Those Years When I Was Forced to Top the Forbes List

Chapter 362 Chengdu Should Be the Vanguard
After signing the contract, I stayed at Panzhihua Iron and Steel Group for two days.

To fully capitalize on the year-long price increase through hedging, there's no time to lose.

Chen Xuebing had the company draft a cash-out plan that included "locking in Australian iron ore blended powder -> FFA freight futures -> RMB 90-day settlement -> futures market hedging -> spot premium distribution (Q1-Q4)" and discussed it with the board of directors of Panzhihua Iron & Steel.

The main funding for this plan comes from the credit line provided by "Pangang Group's annual report + calculation of the financing characteristics of central enterprises". This credit line is very high. Banks usually give central enterprises a credit redundancy of 110%-120%. Pangang currently has more than 100 billion yuan of available space. Using this credit line, a syndicated letter of credit jointly issued by ICBC, CCB and BOC can be issued. The letter of credit under trade can avoid the restrictions on foreign debt quotas and can also establish a 90-day cross-border payment credit endorsement.

攀钢仅用12.27亿的保证金即可撬动100亿远期国际铁矿石及船运贸易量，以52美元/吨价格一次性买入1315万吨铁矿石，9月底发货（11月初到货），并可锁定美汇汇率7.76进行结款（具体以合同签订日汇率为准）。

Although the RMB arbitrage period is shorter, only 90 days, there are no costs. Even with only a 1% increase, the RMB 53 billion investment in mining can yield a profit of RMB 5300 million.

The biggest arbitrage opportunity here might lie in shipping.

The cost of the Capesize vessel FFA contract is locked at $39 per ton.

The largest increase in the CIF price of iron ore is contained here, and international shipping prices may more than double this year.

The shipping cost of 39.8 billion yuan, even if it doubles, would be enough to reach the profit agreed upon by Chen Xuebing.

Chen Xuebing's bet of 30 billion yuan in profit was just for insurance. He also knew that 30 billion yuan was definitely not enough to deal with the three-in-one situation of the listed company. He wanted to hedge more, but this was based on actual delivery. If he did too much, it would not be called hedging, but futures speculation, which is definitely not allowed.

Throughout the entire planning process, there were many things that private enterprises could not overcome, but the board of directors of Panzhihua Iron & Steel Group did not raise any questions about the procedures, LC certificates, foreign exchange reserves, Australian iron ore lock-in, etc., all of which were given the green light.

This is the allure of state-owned enterprises.

The only concern is that this action undoubtedly backfired on the Steel Association.

The contract for 1315 million tons of iron ore was finalized in one go. In addition, Panzhihua Iron and Steel Group has a short- and medium-term iron ore import demand of more than 750 million tons to negotiate this year. This accounts for about one-tenth of the country's iron ore imports last year. Australia received such a large order at the beginning of the year, and prices will definitely rise again.

However, this blame can be shifted to Gu An.

They offered 300 million worth of stocks as a bet, so there was nothing we could do!
No, not 300 million. Since Chen Xuebing bought Panzhihua Iron & Steel Vanadium, the stock price has risen by more than 10%, reaching 330 million.

In addition, Panzhihua Iron and Steel Group established an asset management company to discuss the sale of some non-performing assets, with Changzheng Capital serving as the management consultant.

The entire restructuring process will be lengthy, taking at least three years.

The preparation period is one year, with a focus on completing iron ore arbitrage.

The one-year intensive phase will focus on implementing the "three-in-one" merger of listed companies.

The final phase will last one year, with a focus on completing the divestiture of auxiliary businesses under Panzhihua Iron and Steel Group.

The meeting agreed that rare earth elements were not included in the agenda.

As a "special strategic advisor," Gu An is only responsible for the above three matters, does not get involved in the group's administrative affairs, and does not participate in rare earth business decisions involving national security.

Regarding rare earth matters, Chen Xuebing could only participate by communicating with factory leaders.

In the past two days, Chen Xuebing has also completed communication with the High-tech Zone.

