Those Years When I Was Forced to Top the Forbes List

Chapter 348 The Initial Intention to Make a Fortune in the Stock Market
Good news kept coming in the last few days of 2006.

The prime land in Chengdu has been secured. Due to the large size of the plot, which already meets the planning requirements of the previous two residential communities, it has been decided, after discussion, that the development of the second community can be temporarily suspended if no suitable land is available.

The development plots in Mianyang, Deyang, Ziyang, Ya'an, Meishan, and Aba have been determined one by one.

The land parcel acquired in Deyang is quite good, located in the central Jingyang area.

Mianyang retreated to the old city area.

The land reserves in other places are relatively abundant. Chen Xuebing and Bi Yaxiong went down to take a look and made concessions on some controversial issues in the development process, and also won some favorable conditions.

They promised to donate a 700 million yuan middle school to Ya'an and obtained the right to build balconies 30% larger than the allotted area, which is equivalent to "gifted area".

They promised to build a county hospital in Meishan, requiring an advance payment of 20 million yuan over a two-year period, with the project's plot ratio increasing from 2.8 to 3.3.

In fact, the city below does not strictly control the plot ratio at all. Now is the time when high-rise buildings are needed. They are a symbol of modern cities. As long as people dare to live there, the local government is eager to build high-rises. Chen Xuebing is just using future compliance as a disguised form of charity.

Ma'erkang, the capital of Aba Prefecture, is in dire need of development. In places without buildings, the wind is sometimes so strong that it can blow people away, and it is also difficult to transport materials. The counties below it have low commercial value, and it is usually difficult to invite construction companies, let alone create any obstacles.

Chen Xuebing, however, was the most cautious. At the beginning of the month, he arranged for a geological survey team to go down to the area. In addition to selecting a site at the service area of ​​National Highway 213, they also selected some suitable places to build houses in Ma'erkang, Maoxian, and Wenchuan. After discussing it, they finally decided on four plots of land: 6 square meters in Ma'erkang, 7 square meters in Maoxian, and two plots in Wenchuan.

Wen Chuan had already made a secret trip, and at the final meeting, General Manager Chen "casually drew a line" and drew a place with a high density of old houses. The total development area was 150,000 square meters, which included the demolition of five three-story buildings, three four-story buildings and a group of bungalows. The county government was responsible for the demolition and lobbying, and Gu An paid the compensation and provided replacement housing in the new community.

Ziyang was the last place chosen.

Ziyang is currently undertaking an "eastward expansion and southward extension" strategy and is most interested in Gu'an's satellite city plan. In addition, due to the construction of the transit warehouse, the vice mayor personally received Bi Yaxiong and took him on a tour of the Tuojiang River. He claimed that the area east of the Tuojiang River would be the core of the future, and that as long as Gu'an was willing to develop the satellite city on the other side of the river according to the plan, the land could be sold or given away at half price.

Looking at the bare riverbank, Bi Yaxiong was a little undecided, so he called Chen Xuebing over.

Chen Xuebing had been to the Tuojiang River and knew that both banks had been well developed in later generations, but he felt very unfamiliar with the opposite bank at this time. Since the land price was cheap, he simply agreed, but secretly instructed Bi Yaxiong that the development here could be slowed down and wait for the municipal government's actions.

This place is close to Chongqing, and the current housing prices are too cheap. We can wait until the transportation projects brought by the transit warehouse are completed before construction begins. Given his deep involvement in the Chengdu-Chongqing economic circle plan, he might even be able to get some subsidies once the projects are running on a large scale.

After finishing all that, Chen Xuebing rushed back to Chongqing, which was nearby.

The time was noon on December 30th, a Saturday.

New York 45, a very successful run.

Although there are still two days until New Year's Day, the stock market's annual report card was already finalized on Friday afternoon.

That's terrifying, 2700 points!
In just five trading days this week, the stock market surged by 400 points, with a daily increase of more than 3%!
This week, out of 1434 listed companies on the Shanghai and Shenzhen stock exchanges, 1377 saw their share prices rise!
Financial media are more active than ever before, describing the current stock market as a place where "even a fool can make money, and losing money is like winning the lottery."

Changzheng is not a fool, nor does he have the luck of winning the lottery. Of the 52 companies he invested in, the lowest increase was 6.7%, and the total profit was close to the market's 17.3% increase.

Why did I not outperform the market?

Because Gu An withdrew 82 billion yuan this week during the peak of sentiment, retaining only 23.5 billion yuan in three funds and 22 billion yuan in 3G funds.

Of this 82 billion, 20 billion was from the 3G fund, which will be used for primary market investment after withdrawal. The remaining 62 billion is all net profit!

The annual settlement screen is absolutely astonishing!
The three funds of Changzheng No. 1-3 have the most diversified investments, with many high-return stocks, generating a profit of 26.2 billion yuan and distributing 10.48 billion yuan in dividends to Changzheng Capital!
The 3G Fund invested in large-cap stocks and made a profit of 35.9 billion yuan. Of this, its own funds accounted for 0.0476%, with a profit of about 1.71 million yuan, while market fixed-rate funds accounted for 47.62%, with a profit of 17.095 billion yuan. Since the settlement period had not yet arrived, Changzheng Capital took all of the profits.

