Road to Revival

Tao Tanggang told Zhao Qingmin about the Foxconn incident, and the next day, a company under Donghu Machinery in Pingquan Development Zone started a disturbance. Hundreds of employees blocked the gates of the municipal government due to unpaid wages and other issues.

Tao Tang learned of the incident at an emergency meeting held by the city government the day after it occurred.

The Pingquan Municipal Party Committee and the Municipal Government share the same building, a luxurious thirteen-story building constructed after the turn of the century, commonly referred to by locals as the Municipal Party Committee Building. In reality, the municipal government offices occupy the majority of the building. Besides the main building, the compound contains seven or eight three-story gray buildings constructed in the 1960s and 70s, housing the municipal government's subordinate departments and bureaus. For some reason, the emergency meeting convened by the municipal government was not held in the main building, but rather in the conference room of the State-owned Assets Supervision and Administration Commission on the southeast side.

Tao Tang and Zhao Qingmin were ordered to attend the meeting. The attendees were all key leaders of large-scale enterprises in Pingquan City. Apart from the brothers Tang Yikun and Tang Yiwei, Tao Tang didn't know any of them, but Zhao Qingmin knew most of them and kept introducing them to Tao Tang.

Before the meeting even started, Tang Yikun called Tao Tang over to his side, "Sit here, I need to discuss something with you later."

"What exactly is it about? And why can't I take leave? This has completely disrupted my plans."

"I'm the one who caused trouble for Secretary Wang. Damn it," Tang Yikun muttered under his breath.

"What did you do to upset Secretary Wang?" Tao Tang asked, noticing that leaders were beginning to take their seats on the platform.

"Haven't you heard?"

"What did you hear?"

"Damn it, yesterday a bunch of bastards from the steel pipe factory blocked the gate of the municipal party committee! Mayor Shangguan called me and gave me a good scolding. Secretary Wang is about to be promoted, but that kid just doesn't know his place... He'll never amount to anything." Tang Yikun sighed as he looked at his younger brother, who was chatting and laughing with other business leaders.

"Please be quiet, everyone," the meeting moderator tapped on the microphone. "The meeting is now in session. Mayor Shangguan will now speak."

"Ma Desheng, the vice mayor in charge of industry," Tang Yikun introduced to Tao Tang.

There were no name cards on the stage, and Tao Tang only recognized Mayor Shangguan Hong, who was sitting in the middle.

"Today, we've invited the main party and government leaders of large-scale enterprises within the city to verify one thing," Shangguan Hong's voice was pleasant and magnetic. "Does any of you have any outstanding wages? How many months have you been in arrears, and how much? What are your plans? Give me an explanation right here. Secretary Wang was originally supposed to attend today's meeting, but an important meeting at the provincial level came up, and he entrusted me to convene this meeting to understand the situation." Shangguan Hong took a sip of tea. "As you all probably know, yesterday, a group of people from Donghu Machinery blocked the gate of the Municipal Party Committee, causing a very negative impact. Secretary Wang took this very seriously and convened an emergency meeting of the Standing Committee last night to study and make arrangements. That's the only topic of today's meeting. Mayor Ma, please go through the list, one by one. Even those without outstanding wages should mention whether they currently have any stability issues. Okay, let's begin."

Vice Mayor Ma Desheng immediately pointed to Hongxing Machinery, "Hongxing Machinery? You're here? Oh, Secretary Zhao, why are you sitting in the back? Come sit in the front! You're the largest state-owned enterprise in Pingquan. Has General Manager Tao arrived?"

Tao Tang stood up. "I am Tao Tang. I've arrived."

"Hello, Mr. Tao. It's our first time meeting. Please sit down and let's talk." Ma Desheng was very polite.

"Reporting to the leaders. Hongxing has no outstanding payments, including those within our labor company system. There are currently no obvious signs of mass instability."

"Ah, all resolved? Excellent." Shangguan Hong nodded. "But please don't leave yet; there's something I need to discuss with you afterward."

Next up was Huanqiu Textile Machinery, the largest listed state-owned enterprise in Pingquan City, but Tao Tang ignored it. This meeting had nothing to do with him anymore; he began to ponder his own thoughts…

The meeting lasted about an hour and a half. Approximately one-third of the participating companies had varying degrees of arrears, and half of them could not provide a timeline for resolving these arrears. Shangguan Hong sternly demanded that the arrears be resolved immediately, and that a report on the methods and timelines for resolving the arrears be submitted to the city by tomorrow at the latest. Finally, Shangguan Hong kept Hongxing and Donghu behind, calling the four heads of the two companies into a small meeting room next door.

