Private Entrepreneurs Constitutional Systema
Note: This article is translated from the first issue of "Day of the Impression" magazine. This magazine is a comprehensive foreign publication of the Dawu Group.
The Release of Wealth
People always ask repeatedly, if the company is so big and the company is so extensive then how much is it worth? Some people say that it is one hundred billion yuan (14,503,600,000 US). In fact, the value of Dawucheng is not estimated. Many people don’t understand it. This is a report. You are the boss. How can it be counted? Our company has been developing for more than 30 years, but our wealth is not developed, but released. The value of Dawucheng lies in the wealth it releases. This wealth is incalculable.
We have not borrowed a penny. They are all net assets. Many people don't believe it. How is this possible? The company has three major expenditures, one is taxation, the other is shareholder dividends, and the third is management bonuses of which each account for one-third. We are a farming and animal husbandry enterprise. Many industries not only do not pay taxes, but also enjoy state subsidies. We have very few such benefits.
This enterprise is our family, but we have not received dividends; that is, we receive twice the average wage of workers. With regard to subsidies, this is very small for enterprises; instead, our management takes bonuses, but there are restrictions that they will not exceed five to ten times the average wage of workers. For more than 30 years our companies have earned money in enterprises.
On the other hand, our income continues to grow--especially in the past few years. The company has developed rapidly and has been growing at a rate of more than 20%, so this book number will be large. I don't look at the report, nor do I study it. This number is bigger and it is also a small part of the company's value.
Understand that people do not look at the company's statements and book figures because many companies now rely on bank loans, private loans and blood transfusions. Book assets look a lot, but there is often debt, and there are some debt ratios of more than 90%. For example, Liu Han of Sichuan Province had the right to be powerful, but his corporate assets of about 400 million under the Hanlong Group are also heavily in debt. After he was sentenced to death, the company’s auction was only 300 million yuan, and the debt ratio was also 100 ie. more than 90%. The company assets of a friend of mine in Henan Province are estimated at 600 million, but the debt is as high as 2.4 billion. Finally, the company was insolvent and went bankrupt.
Unlike these companies, our book assets and net assets are real. We did not apply for loans at the beginning of the establishment of the factory. Later, when our own funds could not be spent, there would be no need for loans.
Speaking of our buildings alone, the construction of Dawucheng is undertaken by our construction company. Can we only calculate the construction cost on the books? For example, the building area of our international hotel is 100,000 square meters. If the value of a square meter in Xushui is about 10,000 yuan then the hotel is worth 10 billion yuan which does not include the hot spring hotel, holiday hotel and hot spring club.
In the past two years, we have moved out production units , agricultural parks, food industrial parks, and 400,000 tons of feed plants next to National Highway 107. Each park has a production capacity of more than one billion. The Group’s top three hospitals have been built. Nine of our buildings have 18 floors. The pensioner apartment buildings have also been built. It can be said that Dawucheng has been under construction, and two thousand construction workers are not working all the year round. How much market value can this generate? How to evaluate it? .
There is also our Dawu brand. All our products are Dawu Brand. It has been used as a famous trademark in Hebei Province for more than 30 years. Some time ago, our winery used “Dawuliangye” and Wuliangye. There was a lawsuit. After contesting the issue for more than two years, Dawu Group had to take it to the Supreme Court. We won the case. I have always advocated: not for profit but for good character, for good products, for making clean money--we have always done this. After years of operation, the brand has a certain popularity. The reputation is intangible, but it is valuable in the market because people trust the brand. However, the specific value of this intangible asset has not been evaluated.
As early as 2004, there was a US investment company lobbying me to go public. I said, my business is small, can it qualify for listing? The other party said, don't you have 3,000 acres of land? As long as the land is productive one can evaluate the price. One thousand mu (area) needs 16 million yuan, and 4 million yuan as the company's promotional packaging fee. These 20 million are handled by investment companies. Then, an acre of land is estimated at 300,000 yuan, 1,000 acres is 300 million yuan, plus the group's original assets of 300 million yuan is 600 million. The stock issuance price can be set at 6 yuan, then the market value of the group surges to 3.6 billion yuan; if the stock price reaches 12 yuan, the market value will become 7.2 billion yuan; if the brand of the noon is hyped, the stock can reach 15-20 billion yuan.
In the past few years, an investment company in Shenzhen came over to inspect our poultry company and evaluated the poultry company at two billion yuan. It said that the listing can reach 8 billion yuan. How can it generate such four-fold increase? The people in the investment company said that we have the advantage of technology and market: the average laying hen has 285 eggs, but our chicken can produce 325 eggs, and our chicken can sell for more money than the imported varieties of the United States and the Netherlands. The poultry company hatches 400,000 chickens every day. It is still in short supply. Due to transportation restrictions, many markets have not yet been fully developed. After the listing, the incubator has been expanded nationwide. After operation, 80 billion is a conservative estimate. They are very lively, but I am not interested, so I have not taken them to see the Yixian Wanmu Mountain Farm and the original breeder farm of the poultry company, nor have they assessed it.
We don't have the need for financing. We can't spend our own funds. There is no need to go public and it is not in line with our development path to list money and make quick money.
The wealth of this enterprise is still second. Our greater wealth is Dawucheng. The wealth it releases is our wealth code.
I often say "wealth passwords". The wealth created by enterprises is actually a small part, mainly it is wealth released. For example, the land in Beijing used to be 30,000 yuan for one mu. Now how it has become three million for one mu. Is this wealth created? This is the release of wealth, and the release of wealth is the wealth code.
Is underground oil and coal not wealth? Is jade and gold in the mountains not wealth? If no one is going to excavate it then it is not wealth. Only when enterprises let people go to mine and dig gold can they can become wealthy.
Therefore, if a place’s wealth is to be released, it must be initially supported by the enterprise. This is the introduction and the beginning. After the enterprises are supported, a large number of workers gather here to find employment, live and consume. After the social population gathers, the tertiary industry will rise. At this time, the enterprise is not important. It will improve itself and form a complete flow process. It becomes a society. At this point, its development is unstoppable, and the wealth of this place is released.
The Dawu Group now has 6,000 workers. In the past few years, it has added more than 1,000 workers. These thousands of people have created wealth and they are still spending wealth here. These thousands of people are employed here, their families live here, their children go to school here, the old people are here to support the elderly... consumption is here. Our staff apartment initially sold for more than 1,000 yuan. Now the price in Xushui District is 10,000 yuan. Dawucheng is rated as Kangyang Town. It is a treasure trove of education, medical care and old-age care. Popularity is wealth, so I said that the place to create wealth is not a place of wealth. The place where wealth is consumed is the place of wealth. This is the wealth code of Dawucheng. This wealth is incalculable.
The wealth code is very esoteric. It is not said here. We welcome people of insight to learn from each other.
SUN Dawu and D. Carlton Rossi
May 9, 2003
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