On his way away from Panzhihua Iron and Steel Group, Chen Xuebing received a worried phone call from Secretary Jin of the High-tech Zone.

"Mr. Chen, Huang hasn't made the payment yet. We inquired and they said they plan to postpone it until after the New Year. Mr. Huo hasn't been answering the phone, and the person we've been in contact with has changed to a legal supervisor. We think your guess is reasonable."

Chen Xuebing chuckled upon hearing this.

"It's only been eight days. Secretary Jin, you can wait another seven days and talk about it after the New Year."

Secretary Jin wasn't stupid; how could he not realize that he'd been tricked by Hutchison Whampoa again? He gritted his teeth and asked, "If Hutchison Whampoa breaches the contract, and we apply to the city to cancel the auction results, can you take over the land at the final bid price?"

"The final price? 1.35 billion?" Chen Xuebing shook his head and laughed, "My first price is the one I'm willing to accept, 12 billion! As for the subsequent prices, I'm just helping the district raise the price. If the district management committee dares to act decisively and confirm their breach of contract when the payment date is due, cancel their contract and let me take over, I can have someone sign the contract on New Year's Eve and start construction after the New Year. Otherwise, the district will gamble with them, betting that Chengdu land prices will rise and they can easily find someone to take over at a high price. Secretary Jin, if you're unlucky, it's hard to say whether you'll see that land developed during your term. Two barren, unfinished plots connected together... Hehe, the commercial planning of Shiyang Street will probably be difficult to implement."

Secretary Jin sighed: "But you raised the price so high, to 13.55 billion, and now you want to lower it to 12 billion. If we sell it at this price, we also have to take responsibility."

Chen Xuebing raised his eyebrows.

The business world is like a battlefield, with complex and ever-changing situations. What you gain today may become what you lose tomorrow. No one can predict that what was once a great opportunity to raise prices may now be a dilemma for the district government.

On the other hand, if he hadn't raised the price from 12 billion to 13 billion, perhaps Hutchison Whampoa would have paid more readily?

He spoke earnestly: "They've got your fear of taking responsibility figured out. In other words, the government isn't exactly being too kind to these so-called foreign investors. They're using Hutchison Whampoa to deliberately breach the contract while simultaneously using Cheung Kong Holdings to negotiate with the municipal government for 318 acres of land in Qinglongchang, trying to hoard more land! Hutchison Whampoa and Cheung Kong Holdings are legally independent, but can't anyone with eyes to see that? Can't the people see that? Secretary Jin, you're also part of the municipal leadership. If we were in each other's shoes, and faced with such banditry, I would definitely raise this issue at the municipal committee meeting and directly disqualify Hutchison Whampoa and Cheung Kong Holdings from acquiring land in Chengdu! This will win over the people and establish the image of an iron-fisted secretary! The title of the richest Chinese man will perfectly enhance my reputation and my beliefs! Chengdu will become the first city to refuse the richest man's call! Secretary Jin, a golden opportunity is right in front of you, and I'll help cover your retreat. You won't lose anything; on the contrary, you'll gain real progress in urban development. Don't you want to seize this opportunity?"

This topic is enough to alarm 80% of local officials.

Secretary Jin was naturally alarmed.

Before the Olympics, if a city refuses foreign investment, but the richest Chinese person invests, will it be beneficial to its international image?
But from another perspective, it's an excellent opportunity.

The Li Ka-shing Group has acquired land in Chengdu but has yet to achieve any results, drawing strong public criticism. If they continue to cause trouble and file lawsuits, it would give the government every reason to intervene. Taking action against them would undoubtedly enhance Chengdu's image of fair law enforcement.

Given the current mindset of ordinary people, they will definitely support it.

Of course, there are also extreme cases.

If Hutchison Whampoa and Cheung Kong Holdings engage in a war of words, and subsequent development is not handled well, failing to satisfy the public, it will only make matters worse.

Secretary Jin understood that Chen Xuebing wanted him to go to the city to say these words, to act as his mouthpiece.

