2003: Starting with Foreign Trade

Chapter 601 Finalizing the Backdoor Listing Plan Before Singles' Day
Everything is going on in an orderly manner.

Just as Tan Jincheng had anticipated, on November 5th, the State Council held a meeting of its executive committee. In response to the international financial crisis triggered by the US subprime mortgage crisis, the meeting decided to implement a proactive fiscal policy and a moderately loose monetary policy.

At the same time, ten measures were also confirmed to further expand domestic demand and promote steady and rapid economic growth, with an investment of approximately 4 trillion RMB by the end of 2010.

"Starting today, our monetary policy will officially begin to change."

The continued loose monetary policy has indeed stimulated the economy, but the side effects are also considerable. However, this has nothing to do with Boss Tan. He can't care about these things; he can just enjoy the benefits.

"I've noticed that banks have been very active lately. Business owners who used to have trouble getting loans are now saying that it's easier to borrow money from banks."

The speaker was Zhang Xupeng, who was here today to report on his work.

Jinpeng Trading has many different kinds of suppliers. Some of these companies are not very large, and it was difficult for them to get bank loans during the period of tight credit. Recently, however, the situation has changed, and some of the larger companies are now proactively receiving calls from banks.

"Have you secured the domestic agency rights for Outlet?" Tan Jincheng asked.

"Yes, we've secured them. We negotiated for a month, and it didn't cost much. We'll talk to the existing outlet stores later."

Outlet stores first entered China in 2002, and their annual turnover in Beijing has now reached hundreds of millions of yuan. Zhang Xupeng has no intention of touching these stores, nor can he.

The investors who could open such a large store in Beijing in 2002 were not people that FlashChe could easily manage. The best approach would have been to adopt a joint venture or brand franchising model.

"No need to rush to open new stores. Let's deal with the problems at the old stores first. We can open new stores when the money supply is really loose."

The outlet currently has three stores in China, located in Beijing, Tianjin, and Shanghai. They are very large, and these brand discount stores are very attractive in any era. This is a long-term business.

Outlet malls can be operated in four ways: joint venture, leasing, self-operation, and management, which gives them a relatively flexible approach.

Acquiring the outlet mall serves two purposes: firstly, to expand Jinpeng Trading's business scope, and secondly, to enrich Orange Products' warehousing and brand suppliers.

Imagine ordering goods from the Orange Products website, with the courier picking up the goods from the nearest outlet warehouse and delivering them locally. Sharing a warehousing channel should be quite effective.

"Business in foreign trade is tough this year. Our orders at the Autumn Guangzhou Fair aren't very good. I suggest we scale back our investments," Zhang Xupeng sighed.

The transaction volume of the two Canton Fairs this year was not as good as last year. In particular, the number of exhibitors at the recently concluded Autumn Canton Fair dropped sharply to the lowest level in three years. Indian customers even ranked third.

Flash doesn't do business with Indians, and while their major client, the US, still has strong purchasing power, they're putting a lot of pressure on prices.

Tan Jincheng was also somewhat troubled: "How much are we expecting our exports to decline this year?"

Electronic products, daily consumer goods, and clothing and textiles remain the major export categories, but the purchase volume and profits of these items have declined significantly this year.

The elderly are truly panicked; those who overspend are now afraid to spend money.

"The first half of the year was alright, but the decline became very obvious after August. The annual decline is probably around 15%. I don't know when this financial crisis will end."

"It shouldn't be too long. The US has a new leader, and they'll definitely follow our example and launch a stimulus plan. Life goes on."

If I remember correctly, Obama also did a similar stimulus plan in 2009. I can't remember the exact amount, but it should have happened. Besides, the Federal Reserve has always liked to inject liquidity, and they have the whole world to help absorb it anyway.

The 08 subprime mortgage crisis caused a great stir, but it didn't actually last long. In Tan Jincheng's view, it was more like a financial crisis deliberately created by Wall Street and even the Federal Reserve in order to reap the benefits from the world.

Take the bankruptcy of Lehman Brothers as an example, who was the most unfortunate?

It's Barclays, Nomura Securities, and HSBC. Meanwhile, Blackstone, whose stock price plummeted from a high of $31 to $2, suffered a 93% loss. Our national team even acquired a 10% stake for 30 billion yuan when the stock price was $31.

In one year, the $30 billion had dwindled to just over $2 million.

"How do you know? Did Shen Nanpeng tell you?"

Zhang Xupeng absolutely refused to believe that Shen Nanpeng would tell him these things. Would Shen Nanpeng tell him that Chun Ge would win the Super Girl championship, or that Liverpool could win the Champions League? That's utter nonsense.

"Just pay more attention to the Fed's moves over the years and you'll know; don't worry, we're doing fine. If you're worried, you can reduce your investments a bit. By the way, how's GXG's Taobao flagship store going?"

"It's alright, sales are decent. We're also going to participate in Double Eleven this year, but the discounts they're asking for are quite high, which is a bit annoying."

"Haha, you just need to make one or two really high-discount items, and secretly raise the prices of the others, and then offer discounts on them."

Taobao Mall is the future Tmall, which is also the direct reason for Sun Tongyu's departure. Compared with Tmall, Sun Tongyu prefers to focus on the lower-tier market, which is also an important reason why he started Pinduoduo with Huang Zheng.

Upon hearing this, Zhang Xupeng was stunned: "Holy crap! You can do that?"

