Those Years When I Was Forced to Top the Forbes List

Chapter 211 Changing the Mindset
BOE has neither issued an announcement nor come to Hefei.

Even when I called Wang Dongsheng the next day, he didn't answer.

Following several newspaper reports, BOE's stock price plummeted, reaching the daily limit down price of 2.72 at one point during the day, with 10 lots of sell orders at the limit down price. However, without interference from Changzheng Capital, the limit down price was lifted at the end of the day and even rebounded slightly to 2.75.

BOE seems to be indifferent, showing no reaction whatsoever.

On the third day, Mayor Wu called Chen Xuebing to his office and conveyed a new message.

BOE indicated that it was willing to cooperate, but due to the recent excessive investment in maintaining its stock price, it no longer had the funds to invest in new production lines. It could only borrow 20 billion yuan as an investment, and the rest required the full support of the Hefei government.

This reason is clearly intended to blame Hefei for short selling.

"They're completely unyielding! I think they need to be taught a lesson! Mayor Wu, don't worry, I'll beat them until they submit."

Chen Xuebing cursed coldly.

Now that things have come to this, he's ready to unleash his traditional skills.

report.

Short selling and a report to the China Securities Regulatory Commission directly cut off their financing options.

This time, Mayor Wu, on the contrary, appeared to be extremely patient.

"Mr. Chen, the more demanding the conditions, the less you need to worry about them, because they are impossible to achieve. For such a large investment, reasonable conditions need to be negotiated slowly. We are not in a hurry, but you are a bit impatient."

Upon hearing this, Chen Xuebing gradually calmed down.

Completely crippling BOE wouldn't do any good; cleaning up the mess would be a huge hassle.

But Mayor Wu wasn't finished speaking.

"Actually, in our opinion... if they don't have enough funds to build a 6th generation line, we can lower our target and a 5.5th generation line is also acceptable. I heard that the economic cutting limit of a 6th generation line is 37 inches, which makes it difficult to produce the kind of expensive large TVs on the market. With a 5.5th generation line, we can make computer screens. We can bring in some computer manufacturers, support the enterprises, boost the economy, and then invest in higher-end production lines."

Now, Chen Xuebing understood what was going on.

"Mayor Wu, are you having trouble raising funds?"

He's practically an expert on the control panel now, so Mayor Wu's explanation won't fool him.

Panel production line generations are backward compatible. A 6th generation line can cut glass substrates to make 37-inch TV screens, and can also cut 22, 19, 17, and 15-inch screens, which are commonly used sizes for computer and laptop screens.

The only difference is that the investment cost of a 6th generation production line is 3 to 4 billion yuan higher than that of a 5.5 generation production line.

If we could build high-generation production lines that could make both TV and computer screens, and attract both TV and computer manufacturers, wouldn't that be even better?
The only explanation is that they're short of money.

Mayor Wu pondered for a long time with his hands behind his back, and said, "We have been actively raising funds recently. After discussion by the municipal party committee, if a sum of money is invested in the basic renovation of the newly established Binhu District, the land in Binhu will have value in the future. We can leverage more funds for development, and the urban area can also be expanded rapidly."

"Oh," Chen Xuebing paused for a moment.

This is 2006, not 2008 in the previous life. There are more than two years in between, so Hefei's situation must be different.

If that's the case, then Hefei's investment in BOE in its previous life may have utilized land capital in Binhu District.

I'm in a hurry, but the other party needs time.

However... what he needed was not the sixth generation line in the first place.

Of course, it's not a 5.5 generation line either.

It is a 4.5 generation line.

After being abandoned by Shenzhen and Shanghai in 06, BOE turned to Chengdu and built a 4.5-generation line to produce small screens, just in time for the wave of large-screen smartphones, and thus made a fortune.

This line was built before the Hefei sixth-generation line.

This is the most suitable production line for mobile phone screens. It uses a 680*880 substrate to cut screens smaller than 5 inches, resulting in a very high capacity utilization rate.

The key is that the investment is small; the Chengdu line alone cost only about 3 billion yuan.

Chen Xuebing was determined to develop this line, but considering the relatively small investment, he planned to proceed gradually after signing the contract for the sixth-generation line.

