Chapter 710 Global Strategy

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"Mr. Grubman, I think it's far better to work in a company that is more in line with your career aspirations than to waste your precious time on pointless arguments, do you think?"

Looking at the smiling young man next to him with confidence in his expression, Richard Grubman had a thought-provoking look on his face.

After a long time, "Mr. Guo, if I say that I take over the global company, I will reduce or even temporarily stop investing in container ships." And sell some berths and warehouses, would you agree?"

"Before answering that question, I would like to know more about Mr. Grubman's reasons for doing so. Guo Shouyun said.

Richard Grubman nodded, and after organizing the language, "In 1862, the French physician and economist Clíment Jugra proposed for the first time in his book "On the Commercial Crises and Occurrence Cycles in France, Britain and the United States" that there are 9~10 years of cyclical fluctuations in the market economy, and this medium-length economic cycle was later called the 'Jugra cycle', also known as the 'Jugra medium cycle'. ”

“… The change cycle of the heavy industry industry chain, including steel, manufacturing, shipping, electric power, metal mines, coal, ports, building materials, etc., is undoubtedly a typical "Jugra cycle". Under normal circumstances, the cycle is about 10 years, and the ratio of the length of the rising period to the declining period is about 4:6. Although it is not absolute, it maintains a roughly 10-year cycle change. ”

“… The last 'Jugra medium cycle' in the shipping industry was from the third quarter of 1992 to the fourth quarter of 2001. And the next shipping cycle, if there are no accidents, should be from the fourth quarter of 2001 to the fourth quarter of 2011 or the first quarter of 2012. According to the law of the Jugra cycle rising in 4 years and falling in 6 years, from the fourth quarter of 2001 to the fourth quarter of 2005, the shipping industry was in a stage of rapid development, and then entered a downward cycle from 2006. ”

“… It is now the third quarter of 2004, and another year will be the culmination of the Jugra cycle. If the global company invests heavily in shipping, it will undoubtedly catch up with the high point of the market, not only to spend a lot of unnecessary money, but also to bear high operating costs after the shipping industry enters a downward cycle. So, if Global is serious about investing in the shipping industry, it would be more appropriate around 2009, when the shipping industry reaches the bottom of the downward cycle. ”

“… According to Reuters and Bloomberg survey data, the world's 20 large shipping groups add an average of 37,000 TEUs of capacity every year, and the global shipping industry adds 3.15 million TEUs of capacity every year, with an annual growth rate of 8.6%. The new demand for global capacity is 2.87 million TEUs, with a growth rate of 7.9%! Although excess capacity is the norm after competition in the shipping market, once it becomes long-term, excess capacity will inevitably crush the market. ”

“… Universal is not a traditional shipping company, but a comprehensive company built around commodity trading, involving finance, shipping, logistics, terminal operations and other businesses. There are a large number of small and medium-sized shipping companies and freight companies on the open logistics platform to provide services for it, so there is no need to invest in ultra-large container ships, ultra-large LNG carriers, ultra-large oil tankers, and chemical tankers, etc., which will not be involved in these small and medium-sized shipping companies. In this way, global companies are less affected by shipping cycles and have higher profit margins. ”

“… In addition, with the continuous development of the global shipping industry, large-scale ships are becoming more and more mainstream. This is good for saving freight costs and maintaining profitability during shipping recessions. With the large-scale ship type, the requirements for wharves and supporting facilities are also higher, and small and medium-sized wharves will become more and more marginalized. Therefore, increasing the number of berths at the terminal is not the best development measure. The long-term strategy is to concentrate financial resources to deepen investment in large-scale terminals and optimize supporting facilities. In the United States, for example, the world does not need to invest in dozens of terminals, but only needs to concentrate three or four major terminals on the East Coast, West Coast and the Caribbean. This will not only increase the utilization of the terminal, but also increase the net profit of the terminal operation. ”

