Those Years When I Was Forced to Top the Forbes List

Chapter 286 Those who believe in the lighthouse are all nourishment

As Wu Guangzheng recounted Li Jiacheng's story, Chen Xuebing's thoughts also turned back to him.

Later, Li Ka-shing gradually acquired Hutchison Whampoa, and Cheung Kong merged with Hutchison Whampoa to become CK Hutchison Holdings.

Everyone present seemed to enjoy hearing such stories. After the person involved finished recounting the handover between Hong Kong's two generations of richest men, they were still savoring the moment.

Liu Chuan, in high spirits, poured himself a glass of wine, raised it, and smiled:

"Mr. Wu's decision to do business in mainland China is a wise one! He'll surpass Mr. Li sooner or later! How much has China changed in the last two years? I remember two years ago, before we acquired IBM! Jack Ma and I had just met then, and he was bragging to me that he would make Taobao reach 100 billion yuan in sales! I was shocked and even scolded him, saying, 'Can you even count? 100 billion yuan is a huge amount!' But look at it now, in just two years! Lenovo's annual sales will break 100 billion yuan this year! And Jack Ma? He's already reached over 10 billion yuan, right? That's even surpassed Walmart's China business!"

His words were extremely generous, as if he were close to surpassing Li Changjiang.

Chen Xuebing chuckled inwardly. He had read Lenovo's financial report; its R&D expenditure accounted for less than 2%, and its net profit was only slightly over 1%, which was at a low level compared to its peers.

With sales of 100 billion and net profit of 1 billion, the company relies on contract manufacturing, high dividends, and high salaries for executives. With so many people involved in profit sharing, it's natural that the profit margin is hard to grasp.

However, the profit margin of Qilin's sales is also a problem.

With online channels unable to expand, offline home appliance chain retailers are charging over 20% in fees, which are taken from the selling price. They are making the lion's share of the profits, making it impossible to lower prices.

With a BOM (Bill of Materials) of over 3,000, plus assembly costs, and then adding 20%-25% channel fees, it exceeds 4,000. There are also advertising costs and salaries for the support department. If it doesn't sell for 4999, we can't break even.

Opening my own store seems like I'd have too few products; a store can't possibly sell only one type of phone.

The first generation of mobile phones could only serve the grand strategy, profiting from the long supply chain behind them.

Now it's becoming clearer the more I look at it. In the chain of an advanced mobile phone, foreign technology makes money, the supply chain makes money, and distributors make money. Manufacturers have to invest in research and development. If they can't sell them all, they have to stock up. And if they do sell them all, they have to pay taxes. It's the most pathetic one.

We have to call them one by one.

"In the financial field, look at our General Manager Duan and General Manager Chen. They not only make money domestically, but also achieve great success overseas!"

Liu Chuan continued to "promote my country's prestige," but Duan Yongping suddenly asked, "Chairman Wu, have you received any news from the US real estate sector in Hong Kong?"

He still found it hard to believe what Chen Xuebing had just said about shorting the US subprime mortgage crisis.

However, it didn't directly mention short selling.

At this point, Liu Chuan stopped, and Guo Guangchang and Lu Zhiqiang also perked up.

The main reason is that Chen Xuebing's claim of dozens of times the return is too far-fetched, and considering the historical benefits, it's impossible for them not to be tempted.

Of course, there was more skepticism than doubt.

Wu Guangzheng was also a bit puzzled by this question.

"US real estate...which aspect are you referring to?"

"Will the correction in housing prices impact the ABS (asset-backed securitization) market?" Duan Yongping asked directly.

Wu Guangzheng pondered for a while.

"Um... US housing prices have been consolidating and correcting recently, but that should be pretty normal, right? Since the end of June this year, the Federal Reserve has been continuously lowering interest rates, which has reduced the cost of mortgages in the US and will indeed have a significant impact on housing prices. But you mentioned the ABS market. With the money in the Federal Reserve being released, the liquidity of ABS should be better, and the repayment pressure on homebuyers will also be reduced. It shouldn't have a big impact on loans that are packaged with securities."

Upon hearing this, the members of the Taishan Society all had strange expressions.

Analysis of the US market is rarely heard in mainland China these days.

Ultimately, it's Hong Kong's expertise that allowed them to explain this issue so clearly.

Chen Xuebing hadn't planned to speak. He went to the restroom to empty his stomach and was now struggling with a steamed shad, lost in his own thoughts.

Seeing that several people were looking at him, he put down his chopsticks and smiled:
"Does Chairman Wu know about CDO?"

Wu Guangzheng had actually noticed Chen Xuebing long ago. At the banquet, everyone was enthusiastic, but there was one person whose attitude was rather indifferent. He might not remember the enthusiastic people, but he could easily spot the indifferent ones.

Especially since this person is incredibly young; at this age, he must be a member of a powerful family to be sitting at this table.

He didn't answer immediately, but instead asked Liu Chuan beside him, "Who is this?"

"Oh, this is Mr. Chen from Gu'an Group! Mr. Chen is a leader in the mainland financial industry! His Changzheng Capital ranks first in the private equity field!"

