Chapter 403 Withdrawal of Investment
Cape Town's initiative to compromise is a good thing for Ernst. Now he can get out of South Africa and focus on something more important.
In October, Ernst did not return to the First Town but came directly to Nairobi.
The factories invested by Hexingen in Nairobi have been completed and put into production. At the same time, the headquarters of Hexingen Bank has also moved here, opening up a new location in Nairobi to house the headquarters of Hexingen Bank and a set of luxurious infrastructure.
"How is the current investment situation in North America?" This was the first question Ernst asked after arriving at the headquarters of Hechingen Bank.
"Your Highness, we have already started the eleventh round of asset sales. We still have 30% of fixed high-quality investments on hand. This has allowed us to recover a large amount of funds and make a lot of money. However, based on the current economic situation in North America, we are still losing money in essence. The assets we have thrown away are still continuing to appreciate in value, and the entire market is hot."
Ernst nodded and said, "We can't chew too much. After all, we can't take all the good things. What's the situation in Europe?"
"According to your instructions, we didn't sell as many assets in Europe as we did in North America, but we made more money than in North America. This is because the good impression created by the many brands under the Heixingen Consortium made many people willing to take over at a high price. For example, supermarkets are popular even in locations with poor geographical locations and difficult to make profits. However, Your Highness, many of these buyers hope that we will authorize them to continue using the previous names."
Ernst shook his head and said, "That won't work. We can continue to provide supply channels and even not take a cut from them, but we can't let them use our registered brand name. This is a credibility issue. Of course, if it's a franchise brand, we can introduce it to them."
The supply channels are the most important support for the survival of the supermarket brands under the Heichenrich Group. As an all-round player, the Heichenrich Group has extensive operations in the fields of light industry and electric power industry. It is a unique super giant in the whole of Germany. Heavy industry has just started, but the majority of heavy industry investment is deployed in East Africa. As for Europe and North America, the Heichenrich Group cannot squeeze in.
The rich industrial chain enables supermarkets under the Heixingen Group to obtain a wide variety of goods supply. The most important thing is that agricultural products from East Africa can also be sold through supermarket channels.
Who knows how many businesses and companies are going to go bankrupt in this economic crisis, and the Heixingen Group cannot have anything to do with them.
Ernst went on to say, "Also, we should start cleaning up the bad debts of the bank now. We should sell off all risky assets while the market is hot. We should also raise our loan thresholds and reject all companies with operational problems and unrealistic projects. All branches should start to withdraw funds to ensure that there will be no problems with the deposits."
"Your Highness, I'm afraid our bank will lose a lot of money if this happens."
"Just do what I say. Any company that wants to operate for a long time cannot turn a blind eye to its own problems. Blindly pursuing short-term profits and ignoring risks will not be strong. It will damage the long-term health of the company, and the reputation accumulated before will have to be rebuilt, which is also a huge waste."
Under Ernst's operation, the Hexingen Group sold everything that could be sold and continued to slim down. However, this also brought some negative effects, because many industries were sold, some investors and depositors believed that the Hexingen Bank had operational risks, and the most likely problem was the capital chain, otherwise why would it sell so many "excellent" assets? The current market has brought unprecedented confidence to the whole world. It is like selling air. As long as you blow it well, you can make a lot of money. The Hexingen Group's reverse operation is completely contrary to the mainstream.
Therefore, many investors and depositors turned to invest their money in other banks or the hottest railway industry. Heixingen Bank faced a small run, but it went away quickly as it came. Heixingen Bank had abundant cash flow to begin with, and it had sold a large number of assets and recovered a large amount of funds, so it had nothing to fear.
Heixingen Bank subsequently refuted these false smears: the bank is currently optimizing its investment industry structure and there is no so-called operational risk.
However, the effect of refuting rumors was satisfactory (praise). In Germany, the confidence of depositors was stabilized by relying on the reputation accumulated over the years and the media and newspapers controlled by the consortium. However, it was not so good in other regions.
In particular, the competitors of Hechingen Bank have tried every means to discredit Hechingen Bank. Many financial institutions in London have rated Hechingen Bank as a high-risk enterprise.
The Sun, which is wholly owned by Hechingen Bank, issued a statement to refute the rumor, but the citizens of London believed it even more. What kind of people are you talking about in The Sun? It's ok to play with color and skirt around the edges, but you are not qualified to talk about finance.
However, as London is the center of the financial empire, banks and financial institutions are numerous, and the Hechingen Group does not have much market share here.
Some depositors who followed the trend saw their money being exchanged out, and the idea of a broken capital chain disappeared, so they deposited their money back in. This was a good thing, because some time deposits were exchanged, and Hei Xinggen Bank could pay less interest.
This little incident did not affect Ernst at all. After giving instructions to the Hechingen Bank, Ernst visited several textile factories in Nairobi.
"Your Highness, the current textile production capacity we have invested in Nairobi can meet about 70% of East Africa's demand. The remaining 30% is provided by the Far East factory. The factory in Germany has been sold, but the Far East factory accounts for the majority of exports to Europe, and labor costs play a big role. If we had not split up the Far East textile factory before, we would definitely be able to make more profits."
In general, the textile factory invested by the Hexingen Group in Jiaozhou in the Far East was split into three parts. One part was sold to Shanxi merchants and Huizhou merchants, one part continued to operate and exported to East Africa and Germany with the help of cost advantages, and one part was moved to Nairobi.
The Far East market is indeed very attractive. First, it is large in scale and has high demand, but the profit is not as high as that in Europe. Second, the cost of survival is extremely low, with abundant human resources and sufficient raw materials. Third, there are few things to do. As a foreign-funded enterprise, Jiaozhou Textile Factory does not need to be influenced by bureaucrats. This can be seen from the Shanxi merchants and Huizhou merchants. In addition to the tax part, local officials also take a cut from their operations. As for Jiaozhou Textile Factory, these issues are entrusted to the consulate, and no one dares to cause trouble at the East African consulate.
By the way, the business environment in the Huaihai Economic Zone and Zhuhai Trade Zone has been improved. For example, Jichanglong Silk Reeling Factory, a famous modern national enterprise in the Far East in previous textbooks, has been relocated from Nanhai County to Zhuhai Trade Zone.
Historically, Chen Qiyuan, the owner of Jichanglong Silk Reeling Factory, originally planned to build a factory in his hometown of Nanhai County. However, he died before he could accomplish his goal. He was strangled by the local people, bureaucrats, and gentry, and was caught between a rock and a hard place. Fortunately, Chen Qiyuan had outstanding abilities, which enabled him to run the Jichanglong Silk Reeling Factory in such a difficult environment and compete with foreign companies.
This life is different. In the Zhuhai Trade Zone, most of the economic discourse power is in the hands of the Xiangshan Consulate. The local gentry and bureaucrats have been beaten once by East Africa, and the Guangzhou government is also keeping a close eye on the local bureaucrats, not wanting the last conflict to happen again.
At the same time, by settling in Zhuhai Trade Zone, you can also enjoy preferential policies of the Kingdom of East Africa, mainly more convenient loans. The Far East market is an area that Hexingen Bank attaches great importance to, ranking only after East Africa and Europe, and is at the same level as North America.
Ernst is not afraid of a financial crisis. The Far East is a traditional agricultural country. The benefits it has suffered from this economic crisis outweigh the disadvantages. There will be no loss if more investments are made.
This has resulted in the current contraction of Hechingen Bank around the world, with East Africa and the Far East being the only regions where it is making additional investments.
(End of this chapter)
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