Just as Tao Tang finished exchanging pleasantries with Vice Mayor Ma Desheng, Zhou Hongyou, who hadn't shown up earlier, came over with a black leather notebook. He nodded to Tao Tang and sat down to Shangguan Hong's right.

"President Tao, Secretary Zhao, first of all, on behalf of the municipal government, I would like to thank you both," Shangguan Hong said with a smile. "I heard from colleagues at the State-owned Assets Supervision and Administration Commission some time ago that Hongxing was not very stable and had wage arrears. President Tao's first task after taking office was to address this issue, which has basically eliminated the hidden danger. Secretary Wang was very satisfied and asked me to convey his gratitude to the two leaders."

Tao Tang glanced at Zhao Qingmin, "I wouldn't dare. This is what we should do."

Shangguan Hong nodded. "That's true. But Hongxing has set an example, so the city will be more accommodating. If Hongxing, with its massive scale, can do it, there's no reason why other companies can't. I already spoke with President Tang last night. The steel pipe factory's arrears aren't a major problem; Donghu Group has promised to resolve it as soon as possible. However, Donghu Machinery has recently encountered some operational issues and needs some adjustments. President Tang shared an idea that the city considers feasible. Today, we invited President Tao and Secretary Zhao to specifically discuss the cooperation between Hongxing and Donghu. President Tang mentioned that President Tao led a team to Donghu for research and investigation a few days ago, and you discussed ways to deepen cooperation. That's excellent, and that's how it should be done. Hongxing is the leading state-owned enterprise, and Donghu is the top private enterprise. Both have made significant contributions to Pingquan's economic development and social stability. The city has always believed that if Hongxing and Donghu cooperate well, the problems of Pingquan's enterprises will be basically solved, and economic development will be guaranteed... I won't waste any more time. Shall we ask President Tang to speak first?"

Tang Yikun said, "Okay. I feel guilty for causing trouble for the city... Our idea is this: the steel pipe factory is a small municipal factory that Donghu acquired four years ago. It has more than 300 employees and has been struggling due to technical and equipment issues. Hongxing has pipe fittings, and it has a branch factory that specializes in producing welded pipes. Besides supplying Donghu, its products have other markets. Could Hongxing take over the steel pipe factory? We can discuss the cooperation method. Mr. Tao, you can take it over, or you can send someone to take over the management. Currently, the steel pipe factory has net assets, and we can transfer it for free... Yiwei, is that right?"

Zhao Qingmin, who was sitting next to General Tao, quietly pinched his companion.

"Secretary Zhao, don't try anything funny." Shangguan Hong witnessed this scene. "As the Party Secretary, you mustn't sabotage things. President Tao is a management expert highly regarded by the Brilliant Group; he'll make his own judgment, won't he?"

Zhao Qingmin was a little embarrassed.

"Donghu Machinery's steel pipe factory has total assets of just over 1000 million yuan, with a debt-to-asset ratio of approximately 90%," Tang Yi reported. "From an asset perspective alone, President Tao and Secretary Zhao wouldn't be interested in such a small amount. However, the steel pipe factory has a significant advantage: its market. Last year, the factory's sales volume was just over 1300 million yuan, which was basically absorbed internally by Donghu. After acquiring the factory in the city, we invested in technological upgrades to ensure that its products could meet the needs of Donghu's real estate market as much as possible… Donghu has promised that after Hongxing takes over the steel pipe factory, the market can be fully inherited. This is beneficial to the Hongxing factory…"

"I can vouch for that," Zhou Hongyou chimed in. "Oh, I was referring to Donghu Industrial's investment in the steel pipe factory's technology and equipment. Those assets aren't just scrap metal; they're worth something. The reason for this proposal is that the steel pipe factory's employees haven't adapted to Donghu's management model. Their mindset isn't exactly outdated, but they always miss the days when there was a higher-level management body and haven't fully adapted… I think President Tang's proposal is a win-win solution, and I suggest Hongxing seriously consider it. Furthermore, I suggest Hongxing move your pipe fittings branch to the development zone! The factory will be transferred to you, and the land use rights can be transferred to you free of charge. The municipal government agrees to this."

"Is there anything else you don't understand, Mr. Tao?" Deputy Mayor Ma Desheng asked.

Tao Tang nodded. "I understand now. Mergers and acquisitions are commonplace, and Mr. Tang's suggestion doesn't violate our group's current regulations on asset management. But the core of mergers and acquisitions isn't assets or the market, but the employees... What I want to know is, was the steel pipe factory's collective petition solely because of unpaid wages?"

