amaotonovel Chapter 1498 Love Fills Nine Bends (Final Chapter)
Chapter 1498 Love Fills Nine Bends (Final Chapter)
Chapter 1498 Love Fills Nine Bays (Final Chapter)
The atmosphere in the Shi Group's conference room was as tense as a pressure cooker about to explode. Shareholders, their faces ashen, sat on both sides of the long conference table. The air was thick with the smells of smoke and sweat. Occasionally, someone would move a chair, the harsh sound breaking the deathly silence.
Qin Hao stood in front of the projector, the screen displaying the Shi Group's latest balance sheet. The red deficit figures were as glaring as blood, especially in the "Short-term Debt" column, where the number of zeros after the figures was dizzying.
"As you all can see, the group's current short-term debt is HK$2.87 billion." Qin Hao's voice echoed in the conference room: "And the cash we can use, including the HK$200 million I just injected, is less than HK$300 million."
He paused, letting the number settle in everyone's minds. Some people started sweating, while others instinctively gripped the armrests of their chairs.
"Two hundred million Hong Kong dollars is just a drop in the bucket for this hole." Qin Hao turned to the next slide, which showed the profit and loss statements of the group's various businesses.
Several business segments were highlighted in red on the screen: Shi's Shipping, Shi's Printing, Shi's Hotel Management...
"My first step is to divest these non-core businesses and sell them off as a package." Qin Hao pointed to these sectors with a laser pointer: "They have been losing money every year, dragging down the group's overall performance. Selling them will not only bring in funds, but also get rid of the burden and reduce subsequent losses."
The shareholders began to whisper among themselves. Some nodded, some shook their heads, but most wore expressions of reluctance. After all, these businesses were the culmination of decades of operation by the Shi Group; though not profitable, they represented the Shi family's industrial empire.
“President Qin, although these businesses are currently operating at a loss, they are, after all, the foundation of the Shi family.” An elderly shareholder with white hair stood up shakily: “If we sell them off, will the Shi Group still be the Shi Group?”
Qin Hao looked at him, his tone calm but firm: "Mr. Shi, I understand your feelings. But now is not the time to talk about feelings. If the group goes bankrupt, these businesses will also be lost, and we won't even be able to sell them for a good price."
He turned to the crowd and raised his voice: "Most importantly, we must deal with the properties that Shi Xiaojun purchased with the group's embezzled funds."
The next slide on the screen displayed dozens of property listings: address, area, purchase price, loan amount... Just looking at these numbers made many people gasp.
"Shi Xiaojun may not have learned much else in Hong Kong over the years, but he's certainly adept at leveraging bank funds," Qin Hao said sarcastically. "He used only HK$500 million of his own capital to leverage over HK$2 billion worth of real estate. That's a leverage ratio of over four times."
He circled several key figures on the screen: "Given the current 30% drop in Hong Kong's property market, this HK$500 million has already been completely lost. And our debt is a solid two billion. Banks won't reduce or waive our loans just because the property market has fallen."
The meeting room erupted in an uproar.
"Over two billion?!"
"How...how could we possibly repay this?"
"That spendthrift Shi Xiaojun!"
After the murmurs subsided, Qin Hao continued, "Right now, the value of these properties is shrinking every day. Every day we delay, our debt burden increases. My suggestion is: sell them all, sell as much as you can."
These words immediately drew strong opposition.
"No way! Wouldn't we suffer huge losses if we sold now?"
"Yes, the housing market will eventually recover; selling now would be a huge loss!"
"Let's wait a bit longer, maybe it will rebound in a few months!"
A middle-aged shareholder wearing gold-rimmed glasses stood up and said excitedly, "President Qin, if we sell these properties now, we'll lose at least seven or eight hundred million yuan. Why don't we wait until the property market recovers? Maybe we can make it back."
Others chimed in:
"Yes, Hong Kong's property market has always seen more increases than decreases, so this is definitely only temporary."
"Hang in there a little longer, maybe it will recover soon."
"Selling now would be too unprofitable, we can't sell!"
Qin Hao shook his head inwardly as he looked at these shareholders who were still daydreaming.
"Stop dreaming. Look at the situation outside. Even people have to queue up to jump off rooftops. If we act now, we might still find someone to take over. If we wait any longer, market confidence will completely collapse, and then we won't be able to sell even if we want to."
