Chapter 98 – Tai Hua Factory’s Future Development
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Everything was going along as what Feng Yu expected. Li Mingde was eager to sell the shares but dared not let Fu Guangzheng look at their financial reports.
Fu Guangzheng had studied the situation and discussed with his father. They were willing to accept some losses for the time being. If this company continued to develop, he could get back his investments within 2 years and enjoy the profits for at least the next 10 years.
Also, he would be closer to Feng Yu. Fu Rongjing and Fu Guangzheng take a serious view on their relationship with Feng Yu. Fu Guangzheng deliberately acted like he was taking the bait, and invested 20 million RMB for a 16% stake in the company. He was now the second biggest shareholder of the company.
This was not something Feng Yu expected. He did not expect Fu Guangzheng to be investing so much and the City Government to give him so many shares.
But looking closer, the City did not suffer any losses. Whether it was Fu Guangzheng’s investment or Feng Yu buying into the company using technologies, their shareholding ratio was lowered. On the other hand, the City Government had got advanced technologies and 20 million RMB funds without coming out a single cent.
According to the experts in the City, even with 74% of shareholdings, the City Government’s profits would be more than doubled compared to previous years. Also, the Government was still the major shareholder, and the company still had to pay taxes. The expansion of the factory would also create more jobs. This was a big bargain for the City Government!
Fu Guangzheng had used all his money for this investment. His father had given him 10 million Hong Kong Dollars, and his mother also helped him raised some money. If it wasn’t for their help, he might not even have enough to pay for those used cars.
Now, the factory’s current assets had more than 30 million RMB. This made Feng Yu very happy. The coming 2 years, Feng Yu intend to do the Soviet Union’s advanced equipment and technology reselling business. He had disclosed some of this information to the Motor Factory and Fei Factory. He was now waiting for them to contact him.
Once the orders came in, then he would be able to work with Kirilenko to earn some profits again. Also, he would be able to raise China’s technology standards and also leave a good impression on the leaders.
As for the time being, Feng Yu would be helping his father manage the food processing factory. Now, Tai Hua Premium Cooking Oil was very popular in Longjiang province. There were even some inquiries from Lin Province.
The sales had become stable. Temporary, the production was slightly more than the sales. There was still no need to import new production machines. After the New Year, the value of the Soviet Union’s machinery will drop further! These type of technology and machines will be readily available.
Sugar was produced because of the animal feeds. Feng Yu did not expect to earn much from producing sugar. Feng Yu felt that the most profitable would be animal feeds, more specifically, pig feed.
China’s population and income were increasing rapidly. However, the supply of daily necessities, especially agricultural by-products still cannot meet the demands. This was because the country’s focus for the past few years was in industrial development.
Although the situation was not as bad as the Soviet Union, due to the focus on industrial developments, the government had somehow neglected the development of the agriculture industry.
Now, the number of farms were increasing, but there was not much focus on agricultural products. For instance, the pork supply was not enough to meet the demands. The people had money, but they were unable to buy pork! The pork selling in the cities was not fresh pork too.
The district which Feng Yu lived in, had a chicken farm and pig farm. But these farms were struggling. Last year, the chicken farm had closed. Farming districts and farming villages were similar, but the only difference was that farming districts were more advanced and used more machinery. Everyone living in the countrydies would rear some animals themselves.
Almost every household rear poultry, pigs, cows or sheep. They would slaughter them during Lunar New Year. That’s was the reason why many said that living on the farms was better than living in the cities!
The chicken and pig farms had no way to sell to the people in the district as every household were rearing their own animals. They did consider selling to the cities, but it was not easy to set up the distribution channels.
Feng Yu remembered that in his previous life, there was a ranking chart of China’s wealthiest men. One of the first few to make it on the chart was in the pig feed business. In the 90’s, his pig feed was selling all over China, and he made his fortune from it.
Feng Yu did not expect his father’s small factory to be the best in China but at least it should be the best in Longjiang province or the best in the Northeast region.
Of course, the target right now was to sell the stockpile of sugar!
Feng Yu was sitting with the leader of Bing City’s Food Department to discuss selling Tai Hua Food Processing Factory’s products in their stores.
“Chief Zhou, you should know how popular our products are. Now we occupied 10% of the Bing City’s market share, and this figure is still increasing. It should reach 30% next year. I am confident that if it is managed well, it can reach above 50%.”
Feng Yu was bluffing. With Tai Hua Factory current production rate and to supply the goods to the various stores in the province, they barely occupy 10% of Bing City’s market. The sales in other areas were growing, and the supply cannot be stopped, or it would affect their profits. This was the time for them to increase their brand equity!
But Tai Hua Premium Cooking Oil’s popularity was a threat to the Food Department. They did not expect a small soybean oil factory to capture part of the market share. Most importantly, the Food Department was facing difficulties recently. Many people, including some leaders, were asking them if the oil extracted using the leaching process was safe to consume.
Now it was the market economy, and the government allowed private factories to operate. The Food Department was unable to order Feng Yu to stop selling those oil or change the production method to a less productive method. They also can’t change their current leaching process back to the traditional method. So, they came up with a way, to stop the cooperatives from selling these premium oils and to sell them in their own stores. This idea was supported by the City Government.
However, the representative from Tai Hua Factory was a teenager, and he was here to negotiate about this. At this age, shouldn’t he be n school? Chief Zhou thought that it would be easy to handle a teenager, but he was wrong. This kid not only wanted the Food Department stores to sell his sugar and still wanted the Food Department to help him promote his sugar. How can the Food Department support the products from a small private factory and not its own products?
But Feng Yu had said that if they don’t agree to his conditions, he will not allow the Food Department stores or the cooperatives to sell his products. He would push his products to those small shops. Anyway, there were more and more small shops popping up in the city. The number of these small shops were more than the Food Department stores and cooperatives.
Chief Zhou was now in an awkward position. On the one hand, he wanted the rights to sell Tai Hua Premium Cooking Oil, and on the other, he does not want to agree to Feng Yu’s harsh conditions. This negotiation had come to a standstill.
PS: The requirement to be the major shareholder was to hold more than two-thirds of the total shares and not 51%.
I am not quite sure why the author states that the requirement was to hold more than 2/3 of the total equalities to be considered the major shareholder. From my understanding, owning 51% of the shares would be viewed as the major shareholder. Maybe this is something that only happens in China, or it could be because the factory was a state-owned enterprise.
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