“… That's how the terminal operates, and so does the warehouse. There is no point in pursuing the number of units, but it should increase the radiation area of the core warehouse, increase the utilization rate, and improve the profit margin. In addition, in all logistics links, such as shipping, air transportation, terminals, and freight warehouses, Universal lacks railways and freight airports. Railways and airports are indispensable to the company's desire to build a platform that spans all aspects of the logistics industry. ”

After Richard Grubman finished speaking, he exhaled. After noticing his eyes, Guo Shouyun smiled: "Mr. Grubman's words have made my understanding of the logistics industry more in-depth. And I agree with your analysis very much. So, now more than ever, I want you to take on the role of CEO of Global Corporation. ”

"Mr. Guo, except for what I said before. If I were the CEO of Universal, I would cut down on the variety of commodities on the Global's commodity trading site. ”

"I want to know why. ”

Richard Grubman nodded, "Since it's a commodity trading site, you have to buy and sell commodities." Pacific Energy is the world's largest producer and supplier of electricity, as well as the world's top natural gas transportation, distribution and retailer, and Unocal is the fourth largest oil and gas producer in the United States and one of the top 20 in the world. As a result, electricity, gas, and oil are the most traded on global commodity trading sites. In recent years, with the large investment in agriculture and animal husbandry of Guo's Commercial Group, the trading volume of soybeans, corn and fresh food has also increased. ”

“… In contrast, steel, copper, coal, timber and other types of trading, because Mr. Guo does not have similar support companies, under the competition of the Chicago Mercantile Exchange and the New York Mercantile Exchange, it has never been able to form a scale. Therefore, I think we should give up the trading of small categories and focus on the seven categories of electricity, natural gas, oil, soybeans, corn, wheat, and fresh food. ”

Commodity trading is naturally accompanied by the formation of the futures market. At a time when global commodity trading sites were not large, futures trading was not very remarkable, or even carried out. But as Pacific Energy's power production grows, so does Unocal's presence in the oil and gas sector through acquisitions.

In addition, Guo Shouyun's Kwok Charity Foundation and several affiliated charitable funds invested almost half of it in buying land.

The United States has more than 2 million farms and 1,669,000 square kilometers of arable land, the largest in the world. In recent years, Guo Shouyun has done charity, except for donating to Stanford University, American students going to China, or Chinese students coming to the United States, and several charity schools under his own, most of them have purchased land. The land is then given to people who are homeless and willing to engage in agriculture in the form of charitable donations. The vast majority of these people are Chinese, with a small number of Hispanics and Hispanics.

In order to take care of more rural men from China who could not read big characters and could only farm, Guo Shouyun dismantled the large farms he bought into small farms of more than ten acres.

In the United States, it is common for small farms to cultivate intensively and grow cash crops such as sugar beets and spices for higher incomes. However, these require a high level of knowledge and experience, and are not suitable for newcomers to China. So, in the beginning, it was simple to plant, and they were also experienced in corn, wheat and soybeans. Each year, Kwok's Farms has these farms grow corn, wheat and soybeans on an order-to-order basis, which are then purchased and sold on the Kwok's Commodities Trading website.

With years of accumulation, the Kwok Charitable Foundation has invested more than $5 billion in agriculture. At the same time, the trading volume of corn, wheat and soybeans on the global commodity trading website is increasing, and the influence is also increasing.

Coupled with Kwok's Farms' investment in animal husbandry, there is also an increase in the trading of beef on the global commodity trading website.

Today, electricity, natural gas, oil, corn, soybeans, wheat and beef are nearly the largest trading instruments on the global commodity trading website.

Of course, someone may ask. Since the land has been donated, as the owner of the land, he can plant whatever he wants, and he does not have to sell it to Guo's farm. OK, friend, if you don't sell to Kwok's Farm, don't think about getting donations from the sub-fund of the Kwok's Charity Foundation when your children are studying in the future, and don't expect to receive donations if you are seriously ill.

In contrast, Cargill, Bunge, and Louis Dreyfus Company will not provide you with these. As for how to choose, it is obvious.

