Volume II: Set Sail, Chapter 603

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"Lu Sheng, I can't agree with your request, our Huaqiang Company is now full of funds, and there is no need to raise funds through private placement for the time being!" Li Huolin shook his head and said, he invited Lu Qintian, the chairman of Hong Kong's Lu Group, to have morning tea in the morning.

Because of the political turmoil in China last year, many Hong Kong businessmen felt less confident in ******** and chose to withdraw their capital and emigrate overseas. For example, the Lu Group has a large amount of investment in the mainland, although it will not pat its ass and leave, but it is also hesitant.

In this case, Li Huolin sent people to contact Lu Qintian, hoping to use cash to acquire 40% of the shares of Huafa Electronics held by Lu's Group. As one of the "five golden flowers" of the color TV industry in the deep sea special zone, Huafa Electronics was jointly funded and established in 1984 by Hong Kong Lu's Group and the deep sea special zone development group, and now has an annual production capacity of 200,000 color TVs.

With the support of the Oriental Group, Lu's Electronics has been promoted to one of the world's largest TV manufacturers, with an annual output of more than 7 million color TVs, of which only 2 million are brands, and 5 million units are OEM production capacity for RCA companies. In addition to cooperating with the industrial layout of Dongfang Group in the Deep Sea Special Economic Zone and investing in the construction of factories in the Nanhu Electronics Development Zone, Lu's Electronics also actively cooperates with mainland enterprises.

Limited by the relevant domestic policies,It is difficult for Lu's Electronics to gain the leading power in these joint ventures,The main purpose is to bypass the domestic restrictions on the quota of imported color TVs,Enter the huge domestic color TV market in the form of joint ventures。

Therefore, these joint ventures can only be regarded as an extension of the entire Lu Group, rather than a core asset. The focus of Lu's Group's operation is still on the market development of its own brand and the huge orders of actively serving the Oriental Group.

Therefore, in the case of a haze in the domestic development prospects, if Lu's Group has the intention to adjust its pace, then its equity in each joint venture factory, because it is a non-core asset, will definitely be the easiest to sell. And it is true that when Li Huolin sent in to contact Lu Qintian and expressed his willingness to use cash to acquire his equity in Huafa Electronics, the other party showed great interest.

In 1987, Li Xuan said in a conversation with the relevant leaders of the Shenhai Special Economic Zone that the Oriental Group was willing to help some high-quality mainland enterprises to list in Hong Kong, and use the financing platform of the Hong Kong Stock Exchange to attract Hong Kong's abundant capital to serve the development of the mainland. At that time, Li Hao, who had just been transferred to the ******** of the Special Administrative Region, was very interested in Li Xuan's proposal.

Therefore, under the active promotion of the SAR government, Huaqiang Electronics Company, which has a close relationship with the Oriental Group, was selected as the first pilot enterprise to be listed in Hong Kong. After more than a year of listing counseling by Asian securities companies, Huaqiang Electronics finally successfully listed on the Hong Kong Stock Exchange at the beginning of last year and raised nearly HK$400 million in cash in one fell swoop.

According to Zaihuaqiang's prospectus, a large amount of the funds raised from the financing will be mainly used for the expansion of the company, including the investment required to build a new factory after obtaining a new order from RCA, a subsidiary of Oriental Group. But in fact, due to the steady increase in the performance of Huaqiang, whether it is domestic banks or Hong Kong actresses such as Jiahua and Standard Chartered, they are very willing to provide large-scale credit to Huaqiang.

Therefore, Huaqiang's capital flow was very abundant for a while, which made Li Huolin have more ideas for mergers and acquisitions. In the past few years when Li Huolin presided over the operation of Huaqiang Electronics, the biggest gain was the expansion of business horizons, from the original cadre of a state-owned enterprise to the manager of a large-scale commercial enterprise. In today's business, in addition to self-investment, the most convenient option for enterprises to expand is mergers and acquisitions.

Of course, the reason why Li Huolin wants to acquire Huafa Electronics is actually due to considerations other than commercial interests. After Huaqiang was listed in Hong Kong, it transformed from a state-owned enterprise into a public listed company. However, the Guangdong Provincial Electronic Industry Corporation, the superior authority of Huaqiang Company, is still the controlling shareholder of the listed company, with an absolute controlling stake of 55%.

Huaqiang Electronics is still under the absolute control of the Provincial Electronics Industry Corporation, which is not what Li Huolin wants to see, he wants to obtain greater independent management rights. So Li Huolin figured out that Guò introduced a new major shareholder to dilute the equity of the Provincial Electronics Industry Corporation.