Social security funds and Central Huijin Investment Ltd. accounted for the same proportion as fixed-rate funds, with a total of 17.095 billion yuan transferred out.

Changzheng Capital made a profit of 29.28 billion!
This news has caused a stir among Changzheng Capital and all its investors.

Nearly 16 billion yuan in dividends were distributed to more than 200 investors, averaging nearly 800 million yuan per person!
Each of the two national teams received a dividend of over 8.5 million yuan!
Chen Xuebing's official cell phone, which he had left with Ren Ying, was bombarded with calls. During this period, the phrase Ren Ying used most often was "You're welcome."

When Chen Xuebing entered New York 45, Long March Capital was already overwhelmed and had closed its doors.

After making a phone call to Kan Zhidong, the door opened from the inside. Everyone was still at work, and a large group of people rushed out to greet the chairman.

The sound was deafening.

"Chairman! Red envelope! Red envelope!"

Yes, yes, yes! We have them all!

Chen Xuebing waved and entered the hall. Kan Zhidong, with a stern face, told the employees to return to their workstations, and only then did the hall return to silence.

A repressive silence.

Everyone's emotions are surging, knowing that everyone will have a great New Year's Day holiday.

Chen Xuebing wasn't as excited as everyone guessed. The sooner the stock market gains were realized, the more limited the subsequent returns would be.

Before reaching the peak, is there another two times? Three times?
He said he couldn't.

Seeing that Chen Xuebing was relatively calm, Kan Zhidong began to report on his work once he entered the office.

"Are we still going to lend the money? We mentioned the loan when we distributed dividends, and most of the investors agreed to lend us the profits from this distribution free of charge! If we're going to borrow money, I estimate we can get at least 10 billion!"

"There's no need. We have 3 billion in hand, why borrow more? Let's treat this as a test. Make a note of the investors who didn't agree to lend money. After the holiday, we'll start the third fund's fundraising again, increasing the fundraising limit by 1 billion. We won't be taking these people with us."

Kan Zhidong chuckled and said, "These people have really offended a rich man."

Chen Xuebing shook his head: "It's not that I hold grudges, but these investors who lend us money are our second wallet. By helping grateful people make money and making them rich, we'll have more avenues to go when we really need something in the future."

"Yes, that makes sense! Do you think it will continue to rise if we raise an additional 10 billion yuan after the new year?"

This round of price increases has already made many people somewhat panicked, fearing that if the market falls back, it will be like the sky falling and all their previous gains will be wiped out.

Kan Zhidong was also quite worried, but now that so much profit had been realized and so much money had been withdrawn, Changzheng was bound to be a big winner. No matter how much it lost, it would be the investors who lost.

With the emotions so frenzied before the Lunar New Year, Chen Xuebing wasn't entirely sure what to expect. After a moment's thought, he gave Lao Kan a heads-up: "The future trend is hard to predict, but the emotions certainly haven't peaked yet. Don't sell any stocks you still hold, no matter what. Use the newly raised 1 billion yuan to buy at the right low point."

Hearing this, Kan Zhidong perked up again, but then he remembered something and frowned, saying, "Should we sell off some of our real estate holdings? A friend of mine in Beijing told me that the land value-added tax, which has been talked about for several years, might be implemented after the holiday."

These words struck a nerve with Chen Xuebing, triggering a flood of memories that made his expression serious. "Land value-added tax? What's that all about?"

Kan Zhidong's expression also became mysterious: "Value-added tax! Land prices soared a few years ago, and many people made a fortune. When they sold their properties, they only prepaid a small amount based on the estimated profit, and didn't settle accounts at all! Once a project is sold more than 85%, the true profit of the entire project must be thoroughly settled, and refunds or additional payments will be made according to the actual tax rate! You're asking if there will be any refunds? It'll all be additional payments! The tax rate is also an increasing system, based on the profit ratio of land appreciation. The more you earn, the higher the tax rate. Earning 1 times the profit, you pay 30%; earning 2 times, you pay 50%; earning 3 times, you pay 60%! And it goes back three years! As soon as this policy came out, the real estate sector was immediately hit with a bucket of cold water!"

Chen Xuebing gradually remembered.

Yes, the land value-added tax should be introduced within the next two years.

The investigation will trace back real estate transaction records and receipts, and calculate the total sales revenue minus (land cost + construction cost + reasonable expenses). The main targets of the crackdown are land hoarding, price gouging, inflated costs, and high-end villas.

For example, in a real estate project with a total revenue of 1 billion yuan, the land value-added tax was prepaid at a prepayment rate of 1.5%, and only 15 million yuan was paid. After the actual settlement, the actual value-added amount is 500 million yuan, the applicable tax rate is 40%, and the tax is 200 million yuan, so 1.85 million yuan of tax needs to be paid in back taxes.

For high-end villas and large apartments, a maximum tax of 60% is levied. As long as developers make money on such luxury properties, they will face an extremely high profit tax. This has sparked intense social debate, with many people expressing their support, believing that this is a "tax on enjoyment" that the wealthy should pay.

