Chapter 990 Industrial Excess and Dumping of Goods
In the imperial capital, financial street, and stock trading hall.
Dingsheng Machinery's major shareholder Jia Renlu saw that after the stock market opened, Dingsheng Machinery's stock price plummeted from thirty-eight cents per share to two cents per share.
Jia Renlu's heart was beating fast, and his net worth immediately shrank by more than 100,000 taels of silver coins.
His face turned red, and he shook his head and said: "Money comes quickly in stock trading, but money is lost even faster.
Dingsheng Machinery was operating very well, so why did it fall so badly?"
As soon as Jia Renlu finished saying this, he felt someone tapping his shoulder.
He saw a man wearing a silk gown and gold-rimmed glasses, who looked like a scholar.
"Brother, if you buy Dingsheng Machinery's stocks, you are completely new to the stock market.
Dingsheng Machinery will fall sooner or later, and if you are reluctant to stop the loss, you can only lose money."
Jia Renlu heard this man say that his company's stock price would fall sooner or later.
This completely negates his careful management strategy.
Jia Renlu asked with a slightly dissatisfied tone: "Little brother, you must be realistic when speaking.
I have been paying attention to the company Dingsheng Machinery. They are doing very well. Why do you say that the stock of this company will fall sooner or later?"
The elegant man in a long gown did not answer. He first introduced himself: "I am Li Si, an ordinary teacher at Imperial University. I usually like to analyze market conditions.
If this brother is willing to listen to me talk a few words, then we can go to the teahouse and talk while drinking tea."
Jia Renlu also wanted to know what this scholar said?
Stones from other mountains can attack jade. He understands why he stepped into the trap, so he will not continue to step into the trap in the future.
His current cognition and actions will be very similar.
If you don’t learn, you will continue to fall into the trap when encountering similar situations in the future.
The two of them soon came to a teahouse, and Jia Renlu ordered a pot of the famous West Lake Longjing tea.
The tea exuded a refreshing aroma, and Jia Renlu asked politely: "Mr. Li, I think you also recognize that I am the major shareholder of Dingsheng Machinery.
If Mr. Li can point out the problems of Dingsheng Machinery, he will give you one thousand taels of silver coins with both hands and invite Mr. Li to become the consultant of Dingsheng Machinery."
Jia Renlu is a businessman. He knows that being courteous for nothing is either a traitor or a thief.
The only thing that others can desire from him is money.
He is not well-known in business circles, and his black-and-white photos of egg tarts have appeared in newspapers.
It is not difficult at all for anyone who is interested to know who he is.
Li Si heard Jia Renlu's straightforward words, but he was not angry.
What he just said on the stock trading floor was just to tell Jia Renlu.
It's all about money, there's no shame in monetizing knowledge.
Living in the capital is not easy.
With only the meager salary of a university teacher, life will be very poor.
Li Si sipped a cup of tea and then said slowly: "Boss Jia, your reaction is too slow.
I learned before that your mainstream products of Dingsheng Machinery are various chains, and the most popular products are bicycle chains and tractor chains."
Jia Renlu said proudly: "Our Dingsheng Machinery has a unique quenching process, and the cost has increased slightly.
The bicycle chains we manufacture can last for three or four years without breaking.
Some bicycle chains from small manufacturers will break after two or three months of use.
There is no problem with our company's products, but now there is a huge backlog.
This time the company's stock price plummeted, and even the steel plant was unable to pay back the money.
I still need to get money from my family to fill this hole."
Jia Renlu was very aggrieved. He believed that his company's products were far superior in performance to similar products, but they were not accepted by the market.
However, he must find a way to save the company and face unlimited liability for related debt issues.
The debt owed by the company will not be wiped out once the company goes bankrupt, but the shareholders will also have to be recovered.
I heard that the empire's parliament, many of whom are businessmen, are discussing changes to the law.
These businessmen and parliamentarians proposed that if a company fails, it only needs to bear limited liability and lose the benefits obtained from the company.
Countries such as Rui and Chu in Europe have such regulations.
Li Si saw that Jia Renlu felt aggrieved and couldn't help interrupting him.
He waited until Jia Renlu calmed down and continued: "Boss Jia, I understand your current mood very well.
But the problem you encounter is that you don't understand economics.
With the development of the empire's industry, the empire experienced overproduction in many fields.
Boss Jia’s company is mainly engaged in metal processing.
Boss Jia should feel that the price of steel has continued to fall in recent years.