But Mayor Wu's words sparked an idea in him.

"Mayor Wu, what do you think about building two lines? We can start with a 4.5-generation small screen line, which will only require an investment of over 3 billion yuan. Once our funding situation improves, we can help BOE build a 6th-generation line. How about that?"

"A 4.5-generation production line?" Mayor Wu was taken aback for a moment. "What's it for?"

"We can make screens for devices under 9 inches, with a focus on mobile phones, handheld learning devices, industrial control screens, and the like. If BOE makes these, I can reserve a portion of their production capacity."

“Uh… Mr. Chen, that’s not what I meant.” Mayor Wu’s tone changed again: “When I mentioned the 5.5-generation line, I was just settling for second best. We still want to raise funds to build a high-generation line. We have already invited eight banks, including the China Development Bank, Huishang Bank, Minsheng Bank, ICBC, and CCB, to negotiate a syndicated loan. It just takes some time to integrate land resources. Eight months. As long as we have eight months, we can come up with enough money to build a sixth-generation line.”

Hefei values ​​the electronics industry and the scale of investment; televisions or computers are both options, and mobile phones are also a possibility.

In terms of scale, the 5.5-generation line is less than 10 billion yuan, so their pressure is less and it's acceptable.

However, the industry scale of 3 billion yuan simply did not meet their expectations.

Moreover, it's impossible for Changzheng Capital to invest 13 billion yuan in this amount, right?

He wouldn't let the money from customers slip away.

As for Chen Xuebing's statement about building two production lines, 3 billion is not a small amount. With so much money invested, it's uncertain when the sixth-generation production line will be able to get started.

Many things just disappear if you keep putting them off.

Chen Xuebing could certainly understand the meaning behind Mayor Wu's words.

But once the idea took hold, it wasn't so easy to dispel.

He walked over to the sofa, sat down, and went through the whole story again.

After a long pause, he slowly said, "Hmm, eight months is too long. How about six months? Can you raise the funds?"

Mayor Wu hesitated for a moment before revealing his trump card.

"After six months of discussions with eight banks, we have decided to level the land in Binhu, improve the power system, and resolve the main roads and land use issues. We will then use some of the undeveloped plots as collateral, along with commercial plots in the city, to form a package. Led by the China Development Bank, we will receive an 80 billion yuan, 7-year loan as development funds. This will allow us to expedite the land development process, but we still need to discuss the matter with the banks."

"The money must be in place within six months for this investment to be meaningful to me," Chen Xuebing said firmly.

The Shanghai Composite Index peaked at 6124 points in mid-October 2007, coinciding with the highest market liquidity. Prior to this, the index had been soaring, making selling BOE Technology Group shares the safest option, and attracting the most active buying. Although the index hovered above 5000 points for several months afterward, the bull market fervor had subsided, and a significant decrease in liquidity was inevitable.

In a bull market, BOE's stock price is bound to rise. The key question isn't how many times it will rise, but whether there will be enough buyers willing to take over.

With so many shares and no one willing to buy them, even a high stock price is just a number.

The lock-up period for minority shareholders is at least one year, from August this year to August next year, and some time needs to be allowed to deal with unexpected situations.

Mayor Wu thought about it and decided that six months was a reasonable amount of time. Chen Xuebing had initially made a firm commitment to the project and was determined to stay until it was implemented. While this showed their sincerity, it also put considerable pressure on them.

"Alright, August it is then."

"So, how much money can you come up with for the 4.5 generation line right now?"

Chen Xuebing's sudden change of tone startled Mayor Wu.

"Huh? We still need to build a 4.5 generation line?"

"Of course we'll do it, but Hefei won't need to contribute much money, and you won't need to use bank loans. You take 8 million, and I'll take 8 million to buy BOE's newly issued shares as their capital. The rest they can borrow themselves. How about that?"

Hiss.

This ratio immediately sparked Mayor Wu's interest.

A 50/50 investment leverages 800 million to generate 3 billion.

That's a great deal!
If we're going to do it this way, even if Hefei has a heavier burden, it's still acceptable.

But Chen Xuebing spoke of 8 million as casually as if it were water.
"Mr. Chen, how much financing ability do you actually have? After this investment, can you still handle the investments for the second half of the year? Can you even raise 13 billion?"

