Rebirth: I am in Jin-Cha-Ji

Luo Qirong smiled.

Guangzhou exports so many things now, mainly to Southeast Asia. "What is that?"

"Golden coin turtle." "Are you also selling turtles?"

"It's not a turtle, it's a golden coin turtle. A businessman placed an order for 7,000 golden coin turtles at once."

Wei Hongjun hadn't expected that golden coin turtles could be exported. He nodded.

After China and Britain opened a trade route in Hong Kong, Guangzhou's exports increased. Guangzhou's ports exported everything. With so many products exported through Guangzhou's ports, Guangzhou naturally benefited.

After a few pleasantries, everyone started to get down to business.

"What exactly do the British businessmen want to invest in? How much money do they want to invest?" Mao Zemin asked quickly after sitting down.

Tao Zhu said with a serious expression, "British businessmen want to build a large bicycle factory in China with an annual production capacity of 40 bicycles."

"40?"

Yao Yilin, who was standing next to him, was very surprised and couldn't help but exclaim.

China's current annual bicycle production is less than 20 units, yet a British company is determined to build a bicycle factory in China with an annual output of 40 units, doubling the country's current bicycle production. This certainly surprised Yao Yilin.

However, Wei Hongjun and Mao Zemin managed to keep their composure.

In China, an annual output of 40 bicycles is quite high, and it would make a large bicycle factory. However, in the world, an annual output of 40 bicycles is not a lot, and it is not considered a very large factory.

It would not be difficult for British businessmen to set up such a factory if they were willing.

Wei Hongjun was puzzled by how British businessmen could invest so much money in China and establish such a large-scale enterprise. What were they interested in? How did they plan to make money?

"Why would a British businessman choose to invest and build such a large factory in China?"

Yao Yilin always felt unbelievable.

That’s 40 bicycles.

Wang Quanguo, Director of the Guangdong Provincial Department of Industry, said, "I've spoken with these British businessmen. They said that although China was still very poor, it was no longer difficult for many Chinese families to afford a bicycle. They believe that in a country like China, with its poor transportation conditions, backward economy, and severe car shortage, bicycles will become the main means of transportation. They say the Chinese bicycle market has huge potential and they are willing to make money in the Chinese bicycle market."

"How do they judge that many Chinese families can afford bicycles? Bicycles are not cheap these days; one costs over 100 yuan."

Wei Hongjun was very interested.

What makes these British businessmen so confident in their belief that China's bicycle market has such promising prospects? Wang Quanguo explained, "After accompanying Attlee on his visit to China last year, they toured major Chinese cities and inquired about the salaries of Chinese government officials and industrial workers. They concluded that while many urban Chinese government employees and industrial workers earn modest salaries, they are fully capable of purchasing bicycles. Furthermore, many Chinese government departments will have an increasing demand for bicycles. They estimate that China's annual demand for bicycles will be no less than one million. However, my country's bicycle production is limited, which is precisely why they are willing to invest in the bicycle industry."

After hearing Wang Quanguo's words, Wei Hongjun, Mao Zemin, and Yao Yilin all looked at each other in surprise.

Wei Hongjun and his colleagues were at the central government, in charge of the national economy, so they were well aware of many aspects.

It can be roughly judged.

These British businessmen had only been traveling in Chinese cities for a little over a month, but their keen sense of the currency market was remarkable, and they immediately discovered the booming demand for bicycles in the Chinese market.

Let alone one million, China's demand for bicycles would soon reach two million or three million. By the end of the 1970s, China's bicycle production had reached tens of millions, but demand still outstripped supply.

More than a hundred dollars is a lot of money.

But for the current working class, if they grit their teeth and save some money, they can still afford a bicycle. For those who have reached a certain level of wealth and work, buying a bicycle is even easier.

There are also Chinese government departments.

Departments like the public security and postal services have an even greater demand for bicycles. Wang Quanguo continued, "And the British merchants are aiming not only to sell domestically but also to export them on a large scale in the future. An annual production capacity of 10 cubic meters is just their initial target. If sales are strong, they can expand further. Besides investing in a large bicycle factory, they're also willing to build a sewing machine factory with an annual output of cubic meters."