Qin Hao knew very well that the decline in Hong Kong's property market would last until at least 2003, and given the current financial situation of the Shi Group, it was simply impossible for them to bear the debt of 2 billion yuan until then.
“Sell at a loss, and the group will still exist, so your shares will still be money.” Qin Hao walked back to the conference table, placed his hands on the table, and scanned the faces of each shareholder: “Once the group is dragged down, your shares will become worthless. At that time, you can only watch as these properties are taken away by the banks, leaving not even a trace.”
He straightened up and said in an unquestionable tone, "Whether you live or die is up to you. Now, begin the vote!"
The secretary began distributing ballot forms. The shareholders looked at each other, their faces filled with struggle and hesitation. Some picked up their pens and put them down, then picked them up again; some closed their eyes, as if making a difficult decision; some whispered to the person next to them.
Ten minutes later, the voting ended. The secretary began counting the votes.
"In favor of selling: 38 votes"
"Against selling off: 12 votes"
"Abstentions: 5 votes"
Qin Hao breathed a sigh of relief. Although the process was difficult, he finally passed.
“Okay, since the majority of shareholders agree, let’s start implementing it immediately.” Qin Hao nodded to his assistant: “Notify all real estate agencies to list all the properties on the list. The price can be 10% lower than the market price, but full payment is required. Loans will not be accepted.”
He added, "Especially those with high loan-to-value ratios, we'll prioritize them. The banks are already pressing us, and we have to sell them before they're forcibly auctioned off."
……
In the following month, the Shi Group began a painful process of "cutting off an arm to survive".
First, there was the divestiture of non-core businesses. Shi's Shipping Company was sold to a Singaporean shipping company for HK$80 million; Shi's Printing Plant was sold to a mainland printing group for HK$30 million; and Shi's Hotel Management Company, still possessing value, was sold for HK$120 million…
Although the sale of these businesses was at prices significantly lower than their actual value, it still brought in over 200 million yuan in cash, temporarily easing the group's cash flow pressure.
But the real test is dealing with those properties.
Qin Hao's prediction was correct; the Hong Kong property market is now a buyer's market. The situation where it was once difficult to find a property has been completely reversed, and now buyers are picky and desperately trying to drive down prices.
"Mr. Qin, the buyer for that villa in Repulse Bay only offered 38 million, which is 5 million lower than our asking price."
"The buyer of that shop in Causeway Bay is demanding a 10% price reduction, otherwise they won't buy it."
"Three office buildings in Central have been viewed, but all were deemed too expensive..."
Every day, the feedback from real estate agents made Qin Hao frown. But he knew that now was not the time to hesitate.
"Sell it. As long as you can pay in full, the price is negotiable," Qin Hao told his assistant. "But remember, it must be full payment. We can't wait for the bank to release the loan."
Thus began a massive property sell-off. Villas in Repulse Bay, shops in Causeway Bay, office buildings in Central… dozens of properties under the Shi Group were put on the shelves like discounted goods in a supermarket.
Prices have been falling again and again. Listing prices are already 10% lower than market prices, and transactions often see further reductions of 5%-8%. Some properties have even sold for half the purchase price.
The shareholders trembled with heartache as they looked at the transaction reports. These were real financial losses.
But as Qin Hao predicted, the Hong Kong property market continued to decline in the following months. Newspapers carried bad news daily:
"The owner of a listed company committed suicide by jumping off a building after his real estate speculation business collapsed."
"Banks have begun auctioning off defaulted properties on a large scale, with starting prices at only 60% of the market value."
"The transaction volume in the housing market has hit a ten-year low, and experts predict it will fall by another 20%."
What alarmed the shareholders even more was that if they had waited a month longer to sell the properties they were selling, the prices would have dropped by at least 15%-20%. Moreover, in the later stages, they couldn't even find buyers—everyone was holding onto their money tightly, afraid to make a move.
"Luckily we sold them early." At a board meeting, the shareholder with the gold-rimmed glasses, who had been the most vehement opponent, remarked, "If we had delayed for another month, we probably wouldn't have been able to sell those houses for even half the price they are now."
The others nodded in agreement. Although taking a loss was painful, it was better than being forced to sell at auction by the bank. Forced auctions often only yielded 50%-60% of the market price, and involved paying exorbitant auction fees.
"President Qin's judgment was correct," another shareholder said. "Looking back now, it was indeed the best time to act. Although we lost a lot, at least we saved the group."
Qin Hao sat in the chairman's seat, listening to the discussions with a blank expression. He knew this was only the first step; the real challenges lay ahead.