But saying these words is a gamble; if he does well, it will be a milestone for him; if he doesn't, it will be his epitaph.

“President Chen, you know their influence in Hong Kong. If this affects them, Hong Kong businessmen won’t invest in Chengdu anymore, and we’ll be under a lot of pressure.” “Hong Kong businessmen investing?” Chen Xuebing chuckled. “Finance, real estate, what else? Hong Kong doesn’t have many industrial factories, and even if it did, they wouldn’t come to Chengdu. Besides, businessmen are profit-driven. Whether anyone comes or not depends on Chengdu’s development pace and the potential for land appreciation. If Secretary Jin trusts me, I will be deeply involved in the development of the land in the High-tech Zone for the next two years, guaranteeing that the city’s appearance will be transformed as quickly as possible. Also, BOE may have new factory construction plans next year, at the latest the first half of the year after next. I will get them to settle in the High-tech Zone then.”

Upon hearing this, Secretary Jin's heart was already tipped in skew.

".really?"

Using Li Ka-shing as a scapegoat is a double-edged sword; the key lies in how the economy fares afterward.

If the land is developed well, BOE can also come.
That would probably be praise.

"Hehe, if my reputation wasn't good, Chongqing wouldn't have sent me to handle matters related to the Chengdu-Chongqing economic circle. BOE's production line isn't a high-generation line, it's a 4.5-generation line. The investment probably won't exceed 4 billion yuan, and Chengdu will provide more than 15 billion yuan in loan support. However, I can guarantee that the factory will be very profitable and will definitely have a significant effect on boosting the industry. The GDP revenue will not be less than 15 billion yuan."

In its previous life, BOE's first 4.5-generation line was located in Chengdu.

With smartphones developing ahead of schedule, the market will enter its peak development phase once 3G networks are fully operational. One mobile phone production line is definitely not enough. He originally planned to put the next line in Chengdu, but he never mentioned it.

It's the perfect time to bring this up.

Secretary Jin's throat tightened as he listened.

Chengdu's GDP last year was 3500 billion yuan.

A growth of 150 billion would be tremendous if it were located in the High-tech Zone.

During this period, he paid attention to Chen Xuebing and heard the story of how Mr. Chen helped Hefei to establish BOE. With the two lines completed and BOE's market operations handled properly, the company is now completely different from what it used to be. Its market value has tripled, making it a giant enterprise with a market value of 20 billion yuan, standing shoulder to shoulder with Lenovo. The equity investment in Hefei was a great success.

He was envious, but he never expected that such a good thing would actually happen to him.

A 4.5-generation production line, a 40 billion investment. That's perfect! Any bigger, and one district can't handle it all.

It is still the high-tech enterprise that the Southwest region lacks the most.

Without further hesitation, he immediately made a decision: "Then let's go with Mr. Chen's idea! If Hutchison Whampoa doesn't pay the full amount before the new year, I will propose to the Municipal Committee after the new year that Hutchison Whampoa be prohibited from participating in the bidding for the Chengdu land plots!"

“And Changshi,” Chen Xuebing added.

"After all, E Changshi has no record of violations."

“I’ve already said, Secretary Jin, everyone can see this clearly. Since we’re going to do it, we might as well do it properly. Even if we have to talk about it from a legal perspective, isn’t the connection between Huang and Cheung Kong Holdings direct enough?”

Secretary Jin breathed a sigh of relief: "Alright, but they were among the first Hong Kong businessmen to support the mainland when Hong Kong returned to China, which attracted foreign investment. If they complain to the higher-ups, Mr. Chen, you'll have to help us out."

He wasn't without concerns, but he was convinced that Chen Xuebing was also someone with connections to high-ranking officials.

Chen Xuebing smiled and said, "Secretary Jin, you're overthinking it. It's been almost ten years since Hong Kong returned to China. They didn't cherish the friendship they had back then. They exchanged it all for the benefits they had in hand. They hardly promoted the urbanization process. They focused on cashing in their profits. Their contribution to the country is negligible. Everyone's eyes are sharp. There's a limit to how much patience we can have. These people's good days won't last much longer."

