Huayu: A master director who debuted as a singer

Chapter 97 Revenue from Two Albums' Tape Recordings

The flight from Beijing back to Guangzhou landed at Baiyun Airport.

Chen Jianguo was already waiting at the exit in his Jinbei Haishi van. When he saw Zheng Hui come out, he quickly went to greet him and took the luggage from Lin Dashan's hands.

"Boss, you must be tired from your journey."

"Back to the company," Zheng Hui said before sitting in the back seat.

An hour later, the Jinbei van pulled into the company premises. Pushing open the door, the smell of ledgers and ink wafted out. Chen Jianguo had clearly been working there for quite some time; stacks of sales reports and financial documents were piled on his desk.

"Jianguo, you've worked hard." Zheng Hui took off his coat and hung it on the hanger.

"It's no trouble at all, boss." Chen Jianguo handed over a compiled report.

"Boss, please take a look. This is the sales and profit breakdown for our two albums in China up to yesterday."

Zheng Hui took the report, sat on the sofa, and began to scan it quickly.

Even though he, a reborn individual, had anticipated these numbers, they still stirred a burning passion within him.

After an initial surge in sales and subsequent boosts from the Asian Games and CCTV, the sales of his first album, "Stubborn," entered a period of steady growth.

To date, the total sales volume of the cassette tapes has reached an astonishing 7.2 million, with 300,000 tapes still sitting in the warehouse as inventory for long-term sales.

The second album, "Floating Life," achieved even greater success.

Thanks to its quality and the craze it created in Hong Kong and Taiwan, it ignited the mainland market. Coupled with the lingering influence of the Spring Festival Gala, the sales of the cassette tapes skyrocketed, selling a total of nine million tapes. There are also 500,000 tapes still in the warehouse for emergencies.

"For the cassette tapes, we kept the cost down to one dollar. With two albums and some previous restock orders, we produced a total of about 19 million cassette tapes, and the total production cost was 19 million."

"The profit situation is more complicated."

We mainly operate along two lines: one is bulk wholesale to the four major wholesalers, and the other is through the publishing house's channels under President Wang.

Although the publisher also takes a cut, their settlement price for us is higher, and our profit margin is larger. The publisher helped us sell approximately five million cassette tapes in total.

After deducting all costs and distribution fees, the final profit from the two album cassettes was 34.1 million.

Thirty-four million one hundred thousand!

This figure represents the net profit he made from the mainland cassette tape market. In the late 1990s, when piracy was rampant, this was an almost unimaginable astronomical figure.

"What about the CDs?" Zheng Hui continued to ask.

When CDs were mentioned, Chen Jianguo's tone became less excited: "The domestic CD market is still not good. Although we price CDs high, and you can make a profit of thirty yuan per CD, sales have not been able to increase."

Two albums, each selling only around 100,000 CDs. We produced a total of 400,000 CDs, with a production cost of five yuan per CD, costing us two million yuan in production costs alone. In the end, the total profit from CDs was only a little over five million yuan.

Zheng Hui nodded, not surprised. At that time, the purchasing power of most people in mainland China was insufficient to support the huge CD market.

The high price of CDs (tens or hundreds of yuan each) and CD players is too extravagant for ordinary wage earners whose monthly salary is only a few hundred yuan.

"Adding the money you earned from commercial performances and endorsements, after deducting all production costs, operating expenses, and prepaid taxes, our company's current available cash flow is 58.2 million."

Fifty-eight million two hundred thousand!

In 1999, when the average income of urban residents was only over 5,000 yuan, this was equivalent to the annual income of 10,000 people.

Zheng Hui was also excited about the figure, but the money couldn't just stay in the account. He put down the report and said to Jianguo, "Jianguo, there are two things you need to do right away."

"Boss, what are your instructions?" Chen Jianguo immediately took out paper and pen to write it down.

"First, transfer ten million RMB to my account under the guise of company dividends."

Chen Jianguo looked up: "Ten million? Boss, that's a huge amount of money, especially regarding taxes—"

"It will be handled according to the regulations for dividend distribution by foreign-invested enterprises," Zheng Hui explained. "I am a Macao resident and therefore a foreign investor."

According to current regulations, profits received by foreign investors from their invested enterprises are exempt from individual income tax.

"I understand." Chen Jianguo nodded and wrote this down.

"Secondly, the office we're renting now is too small. The company will expand in the future, and the number of people will increase. We can't keep paying rent to others. Starting today, find me a place in Guangzhou."

Looking for office space?

