louisehourcade Chapter 174 Public-Private Partnership, Regulated Development
Chapter 174 Public-Private Partnership, Regulated Development
In the sweltering summer of 1983, the air in Zhangcheng was thick with the pungent smell of coal smoke characteristic of industrial areas. Inside the office of Chenqing Hardware Factory, the ceiling fan whirred tirelessly, but the breeze from its blades couldn't dispel the heavy expression on Lin Chen's face. He held a red-headed document he had just retrieved from the county's Bureau of Industry and Commerce in his hand; the edges of the pages were crumpled from his fingers, and the bold words "Guiding Opinions on the Restructuring of Individual Industrial and Commercial Households" stood out prominently.
"The policy came sooner than expected." Lin Chen laid the documents out on the mottled wooden table, his fingertip pointing to the clause "encouraging individual enterprises to take the public-private partnership route and standardizing equity structure." "The pressure of restructuring that I was worried about before has really come down to us."
Su Qing walked in carrying two cups of cooled mung bean soup, gently placing them beside the documents. She had just returned from the tax bureau; her canvas bag still held thick ledgers, and beads of sweat trickled down her cheeks, leaving faint marks on her sun-reddened skin. "I checked with the tax bureau. There are at least three benefits after the public-private partnership: First, we can enjoy the tax reduction policies for state-owned enterprises, with the value-added tax dropping from 15% to 8%; second, we can apply for policy-based loans from banks, with interest rates three percentage points lower than commercial loans; and third, we can be included in the national material supply system. For example, the alloy steel we urgently need can be centrally allocated through the Planning Commission, so we won't have to ask around for sources anymore."
Lin Chen picked up the mung bean soup and took a sip; the sweet coolness dispelled some of the heat. Looking at the densely packed accounting data in Su Qing's ledger, every cost and profit clearly marked, his anxiety eased slightly. "The good news is indeed tempting, but there are many difficulties." He took out a yellowed piece of paper from the drawer, detailing the initial investment in the factory. "Of the 800 yuan we raised as start-up capital, 300 yuan came from selling your ancestral silver jewelry, and 500 yuan was from my watch and an advance on my salary. Now we need to quantify equity. How do we calculate the technology investment? And what about the long-term employees who have worked with us for two years? Should their seniority and contributions be converted into shares?"
Su Qing sat on the wooden chair opposite Lin Chen, flipping to the last page of the ledger. A list of factory employees was pasted on it, with each name followed by their start date, position, and contribution record. "This is my employee contribution sheet. Uncle Wang has been with us since the beginning. His improved mold-making process increased production efficiency by 20%. According to industry standards, this kind of core technology contribution can be converted into 3% equity. Chen Lei led the packaging R&D, which secured a large order for us from Boss Chen; 2% is reasonable. There are also six other long-term employees; each can enjoy 0.5% to 1% of the profit-sharing shares based on their seniority and performance. They only participate in profit sharing, not decision-making."
She paused, her fingertip tracing the name "Lin Chen": "Your technical contribution is the core. From improving the high-efficiency spinning machine to developing wear-resistant plowshares, and now to the three-layer moisture-proof packaging, every breakthrough the factory has made is inseparable from your technical support. According to the standards of asset appraisal agencies, technical contributions can account for 40% of the total share capital. The remaining 50%, our initial investment of 800 yuan, will be converted into 30% equity based on the current asset appreciation ratio of the factory, and the remaining 20% will be held as public shares, with the county industrial bureau representing the state."
Looking at Su Qing's well-organized plan, Lin Chen couldn't help but recall the scene two years ago when they first started the factory. Back then, they were crammed into an abandoned old factory building. Su Qing spent her days running sales and her nights checking accounts under a kerosene lamp, often staying up late. Now, facing the complexities of equity restructuring, she could handle it with such composure; this growth filled him with both pride and admiration. "20% public share—isn't that too high?" he worried. "What if the representatives sent by the Industrial Bureau interfere with production decisions?"
"I've already communicated with Section Chief Li of the Industrial Bureau beforehand." Su Qing took out a draft agreement from her canvas bag. "They promised to only send financial supervisors and not interfere with daily operations. Moreover, half of the dividends from the public shares will be used for the factory's technological research and development and employee benefits. More importantly, with the public share background, we will receive preferential policies when applying for national-level technology patents and participating in large-scale exhibitions such as the Canton Fair."
Just then, the office door opened, and Uncle Wang walked in carrying a freshly forged plowshare, his dark face showing some worry: "Director Lin, Accountant Su, I just heard the young people in the workshop talking about a joint public-private enterprise. Does that mean the factory will be under public management from now on? Will the treatment of us old workers be affected?"
Lin Chen quickly got up to bring Uncle Wang a chair, while Su Qing handed him the employee stock ownership plan: "Uncle Wang, take a look at this. After the public-private partnership, not only will your salary increase by 10%, but you will also receive 3% of the shares, and you can participate in profit sharing at the end of the year. Based on last year's profits, your profit sharing will be roughly equivalent to half a year's salary."
