Before he came, Li Mu didn't expect Zhao Xianliang to share so much experience with him.
Taobao's potential in stimulating domestic demand and promoting economic development had been highly recognized by the government. Thus, it had also received many macro-level favorable policies, including "Computers in the City", tax exemptions for enterprises, vehicle import tax exemptions, and land acquisition. However, these were all support given by the Economic and Trade Commission on behalf of the country. Li Mu had never asked the local government for help.
The macro-level favorable policies naturally needed to be formulated by the country, but things like land still needed to be communicated with the local government. After all, the local government was the parent of the enterprise.
Li Mu recalled some interesting news that he had read in his previous life. There were some listed companies that had been making losses for years, but they unexpectedly made a profit that year. The reason for the profit was that the company sold a certain piece of land or some high-priced real estate in Beijing. Although this news made people not know whether to laugh or cry, it was indeed very enlightening when one thought about it carefully.
In his previous life, a slightly larger real estate in Beijing could easily cost tens of millions. If it was a school district house, a small house could easily be sold for ten to twenty million. Then the question was, how many enterprises could achieve annual profits of more than ten million? Other than a few enterprises that made money like printing money, a considerable number of enterprises seemed to be large, but after maintaining the operation of the whole business, it was already very impressive that they could achieve a small or no profit. In this case, the company could make a profit of tens of millions by selling a real estate, which was naturally very eye-catching in the financial report.
Although Li Mu had also infiltrated into the real estate industry with the help of Wanying Group, all of this had nothing to do with his own office. Since Zhongguancun in Beijing had not developed beyond the fifth ring road, he should quickly ask the municipal government for two pieces of land within the fifth ring road. Not only could he solve the problem of office space once and for all, but he could also increase the fixed assets of the enterprise by a large amount. After all, Yanjing's land price would soar like a rocket in the future. If he asked now, the municipal government might give him a little more, but if he asked after the price was high, the municipal government might also feel the pinch.
After making up his mind, Li Mu admired Zhao Xianliang a little more. An experienced person was indeed an experienced person, and he had much more experience in many fields than Li Mu.
At this time, when Zhao Xianliang saw that Li Mu was mainly listening to him, he barely spoke and barely expressed his personal views, so he couldn't help but ask, "By the way, what do you think about the development of coal and steel in the future?"
Li Mu said modestly, "I don't know much about these two industries. I was influenced by my parents in the coal industry more or less. I only know that the price of coal started to rise last year, so I don't know much. As for steel, I know nothing."
Zhao Xianliang said with a smile, "You don't need to know a lot. You just need to roughly analyze the prospects of these two industries based on your current understanding."
Li Mu thought for a moment and said, "Then I think overall, it should be relatively optimistic. After all, the overall development of the domestic economy has been very good in recent years, and the demand for energy is definitely increasing. Moreover, the real estate industry is so popular, and with the development of infrastructure everywhere, the demand for steel will definitely increase. If we don't consider the level of regulation by the country, the overall situation should be getting better and better."
Zhao Xianliang nodded. "That's true. Everyone is optimistic about the overall trend of the industry, but the policy is a little unclear. The macro regulation of these two industries is very complicated, and once it is regulated, it will be very strong."
As he said that, Zhao Xianliang continued, "In comparison, the steel industry is even more complicated than the coal industry. Our domestic coal reserves are large, and the mining volume is also large. It is almost completely self-sufficient. However, steel is different. Our country has few iron ore mines, and the quality is low. Overall, we rely on imports. In addition to the regulation by the country, we are also restricted by the iron ore suppliers.
Overall, it is very passive. "Li Mu suddenly thought of a very famous iron ore negotiation incident in his previous life. Hua Xia lost the negotiations with the three iron ore giants for six consecutive years. As a result, the entire Hua Xia steel industry paid at least 700 billion yuan more. Although Li Mu didn't know the specific situation, he remembered that the main reason was that Hua Xia's steel industry lacked the right to speak in front of the three giants.
Thinking of this, Li Mu asked curiously, "Uncle Zhao, if you want to control the price of iron ore, what kind of strength do you need?"
Zhao Xianliang said with a smile, "Become one of the three giants, or control the three giants. There is no other way."
Li Mu couldn't help but ask, "Are the three giants that you mentioned so powerful?"
Zhao Xianliang nodded. "The three giants refer to Australia's BHP Billiton, Brazil's Vale, and the United Kingdom's Rio Tinto. BHP Billiton was formed through the merger of BHP and Billiton last year. Not only do these three companies control a large amount of iron ore production capacity, but most importantly, they have long held the right to set the price of iron ore in the international trade. As long as the right to set the price is in their hands and not weakened, there is nothing we can do."
