Chapter 1081: Doing Things and Making Money

Facts in a few years will also prove that all the predictions made by foreigners about China are not self-fulfilling. China's economic and corporate growth is still moving forward in a tortuous way according to its own logic, and has nothing to do with those overly optimistic or pessimistic conjectures.

In fact, since the death of John King Fairbank in 1991, there has been no second observer in the mainstream Western world who has an objective and sober understanding of China.

Since the 1990s, a sign of China's economic vitality is that almost every few years, Chinese and foreign economists have to change their ideas and adopt new language or concepts to describe and analyze new economic phenomena in China.

The fate of China's economy is slowly transformed in the transformation of these frameworks and concepts, and it is increasingly speculative with the common language of international game rules and gradually getting on track.

In recent days, the New York Times interviewed John Galbraith, who was once the president of the American Economic Association, and asked him to talk about the future Sino-US relations. The 94-year-old John Galbraith had just returned from another rising Eastern country, India. He said in a awed tone that half of my knowledge in China was wrong, and the other half was useless.

As for China, he said that many of their predictions about China were just their own conjectures.

The impact on China is a continuous and long process. In China, which is undergoing gradual changes, no change has ever been made overnight.

In fact, the withdrawal of the state and the advancement of the private sector, which began three years ago, was a major strategic decision to deal with this change. The advance, retreat and reorganization of state-owned capital groups were all based on the market opening timetable.

For some things in China, even Welch, the world's largest general company, is very puzzled. Before his retirement this year, when a reporter asked him about his views on the Chinese market, Welch said that he had been going there for ten years, and every time he went there, he would laugh at how little he knew the last time he came. That place is so big and so complicated. He can't understand it, really can't understand it, which may be the reason why he wants to retire, because it should be someone else who understands it.

GE's turnaround in China was in the hands of his successor, Immelt, who shifted the investment focus from civilian products to more technologically advanced infrastructure projects. GE's industrial lighting, medical equipment, gas turbines, fans, hydropower equipment, aircraft engines, and power transmission for industrial groups have all received good returns in China. Most of these areas are off-limits to private capital.

There is also an unusual signal. In October this year, China allowed foreign investment to participate in the disposal of non-performing assets for the first time. At the first bidding meeting, Morgan Stanley exclusively obtained an asset package worth 10.8 billion yuan. These non-performing assets are distributed in 18 provinces and cities across the country, involving 254 companies and factories in the real estate, textile, metallurgy, and pharmaceutical industries, most of which are state-owned enterprises.

Obviously,

these non-performing assets are the surplus value generated by the strategy of state retreat and private advancement. While Morgan Stanley shares the huge profits of Chinese companies' financing at home and abroad, it is also envied and jealous by countless peers. In fact, there are no rigid and restrictive legal regulations for access to China's capital market. The substantive threshold lies in the policy approval red line. Like most joint ventures in the past, the opening of the capital market is more sensitive and cautious.

Another point worth noting is that the trend of wholly-owned enterprises in multinational companies is becoming more and more obvious.

In the past many years, foreign-funded factories had to have a joint venture partner in China. For example, Coca-Cola and Pepsi-Cola's canning plants in various places had to be jointly owned with state-owned grain and oil companies, and Procter & Gamble's partners were stipulated to be local state-owned daily chemical factories.

Now that this restriction has been gradually lifted, some multinational companies that have already established joint ventures think that they have a stable foothold, so they use various means to force the Chinese to throw the pot.

Many directors of foreign companies believe that wholly-owned enterprises are a natural choice for joint ventures after China's accession to the WTO.

The representative of foreign companies that are most determined to take wholly-owned actions and are willing to fight with China is Pepsi-Cola. At that time, Pepsi-Cola had established 15 joint venture canning plants in China. In September, Pepsi (China) Investment Co., Ltd. established a wholly-owned company in Shandong and announced that Qingdao would be designated as its sphere of influence. Previously, Pepsi had established a joint venture factory in Shandong. The two Pepsi companies launched a price war for the Qingdao market, which confused the outside world for a while.

Pepsi also tried to force out the Chinese partner in Chengdu, Sichuan. When the negotiations failed, the US announced a substantial increase in the price of concentrate and refused to approve Sichuan Pepsi to produce more brands of beverages.

The US's brutality caused collective resistance and boycott by the Chinese joint venture canning factories. Subsequently, the US announced the dismissal of the leader of the boycott alliance, the Chinese general manager of Shanghai Pepsi. Later, fourteen of the fifteen canning factories held a press conference in Chengdu and jointly accused Pepsi.