Uncle Wang took the form, his reading glasses slipping down to the tip of his nose. He held it up to the light to examine it closely, his fingers repeatedly tracing the words "3% dry shares." When he saw the estimated dividend amount, a look of surprise appeared on his dark face: "Really...really can I get that much? I worked in a state-owned factory for over ten years and never enjoyed this kind of treatment."
"This is what you deserve." Lin Chen patted Uncle Wang on the shoulder. "Everyone saw how much raw material cost you saved us by improving the mold process. The purpose of public-private partnership is to ensure that all employees who contribute benefit." He paused, then raised his voice, "Not only you, but all the long-term employees in the workshop have shares. From now on, the factory belongs to all of us. We will share the profits and the risks together."
Uncle Wang was so excited that his hands were trembling. He suddenly stood up and walked towards the workshop: "I'll go and tell everyone to work with peace of mind!" Watching Uncle Wang's hurried departure, Lin Chen and Su Qing smiled at each other. The employees' concerns were finally relieved.
For the next month, Su Qing became the busiest person. Every day, she traveled between the Industry and Commerce Bureau, the Tax Bureau, and the Industrial Bureau, submitting equity valuation reports, revising cooperation agreements, and handling business registration changes. To ensure the fairness and impartiality of the equity quantification, she also specially hired experts from the local accounting firm to conduct a comprehensive audit of the factory's fixed assets, technology patents, accounts receivable, and other related matters.
Lin Chen was responsible for stabilizing production and technological research and development. He knew that the factory's production could not afford any mistakes during the restructuring period, otherwise it would affect the asset valuation results. In order to improve production efficiency, he led the technical team to upgrade the existing semi-automated production line, connecting the waste secondary smelting device with the forging process, which increased the steel utilization rate from 85% to 90%.
That evening, Su Qing dragged her tired body back to the factory, but a smile she couldn't hide graced her face. Holding a brand-new business license, she strode into Lin Chen's office: "It's approved! The Industry and Commerce Bureau has approved it, and our factory has officially changed its name to 'Zhangcheng Chenqing Hardware Manufacturing Joint Venture'!"
Lin Chen put down the blueprints and took the business license. The red cover, embossed with the factory name in gold, and stamped with the bright red seal of the Industry and Commerce Bureau, exuded solemnity. He stroked the license, his heart filled with mixed emotions. From a small workshop started with 800 yuan to a factory with formal joint venture qualifications, the hardships and efforts of the past two years had finally paid off.
"There's more good news," Su Qing said, taking a sip of water. "The bank has approved a policy-based loan of 50 yuan for us, with an annual interest rate of only 6%, which is a full 4 percentage points lower than commercial loans. I've already made an appointment with the bank, and the loan will be disbursed next Monday."
"Great!" Lin Chen stood up excitedly. "With this loan, we can implement our expansion plan. That piece of wasteland on the outskirts of the city that we had our eye on can be used to build a new forging workshop and R&D center. With the addition of two precision grinding machines, the precision of our products will reach international standards."
The next morning, a new factory sign was hung at the factory gate. The bright red characters "Zhangcheng Chenqing Hardware Manufacturing Joint Venture Factory" stood out prominently in the sunlight. The workers in the workshop, all dressed in brand-new work clothes, beamed with pride. Su Qing stood under the sign, distributing new share certificates to each employee. When Chen Lei received his share certificate with his name on it, his eyes welled up with tears: "I used to be just an apprentice from the countryside. I never imagined I'd become a shareholder in the factory. This is all thanks to Factory Manager Lin and Accountant Su!"
Although the opening ceremony was simple, it attracted many people to come and offer their congratulations. Section Chief Li from the County Industry Bureau personally attended, shaking Lin Chen's hand and saying, "Director Lin, your Chenqing Hardware is a pilot project for the reform of individual enterprises in our county. We hope you can set an example and drive the standardized development of more individual enterprises." He paused, then pointed to several reporters behind him and said, "Reporters from the regional newspaper and television station are also here; we should publicize your successful experience."
Lin Chen and Su Qing led the reporters on a tour of the factory. When the reporters saw the neatly operating equipment on the automated production line, the sophisticated testing instruments in the quality inspection workshop, and the energetic spirit of the employees, they couldn't help but praise them. "I didn't expect a joint venture factory to be so well-managed and technologically advanced," said a reporter from the local newspaper while taking photos. "This could definitely serve as a typical case study of the transformation of the private economy in our region."
After the tour, Section Chief Li convened a brief meeting with all employees. Standing on the makeshift platform, he said loudly, "Fellow employees, Chenqing Hardware's achievements today are inseparable from Director Lin's technological innovation, Accountant Su's meticulous management, and everyone's hard work. The Industrial Bureau promises to continue supporting Chenqing Hardware's development. I hope everyone will work together to make the factory even better!"