British businessmen are targeting China's light industry.

After all, China's light industry is currently very backward. Investing now would certainly help seize market share and also enable exports. British and American businessmen have been fiercely competitive in the former Commonwealth and British colonies.

American merchants have much lower costs than British merchants.

This was primarily due to the high production efficiency and mechanization of American merchants, which allowed them to significantly reduce costs. British merchants, by comparison, lagged far behind. British products were simply no match for American goods. In their own territories, such as the Commonwealth and British colonies, they were steadily losing ground to American merchants. Consequently, British merchants constantly sought a way out, a means to counter the American merchants.

That's why some British businessmen set their sights on China.

But investing directly in building a factory in China?

It doesn't necessarily mean the cost will be much lower. In China right now, apart from low labor costs, other costs are not low at all. Setting up such a business wouldn't reduce costs much. So Wei Hongjun asked, "What conditions do they have?"

The reason why Wei Hongjun didn't believe them was simple.

Tao Zhudao said: "They put forward two conditions and two questions. The first condition is that their people must be involved in business and financial management."

"That's as it should be. They've invested so much money, so it's understandable that they're sending people to participate in operations and financial management. They're also more knowledgeable about managing these projects and understanding financial matters. Our people can learn from them."

British merchants are not providing loans or fixed investments.

Since it is a direct investment to build a factory, we must send someone to run it and supervise the finances.

"The second condition is that the factory must be liquidated annually to determine the factory's capital situation."

"—Annual liquidation?"

"Yes. What they mean is to audit the accounts and liquidate the factory assets once a year to determine the status of their assets in Gongguang. To see if Gongguang's assets have increased or decreased?"

"What about the two questions?"

“The first question is, if they want to sell their shares, how will they sell them? Will we buy them? If we don’t buy them, will we allow them to transfer them to someone else?”

Wei Hongjun felt that he had grasped the thinking of some British businessmen. They were not only interested in profits.

They were seizing the current lag in China's light industry, hoping to quickly capture the Chinese market and expand their holdings. Each military liquidation was a confirmation from both China and Britain of the value of their industry. Since one-third of profits were to be used for industrial accumulation, they were aiming to expand their industrial assets.

After developing the factory to a certain scale, they can sell some shares to recover funds.

They were extremely confident in the development of their factory. Wei Hongjun had indeed guessed some of the British merchants' thoughts. After their tour of China, they were truly confident in China's development.

They told Wang Quanguo that the Chinese market could absorb 100 million bicycles a year, but that was actually a reservation. According to their calculations, the Chinese market could reach 500 million bicycles.

Moreover, bicycles in China are expensive and have high profits.

Even if they could not take away all the profits, British businessmen believed after calculation that the return on asset investment would not be too low.

More importantly, British businessmen were ready to export bicycles.

Britain is not short of markets. The Commonwealth and British colonies represent a vast market. In the past, Britain was powerful enough to close off these markets with tariffs, forcing them to buy British goods. But now, they are no match for the United States, so they have no choice but to open up their markets.

British businessmen still have a lot of connections in these countries and regions.

The British businessmen were fully confident they could develop the bicycle factory into one of the largest in China, capturing not only the domestic market but also the Commonwealth and British colonies. Once the bicycle factory expanded and profits increased, they would want to sell some of their shares. That's why they raised the issue of share sales.

"What about the second question?"

"They want to know how to exchange the money after the factory distributes dividends?" Wei Hongjun remained silent.

This is indeed a huge problem. They sell bicycles in China and earn RMB. But after they earn RMB, how do they move the money? Does the Chinese government allow them to exchange it for foreign currency?

Mao Zemin shook his head and said, "At this stage, our country is seriously short of foreign exchange. It is impossible for them to exchange currency at will."

"If we can't exchange currency, do they have any other ideas?" "Yes."

Tao Zhu said: "They hope that the country can export materials to them at low prices and let their trading companies act as agents."

Wei Hongjun couldn't help laughing. The British businessman was really smart.