Even if a war broke out in Europe, it did not affect the continued decline of steel prices.
Things produced in factories cannot be sold, so manufacturers will inevitably sell them at reduced prices in order to prevent a backlog of goods.
The current thinking of manufacturers is not how much profit they can make, but how to keep the factory alive.
The market price of Boss Jia's bicycle chain is 30 cents a piece. If it sells for 10 cents a piece now, the factory can survive. Boss Jia can't do it."
Jia Renlu was a little confused. He asked Teacher Li Si to learn more about what industrial excess is and what crises it will lead to.
After he understood the situation, he suddenly realized: "This situation is not the same as the low price of grain and the harm to farmers that has always happened in history.
Now it has just changed from being a low-income farmer with low prices to a low-income factory with low prices for iron.
Once Teacher Li explained it like this, I was able to understand the problem.
Now as long as we can save the company, let alone ten cents a piece.
The company's production cost is eight cents a piece, and even if it costs five cents a piece, I am willing to sell it."
Jia Renlu learned about the situation of industrial oversupply and decided to cut his losses.
The products from their factory cannot be sold, and the main reason is that the prices are high.
Steel prices continue to fall, and the prices of other companies' products decrease accordingly.
Their company is slow to respond, and even if it has some advanced technology, its products still cannot be sold.
Li Si drank a cup of tea and did not continue talking.
When Jia Renlu saw this situation, he took out two banknotes worth one hundred taels of silver coins.
He handed the two banknotes to Li Si and said politely: "Teacher Li, please accept my kindness."
This chapter is not finished yet, please click on the next page to continue reading the exciting content! Li Si happily took the two hundred taels of silver coins. He spent so much money just for this little money.
After he accepted the money, he immediately provided a solution.
"The industrial surplus in the empire is already serious, and there are no problems yet.
Just because the empire decided to develop South Asia and India, it consumed a lot of the production capacity of government-owned companies.
It is difficult for private companies to participate in these projects.
The way to solve the problem is to transfer the contradiction outward.
Compared with the empire, the European regional market is not too large.
But for a certain company, this is a huge market.
Even if these countries prefer their own industrial companies, as long as the price of the products is low enough, it will not be too difficult to knock on the doors of these countries.
Many companies that have survived the crisis have survived through this method.
Boss Jia needs to act quickly. Once problems arise in European countries, they will directly close foreign trade and diverting the crisis will not work."
After Jia Renlu listened to Teacher Li Si's advice, he happily handed over the remaining eight hundred taels of silver coins with both hands.
Teacher Li Si’s suggestion is worth one thousand taels of silver coins.
Dingsheng Machinery cleared a large amount of accumulated inventory and subsequently reduced production capacity to cope with the crisis of industrial oversupply.
Dingsheng Machinery is a company worth hundreds of thousands of silver coins.
A mere thousand taels of silver coins can save Dingsheng Machinery, which is really worth it.
Jia Renlu invited Teacher Li Si to become the company's consultant and personally guide this matter.
Dingsheng Machinery sells products to European countries through low-price dumping.
…
Wu Guo built Yecheng.
Zhao Zhiwen, director of the state-owned machinery factory, walked quickly to the garage holding an umbrella.
He sat in the car and watched the heavy raindrops hitting the car window.
He didn't know much about the weather in Europe. He didn't know why, for some reason, frequent rains began to occur in Western and Central Europe since August.
The water level of the Danube River has risen by three to five meters.
If the Han people didn't attach great importance to water conservancy, the countries along the way would have built dams and reservoirs.
Zhao Zhiwen estimated that the Danube River is likely to flood and flood a lot of land.
This is the time when the official food harvest is about to begin.
Once the fields are flooded, food shortages will become a big problem.
Zhao Zhiwen braved the rain and came to his uncle Zhao's family.
His uncle Zhao Quan was the steward of Prince Wu's Mansion.
Uncle Zhao Quan, as a confidant of the King of Wu, is now in charge of the Young Mansion of the State of Wu, the King of Wu's money bag.
Zhao Zhiwen only walked a few steps and came to the study room of his uncle Zhao's family. His body was already soaked by the rain.
When Zhao Quan saw Zhao Zhiwen's embarrassment, he immediately ordered his yellow-haired servant at home to bring a clean piece of clothing for Zhao Zhiwen to change into.
Zhao Quan said in a slightly reproachful tone: "Zhiwen, it's raining so heavily outside, why did you come to my uncle's house?
If you have any questions, let’s wait until the rain stops.”