For Li Huolin, the best choice is the SAR government. Huaqiang Company is located in the Deep Sea Special Economic Zone, and if it wants to develop better, it must rely on the support of the SAR government. As far as the SAR government is concerned, taking a stake in Huaqiang, a leading enterprise in the domestic color TV industry, will help the government increase its influence on the entire TV industry in the SAR.

And Huapower Generation's subsidiary, which has a production capacity of 200,000 color TVs, soon entered Li Huolin's sight. First of all,Huafa's production capacity is not small,And Huaqiang、SEG、Kangjia、Sanda is called the "five golden flowers" of the color TV industry in the Special Economic Zone。 In fact, Huafa Electronics is a joint venture between Tefa Group and Hong Kong Lu's Electronics, and adopts the modern enterprise management model of Lu's company.

As one of the largest foundry enterprises of the Oriental Group, Lu's Electronics has been greatly influenced by the Oriental Group in its management process. The TV factory, the core asset of Huaqiang Company, is a joint venture between Huaqiang and RCA Company, so Huaqiang and Huafa actually have a blood relationship in enterprise management, which is very beneficial to the integration of the merged enterprise.

After receiving positive recovery from the Lu family in Hong Kong, Li Huolin also revealed to the principal leaders of the SAR Municipal Party Committee that he hoped to merge the two electronics companies, Huafa and SEG. That's right, in Li Huolin's plan, in addition to Huafa, there is also SEG.

The role played by the Shenhai Municipal Government in the rise of the color TV industry in the Special Economic Zone has always been somewhat passive. First of all, the Oriental Group, which has laid the foundation for the color TV industry in the Special Administrative Region, is too strong because its strength makes the SAR government, which covets the investment of the other party, can only position itself as a service provider.

In addition to oriental enterprises, another important role in the SEZ industry is the large state-owned enterprises attracted by the convenience of the SEZ, but it is also difficult for the SAR government to command these provincial and central enterprises. For example, for example, Sunda Company is actually an enterprise established by the Ministry of Electronic Industry in the Deep Sea Special Zone Office, which is directly led by the Ministry of Electronic Industry. Kangjia is a joint venture controlled by the state-owned Overseas Chinese Town Company.

The SAR government naturally hopes that it can become the leader and formulator of the entire industrial development plan, so in order to strengthen its own right to speak, the SAR Development Group and Shenhai Electronics Group have come forward to establish Huafa Electronics and SEG Electronics.

The parent company of SEG Electronics, Shenhai Electronics Group, is actually a company specially established by the SAR government in order to strengthen the coordination and guidance of the entire electronics industry. It's just that the main development direction of Shenhai Electronics Group is concentrated in the professional electronic supporting market.

It relies on the advantages of large-scale enterprise gathering in Nanhu Electronic Development Zone, and has built SEG Electronics Market in Xinnan Town. As the first specialized market in China specializing in the sales of various electronic components and the organization of supporting supply of production materials, SEG Market has achieved great success since its opening.

Compared with the smooth sailing of the SEG market, the development of SEG Electronics can only be said to be bad luck. With the assistance of RCA, Shenhai Electronics Group built an automated assembly line with an annual output of 240,000 color TVs at the end of eight years. After being put into production, SEG Electronics, in the round of home appliance sales boom from 85 to 88 years, only caught up with the good times of the last year, and then began to struggle in the context of the whole industry in trouble last year.

Compared with the glamorous and beautiful performance of Huaqiang Company, the two electronics companies of Huafa and SEG were not very good in last year's performance. If Huafa and SEG are integrated into Huaqiang, the SAR government's control over Huaqiang will increase significantly. With two enterprises that are about to become burdens, and a leading enterprise in the industry, the SAR government will make money no matter how you look at it!

You must know that Huaqiang's existing color TV production capacity is 700,000 units, and the new factory under construction can add another 400,000 units after it is put into operation. And if Huaqiang annexes Huafa's 200,000 production capacity, and SEG's 240,000 production capacity, its total production capacity will reach 1.54 million units, becoming the largest color TV manufacturer in China!

However, just when Li Huolin felt that his plan was close to success, a new change suddenly occurred in Hong Kong. Lu's Group seems to have suddenly changed its mind and is no longer willing to sell its 40% stake in Huafa Electronics.