Li Mu asked him, "Is it possible to buy over the three giants?"
Zhao Xianliang said with a smile, "In theory, yes, but it is very difficult to do it in practice. Putting aside the huge profit potential of these three companies, the most important thing is that the capital they can mobilize can reach the scale of trillions of US dollars. It is not something that any individual or company can shake or interfere with. Behind these three giants, there is the participation of capital from all over the world. Wall Street is the first to bear the brunt, and companies like Goldman Sachs with strong manipulation ability are especially terrifying. In addition, there are the powerful Japanese chaebols, Australian and Brazilian chaebols, and the government involved. The interest game behind the scenes has long gone beyond the scope of the companies."
As he spoke, Zhao Xianliang continued, "In fact, many steel companies in Hua Xia have thought about interfering with the price of iron ore. Some companies even tried to invest in iron ore companies, but it was useless. This kind of investment is equivalent to speculating in stocks. It is only the most basic investment. At most, they can interfere with the operation of the company, but they have no say in the price of iron ore."
Li Mu still nodded and said jokingly, "In that case, if we want to control iron ore, we have to control Wall Street first …"
Zhao Xianliang said with a smile, "There is another way, which is the worldwide economic crisis. What physical companies are most afraid of is the economic crisis."
Li Mu asked subconsciously, "What do you mean?"
Zhao Xianliang took out a box of cigars from the drawer and handed one to Li Mu. He lit one himself and said with a smile, "Think about it. How much does it cost to maintain the operation of a coal mine? The cost of the government, the cost of loans before production, the cost of hardware, the depreciation of equipment, and the cost of labor … These are all placed in front of you. Let's make a rough assumption. If your coal mine produces one million tons per year, and the annual hard cost is 400 million, then when the price of coal is more than 400 yuan per ton, you will make money. The coal price of 400 yuan is the critical point of your coal mine's operation. What if the coal price breaks through the critical point and plummets to less than 400 yuan? Do you think any of the costs I mentioned just now will be less? "
After saying that, Zhao Xianliang paused and answered himself, "The fact is, the cost of every step is not small! Not only can the cost not be reduced, but you still have to keep operating even when you are losing money. Because once you stop, your workers will leave, the bank will be worried that you can't repay the debt, and they will seize your coal mine. Your other creditors will also come to collect the debt. At that time, it will be chaos, and it won't take long for your coal mine to close down. So, even if you are losing money, you can only bite the bullet and continue to lose money while waiting for the industry to recover. At that time, everyone is competing for the foundation. The coal mines that can't hold on will close down one after another. "
Li Mu said thoughtfully, "A coal mine already has such a big cost pressure. The cost of a giant mining company like the three giants will be even higher …"
"That's right." Zhao Xianliang said, "If the iron ore market falls below the critical point of the three giants, they will have a lot of room to lose money. Don't think that they can casually make a profit of more than a billion US dollars a year. If the market really falls, it is possible that they will lose seven to eight billion US dollars a year."
At this point, Zhao Xianliang changed the topic. He shrugged and said, "But it doesn't make much sense. Even if the iron ore market really falls at a certain point in time, it is nothing to them. Their foundation is too strong, and they can afford to lose money …"
When Li Mu heard this, he basically gave up the fantasy in his mind. He originally thought that he had a chance to reverse the huge loss that Hua Xia would suffer in the future. But now it seemed that this idea was simply too unrealistic. Even the country with the world's largest steel output and the largest iron ore import volume could not control the three giants. Instead, it was cheated by the three giants. What was a small fry like him?
At this time, Zhao Xianliang said to Li Mu jokingly, "If your company can grow quickly and gain a foothold in the American capital market, with your speed of development, you may be able to achieve a pivotal position on Wall Street in the future. At that time, maybe one day you will really have the ability to influence the steel industry on another level."
Li Mu couldn't help but laugh and said, "This goal is really too big."
Zhao Xianliang said with a smile, "It's just a casual chat. Nothing is impossible. You can create so many miracles in more than a year. I believe that if you go to the overseas capital market, you will still be like a fish in water."
As he said this, Zhao Xianliang reminded him, "However, there is one thing I want to remind you."
Li Mu hurriedly said, "Go ahead."
Zhao Xianliang said meaningfully, "You have to contact more capital. Not only do you have to contact capital, but you also have to understand the entire capital market and cooperate with capital more. In short, you have to get close to capital! Treat capital as a lover! "
Although he didn't understand the Internet, Zhao Xianliang could also see that Li Mu was extremely cautious about financing. Makino Technology did not move after two rounds of financing, and Taobao did not even raise a round of financing. In his opinion, although Li Mu could hold more equity in his hands, this was not a really healthy model.
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