Chen Xuebing smiled.

His financing ability is actually quite easy to calculate.

The most conservative estimate is approximately 7.7 times his own capital.

According to the conditions Bosera set for helping him raise funds, 15% of the funds were to be used as a deposit. So if he wanted to raise a 10 billion yuan fund, he would need about 1.3 million yuan, plus 8.7 million yuan of external investment, to make a total of 10 billion yuan.

10÷1.3≈7.7.

With one dollar, he could at least create a fund worth 7.7 dollars.

Given his profitability, transparent supervision, principal protection, and his own funds as collateral, even unfamiliar investors would find it hard to refuse such a offer.

These are conditions that most private equity firms cannot offer.

Ninety-nine percent of private equity funds in China are not transparent private equity funds and lack regulation. Most of them are people who want to manage hundreds of millions of yuan with just a few million yuan. Although the conditions they offer are bold, investors know in their hearts that these people are gambling with their lives. If they really lose, they can only jump into the Huangpu River or pack up and run away.

If they were to act as third-party regulators like Chen Xuebing, depositing margin and then refunding all losses exceeding the margin and dissolving the fund, it would be a mistake.
How many people would dare to do it?

How many people can do it?

If you can do it, will you earn as much as he does?

Leading returns and far superior fund security compared to his peers—that's the source of his confidence.

As long as he maintains his top ranking in returns over a long period and has sufficient funds, he can simply find several banks and securities firms to issue products for him based on the amount of money he wants, according to that ratio.

Moreover, besides this 7.7 times, there is an additional portion.

It's about trusting his long-time customers.

As long as they make money, they and their network of contacts will flock to his fund products. For these people, he doesn't need any margin at all.

For him, the ability to raise funds is only a matter of time. If given a year, he can raise more money than the Hefei government.

He certainly had the confidence, but Chen Xuebing didn't answer directly. Instead, he said it from a different angle:
“Mayor, my words will only have meaning once my first funding is secured and I'm tied to the Hefei government. You should hurry up and push forward with the first cooperation to get me on board first.”

These words struck a chord with Mayor Wu.

That makes sense.

No matter how sincere the cooperation between the two parties is, they still need to actually spend their money on this land to truly achieve unity of purpose.

"Given BOE's current attitude, it's unlikely we'll reach a conclusion in the short term. What are your plans for negotiation?"

"Hehe, Mayor, I can't discuss the current situation. I think it's your turn to take action. If you handle it properly, you might not even need to spend 8 million. Someone will cover part of it for you."

"Oh?" Mayor Wu's voice rose three octaves.

"However, you'll need to abandon a little bit of your integrity."

Hefei's moves are swift and elusive.

Chen Xuebing and Mayor Wu had a conversation in the morning, without even holding a Standing Committee meeting. The two leaders met briefly, and in the afternoon, a division-level cadre arrived in Shenzhen. Led by the local Hefei investment promotion team, he made contact with the Sharp team, who had just returned to Shenzhen.

They made no attempt to hide their invitation to Sharp to build a 7.5-generation production line in Hefei, and generously offered similar terms to those of BOE.

Because the 7.5 generation line is of a higher generation, Hefei has pledged to invest 120 billion yuan.

Sharp was overjoyed.

Just when we were worried that BOE would come to Hefei next, Hefei has also come.

They immediately invited the Hefei representatives to their hotel to discuss the matter, even booking a private room and hosting a lavish dinner for them.

According to reports from the front lines, Sharp representatives did not discuss any technical specifications or construction methods for the 7.5-generation line at the dinner table; they simply expressed their delight and interest in cooperation.

Whether the Shenzhen government knows about this information or not, nobody knows.

But starting the next day, Sharp's people were arranged by Shenzhen to stay at another hotel under Shenzhen Investment Holdings, the Wuzhou Hotel.

People from Hefei wanted to book a room, but were told there were no rooms available, and that there was renovation work being done at the elevator entrance on the floor where Sharp lived, so visitors were not allowed.

In the following days, Sharp employees worked long hours, leaving early and returning late, and were picked up by government buses as soon as they left the hotel.

……

(End of this chapter)