As a joint venture, although Lu's Group is the party with a small shareholding, its decision will directly affect the choice of the Special Development Group and the SAR government behind it. Because if the Luk Group, as a Hong Kong businessman, does not agree, the SAR government will never be able to force it forward.

According to the articles of association of your Huaqiang company, shareholders who hold 10% of the shares have the right to nominate directors, and I ask Lu to have at least one seat on the board of directors of Huaqiang!

Otherwise, there will be no point in us taking a small amount of shares! You Huaqiang are not short of cash, and our Lu family is also not short of cash! I agree with the analysis of the domestic color TV industry in the latest issue of the "Oriental Outlook Weekly."

The decline in the sales of color television sets on the mainland last year was only a temporary low tide under the superposition of various factors, and the future potential of the Chinese market is unlimited! I have no reason to give up a company like Huafa that can rank among the top 20 color television enterprises in the country because of tens of millions of cash! There is no problem with Huafa's enterprise management, and I believe that it will soon be able to get out of the predicament!" Lu Qintian said with a smile.

The reason why Lu Qintian changed his mind is simple, Li Xuan had previously made the decision to continue to increase investment in the deep-sea special zone and the mainland. The Oriental Group is definitely a bellwether for Hong Kong's capital investment choices, and Li Xuan's willingness to endorse the future development prospects of the mainland can undoubtedly greatly enhance the confidence of other Hong Kong investors.

In fact, Lu Qintian also personally probed Li Xuan for this reason, and Li Xuan did not be vague or pretentious, but told him in person in a very positive tone that he was still very optimistic about the future development prospects of the mainland. This made Lu Qintian feel reassured, and changed his previous plan to withdraw some funds from the mainland.

As a shrewd businessman, Lu Qintian knows very well that the icing on the cake is not as good as charcoal in the snow. Now is the moment when the development of the mainland is in a certain predicament, and if he can increase investment at this critical moment, it will be easier for him to gain true friendship. This may have a crucial impact on the future development of Lu's Group in the Mainland.

Of course, it is impossible for Lu Qintian to invest indiscriminately, and Huaqiang Company is one of the high-quality assets that can enter his eyes. Therefore, he rejected Li Huolin's desire to acquire 40% of the equity of Huafa Electronics held by him in cash, and instead proposed to obtain 20% of the equity of Huaqiang Company in the form of this part of the equity plus cash.

In the current shareholding structure of Huaqiang Electronics, the controlling shareholder Guangdong Electronic Industry Corporation holds 55% of the shares, RCA holds 15% of the shares, and the remaining Gongzhong holds 30% of the shares. And Lu Qintian's appetite is not small, and he wants to become the second largest shareholder of Huaqiang Company in one fell swoop.

And more importantly, if Lu Qintian's request is agreed, the shareholding of the Provincial Electronic Industry Corporation will definitely be diluted to less than 50% and lose its absolute controlling position. Although Li Huolin intends to dilute the equity of the Provincial Electronics Industry Corporation, there is a premise that the state must ensure absolute control of Huaqiang Electronics.

Therefore, Li Huolin's original idea was to introduce the Tefa Group, so that for the country, Huaqiang's equity is just a left-handed change for a right-handed hand, and the control is still firmly in the hands of state-owned capital. And once the state-owned shares lose their absolute controlling position, it means that the control of Huaqiang Company may change hands, which is easy to become the target of domestic conservatives!

"Lu Sheng, I need to go back and have a serious discussion with the board of directors and the management before I can finally reply to you! Huafa's major shareholder, Tefa Group, has actually been involved in the merger and acquisition we proposed, and I hope you can know this! Moreover, Huafa's production line was built in 84 years, mainly to produce 14 and 16-inch small-screen color TVs!

With the improvement of the living standards of the people in China,The sales growth rate of small-size color TVs is beginning to decline slowly,20The sales of color TVs above inches are getting higher and higher。 Therefore, Huafa's production line will be completely eliminated in less than five years! But Lu's development focus is obviously not on a joint venture like Huafa, I guess you are unlikely to continue to invest heavily in upgrading Huafa's production line in a few years, so it is better to present it when the company still has a lot of value, and discount it in a timely manner!" Li Huolin continued to put pressure on Lu Qintian.

The meeting between the two did not achieve any results, but after testing each other, everyone at least understood some of each other's thoughts. Especially for Li Huolin, he is determined to win Huafa, if Lu Qintian only needs 10% of the equity, he will have a lot more room to operate!(~^~)