All costs must be supported by invoices; it's not something that can be settled by simply making a couple of accounting entries.

Of course, it's impossible to completely block it. Developers will inflate costs, which leads to a lot of fake invoices. But in the end, the fake invoices still go to the national tax bureau, and the national tax revenue has indeed increased significantly.

Chen Xuebing narrowed his eyes: "Are you sure it's after the New Year?"

"Yes, they said they've already arrived at the GWY's policy office."

Kan Zhidong's affirmative answer made Chen Xuebing fall into deep thought, and a deep sense of helplessness rose in his heart.

Land value-added tax—that's a heavy tax!
Previously, he had no involvement in the real estate industry and only had a general understanding of these taxes and fees, but had not included them in his calculations. Now, as he thought about it, he suddenly understood why Li Ka-shing was hoarding properties so much.

Tax avoidance.

The liquidation threshold is set at ≥85% completion. By developing in phases and delaying completion, he kept the sales rate below 84%, thus never triggering the liquidation threshold.

Without applying for a pre-sale permit, the policy has no target for implementation.

Finally, when the liquidation threshold was triggered, the project company's equity was transferred instead of the land was sold directly, thus avoiding the final VAT settlement.

That’s a good idea.

Upon careful reflection, he realized that he had heard of quite a few "brilliant tricks" before.

For example, if real estate company A acquires land for 10 billion yuan, develops it to an investment of 8 million yuan, and then transfers it to shell company B for 18 billion yuan, and company B continues to develop and sell the land, the value-added amount can be recalculated.

Alternatively, they could sign dual contracts with clients, using the furniture contract for off-the-books payments and including the client's renovation costs in the overall construction cost to offset taxes.

Alternatively, by developing mixed-use residential communities combining villas and regular housing, the landscaping costs of the villa area can be entirely incorporated into the regular housing, thereby reducing the appreciation rate of the villa properties.

There are quite a few ways to circumvent this value-added tax. Besides falsifying costs, developers have come up with all sorts of ways to "reduce the value-added portion." Although policies have been trying to plug loopholes, they can't stop these clever minds.

Thinking of this, the slight displeasure that had just arisen in him gradually subsided.

We can't just enter the real estate industry and be hit by a heavy tax storm, can we?

But
It seems he has no choice but to conform and join the "tax-resistant group" along with those real estate developers.

I think I once cursed them for being unscrupulous, taking advantage of the country's development dividends, and then thinking about going against the country every day, running away abroad after making money.

At this moment, deeply immersed in their emotions, he seemed to begin to empathize with them.

When the exorbitant profits from land appreciation become a lower-level high profit, even if the government levies taxes, the profit margin is still far higher than that of other industries. Why can't we accept this?
With ample funding sources in the real estate sector, he had money in the market to help him make money—hundreds of billions, hundreds of billions, trillions. The market was becoming increasingly active, and even with an annual profit of only a dozen percent, it was still a terrifying figure. However, when the time came, he couldn't suppress his greed and thought about evading taxes.

When he first started doing business, he tried every means to calculate his profits so that Ren Ying could pay taxes. The anxiety he felt when he couldn't pay taxes because of his piracy business seemed to have completely disappeared.

Why should others pay, but I shouldn't?
Is this reasonable?

Chen Xuebing examined his own heart and couldn't help but sneer, a hint of mockery appearing on his face.

Damn it, you're a greedy thief too.

He gradually regained consciousness and sighed.

"What's wrong? Regretting getting into real estate?" Kan Zhidong saw through his thoughts, laughed, and patted his arm. "It's okay! We can always find a way to address policy issues! Local governments also want to develop, and there are still many tax reduction policies available! If all else fails, we can focus on developing technology companies and finance! Technology companies can avoid taxes, and investment tax rates are very low!"

Chen Xuebing's smile gradually appeared.

Yes, he has already evaded a lot of taxes. He once wanted to be a major taxpayer, but he hasn't achieved that yet.

"Heh." He grinned. "What am I afraid of? Do you think I'm greedy? Do I lack money? With 3 billion in cash in hand, even the richest man wouldn't dare say he's richer than me! I'm not only going to do real estate, but I'm going to do it big, the biggest in the country! We're going to be China's largest taxpayer! Surpassing PetroChina and China Tobacco! We'll earn money for the country's military!"

"You have ambition!" Kan Zhidong laughed heartily, patting Chen Xuebing on the shoulder heavily.

"However," Kan Zhidong said with a slight smile, then changed the subject, "Isn't there a share of your 30 billion?"

He has a 2% share of the profits from Long March.

Chen Xuebing rolled his eyes, took out his Kirin phone, opened the calculator, and precisely pressed a few numbers.

29.28 * 0.02 = 0.5856
"5800 million, I'll never forget you!"

Kan Zhidong's eyes suddenly lit up, then he hesitated before saying, "I think it's 5856."

"You're still arguing with me over 56? You've already invited me for tea!" Chen Xuebing said without another word, and walked out with his hands behind his back.

"Lu Xiaochun! Call a meeting! Distribute the money!"

A burst of cheers erupted outside.

(End of this chapter)