Bo.

Sitting in this room again, Zhou Ping was actually the one who felt the most deeply.

Once upon a time, his biggest dream was to become the financial manager of his uncle's factory, handle tens of millions of yuan a year, and live a high-salary life with a monthly income of 5000 yuan as soon as possible.

"President Yan, I was just telling Zhou Ping last time that I would personally visit you. You actually had time to come see me! I was going to go out today anyway, but I canceled everything else!" President Zhou said with a smile.

"Mr. Zhou, you're too kind. I really don't think it's necessary to go to so much trouble. As for ceramic companies, well, I don't know much about pottery and household porcelain, but I often come into contact with the tile industry and I'm quite interested in it. Just listening to you isn't enough; I need to come and see for myself. You can't just talk the talk." Returning to this familiar place, Yan Hui was in a good mood.

“That’s true. My factory has a lot of historical reasons, and it’s too difficult to innovate technologically now. Mr. Yan, to be honest, I’ve invested in a tile factory that’s been established for a little over two years. The two production lines are already in stable production, but the company has many problems. My current equity stake is 7%, to be precise. The company is definitely making money, but I have no say in it. I think if you’re also interested, we could consider investing together. If we had about 35% equity, we could do a lot more. The factory is in a mess right now, with several shareholders causing trouble among themselves. Buying equity shouldn’t be difficult. I’m willing to put up another 100 million yuan and try to buy about 5% more equity.” Mr. Zhou directly stated his thoughts.

Before coming, the two had a brief conversation on the phone. "Mr. Zhou, I actually don't quite understand. I asked Zhou Ping at the beginning why you don't invest the funds here into your own company?" Yan Hui asked directly.

“These days, you have to create your own brand for tiles, otherwise it’s really hard to sell them. Mr. Yan, to be honest, a standard production line costs about 800 million yuan to build, and that’s not even considered advanced. My production line is only worth about 400 million yuan now. I’ve been adding equipment over the years, but it’s still not keeping up with the times. If I wanted to sell it now, I’d probably struggle to get even 300 million yuan, but building a new production line from scratch is extremely difficult. It’s not just a matter of money; it also requires professional technicians. I’m really torn. If I go all in and switch production lines, I’m afraid I won’t be able to find the right technicians and distribution channels. I made some money selling my house, so I’m thinking of investing in other businesses,” Mr. Zhou explained his predicament.

Don't be fooled by the fact that opening a factory is very profitable; it's not as simple as it seems.

Back then, in order to secure the business from Jian'an Group, President Zhou used the company loan to invest in that project to buy shops, thus securing the tile business and breaking into some new supply channels.

However, the profit from this single project is still limited. Yan Hui supplied plywood to that large real estate project, and the profit from start to finish was only around 100,000 yuan. He achieved compound growth by constantly developing new business in the later stages, while General Manager Zhou in Linzi did not have this ability.

He tied up most of his funds in a vacant project, resulting in the company having no working capital for at least three years and missing the best opportunity for expansion.

The shop appreciated in value later on, and Mr. Zhou has sold two units so far, so he still has some money in hand.

Overall, they were lucky, considering how many entrepreneurs have been eliminated by the market in this era.

"Well, what's the situation with this company you invested in? Logically speaking, if you can get a 7% stake, you should have a pretty good relationship with all the shareholders, right? How come, as you're saying, you still have to fight for a certain degree of control?" Yan Hui asked.

"There are no outsiders here, so I'll explain slowly." General Manager Zhou gave a detailed introduction to the tile factory.

The company that Mr. Zhou invested in is actually a village collective enterprise. The land it uses is the village's land, but the equipment investment is done by several families together.

The area around this village was originally home to brick and ceramic factories. Because of the rapid market growth, many people made money.

In this day and age, almost no factory doesn't make money, since it really doesn't require much brainpower. You can sell something that costs 5 yuan to produce for 6 yuan, making a 20% profit. If there's a market for it, you make money—it's that simple.

There are three families involved, with a total of seven shareholders. Because they have known each other for a long time, in order to ensure the production of high-quality tiles in one go, these seven people partnered up to start a tile factory at the end of 2005, investing in two production lines with a total investment of approximately 15 million yuan.

(End of this chapter)