Even after raising over a billion Hong Kong dollars through a large-scale sale of properties, the Shi Group's situation remains far from optimistic. While some of its debt, amounting to several billion Hong Kong dollars, has been reduced, the remaining amount is still substantial. Furthermore, after a brief rebound, the group's share price has begun a new round of decline—falling from HK$6.7 to HK$4.2, resulting in a market capitalization loss of over 60%.
Worse still, the effects of the Asian financial crisis began to emerge. Hong Kong's retail, tourism, and catering industries were severely impacted, unemployment soared, and consumer spending declined. The Shi Group's department stores, restaurants, and hotels all saw their revenue halved.
……
Late at night, in the chairman's office of the Shi Group. Qin Hao and Shi Xiaona sat on the sofa, a pile of reports and documents spread out in front of them.
The view outside the window is of Victoria Harbour at night, but the neon lights across the harbor are noticeably dimmer than in previous years. The shadow of the financial crisis looms over the city, and also over the Shi Group.
"Our revenue has dropped another 30% this month," Shi Xiaona said wearily, rubbing her temples. "Many brands have closed down at the department stores. Restaurant foot traffic is only half of what it was last year. Hotel occupancy is less than 40%..."
Qin Hao frowned as he looked at the figures on the report. He knew that the decline of the Hong Kong market could not be reversed in the short term. The impact of the financial crisis would last for a long time, and it would take several years for the Hong Kong economy to recover.
The Shi Group, however, cannot wait that long.
“Xiao Na, we need to make a major decision.” Qin Hao looked up at his wife: “I think the group should shift its development focus to the mainland.”
Shi Xiaona was taken aback: "Mainland? But we have almost no business in the mainland."
“Not now, but we can build it.” Qin Hao stood up and walked to the map of China on the wall: “Look, the Hong Kong market is saturated and has been severely impacted by the financial crisis. But the mainland is different; the mainland economy is developing rapidly and has huge market potential.”
He pointed to several cities on the map: "Guangzhou, Shenzhen, Shanghai, Beijing... the consumption power of these cities is rapidly increasing. Moreover, the inland areas were relatively less affected by the financial crisis, and their economies are still growing."
Shi Xiaona walked over, looked at the map, and said thoughtfully, "You mean we should abandon the Hong Kong market and focus all our efforts on the mainland?"
"It's not abandoning the business, it's a strategic shift," Qin Hao corrected. "Hong Kong will remain our headquarters, but our business focus will shift to the mainland. For the next five to ten years, the group's development will be primarily based in the mainland."
He paused, then continued, "Production costs are lower in the mainland, the market is larger, and there is more policy support. We can move our factories to the mainland and take advantage of its labor force to reduce costs; we can also expand our sales network to the mainland and seize the emerging consumer market."
Shi Xiaona remained silent for a while. She knew Qin Hao was right, but she also knew how difficult this decision was.
The Shih Group is a Hong Kong company, rooted in Hong Kong, and its soul is in Hong Kong. All shareholders are Hong Kongers, all employees are Hong Kongers, and all business revolves around Hong Kong. To shift the focus to the mainland would be tantamount to changing the group's DNA.
Moreover, the business environment, laws and regulations, and market rules in mainland China are different from those in Hong Kong. The Shi Group had no foundation in mainland China and had to start everything from scratch.
"Will the shareholders agree to this?" Shi Xiaona asked worriedly.
“They won’t agree easily,” Qin Hao said frankly. “But we have to persuade them. This is the group’s only way out.”
A few days later, the Shi Group held a special board meeting to discuss the group's future development strategy.
When Qin Hao proposed the plan to "shift the focus of development to the mainland over the next five years," the meeting room immediately erupted in discussion.
"No! How can we shift our focus to the mainland?"
"We have no connections in mainland China; going there would be suicide!"
"Although the Hong Kong market is facing difficulties for the time being, it will eventually recover. We should hold on to Hong Kong!"
"Yes, we cannot give up Hong Kong!"
Opposition was widespread. Almost all Hong Kong shareholders strongly opposed the plan. They believed that the Shi Group should remain in Hong Kong and wait for the market to recover.
Only a few shareholders remained silent; most of them had business dealings with the mainland and were aware of the development potential of the mainland market.