"No," Zheng Hui shook his head, "We'll just look for an entire building. It needs to be easily accessible. If we find a suitable one, we'll buy it directly."

We'll use one floor ourselves, and rent out the rest. Money in the bank only depreciates; turning it into fixed assets is the safest bet.

Buy a building!

Chen Jianguo and Lin Dashan exchanged a glance, both seeing shock in each other's eyes.

Seeing their reactions, Zheng Hui thought to himself, "This is nothing. Buying a house in Guangzhou isn't expensive. Right now, the price in Tianhe or Haizhu districts is only a few thousand yuan. With over 50 million yuan, I can buy 10,000 square meters."

He even plans to buy a building in Beijing later, or buy land to build his own.

On July 13, 2001, Beijing successfully won the bid to host the Olympic Games. From that moment on, land prices in Beijing would skyrocket, ushering in a bull market that would last for more than a decade.

The assets he buys in Beijing now for ten million yuan could be worth hundreds of millions, or even more, in ten years. How could he possibly miss out on such a highly profitable deal?

He didn't say much, just told Chen Jianguo to go see the properties, and to report back to him if there were any suitable ones. He would come back to make the payment after the contract was finalized and everything was agreed upon.

After explaining everything, Zheng Hui glanced at the time and said to Lin Dashan, "Brother Dashan, you drive to the White Swan Hotel. I already called President Wang to tell him I'm back and I'd like to treat him to lunch."

At 12:30 pm, in a river-view private room at the White Swan Hotel in Guangzhou.

When Zheng Hui pushed open the door, President Wang was standing by the window, looking at the rolling Pearl River outside, his back view revealing an irrepressible sense of pride and high spirits.

"Mr. Wang, I'm sorry to have kept you waiting." Zheng Hui greeted him with a smile and then closed the door behind him.

-

President Wang turned around, his face now beaming with joy, even the wrinkles around his eyes were filled with laughter.

"You brat, why are you shouting like that too! The official transfer order hasn't come down yet."

President Wang stepped forward and warmly pulled him to sit down in the main guest seat.

"Little Zheng, I have to toast you! If it weren't for you, I wouldn't be where I am today!"

The two clinked glasses and drank together, creating a lively atmosphere.

However, after a few drinks and having finished recounting the happy news, President Wang's smile gradually faded, a look of worry crept into his brows, and he let out a heavy sigh.

"What's wrong, Mr. Wang?" Zheng Hui noticed the change in his mood. "This promotion is a good thing, why are you sighing like that?"

President Wang poured himself another glass of wine, drank it all in one gulp, and a bitter smile appeared on his face.

"Xiao Zheng, you have no idea, I've jumped from one fire pit into an even bigger one."

Zheng Hui frowned slightly: "What do you mean?"

"You're young and don't know the history of our old film studios. Back in the 1980s, Pearl River Film Studio was incredibly glorious! Films like 'The House of 72 Tenants' and 'Yamaha Fish Stall' had people all over the country lining up to buy tickets to see them!"

"Since the state implemented market-oriented reforms to the film industry in 1993 and abolished the unified purchase and distribution system, life has become increasingly difficult for us state-owned film studios."

"Take Pearl River Film Studio for example. Do you know how much those excellent directors, screenwriters, and cinematographers in the studio earn each month?"

Zheng Hui shook his head.

"A few hundred yuan! Just a few hundred yuan a month! That's not even enough to rent a decent place in Guangzhou!"

"People need to eat!"

President Wang picked up the wine in front of him again and drank it all in one gulp: "In order to survive, those talented people have all gone out to take on private jobs."

Some went to film shampoo commercials, some worked as production assistants on low-budget Hong Kong film crews, and even our old art designer, who won a Golden Rooster Award back in the day, went to do interior design for nightclubs in Dongguan!

"They go out and take on freelance work, and in just a few years, their wallets are bulging, and they're even driving cars. Who would want to go back to the factory and earn a fixed salary of a few hundred yuan to do some kind of artistic creation?"

"With all the talent gone, the factory has completely stopped producing anything. It's a large factory with over a thousand employees; we need to pay the pensions of retired workers, the wages of current employees, and the utility bills. Where will the money come from?"

At this point, President Wang gave a self-deprecating bitter smile: "In order to survive, the factory came up with a plan—selling factory logos!"

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"As long as the shell companies outside pay a management fee, even if they make a piece of garbage, they can still hang the Pearl River Film Studio's golden signboard at the beginning of the film!"

Now everyone calls us "Zhuying" (meaning "rental"), not "Zhuying" (meaning "rental").

