Video Game Empire

() "Lu Sheng, I can't agree with your request. Our Huaqiang Company has sufficient funds now, so we don't need to raise funds through private placement for the time being!" Li Huolin shook his head and said that he had an appointment with Lu Qintian, the chairman of Hong Kong's Lu Group, in the morning. Have morning tea.

Because of the political-political turmoil in the country 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 slap the **** and leave, it also has hesitation.

Under such circumstances, Li Huolin sent someone to contact Lu Qintian, hoping to acquire 40% of Huafa Electronics' shares held by Lu's Group in cash. Huafa Electronics, as one of the "five golden flowers" in the color TV industry of the Deep Sea Special Zone, was jointly funded and established in 1984 by the Hong Kong Lu Group and the Deep Sea Special Zone Development Group, and now has an annual production capacity of 200,000 color TV sets.

With the support of Dongfang Group, Lu's Electronics has been promoted to one of the largest TV manufacturers in the world, with an annual output of more than 7 million color TV sets, including 2 million sets of its own brand, which is the OEM capacity of rca company. 5 million units. In addition to cooperating with the Oriental Group's industrial layout in the deep-sea special zone and investing in large-scale factories in Nanhu Electronics Development Zone, Lu's Electronics also actively engages in joint ventures with mainland enterprises.

Huafa Electronics is one of its many joint ventures in China. It is only limited by relevant domestic policies, and it is difficult for Lu's Electronics to gain dominance in these joint ventures. Therefore, the main purpose of Lu's company's participation in these joint ventures is to circumvent domestic restrictions on imported color TV quotas and to share the growing domestic color TV market by means of joint venture brands.

For the Lu Group, these joint ventures can only be regarded as extended businesses rather than core assets. The focus of Lu's Group's operations is still on the market development of its own brands and on actively serving the huge orders of the Oriental Group.

The Lu family has followed the Oriental Group in recent years and has made large-scale investments in the mainland. Under the circumstance that the domestic development prospects are clouded, if the Lu Group wants to adjust its investment pace, then its equity in each joint venture factory, because it is a non-core asset, is definitely the easiest to sell. And this is indeed the case. When Li Huolin sent in to contact Lu Qintian and expressed his willingness to use cash to acquire his equity in the China Power Generation subsidiary, the other party showed great interest.

In 1987, when talking with relevant leaders of the Deep Sea Special Zone, Li Xuan said that the Oriental Group is willing to help some high-quality enterprises from the mainland go public in Hong Kong, and use the financing platform of the Hong Kong Stock Exchange to attract abundant capital from Hong Kong to serve the development of the mainland. Li Hao, who had just been transferred to the special zone at that time, was very interested in Li Xuan's proposal.

Therefore, under the active promotion of the SAR government, Huaqiang Electronics Co., Ltd., which has a close relationship with Dongfang Group, was selected as the first pilot enterprise to go public 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 400 million Hong Kong dollars in one fell swoop.

In Huaqiang's prospectus, the large amount of funds raised from the financing are 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 the Oriental Group. But in fact, due to the steady growth of Huaqiang's performance, both domestic banks and Hong Kong banks such as Jiahua and Standard Chartered 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 - mergers and acquisitions. During the years when Li Huolin presided over Huaqiang Electronics, the biggest gain was to broaden his business horizons, and he quickly transformed from a state-owned enterprise cadre to a manager of a large-scale commercial enterprise. In current business operations, in addition to self-investment, a more convenient option for companies to expand is mergers and acquisitions.

Of course, the reason why Li Huolin wanted to acquire Huafa Electronics actually had 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 previous superior department of Huaqiang Company, Guangdong Electronic Industry-Industry Corporation, is still the controlling shareholder of the listed company, with a 55% absolute controlling stake.

Huaqiang Electronics is still under the absolute control of the Provincial Electronics Industry Corporation. This is not what Li Huolin wants to see. He wants to gain greater autonomy. Therefore, Li Huolin wanted to dilute the equity of the Provincial Electronics Industry Corporation by introducing a new major shareholder.

For Li Huolin, the best choice is the SAR government. Huaqiang Company is located in the deep-sea special zone. If it wants to develop better, it must rely on the support of the special zone government. For the SAR government, 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.

Therefore, Huafa subsidiary, which has a production capacity of 200,000 color TV sets, soon entered Li Huolin's sight. First of all, Huafa's production capacity is not small, and it is called the "five golden flowers" of the color TV industry in the special zone together with Huaqiang, SEG, Kangjia, and Sangda. Secondly, Huafa Electronics is a joint venture between SDG and Hong Kong Lu's Electronics, which adopts Lu's modern enterprise management model.

As one of the largest foundry companies of the Oriental Group, Lu's Electronics, most of its management processes come from the Oriental Group. Huaqiang's core asset, the TV factory, was established as a joint venture between Huaqiang and rca. Therefore, Huaqiang and Huafa have a deep blood relationship in corporate management, which is very beneficial to the integration of the merged enterprise.

After Li Huolin received a positive response from Hong Kong's Lu's, he soon revealed to the main 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 SEG.

The role played by the Shenhai Municipal Government in the rise of the color TV industry in the special zone has always been somewhat passive. First of all, the Oriental Group, which has laid the foundation for the color TV industry in the SAR, has too strong capital, so the SAR government, which covets the other party's investment, can only position itself as a service provider.

In addition to the oriental enterprises, another important role in the industry of the special zone is the large state-owned enterprises that are attracted by the convenient conditions of the special zone. But for these provincial and central enterprises, the SAR government is also difficult to command. For example, Sunda is actually an enterprise established by the Office of the Ministry of Electronics Industry and Industry in the Deep Sea Special Zone, and is directly led by the Ministry of Electronics Industry and Industry. The Kangjia Company is a joint venture controlled by the state-owned OCT Company.

