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Li Mingde called Feng Yu to report on his progress . This was because, from January 1st this year, China’s Labour Law had been inforced . All companies must sign contracts with their employees and must contribute to the social security system .
When this law was announced, Feng Yu asked Li Mingde to quickly sign official contracts with all their employees . This was to prevent them from overthinking .
However, Li Mingde said there was no need for them to do so . Everyone in the company trust Feng Yu .
Feng Yu knew that Li Mingde was bootlicking, and all the employees trust Li Mingde more . But Feng Yu still insist Li Mingde complete the contract signings as soon as possible . He must also explain all the terms in the contract and must not hide anything from the employees .
The Machinery Company must also pay the social security for all the employees, including those at their branch factories, on time .
Li Mingde still does no know about the benefits of paying social security . The government will be taking care of all the retired employees instead of the company . This would help the company save lots of money .
Because this was the first year the law had started, those workers who were nearing retirement have the option of paying a lump sum and then still enjoy retirement funds . Of course, this lump sum payment to social security will be borne by the company and not the worker .
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When Li Mingde announced this news, all the employees were overjoyed . Although they kept saying they trust the company and Li Mingde, all of them were still worried the company will not take care of them after their retirement .
Now, the country promises to take care of them, and they have no more worries .
Bing City Machinery Company was one of the fastest companies among all big enterprises to complete the contract signings . Some company’s leaders were still trying to delay . They wanted to wait until the end of the year . But they did not know that late payments can incur interest . The interest rates were the same as the banks . The business owners felt that they could have better use for this amount, and the returns will inevitably be higher than the interest incurred .
But Feng Yu’s companies do not need to do this . All of his companies had sufficient funds . If Bing City Machinery Company needs to get a bank loan, all the bank managers in Longjiang province will be queuing up at Li Mingde’s office and will try to give their best offer .
The past two years, the higher-ups had given high targets to the banks for giving out loans . To hit the target, banks simplified their loans procedures .
Now, the banks had completed the mission given to them by the higher-ups, and some banks had even loaned out more than the target . But now, the banks faced a series of problems . Many companies and individuals were unable to repay their loans!
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The banks had lots of bad debts and cost the banks to suffered massive losses .
But if the banks loan money to Bing City Machinery Company, they do not need to worry . All of them knew how profitable Bing City Machinery Company was and their products were sold all over China and were even exported to Russia .
Even if Bing City Machinery Company could not repay their loans, the banks could also recover the debts from auctioning their assets . But Li Mingde rejected all the offers from the banks as the company does not need any loans .
If Bing City Machinery Company lack funds, Feng Yu could just inject some money into the company . Of course, the City will not agree to it as this will dilute their shares . This was a good company, and the City does not want their shares to be diluted . Another way was to list the company on the stock exchange .
Since the stock exchange was set up in China two years ago, there was an increase in the number of listed companies . These companies wanted to raise funds for their developments . One of the more successful company was Changhong .
Changhong was already listed, and Feng Yu knew that they share prices would skyrocket after they got listed . They amassed a substantial fund from the market and expanded their factories, R&D facilities, and marketing .
Currently, Changhong had become the leader in China’s domestic TV brands . No other companies could threaten them of this status in China .
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The Provincial Leaders of where Changhong was located also start to promote Changhong . This was also considered the Province’s achievement . A company like Changhong had appeared in their province, and how can they not make use of this company?
But Feng Yu remembered that Changhong was only successful for these 2 to 3 years . The management of Changhong will be making a grave mistake soon and resulted in the company to go downhill .
Changhong was too confident of their 21-inch color TV and felt this will be mainstream TV in the market . Now, the 21-inch color TV might seem to be the mainstream TV and Changhong had China’s most advanced technology in this field . Their manufacturing cost was also the lowest compared to other foreign MNCs .
But in another 2 years, the TV will become bigger . 25 inches, 29 inches, 32 inches, 34 inches, and even 42 inches TVs start appearing in the market . All TV manufacturers start to manufacture bigger TV to meet market demand .
However, Changhong still insists on producing 21 inch TV and did not lower their production . As a result, their TVs were unsold and stuck in their warehouse .
This was the turning point of the company, and Changhong fell from being the domestic market leader to number 2 . Their placing continues to drop to number 4, etc .
But now, all these still have not happened yet . Changhong was still able to make lots of profits for the next 3 years .
The local government was jealous of many companies’ success . They realized that companies do not need to get loans and could still be able to raise funds and develop quickly .
Also, after the company was listed, the company’s value would increase as the share prices increases . This way, a successful company will appear in the province or city governed by those local authorities . A company that was worth 100 million might become 300 million RMB after getting listed . The local authorities could brag to their higher-ups and try to get the credit .
Look, this listed XXX company was set up when I was in charge of the city . This company was only worth 100 million RMB, and now, it’s worth had increased by several folds . The higher-ups will think that this person was good at business . This was the time when the Chinese government emphasizes on the economy . The higher-ups will surely groom this person .
So, there were a large number of companies that were listed . Many of these companies did not even reach the minimum requirements of being listed . But this was not important as the local government will help them/ Furthermore, there were lots of loopholes in the laws . The number of companies getting listed on the stock market had increased by more than 10 times compared to the previous year .
Some of these listed companies had grown after being listed, and the investors all made money . But there were many companies whose shares did not move after they got listed . Some companies had raised a large sum from the stock market, but all their funds disappeared . The local government had taken the money away, or the companies’ leaders ran away with the money .
But no matter what, all the local government felt that getting the companies under their jurisdictions to be listed on the stock exchange was one way to show the higher-ups how successful they were . All the local governments wanted more listed companies to appear .
Li Mingde was also summoned by his leader for a talk . He wanted Bing City Machinery Company to be listed on the stock exchange!
This was also one of the reasons why Li Mingde called Feng Yu . He needed Feng Yu’s help .