Wu Guangzheng remained silent, waiting for Liu Chuan to continue his introduction.

Private equity in mainland China is still in its infancy and not very large, so ranking first doesn't mean much.

"Mr. Chen has also made significant achievements in the telecommunications industry! His companies Spreadtrum and Singularity are now working with Datang Telecom to create the domestic TD standard! Our Ministry of Information Industry attaches great importance to Mr. Chen after the meeting. Today, I actually dragged him away from the desks of Vice Minister Zhang and General Manager Wang of China Mobile!"

Liu Chuan didn't want his invited guest to embarrass him, so he went to great lengths to promote him.

In reality, he didn't know what Chen Xuebing and those two had talked about.

Upon hearing these two titles, Wu Guangzheng finally became serious, thinking to himself that this was indeed a person with a powerful background. His face broke into a smile again: "President Chen is young and promising. I have long admired you."

Chen Xuebing had already lost interest in the conversation. It seemed that if no one had to pull some strings for him today, he wouldn't even have the right to have a chat.

He simply stood up with his glass of wine and apologized, "President Liu, I have some business to attend to at my company. You guys continue eating, I'll be leaving now."

Chen Xuebing tilted his head back and drank it all in one gulp before pulling out his chair.

No one in the capital world could control him anymore. Now that he has the telecommunications industry under control, he doesn't need to care what a bunch of business people think of him.

"Eh?" Liu Chuan quickly stood up and hurriedly gestured for him to sit down. "President Chen! Sit down, sit down! What could be so important this late! You're not giving me any face!"

As he spoke, he winked at Jack Ma, who was standing next to Chen Xuebing: "Mr. Ma!"

Jack Ma secretly sighed that Chen Xuebing really had a temper, but such a temper also made him feel good.

We are all people with bright futures, and we jointly control the development of the Internet. Why should we be subservient to others?
But Guo Guangchang of the Zhejiang Businessmen Alliance was also giving him a meaningful look. He wanted to create his own circle, so he had to get up and pull Chen Xuebing aside.

"Mr. Chen, we haven't finished discussing business yet! Please sit down a bit longer; you have to give me face, right?"

As Old Ma spoke, he subtly praised himself.

Lin Huixiang was originally going to try to persuade her.

Who's on the other side?
The second son-in-law inherited half of the shipping magnate's estate! The shipping magnate was an even more established Hong Kong tycoon than Li Ka-shing, a world-renowned shipping magnate! Her parents grew up listening to stories of Pao Yue-kong!
But when she saw Chen Xuebing stand up, all the important figures at the table came over to persuade him to stand up, and she suddenly thought this man was incredibly handsome. Now that Mengzhen had found him, why should she worry about her family's attitude?
Wu Guangzheng was here today to cultivate relationships with these wealthy mainland businessmen, and naturally didn't want to strain the situation. In the early days of Hong Kong, there were no rules for territorial disputes; the game was wild. Even in the top business circles, it was common for disagreements at dinner to escalate into threats and confrontations. Besides, this was just a minor disagreement. He calmly stood up and said:

"Mr. Chen! I know about the CDO you just mentioned! It's a secured debt bond! Let's sit down and talk!"

Chen Xuebing did not sit down, but calmly asked, "Then, Mr. Wu, tell me, what are debt-backed securities?"

“That’s it.” Wu Guangzheng gestured back and forth with his hands: “A bunch of loan agreements with different credit ratings, packaged into a box, and sold as a bundle. Mr. Chen, what you’re talking about isn’t ABS, it’s ABS of ABS, subprime mortgages.”

Chen Xuebing nodded, a half-smile on his face: "Then why do this subprime mortgage?"

Wu Guangzheng also revealed a slightly meaningful smile: "A game of capital."

Chen Xuebing said, "Super land rent means that the bank will receive the loan 30 years later, and will also have to pay out the future benefits in one lump sum to recoup the funds and make more loans. Other people also help the bank pass on this landmine. As long as someone takes the baton, everyone involved will make a profit. In the end, whoever gets the bomb will be the one who suffers."

Wu Guangzheng shook his head at this point: "It's not necessarily going to explode. Pension funds and insurance companies will eventually acquire these long-term return asset packages. They can accept long-term returns. These companies are backed by the U.S. Treasury Department, Social Security Administration, and IRS. There are safety valves in place, and the Federal Reserve will cooperate with them."

"The Federal Reserve has so much money it can't spend it all, it can just print more and the whole world will foot the bill, right?" Chen Xuebing interrupted.

Wu Guangzheng choked for a moment, but then shook his head: "No, I was just saying that interest rate policy adjustments can give borrowers more room to repay."

“Financial institutions are using excessive leverage, with leverage of 30 to 50 times. Even the slightest fluctuation can ignite panic.”