“… Fewer categories help the world become more specialized in storage, transportation, sales and other links. In turn, we will improve our service level, market share and influence around the world. Mr. Kwok is well-capitalized and should choose one of ADM, Cargill, Bunge and Louis Dreyfus Company to strengthen his dominant position in the trading sector, especially in agriculture. ”

ADM, Cargill, Bunge and Louis Dreyfus Company are the world's four largest grain merchants, controlling 80% of the world's grain trade. If one of the hundreds of billions of dollars is traded every year, the global commodity trading site will become one of the real leaders in the field of agriculture and animal husbandry in the world.

“… Retrofitting of logistics systems. In terms of sea freight, I hope to sell container ships under 10,000 tons of TEU, all single-hull tankers below Suezmax, and LNG carriers under 200,000 cubic meters. Because although small and economical ships are now the mainstream of maritime transportation, they are also the most vulnerable to losses once they encounter a shipping cycle. On the contrary, it is a very large ship, which can get orders at a low point in shipping by virtue of its economy. ”

“… In terms of air freight, I want to sell all the cargo planes. We are engaged in commodity trading, and the price of cargo planes is clearly not suitable for us. ”

“… In terms of terminals, we will strengthen our shareholding and interests in the hub port, expand the throughput capacity of the hub port through investment, and win more orders. ”

“… In terms of land transportation, it is mainly railway and road transportation, as well as the construction of freight warehouses and storage and transportation equipment. We can currently acquire one of the six Tier 1 railroad companies in the United States. ”

The American freight railroad companies are divided into three categories according to their annual turnover, Class I railways with an annual turnover of more than 250 million US dollars, Class II railways (regional railways) with an annual turnover of 200 million ~ 249 million US dollars, and Class III railways (local railways) with an annual turnover of less than 200 million US dollars.

At present, there are six first-class railroad companies: Pacific Union, North Burlington-Santa Fe, CSX, Norfolk Southern, Central Illinois Gulf Company, and Missouri-Kansas-Texas Railroad. All six railroads are national rail companies, and their transportation networks reach all states in the United States, as well as Canada and Mexico.

“… If all this can be achieved, we will become the world's largest integrated logistics and commodities trader. ”

Guo Shouyun nodded, and after a moment of silence, he said: "Building a world-class comprehensive logistics and commodity trading platform is also my expectation for a global company. However, in the development plan you envisioned, I agree with the sale of the aviation business. Indeed, the high freight rates of air transport are too high for larger commodity transactions, and there is no need to retain the aviation sector after reducing the assortment of global trading sites. ”

“… In addition, I do not agree with the strategy of selling container ships under 10,000 tons of TEU, all single-hull tankers below the Suezmax, and LNG carriers under 200,000 cubic meters. Because Pacific Energy, Unocal and Kwok Commercial themselves need a large number of specialized ships to provide logistics services for them. This is a business that Universal will not lose, and there is no need to give this money to other shipping companies to earn. ”

"Regarding the investment in the port, it is no problem to focus on investing in the core hub port, and it is also the right thing to invest in expansion. It's just that the assets of the six major American railroads are huge, and I agree with your acquisition strategy, but it will have to wait until next year. ”

"Next year?"

Guo Shouyun nodded affirmatively, it will take time to sell eBay and Yahoo shares, which this year has already been used to buy a 22.4% stake in Scottish Power. The rest will not be possible until at least next year. In addition, each of the six major U.S. railroad companies has assets of tens of billions of dollars, and it is obviously not enough to recoup funds from the sale of shares in eBay and Yahoo, even if it sells 40% of the shares of Dabor Steel Phase I. So, if you want to buy one of the big six railroad companies, you need to use the Bruce Fund, which has $180 billion in capital reserves.

At present, the $180 billion is all invested by Guo Shouyun in oil futures and gold spots. Liquidation takes place in March every year.

The purpose of the liquidation is to comprehensively assess the total value of the assets of Kuok's, Pacific Energy, Unocal, Matrix, and Phoenix Bank, which are affiliated with the Bruce Fund, and then issue a new asset-backed security to cover the previous batch of asset-backed securities and repay the interest.

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