Zhao Qingmin noticed that Zhou Hongyou and Tang Yikun exchanged a glance, and thought to himself that his young leader was no novice, but rather quite shrewd.

Shangguan Hong smiled. "President Tao's concern is reasonable and understandable. Mayor Zhou, please speak up."

"Besides the employees, there are indeed some other minor issues." Zhou Hongyou frowned. "When the steel pipe factory was acquired by Donghu, its original site was repurposed for commercial development by Donghu Real Estate, which involved housing compensation for some employees. Strictly speaking, there's no problem; agreements were signed back then, and they can withstand scrutiny both in terms of policy and procedures. However, after the development of the residential complex, some of them felt they were unfairly treated and wanted to overturn the original agreements. I want to assure you that this issue will not be brought to Hongxing; Donghu has promised to resolve it themselves."

"Mayor Shangguan, Vice Mayor Zhou, Vice Mayor Ma," Tao Tang said solemnly, "I understand the city's intentions. I think the city has simply acted as a go-between; the specifics will have to be discussed between our two companies, right?"

"That's right, it's matchmaking." Shangguan Hong nodded.

"Distinguished leaders, we are different from Donghu. What Boss Tang can decide here, I cannot. We need to follow procedures, especially those at Yanjing. Furthermore, the unpaid wages of a few hundred people aren't a major problem, but the issues arising from land acquisition and relocation are more complicated. It's best to resolve them promptly before the formalities are completed, especially if this matter is approved by Yanjing headquarters. Mayors, once these people are transferred to Hongxing, they will definitely contact Hongxing first, but Hongxing will be completely unaware and unable to handle the situation, inevitably leading to disputes, right? I think we should do this: since the city leaders are specifically coordinating this matter, and Hongxing and Donghu are closely cooperating companies, we should split up. Secretary Zhao and I will initiate the procedures as soon as we return, and do so as quickly as possible. Meanwhile, Donghu should resolve the remaining issues as soon as possible. Let's work together and meet at the city government as soon as possible."

As Tao Tang spoke, he thought to himself, Donghu was nothing special. It followed the same old path as most people: spending a small amount of money to buy state-owned enterprises in prime locations, then relocating the entire enterprise and reselling the land for commercial development. The profits came from real estate, not from its subsidiaries.

"Oh, I think President Tao's attitude is acceptable. Old Tang, what do you say?" Shangguan Hong passed the buck to Tang Yikun.

Tang Yikun thought, "If I could resolve those people's demands for housing, I might not give up." However, this was just the beginning of his overall plan, and he was prepared to suffer some losses. "Okay, I agree. But going against the original agreement will bring a series of consequences. I've already stated that the owed wages will be paid as soon as possible. But for other aspects of the work, I hope the city will cooperate."

"Sure, this falls under Mayor Zhou's jurisdiction. Go talk to Mayor Zhou. Old Tang, regarding the unpaid wages, stop bringing up specific management systems. There's a labor law in place; we need to focus on the bigger picture."

"Yes, we understand. Please rest assured, city leaders."

After the meeting, Tao Tang declined Shangguan's offer to stay and also refused the Tang brothers' invitation to dinner, leaving the municipal government office under the pretext of urgent company business. On the way back to the factory, Zhao Qingmin reminded him, "You've already noticed what I was worried about, so I'm relieved. But if we don't do it, Donghu will definitely use the orders as leverage. I just don't understand why they're making such a fuss over a small operation with only a few hundred people?"

"Isn't it obvious? Tang Yikun has his eye on our Hongxing land." Tao Tang sighed. "Secretary Zhao, I think we should initiate the relevant procedures. I'll call Yanjing and arrange for the Development and Planning Department and the Policy Research Office to conduct some preliminary investigations. If the city inquires, we'll have something to say."

"I have no objection," Zhao Qingmin said. "They say they're acting as matchmakers, but I can tell they're actually on Donghu's side."

"Of course. Putting aside everything else, how much tax and profit does Donghu pay in a year? How much do we pay? We can't compare. I'm afraid Hongxing won't be able to operate in isolation in the future. By the way, do you believe it or not, Donghu is probably also in a hurry to restructure. Last time I went to Donghu Machinery, and after listening to Tang Yiwei's introduction, it was simply a hodgepodge. Its products are more than ten times more complex than ours, but its scale is so small. It would be strange if it didn't lose money. I think the steel pipe factory is just the beginning."

"You really need to take this seriously. They're trying to restructure, which basically means getting rid of a lot of burdens. In Pingquan, if they abandon us, it won't be easy to find someone to take over."

"Yes, yes... When dealing with private companies, you can easily get tricked." Tao Tang closed his eyes and leaned his head back on the back seat.