Zhao Zhiwen said with a wry smile: "It has been raining for more than ten consecutive days, which is comparable to the rainy season in the south of the empire.
In the history of the Holy Roman Empire, there is no record of such heavy rain.
This rain is an abnormal situation, and some experts have spread rumors in newspapers, saying that it is caused by climate change caused by burning a large number of forests in American countries and converting forests into farmland.
These experts are just talking nonsense. How can burning forests in American countries affect rain in Europe?"
After Zhao Zhiwen complained about this matter, he also changed his clothes.
He sat opposite his uncle Zhao Quan and drank a cup of hot tea to warm himself.
Then he said helplessly: "Uncle, if there is no urgent matter, my nephew will not come to you to deal with it.
I was promoted by my uncle to manage a state-owned machinery factory.
Now the state-owned machinery factory can hardly continue to operate, and workers can hardly pay their wages.
My nephew is helpless now and can only ask his uncle for help."
When Zhao Quan heard what his nephew Zhao Zhiwen said, he immediately felt something was wrong.
He knocked on the table lightly and said with a tone of resentment: "Zhiwen, I will put you in charge of the state-owned machinery factory.
You just need to do things step by step, no messing around.
How many tasks are received and how many things are produced.
You only need to produce the product in good quality and quantity, and everything else has nothing to do with you.”
Zhao Zhiwen replied a little aggrievedly: "Uncle, how could it not be related?
You may have been deceived by the people below and don't know how difficult it is for our state-owned factories.
Take the barrels and tracks produced by our factory as an example.
The barrel of a machine gun produced by our factory only costs 1,600 yuan.
For merchants in the empire, the CIF price of their gun barrels was less than five hundred coins.
Both chariots and tractors need tracks, and the cost of our factory is thirty-seven taels of silver coins.
The CIF price for imperial merchants is only thirteen taels of silver coins.
This price is even worse than being cut in half. Even if it is a state-owned factory, they do not want to use the parts we produce.
Because the accessories produced by Empire are not only cheaper, but also of much better quality than ours.
The market is flooded with the empire's products, and the products of the machinery factory have no competitiveness at all."
When Zhao Quan heard what his nephew said, he banged his hand on the desk and said, "This is the empire dumping us.
With the empire's technology and production scale, even including freight, the cost is much lower than our own production.
For industrialized products, the more produced, the lower the cost will be.
My uncle really doesn’t know the specific situation.”
After Zhao Quan finished speaking, he made a few calls to get to know the specific situation from his subordinates and colleagues.
After he ended the call, his face turned livid.
"The empire is going too far and is just dumping goods.
The empire took advantage of their complete system and low cost.
They sell these goods to our country, which seriously affects the situation of our factories."
Zhao Quan knew the whole story and was very angry.
What happened to Wu Guo's private factories?
That has little to do with him, but Wu Guo's government-run factories are now generally in a downturn, and many factories are unhappy.
Following the order of the King of Wu, he established Wu's own industrial chain.
If you don't do this well, you will definitely lose the trust of King Wu.
Zhao Zhiwen saw that his uncle was very angry. He thought his uncle had a solution and quickly asked: "Uncle, what should we do now?"
Zhao Quan shook his head and said helplessly: "Nothing can be done now. Ever since the conflict between Chu and Song Dynasty intensified in Europe, countries have realized that peace has gone far away.
Now all countries are stepping up preparations for war, and cannot do without the products of the empire.
Once a trade conflict occurs with the empire, it will be detrimental to the development of Wu State.
Neither King Wu nor his ministers would agree to this.
Now my uncle can only order the government-run factories to use some of the products we produce so that factories like yours can barely survive."
After Zhao Quan finished explaining his method, he stood by the window, looking at the pouring rain outside, and fell into deep thought.
Government-run factories can save part of the factory through mandatory orders.
However, the dumping by the empire has had the biggest impact on industry, which is the large number of private factories that must exist.
These private factories slowly died out, and Wu's hope of building an industrial chain completely disappeared.
Zhao Quan had just learned that the dumping of imperial industrial products was not aimed at Wu, but at Europe and America.
They used cheap and high-quality products to destroy the fragile industrial chains of each vassal country.
Zhao Quan can analyze which country can escape this crisis and retain its own industrial chain as much as possible. This country will definitely stand out in future competition.
When Zhao Quan thought of this, he ignored the pouring rain outside and immediately took a car into the palace to pay homage to King Wu.
The empire dumped goods, which was both a crisis and an opportunity for Wu.