The SAR government naturally hopes to become the leader and maker of the entire industrial development plan. Therefore, in order to strengthen its own right to speak, the Shenzhen Municipal Government has successively set up two companies, Huafa Electronics and SEG Electronics, through the Special Economic Zone Development Group and the Deep Sea Electronics Group.

The parent company of SEG Electronics, Deep Sea Electronics Group, is actually a company specially established by the SAR government to strengthen the coordination and guidance of the entire electronics industry. However, the main development direction of Deepsea Electronics Group is concentrated in the professional electronic supporting market.

Relying on the advantages of large-scale enterprise aggregation in Nanhu Electronic Development Zone, it built the SEG electronic market in Xinnan Town. As the first specialized market in China that sells various electronic components and organizes the 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 company, deep sea electronics group built an automatic production line with an annual output of 240,000 color TV sets at the end of 1987. After being put into production, SEG Electronics only caught up with the good times of the last year in this round of home appliance sales boom from 1985 to 1988, and immediately began to struggle against the background of last year's troubled industry.

Compared with Huaqiang's bright and beautiful performance, the performance of Huafa and SEG last year was not very good. And if Huafa and SEG are integrated into Huaqiang Company, the SAR government's control over Huaqiang will increase significantly. Using two companies with average benefits for a leading company in the industry, the SAR government will make money no matter what!

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

However, just when Li Huolin felt that his plan was close to success, something unexpected happened in Hong Kong. The Lu Group seems to have suddenly changed its mind and is no longer willing to sell its 40% stake in Huafa Electronics.

As Huafa is a joint venture, although Lu Group is the party with a smaller stake, its decision will directly affect the choice of SDG and the SAR government behind it. Because if the Lu Group, a Hong Kong businessman, does not agree, the SAR government will never force the merger.

"Li Sheng, since you have an opinion, then I can take a step back and ask for your 10% stake in Huaqiang! According to the articles of association of your Huaqiang company, shareholders who hold 10% of the shares have the right to nominate directors. I ask Lu's Have at least one seat on the Huaqiang board of directors, otherwise a small amount of equity participation is meaningless to us!

You Huaqiang are not short of cash, and our Lu family is also not short of cash! I agree with the analysis on the domestic color TV industry in the latest issue of Oriental Outlook Weekly. The decline in sales of color TVs in mainland China last year is just a temporary low ebb under the superposition of various factors. The future potential of the Chinese market is limitless!

I have no reason to give up a company like Huafa that can be ranked among the top 20 color TV companies in the country because of tens of millions in cash! There is no problem with Huafa's corporate 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 very simple. The Oriental Group just announced not long ago that it will continue to increase investment in the deep-sea special zone and the mainland. Orient Group is definitely the vane of all Hong Kong capital investment choices. Since it is willing to endorse the future development prospects of the mainland, it can undoubtedly greatly enhance the confidence of other Hong Kong investors.

In fact, Lu Qintian personally talked to Li Xuan about this, and Li Xuan did not equivocate or pretend, but told him in a very affirmative tone that he was still very optimistic about the future development prospects of the mainland. This made Lu Qintian's heart very settled, and changed his previous plan to withdraw some funds from the mainland.

As a shrewd businessman, Lu Qintian is very aware of the truth that the icing on the cake is not as good as the help. Now is the time when the development of the mainland is in a certain predicament. If he can increase investment at a critical moment, it will be easier for him to gain true friendship. This may have a crucial impact on the future development of the Lu Group in the mainland.

Of course, it is impossible for Lu Qintian to invest indiscriminately because of this. Only one of the high-quality assets like Huaqiang Company that can catch his eye will attract his interest. Therefore, he rejected Li Huolin's suggestion that he wanted to acquire 40% of Huafa Electronics' 40% stake in Huafa Electronics in cash. Instead, he proposed that he would use this part of the equity plus cash to obtain 20% of Huaqiang's equity.

In the current shareholding structure of Huaqiang Electronics, the controlling shareholder Guangdong East Electronic Industry-Industry Corporation holds 55% of the shares, rca company holds 15% of the shares, and the remaining public holds 30% of the shares. And Lu Qintian's appetite can be said to be not small, and he wants to become the second largest shareholder of Huaqiang Company in one fell swoop.

And what's more important is that if Lu Qintian's request is granted, the provincial electronics industry-industry corporation's shareholding will definitely be diluted to less than 50%, and it will 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 the absolute control of Huaqiang Electronics. UU reading www.uukanshu.com

Therefore, Li Huolin's original idea was to introduce SDG, so that for the country, Huaqiang's equity was just a left-handed swap, and the control was 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 can easily become the target of domestic conservatives!

"Lu Sheng, I need to go back to discuss with the board of directors and management seriously about your request before I can finally answer you! SDG, the major shareholder of Huafa Company, has actually agreed to our merger proposal, I hope you can know this. What's more, Huafa's production line was built in 1984, mainly producing 14- and 16-inch small-screen color TVs!

With the improvement of people's living standards in China, the sales growth rate of small-size color TVs is beginning to decline rapidly. On the contrary, the sales of large-screen color TVs over 20 inches are increasing. Therefore, Huafa's production line will be completely eliminated within five years, but Lu's development focus is obviously not on joint ventures like Huafa.

So I doubt that you will continue to invest proportionally in the future, and spend a lot of money to upgrade the existing production lines of Huafa Company. Therefore, in my opinion, Lu's company should take advantage of the fact that Huafa's current value is not high enough to make a discount! "Li Huolin continued to put pressure on Lu Qintian.

The meeting between the two did not reach 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 for Huafa. And if Lu Qintian only had 10% of the equity, he would have much more room to operate! (To be continued.)