A round of enthusiastic applause erupted from the audience. Uncle Wang held up the share certificate in his hand and shouted, "We will definitely work hard and live up to the leaders' expectations!" The applause grew even louder, drowning out the roar of the machines in the workshop.
After the meeting, Lin Chen and Su Qing went to the office to plan the next steps for development. Su Qing took out an expansion budget: "A loan of 50 yuan, of which 30 yuan will be used to purchase land and build a new workshop, 10 yuan will be used to introduce precision grinding machines and testing equipment, and the remaining 10 yuan will be used as working capital to purchase raw materials and pay employee benefits."
Lin Chen looked at the budget sheet and nodded: "Regarding the equipment, I've already contacted a foreign trade company in Guangzhou. They have a batch of second-hand German precision grinding machines, in perfect working order, and the price is half that of new equipment. They can ship them next week. I've also drawn up the design drawings for the new workshop. It will be a fully enclosed structure with ventilation and cooling equipment installed, so the workers won't have to work so hard in the summer."
"There's also the issue of talent development," Su Qing added. "I've reached an agreement with Principal Zhang of the vocational school. They will train a group of students specializing in precision machining specifically for us, and they will go directly into the factory after graduation. We will cover the students' tuition fees, and the students can intern at the factory during their studies. This will not only solve our talent shortage problem but also cultivate technical talent for society."
Just then, the office phone rang. It was Mr. Chen from Hong Kong calling. "Manager Lin, congratulations on the successful restructuring of your factory!" Mr. Chen's hearty laughter came through the phone. "I just saw your report in the newspaper. I didn't expect you to develop so quickly. By the way, the Southeast Asian Agricultural Machinery Expo is opening next month. I've already registered you. I hope you can participate with your new products and explore a larger market."
Lin Chen's eyes lit up: "Thank you so much, Boss Chen! We've just developed a new type of wear-resistant bearing and are looking for an opportunity to launch it in the international market."
"That's wonderful!" Boss Chen's voice rang with even more excitement. "I've already booked the best booth for you, and I'll personally take you to visit your major clients in Southeast Asia. As long as the product quality is excellent, I guarantee your orders will increase tenfold!"
After hanging up the phone, Lin Chen and Su Qing smiled at each other. They knew that the public-private partnership was just a new beginning, and with continuous technological innovation and market expansion, Chenqing Hardware's future would surely be even brighter.
In the days that followed, the factory was a hive of activity. On the construction site of the new workshop, workers were working overtime, the roar of mixers and the welding of steel bars intertwining to create a symphony of development; in the production workshop, workers skillfully operated the newly upgraded equipment, producing batches of high-quality hardware parts; in the R&D center, Lin Chen and his technical team repeatedly adjusted the parameters of the new bearings, striving to present the most cutting-edge products at the expo.
Su Qing was busy liaising with banks and suppliers to ensure that expansion funds and raw material supplies were in place on time. She also implemented a new employee performance appraisal system, incorporating indicators such as output, quality, and innovation into the evaluation, which greatly motivated employees. The scrap rate in the workshop dropped from 8% to 3%, production efficiency increased by 15%, and the factory's profits soared.
A month later, the new workshop was successfully completed, and the precision grinding machine was installed and debugged. When the first new wear-resistant bearing rolled off the production line, Lin Chen repeatedly tested it with testing instruments, and all indicators reached the international advanced level. He excitedly held up the bearing and said to the employees surrounding him, "Look everyone, this is our new product. Its wear resistance is 50% higher than similar products on the market. It will definitely shine at the expo!"
The employees erupted in enthusiastic cheers. Uncle Wang exclaimed excitedly, "Director Lin, with this new product, Chenqing Hardware can go global and conquer the world!"
Lin Chen nodded, gazing out the window. The setting sun cast a warm golden glow on the newly built workshop. He knew that the public-private partnership had not only put the factory on a path of standardized development, but also provided a more solid foundation for the dreams of him, Su Qing, and all the employees. In the spring breeze of reform and opening up, Chenqing Hardware, like a ship, was setting sail towards a wider ocean.
The night before they were to depart for the Southeast Asia Expo, Lin Chen and Su Qing sat in their office, organizing the exhibition materials. Su Qing looked at the thick product brochure in her hand, which bore the logo of Chenqing Hardware and pictures of their new bearings, and a satisfied smile appeared on her face: "From a small workshop to a joint venture, from the domestic market to the international stage, we've finally made it."
Lin Chen grasped Su Qing's hand. Her hands, roughened by years of accounting and sales work, were exceptionally warm. "This is just the beginning," Lin Chen said, his gaze firm and bright. "In the future, we will establish our own R&D center, build an internationally renowned brand, and make Chenqing Hardware products available all over the world."