What he needs to do now is lift the lid.

Some hypocritical faces must be exposed, their fangs revealed, in order to evoke sufficient revulsion.

The Hong Kong issue cannot be resolved by simply holding a meeting. On the contrary, angering the Li family and letting them disrupt the meeting, thereby provoking the upper echelons' displeasure, might actually provide a breakthrough within the deeply entrenched local conglomerates.

He is now gradually realizing that Chengdu can be the vanguard in exposing the Li family.

Secretary Jin sighed, “Yes, just the other day we were talking about how China Resources Land’s 840-mu ‘Eastern City Land King’ project, acquired in December 2005, has already started construction, and China Overseas’ project, acquired around the same time, has already reached its third phase of sales. And what about our ‘Southern City Land King,’ Nancheng Duhui? Sigh, three years have passed. I heard that Hutchison Whampoa’s 560-mu ‘Yicui Garden’ project in Wenjiang is preparing to sell to a Guangzhou company. This land was also acquired in the same year as Nancheng Duhui, and after three years of no development, now that it’s being sold, Wenjiang is finally relieved. We really hope they can sell Nancheng Duhui as well, so other companies can develop it.”

At this point, the pent-up resentment began to be mentioned by name, and no longer concealed.

Chen Xuebing laughed and said, "Look, Wenjiang and the Development Zone are about to take action in Chenghua. How can we not stop them? Since Chengdu has suffered under Li Ka-shing for so long, and the Development Zone is the biggest victim, you should be the first to stand up! Your attitude must be firm! I will be your economic backer! When you raise this with the Municipal Committee, you can tell them our attitude. As long as we drive Li Ka-shing out of that land in Chenghua, my offer will definitely not be lower than Cheung Kong Holdings'! They want to sell it through a 17 billion agreement, right? I'll give them a bottom line, at least 20 billion!"

He would not allow any more surprises in Chenghua. With the Construction Department above and the High-tech Zone below, Chengdu was being pressured from both sides.

"20 billion." Secretary Jin seized the opportunity and said inexplicably, "President Chen, that piece of land was originally an industrial zone. Although the location is also within the Third Ring Road, it is not as good as our land. You offered 20 billion for 320 acres there, while we are only offering 12 billion for 200 acres here. Isn't that a bit low? You should lower the price and give me an explanation."

"That land is for commercial and office use! There's also a tax reduction policy for luxury goods, and as you know, the national tax bureau targets residential land! The land in Chenghua can be paid for in two years! Capital tied up also costs money! So, that's my condition: if you give me two years of installments, I'll add another 50 million!"

"This really won't do."

"Fine, I'm a straightforward person. I'll add another 2500 million, making it 12.25 billion, as a way of giving you an explanation!"

"How about 12.4 billion?"

"My money doesn't grow on trees, so let's round it up to 12.3, that's the most I can give."

"Okay, alright! Regarding BOE, could you come with me to meet with the city leaders and make a commitment? It would be best if we could get the BOE factory leaders here to sign a letter of intent for cooperation!"

With many things to do after the New Year, Chen Xuebing didn't want to deal with the city level anymore. After thinking for a while, he said, "I don't have time. I can call the leaders of BOE, but if we talk to the city, what if other districts also come and offer too generous terms? I can't say whether this project will still be in the High-tech Zone. You should think carefully about whether to talk to only the districts or the city."

"Right, right, right." Secretary Jin slapped his forehead hard. "Then the BOE representatives will talk in the district! I'll handle the city-level matters!"

Chen Xuebing glanced at the time and smiled faintly.

"If we calculate it this way, Hutchison Whampoa's payment deadline is exactly February 17th, which is Lunar New Year's Eve. So, on the first day of the new year, when the news of Hutchison Whampoa's default is posted on the official website of the High-tech Zone, we can call it a charge. How about that?"

Secretary Jin was taken aback for a moment, then chuckled: "President Chen, there's never a good day when I'm your opponent."

(End of this chapter)