A month later, PepsiCo of the United States filed a request with the Arbitration Court of the Stockholm Chamber of Commerce of Sweden to terminate cooperation with the Chinese partner in Chengdu on the grounds of audit failure. The Swedish court finally terminated the trademark licensing contract and concentrate supply agreement on the grounds that non-cooperation with inspections and cross-regional sales did not constitute a fundamental breach of contract, and Pepsi won a complete victory.

The Pepsi arbitration storm was essentially a predatory expansion by transnational capital taking advantage of the vacuum in Chinese laws and management when China joined.

There is another follow-up detail worth recording about this incident. Five years later, Wang Shengchang, a member of the China International Trade Arbitration Commission who participated in this case and advocated arbitration in the Swedish court, was arrested on suspicion of economic issues. At that time, the relevant parties reported that Wang Shengchang had privately divided state-owned property and was suspected of bribery. His role in the Pepsi arbitration incident was questioned.

However, this is all later.

For all this, all Fan Wubing could do was to watch coldly.

This is not because he wanted to see this situation happen, but in this era, the role he can play is limited. After all, the decision-making level cannot listen to only his opinion, especially in these new attempts, countless large and small interest groups need to share a piece of the pie. If he tries to stand out, it will be nothing but a fight between an egg and a stone.

Sometimes, having a lot of money can't solve all problems. What Fan Wubing is doing now is to consider joining some key industries to lay some useful foundations for China's rise, such as energy, mineral resources, and military production. These are the industries he focuses on. As for other aspects, he can intervene in those industries that are more profitable and steadily developed, such as the electronic chip industry and the developing electronic manufacturing industry, which still need to continue to maintain their leading position.

For the huge civil aircraft manufacturing and shipbuilding, as well as the construction of docks and ports, Fan Wubing has already invested a huge amount of money. Now he just needs to continue to increase capital and wait for the harvest. These are all industries that are sure to make money. Fan Wubing doesn't need to worry at all. While transnational capital continues to penetrate and state-owned capital is strongly reorganized, Mingui Capital looks like a bystander outside the chess game. In the history of Chinese enterprises in recent years, the game between capitals of different natures has always been the main factor that troubles and promotes the ups and downs of China's economy.

With China's accession, the game pattern of the three major capital groups has undergone fundamental evolution. The two powerful capitals have reached a new consensus on the distribution and reorganization of interests. The private capital that has achieved great success in many competitive markets has been increasingly marginalized, and only a very small number of people have achieved symbolic success.

In May, Liu Yonghao announced that he was the largest shareholder of Minsheng Bank.

Minsheng Bank was established five years ago when the atmosphere of reform was unprecedentedly strong. At the initiative of Jing Shuping, the then chairman of the All-China Federation of Industry and Commerce and a senior financial expert, the State Council approved the establishment of the first national joint-stock commercial bank, Minsheng Bank. Jing Shuping served as chairman, and the shareholders included several well-known private entrepreneurs who joined the All-China Federation of Industry and Commerce. Among them, Liu Yonghao, who served as vice chairman, invested more than 8 million yuan to become the first shareholder unit.

In this way, in the financial field where state-owned banks have a comprehensive monopoly, Minsheng Bank was born with the support of the semi-official All-China Federation of Industry and Commerce. Although it is weak, it is the only experimental commercial bank with clear property rights.

In the following years, the macroeconomic situation was turbulent, the performance of Minsheng Bank fluctuated greatly, and shareholders came and went several times. However, Liu Yonghao, who had a far-sighted vision, persisted in acquiring shares of Minsheng Bank, and his shareholding ratio quietly increased.

Last November, Minsheng Bank was approved to be listed on the Shanghai Stock Exchange. Its unique identity immediately attracted the attention of the capital market, and the frozen funds for new share subscription exceeded 400 billion yuan, setting a national record at the time.

The Liu brothers started their business by raising quails and producing feed. Now they have entered the financial field due to special opportunities, which naturally attracted people's endless envy and speculation. In this year's Forbes China Rich List, Liu Yonghao and his family were prominently listed.

In fact, many people felt very strange that Mang's Investment Group had not entered the banking industry. According to the situation at the time, if Fan Wubing wanted to get involved in the banking industry, it would only be a matter of words, and the position of the major shareholder would be a natural choice. However, the strange thing was that he was indifferent to this, which made people feel incredible.

Fan Wubing also has his own considerations on this point. In fact, the banking industry does not create actual value. For capital operation, it is more about using other people's money to lend money and make money. In fact, it is a means, not a bell.

Fan Wubing, who has always been committed to developing the real industry in China, naturally disdains this. Even if it can increase the value of his own funds, what benefits can it bring to the entire country?

Rather than being envied by others, it is better to do his own work of industrial development in a down-to-earth manner. In this way, even if he makes money, he will not attract too much criticism. After all, he is a doer first, and a money-maker second.