Any business negotiation is conducted in several rounds, and the process is very long and tedious.
But the negotiation was quite fast this time. Both parties were sincere in their cooperation and the land had been selected. It was just a matter of price.
The Shanghai side discussed it for a whole night, and when Xie Zhenguo and his group arrived at Chen Xia's hotel the next day, they all had panda eyes.
The debate last night was quite heated. The price was too high. I was afraid it would scare away the Four Seasons Group.
But you said you wanted to set the price low, and many things will be difficult to explain later.
Therefore, how to strike this balance depends on Xie Zhenguo's negotiation skills.
He has a bottom line. As long as he sticks to it, any extra point he can negotiate down is extra profit.
Negotiations resumed.
Xie Zhenguo took a document from his secretary and said with a smile:
"Mr. Chen, Mr. Lu, after our research and discussion, and considering the Four Seasons Group's contribution to our city's economy, we have decided to convert the 400 mu of land on Nanjing Road into commercial land, with a price of 2 million yuan per mu, for a total of 800 million yuan.
The textile factory and pharmaceutical factory land on the Suzhou River in Putuo covers a total area of 800 mu. The industrial land can be converted into commercial and residential land with a price of 1 million yuan per mu, which is 800 million yuan.
At the same time, to demonstrate our sincerity, we will provide a 400-mu piece of industrial land in Baoshan District free of charge for the construction of the new pharmaceutical factory. Of course, we also accept payment from Four Seasons Group in Hong Kong dollars or US dollars."
After Xie Zhenguo quoted the price, he glanced guiltily at the Hong Kong man opposite him.
Chen Xia and Lu Yuankai also looked at each other.
Both parties knew that the price was too high.
Here is a data for readers' reference: the exchange rate of RMB to USD in 1992 was 5.5:1
By the second half of 1993, the exchange rate of RMB against the US dollar had depreciated to an astonishing 8.6:1.
Keeping this exchange rate in mind, let's look at the average land price in Lujiazui, Pudong New Area, in August 1993: 845 yuan per square meter (564,000 yuan per mu), which is about 65,000 US dollars in US dollars.
In 1992, Xie Zhenguo's offer was just made, and the land transfer fee for one acre of land on Nanjing Road was US$364,000.
Even though there is a difference in location, Lujiazui is not much worse. There is a difference of 6 times between the two.
What's more, Four Seasons Group also has to bear the costs of demolition and resettlement, as well as the costs of relocating and rebuilding the pharmaceutical factory. Such an expensive land transfer fee is probably a domestic record, right?
The Shanghai Stock Exchange still couldn't withstand the pressure and was ready to be slaughtered.
In fact, what Xie Zhenguo didn’t say was that the bottom line of the Shanghai Stock Exchange is that it can be one-third cheaper, but he would never say it.
When Chen Xia heard the price, he secretly groaned in his heart, thinking that it was 1.6 billion RMB in one breath, as this was almost 300 million US dollars.
If we add in the construction costs, decoration costs, resettlement housing construction costs, pharmaceutical factory reconstruction costs, etc. of the shopping mall, the total investment in several projects in the Shanghai Stock Exchange will be at least more than 500 million US dollars?
It's not that Chen Xia doesn't have the money, but it's painful to take out such a large sum of money at once.
what to do?
After returning, the Hong Kong team said that the land price was too high.
Chen Xia was also undecided for a moment. He wanted... and... and...
Capitalists are just so greedy.
"If you have any questions about foreign affairs, ask your father-in-law." Chen Xia called Gu Wei. When his father-in-law heard that this involved a business worth hundreds of millions of yuan, it was a big deal, so he asked the driver to take him to Shanghai that day.
The old man wants to make use of his remaining energy and act as the behind-the-scenes operator.
In the evening, at the hotel where the Four Seasons Group delegation was staying.
Gu Wei listened to his son-in-law's arrangements for the industrial layout of the Shanghai Stock Exchange and Lu Yuankai's report on the negotiations, and fell into deep thought for a long time.
Chen Xia had obviously gotten used to his father-in-law's behavior when he was thinking about something, so he just sat quietly aside.
Lu Yuankai did not dare to underestimate the "father-in-law" in front of him. This man was a big shot who had served as mayor of a city, and he was also the father-in-law of the boss and the director of the group's supervisory department. His high position and power were no joke.
What Gu Wei was thinking at this time was to put himself in the other person's shoes and look at this investment from the perspective of the Shanghai Stock Exchange. If I were the mayor, what would my mentality be when making the bid?
Suddenly he opened his eyes and said firmly:
"You should bargain. 2 million per mu is too expensive. And in business, bargaining is inevitable. They're offering a high price to make you feel embarrassed to bargain more. It's a psychological tactic."
Chen Xia asked, "Then what's a reasonable bargaining price?"
Gu Wei habitually tapped the armrest of the sofa:
"Don't be too harsh and don't touch people's bottom line. Although you may have gained an advantage this time, it will leave a bad impression on people and will be detrimental to future development.
But we cannot refuse to bargain. If we do not bargain, people will think we are fools and it will whet their appetite, which will make it difficult to negotiate other project investments in the future.
So, if you quote a price tomorrow, you can lower the price per mu of Nanjing Road to 1.4 million and the price of the textile factory and pharmaceutical factory land to 650,000. The Shanghai Stock Exchange will definitely not agree, and there will definitely be a third round of negotiations.
"As long as you stick to your base price, no more than 1.6 million and 750,000 respectively, you'll definitely be able to acquire these plots of land. This way, you won't break their psychological bottom line, but will still make them feel like they've gotten a good deal."
Chen Xia clapped his hands and said, "Okay, Mr. Lu, this is the tone for your negotiations tomorrow."
This price was similar to what Lu Yuankai had in mind, so Lu Yuankai readily agreed and even gave a thumbs up to "Minister Gu".
He was really convinced this time. It seemed that this "father-in-law" was definitely the real deal.
Sure enough, during the negotiations the next day, Xie Zhenguo did not agree to this price. Of course, he would have agreed if the Hong Kong side had taken a tough stance, but when he saw that the Hong Kong side's attitude was relatively friendly, he wanted to make more money.
Gu Wei had been communicating and guiding the negotiation team behind the scenes, and the final agreement was exactly what the old man had expected.
The price per mu on Nanjing Road is still 1.6 million yuan, the land for the textile factory and pharmaceutical factory is still 750,000 yuan, plus an industrial land in Baoshan District, the total discount is 1.24 billion yuan.
Chen Xia did not choose to pay with US dollars or Hong Kong dollars because the devaluation of the RMB could happen at any time in the 1990s, and he would suffer a huge loss if he used foreign currency.
The land transfer price shocked the whole country, setting a record for the highest single transaction. For a time, the Shanghai stock market was celebrating.
As an official in charge of the economy, Xie Zhenguo was even praised by the highest level because he was able to stick to principles and get rid of a burden on the pharmaceutical factory. He is definitely a good cadre in the new era of reform and opening up and should be reused.
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