They've thought of everything they can think of. They also know that China lacks foreign exchange and controls its currency. So, they don't expect China to exchange currency for them. Their goal is to do more trade. They want to use the money they earn from China to buy goods cheaply from China, then export them through trading companies to earn more money.

This is a one-stop way to make money.

Wei Hongjun thought for a moment and said, "Are there any unresolved issues in our cooperation?" "Yes, we have identified six areas of problems."

932 Sino-foreign joint ventures

"Tell me more specifically."

After all, it's our first collaboration.

Wei Hongjun knew that there would be many questions, but he didn't expect Tao Zhu to raise six questions right away.

But Wei Hongjun likes it this way.

Don't be afraid of problems, just solve them. What's scary is not being able to find the problems, or finding the problems but ignoring them or covering them up.

"First, the land issue. How are we going to handle the land for this kind of cooperative company? Previously, they were all state-owned and collective enterprises, so we didn't delve into the issue of royal land. But this time, a cooperative company is being established, and half of the shares are owned by British merchants. We can't just give the company the land for free."

Don’t think that the government doesn’t value land now.

Previously, state-invested public enterprises were the majority, with the occasional collective enterprise. Because Wangdi is state-owned, and the other enterprises are either state-owned or collective, there were some controversies surrounding Wangdi. However, everyone was in agreement and didn't discuss the issue.

But we have to talk about it now.

If you're collaborating with British companies, can you give them land for free to build a factory? That wouldn't be a loss of national assets. At such a sensitive time for collaboration, every aspect must be considered to avoid any potential leverage.

Wei Hongjun did not express his opinion and asked, "What do the Guangdong comrades think?"

"We want to value the land and incorporate it into the factory, which will be considered our investment. But if that's the case, how will the ownership of the land be handled? Should we sell it to Gongguang or...?

Of course, this has also been discussed in Guangdong.

But because the differences were too great, no final decision was made.

There are currently no clear policies or laws regarding how to use state-owned land. How to use state-owned land and under what name to use it are both major issues.

Wei Hongjun said directly, "There have been some discussions within the central government regarding land issues in the past, but due to being preoccupied with other matters, we haven't delved into them in detail. Therefore, there's still no definitive conclusion regarding land use. However, one thing I can confirm is that ownership of royal land cannot be transferred. Since all royal land nationwide, including urban and rural land, has clear ownership, no one can destroy it. Land is state-owned, and this must be upheld. Regarding the land issue, you can experiment with a different approach, separating ownership from use rights. Ownership of royal land remains state-owned, but land use rights can be granted for ten, twenty, or thirty years. Guangdong is the first to experiment, so you need to experiment with some issues first."

"Is ownership and usage rights separated?" "Yes."

Wei Hongjun nodded. Mao Zemin said, "This is actually the land rent model. The land is state-owned and leased to you for a period of time. State-owned enterprises use the land for free, so there's no usage fee, and thus no rent. But you're a cooperative enterprise, so you have to pay for the usage fee, the land rent. If you think about it this way, the right to use the land can also be an investment from the state-owned enterprise."

Ownership and usage rights are separated.

It wasn't a new concept. As soon as Wei Hongjun said it, Mao Zemin understood what he meant. The thousand-member troops in Guangdong were also working on the front lines, and they immediately understood what Wei Hongjun meant.

So everyone nodded. "We'll give it a try."

Guangdong cadres such as Luo Qirong and Tao Zhu nodded.

Wei Hongjun also wrote down this issue in his notebook. Right now, during the period of national construction, the issue of land ownership hasn't arisen yet. However, once the initial investment and construction phase is complete and the city develops, disputes over land ownership will likely increase.

After all, urban land is limited.

As the city develops, if you're a state-owned enterprise directly invested in by the state, or a local city-owned enterprise, that's fine. But if you're a provincial enterprise or a local collective enterprise from outside the city that wants to open a factory, will the city agree?

Will they argue with you over land issues?

These all need to be taken into consideration.

However, the issue of urban land was not under Wei Hongjun's jurisdiction. He planned to write a report on the issue and submit it to the Secretariat for handling.

Tao Zhudao: "The second issue is the status of this type of ownership enterprise in the socialist economic system."