"Why not? Just raise the price a little, who would know? But let's skip it this year, there's not enough time. We can do this next year before the Double Eleven event. Raise the price a month in advance, and consumers won't notice." There are many tricks on the internet, and these are all tricks from Double Eleven in my previous life: raising prices, using all sorts of calculation formulas. Even non-mathematicians feel like they don't know how to shop online. Tan Jincheng doesn't like shopping on Double Eleven for this reason.

Buying something is harder than getting married, and it's not much cheaper. But if the company does it this way, as the brand owner, you can only comply with the rules.

Zhang Xupeng thought about it and felt that it might actually be feasible: "Damn it, when it comes to being a dog, you're still the dog."

"Haha, there are only wrong purchases, never wrong sales. As businessmen, it's our duty to pay attention to profits, but as a consumer, I still suggest you place your order through Orange Products Club. We don't play tricks."

It's impossible not to use tricks, but Tan Jincheng doesn't plan to be that ruthless. Orange Products Club isn't a big company, so there's no need for them to be so unscrupulous as to use any means necessary for traffic.

In business, it's not that we're afraid of you using tricks, as long as you're more sincere than your competitors.

"By the way, when will Flashspeed Technology go public? Wasn't the on-site inspection finished?"

"I don't know the specifics yet, it's still going through the process. If it goes as fast as the end of this month, it will probably be the end of next month if it goes as slow."

The on-site inspections of Changfeng Group and Shanchi Technology have been completed. It is unknown whether there will be any supplementary materials. The China Securities Regulatory Commission has not issued any announcements so far.

Furthermore, since the Shanghai Composite Index fell to 1664 points on the 28th of last month, seven days have passed and the index is still hovering below 1800 points, indicating that market confidence has not fully recovered.

Today's State Council executive meeting did not cause much of a stir in the market, mainly because too much information has not yet been released.

Of course, even if it were released, the retail investors wouldn't react that quickly; the market has been falling for almost a year, and people are numb to it.

"Should we ring the bell?"

"We'll ring the bell, but not on the day the company officially changes its name, not on the day trading resumes."

Changfeng Group suspended trading on August 25, and it has been suspended for more than two months. During these two months, Changfeng Group has issued an announcement every five days regarding the postponement of the resumption of trading, and of course, it has also released some progress information.

The investors trapped inside are both excited and apprehensive. They avoided a major crash after being suspended from trading for more than two months, but no one can guarantee that the stock market will not be affected after trading resumes. The environment of the stock market this year is really too bad.

"Oh, I see. Then you have to let me know when you ring the bell. It can't be like last time. I want to participate this time too."

Compared to Orange Technology, Zhang Xupeng has a stronger emotional attachment to Flash Technology. When the Xiapu Industrial Zone was first established, he helped purchase a lot of equipment and transported it there little by little using a pickup truck.

They even got involved in recruiting employees. Back then, they were all one big family, only thinking about how to save their brothers a little bit.

"That's for sure. Shanghai isn't far away. This time, not only will you be going, but I'm also planning to invite your dad and my dad."

"Haha, at least you have some conscience."

Fearing that the two might take a wrong turn, Lao Zhang and Lao Tan didn't receive the same treatment they do now when they came to Beicang. They still had to do their jobs, and there was no psychological burden in directing them.

Monday, April 11th.

The day before the Double Eleven shopping festival, which was launched ahead of schedule, was much busier than last year. This year, Taobao Mall, JD.com, and Vancl, which launched hastily, were all incredibly popular with their marketing efforts.

In addition, Orange Products, the shopping website under Orange Technology that set the record for the fastest IPO this year, as well as a series of e-commerce websites of all sizes, have joined the Double Eleven shopping festival promotions.

"This thing has really become a hot topic. It'll become a regular shopping festival from now on, giving consumers another reason to buy."

Tan Jincheng, who came to inspect Orange Technology, jokingly said to Sun Tongyu with a smile that most of the world's festivals are created by businesses.

Today, the Shanghai Composite Index surged 7.27% to 1874.80 points. While retail investors are still unaware of what happened, Tan Jincheng already knows: the details of the four trillion yuan stimulus plan will be officially announced tomorrow.

Nothing reacts to market advances more sensitively than the capital market.

Today, the China Securities Regulatory Commission (CSRC) officially approved FlashTech's backdoor listing plan. At 9:00 AM this morning, Changfeng Group, which had been suspended from trading for more than two months, issued an announcement that FlashTech would be backdoor listing.

The transaction plan involves the company selling all its assets and liabilities, excluding the Tianjin industrial base and off-road vehicle business, for RMB 21 billion, and exchanging them for an equivalent portion of the proposed acquisition of Flash Technology, valued at RMB 3 billion.

The difference will be paid by the company through the issuance of shares in cash. At the same time, the company plans to issue shares in a private placement at a price of no less than RMB 11.03 per share to raise supporting funds of no more than RMB 12 billion.

Changfeng Group's announcement, like today's stock price surge, attracted considerable attention and became a trending topic throughout the day.

"Hahaha, the backdoor listing plan has been officially finalized, which means that the resumption of trading is not far away. Hahaha, I'm going to make a fortune."

Xiao Zhang in the electronics workshop was overjoyed. He made up his mind that the day the stock resumed trading would be the day he resigned. He figured he might as well quit this lousy job!

(End of this chapter)