Chen Xuebing glanced at the members of the Taishan Club, especially Lu Zhiqiang, and then continued with a smile: "Why have American house prices always been rising? Because only when the American public believes that 'even if they can't afford to repay the loan, they can still make a profit by selling the house,' are they willingly forced into taking on debt to buy a house. Even if house prices don't fall for a while, it's a huge blow to market confidence. Don't underestimate this house price correction. I think many institutions are already feeling the pressure of defaulting on loans, but no one dares to say it. Everyone is thinking of continuing the game of musical chairs, but the person who takes the baton knows that the drum is about to burst, so they're unwilling to take the baton anymore. The market will change very quickly."

This statement can also serve as a reminder to the real estate developers present.

Especially Oceanwide Holdings, and Mr. Liu's secret manipulation of his protégé: Sun Hongbin of Sunac.

In later generations, the real estate market was worth hundreds of billions.

The members of the Taishan Club noticed that Mr. Wu from Hong Kong seemed to be moved by this logic, and they were all somewhat alarmed.

Is it true?
With leverage of tens of times, is the US playing this game so aggressively?

But Wu Guangzheng pondered for a moment, then laughed: "President Chen is overthinking things. A mature financial system that has been around for a century has a very complex regulatory mechanism behind it. It won't collapse so easily."

"Hehe, those who believe in the lighthouse become nourishment beneath it." Chen Xuebing chuckled, not wanting to argue about the matter any further.

If the argument continues, the issue of operational logic will inevitably come up.

He could say whatever he wanted about the US housing market crashing. Anyway, none of the people present knew how to short sell, and they wouldn't dare to touch it rashly. Even Goldman Sachs had been tricked in their past lives.

"However, Mr. Wu, there was another comment you made about Mr. Li Ka-shing that I cannot agree with."

Wu Guangzheng raised an eyebrow: "Oh?"

“You say Li Ka-shing’s success is due to timing and fate, but I believe his success is due to choosing the right side at crucial moments. When he chose you, he was on the side of the new capital HSBC. That is the foundation of his success and the reason why your family has continued to this day.”

"Choosing sides is very important."

"With the mainland's Olympic Games just around the corner, it needs a stable, united, and patriotic Hong Kong. Mr. Wu is now in a position at the Hong Kong Trade Development Council, where he is responsible for serving manufacturers and traders and building a business platform. If he chooses the right side, he may very well become a contributor to Hong Kong's future."

His sharp words startled everyone in the room.

Damn, what a young man.

You're teaching people how to do things?

But this statement represented an absolutely correct stance, and no one present refuted it.

Chen Xuebing was just mentioning it casually; he had only looked up the responsibilities of this so-called Trade Development Bureau on his phone earlier.

Wu Guangzheng pondered seriously, then sighed with a wry smile: "If Hong Kong's manufacturing industry were so easy to develop, we wouldn't need to come to the mainland to look for opportunities."

He said this because he believed that Chen Xuebing had a powerful background and that someone was trying to recruit him, but he didn't actually have any real power, so he made a rebuttal.

The financialization and real estate development of Hong Kong will inevitably lead to the hollowing out of the manufacturing industry. This situation has been formed by various forces and is not so easy to change.

His position was not something he could actually do; it was merely a recognition of a social class.

He just wants to be on this team, but he doesn't know how to stand properly.

Chen Xuebing understood his words, thought about it for a moment, and then said:
"Hong Kong's Cyberport and Silicon Harbour projects have both turned into real estate projects, right?"

A decade or so ago, Hong Kong's semiconductor industry was quite good, attracting a lot of foreign investment, and the Hong Kong government was also keen to continue developing this mature business.

Two semiconductor industry plans were launched in succession.

The Silicon Harbour Project brought in Zhang Rujing, who was accused by some "people" of land speculation and was driven to Shanghai, whereupon they were not allowed to touch Hong Kong's land.

The Cyberport project was again heavily involved by Li Ka-shing's son, who turned the reclaimed land into a real estate project.

To this day, all that remains are a bunch of small, unrecognizable tech companies.

"I'm not entirely sure either, Mr. Chen. There are many reasons for the hollowing out of Hong Kong's manufacturing industry. We've tried many methods, but the financial and real estate sectors are too strong, which has suppressed the development of some other industries."

Wu Guangzheng only mentions the positive aspects. He can mention Li Ka-shing's rise to wealth to elevate himself, but talking about the negative aspects of the other person is a bit offensive.

"I didn't say anything, nor did I feel it was anyone's responsibility." Chen Xuebing softened his tone:
"However, since Hong Kong people are not good at high technology, let's be more open and let mainland companies come. We don't need a big space, just an industrial park or a few buildings. Let us enter Hong Kong's internet market and actively change people's lifestyles. I think mainland companies would be very interested."

After he finished speaking, he glanced at Jack Ma.

Jack Ma was stunned for a moment, then gradually became excited.

Hong Kong is a high-end market!

However, due to the restrictions of the CEPA agreement, foreign platforms must operate in joint ventures with local companies, which prevents Taobao's operations from entering the market.

The buildings Chen Xuebing mentioned are not just buildings, but a gateway to the Hong Kong market.

This gap cannot be opened by the mainland; it must be created by Hong Kong itself.

(End of this chapter)