After the objections from Qin Hao and others subsided slightly, he slowly spoke: "Everyone, I understand your feelings. The Shi Group did indeed originate in Hong Kong, and Hong Kong is our root. But please think about it, if our roots are rotting, are we still going to cling to those rotten roots?"
He walked to the projector and switched to a chart: "This is Hong Kong's GDP growth rate over the past ten years. As you can see, the growth rate has declined sharply since 1995. And this is the mainland's GDP growth rate over the past ten years—"
The next chart shows that China's GDP growth rate has consistently remained above 8%, and in some years it has even exceeded 10%.
"On one side, there's negative growth; on the other, positive growth of over 8%. On one side, the market is shrinking; on the other, it's expanding. On one side, costs are high; on the other, costs are low." Qin Hao looked at the shareholders: "If you were an investor, which would you choose?"
The meeting room fell silent. The numbers didn't lie; the contrast was too stark.
“But…we have no connections or resources in mainland China, how can we conduct business?” one shareholder asked.
“We are not abandoning Hong Kong. Hong Kong remains our headquarters and an important market. But we must open up new battlefields and find new growth points. Otherwise, being stuck in Hong Kong will only lead to our demise.”
The shareholders began to hesitate. They looked at Qin Hao, then at Shi Xiaona, and then at the financial statements in their hands. Reality was harsh; what Qin Hao said, though unpleasant, might be true.
Mother Shi spoke slowly.
“I have conducted research in mainland China, and the market potential there is indeed huge. Moreover, the production costs are much lower than in Hong Kong. If we move our factories to the mainland, the costs can be reduced by at least 30%.”
Shi Xiaona also stood up: "Everyone is well aware of the current situation. If things don't change, the group won't survive until next year. Although the changes are risky, at least there's a glimmer of hope."
She looked around and said firmly, "Let's begin the vote now. Those who agree to shift the development focus to the mainland, please raise your hands."
In the meeting room, the shareholders looked at each other in bewilderment. Some struggled, some hesitated, and some had already quietly raised their hands.
One minute later, the secretary began counting the votes.
"In favor: 30 vote."
"Against: 20 votes"
"Abstentions: 5 votes"
Although there were many dissenting votes, the number of votes in favor exceeded half. The plan was approved.
Shi Xiaona breathed a sigh of relief.
……
In the following years, the Shi Group embarked on a difficult but determined transformation.
In 1999, the Shi Group established its first production base in Guangzhou. Its garment factories, toy factories, and electronics assembly plants, originally located in Hong Kong, were gradually relocated to Guangzhou. Labor costs in mainland China were only one-third of those in Hong Kong, and land costs were only one-tenth, resulting in a significant reduction in production costs.
In 2000, the Shih Group established a marketing center in Shanghai. Products that were originally only targeted at the Hong Kong market began to enter the mainland market. From high-end clothing to children's toys, from home furnishings to electronic products, the Shih Group quickly gained a foothold in the mainland market by leveraging its advantages in design and quality.
The transformation process was not smooth sailing. Mainland laws, regulations, tax policies, and market rules all needed to be relearned; mainland consumer habits, aesthetic preferences, and purchasing power all needed to be re-examined; and mainland competitors, channel relationships, and supply chains all needed to be rebuilt.
However, Shi's Group is an established company after all, and its management experience is much stronger than that of some makeshift teams in the mainland. After overcoming the initial discomfort, its subsequent development gradually became more stable.
……
At the same time, Burger King has experienced rapid growth.
As the new millennium approached, Burger King had more than 2,000 stores in mainland China, covering all provincial capitals and major prefecture-level cities. Of these, 500 were directly operated stores, mainly located in first-tier cities and some strong second-tier cities; the remaining 1,500 were franchised stores, spread throughout the country.
Burger King has become the leading brand in the mainland fast food industry, a fact that KFC and McDonald's can only follow behind and call it the big brother.
Most importantly, Burger King has established a complete supply chain system. Six large chicken supply bases ensure a stable supply of raw materials; ten regional distribution centers ensure efficient logistics; and an operations supervision team of more than 100 people ensures the service quality of the stores.
The franchise model has proven successful. Although the headquarters only takes a 5% cut of the revenue from the 1,500 franchise stores as a management fee, the profits from raw material supply and consumable sales contribute over 100 million yuan annually to the headquarters. The franchisees are also very satisfied, as most stores break even within two years, after which they enjoy a stable cash flow.
Yang Shumao's Sifang Real Estate has also developed smoothly, ranking among the top tier of real estate companies in the entire northern region.
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