"I had just finished talking to the bureau a few days ago, and then I quietly went to the Pearl River Film Studio for a look."

"The studio was filled with cobwebs, and the equipment was covered with a thick layer of dust."

The recording studio, editing studio, and film processing studio—all that expensive imported equipment looked like it hadn't been used in ages.

"It's not that there's no one left in the factory; there are still some directors, screenwriters, and art directors sticking around."

But when I talked to them, I found they were all like lost souls, not knowing what the meaning of their perseverance was, just living day to day, going through the motions.

President Wang looked at Zheng Hui, his eyes filled with confusion and worry: "Xiao Zheng, tell me, what can I do in such a mess? I'm really afraid that not only will I not be able to save the factory, but I'll also get myself into trouble."

Zheng Hui fell silent.

The scene described by Director Wang was familiar to him. This was not just the predicament of Pearl River Film Studio, but a common situation for the vast majority of state-owned film studios across the country in the late 1990s.

Under the impact of the market economy, these once-glorious film studios are rapidly declining in an irreversible manner due to their rigid systems and conservative thinking.

What can he do?

He's just a singer right now, an outsider who hasn't even stepped through the doors of film school. Even if he wanted to help President Wang, what reason or status did he have?

Making movies is not like writing songs; you can't just say you're a genius and self-taught.

That requires control over the entire film industry process and coordination of various departments such as cinematography, art direction, sound recording, and acting.

These are all things he can't simply explain away as being self-taught. He wouldn't rashly start making films without spending at least a year or two in school.

"Mr. Wang, you have to eat one bite at a time and walk one step at a time."

Zheng Hui could only raise his glass and comfort him, saying, "You've just taken office. First, stabilize the morale of the factory workers and sort out the internal accounts. That would be a great achievement."

As for how to reform and find a way out, those are long-term matters and cannot be rushed.

President Wang sighed, knowing that Zheng Hui was telling the truth, so he said no more and just drank in silence.

Seeing President Wang's worried expression, Zheng Hui had a sudden thought and remembered something.

His own troubles might provide President Wang with a negligible breakthrough.

"Mr. Wang, don't just talk about your troubles. I actually have something I'd like to ask you for a favor with."

"It's your business? Go ahead and say it!" President Wang looked at Zheng Hui.

Zheng Hui then briefly explained how he had recently connected with "Young Justice Bao" through him and how he had already reached an agreement with producer Chen Yong.

"...That's how it is. The production team will be preparing soon. But I know nothing about the financial management of the production team, and Li Zongming is mainly responsible for external public relations, so he can't be on set every day."

I want to find a trustworthy and knowledgeable person to help me keep track of the film crew's accounts.

Zheng Hui looked at President Wang and revealed his purpose: "You are an old hand at this. There must be some experienced, honest and reliable old accountants in the Pearl River Film Studio."

After you take office, could you please keep an eye out and recommend someone for me?

"I'll have this guy keep an eye on the film crew for me, and I'll pay him market rate. It'll be a way to give someone from the factory a part-time job so they can contribute what they can. What do you think?"

President Wang's eyes lit up instantly after hearing this.

He was worried about how to win people's hearts and how to find something to do for his listless employees. Zheng Hui's request was like a godsend!

Sending someone to accompany the production team would not only reassure Zheng Hui, the major investor, but also generate revenue for the factory's employees. Furthermore, it would provide an opportunity for the factory's staff to learn about the operational models of commercial film crews outside the factory.

This is a win-win-win situation!

"No problem! Leave it to me!"

The worry on President Wang's face vanished: "There are several veteran accountants in the factory who have been with film crews for decades. Their professional skills are beyond question, and their character is absolutely reliable."

"These past few years, there haven't been any films or TV shows being made at the factory. I've had no opportunity to use my talents, and I spend my days drinking tea and reading newspapers in the office. I'm practically rusting from boredom."

"When your production team is ready, I'll pick the most capable person and send them directly to you! You can use them with confidence; I guarantee they'll manage your accounts perfectly, and not a single penny will be out of control!"

"Thank you so much, Mr. Wang." Zheng Hui raised his glass.

President Wang, beaming, said after touching him, "I should be thanking you! You've solved a problem for me!"

The meal was enjoyed by both the host and guests.

Zheng Hui not only reassured his soon-to-be-appointed ally, but also conveniently found a reliable supervisor for his first film and television project.

President Wang saw a glimmer of hope in Zheng Hui's request to revitalize the stagnant Pearl River Film Studio.

A single spark can start a prairie fire. Perhaps, all the changes will begin with this small part-time job.