Chapter 295 Musk deer breeding is too difficult
Lin Sanqi looked at the busy pharmaceutical workshop in front of him and was a little confused:
"Mr. Qiu, moving the pharmaceutical workshop into the building—does the government allow it? Or do the surrounding residents approve? Will the environmental protection department, drug regulatory authorities, police, firefighters, and the like come to cause trouble every day?"
Qiu Minli took Lin Sanqi on a tour and patiently explained:
"Hong Kong is different from the mainland. We have limited land resources. If you want to build a pharmaceutical factory, you need at least several hundred acres of land. I remember once visiting a pharmaceutical factory that covered an area of more than 3,000 acres. I was stunned on the spot.
Since we can't get land for a pharmaceutical factory, and even if we do, we can't afford it, then our factory has no choice but to move into a building. Fortunately, unlike Western medicine, most of our Chinese medicine is traditionally handmade and doesn't require much machinery.
As for the pollution issue you mentioned, the smell of traditional Chinese medicine is non-toxic. Furthermore, Hong Kong's sewage treatment is excellent, and the wastewater generated by our pharmaceutical production can be centrally treated, without causing environmental pollution or impacting surrounding residents."
Another Miaochuntang executive who was accompanying him continued:
"For the Hong Kong government, there's actually not much difference between a Chinese medicine factory and a food factory. Think about it, a food processing plant can be built in a residential area, just like breakfast shops in mainland China are located below apartment buildings. The same is true for pharmaceutical factories."
Oh~~~
Lin Sanqi understood that it was still the fault of Western thinking.
Westerners do not regard Chinese medicine as "medicine", but as a health product, or a complementary and alternative medicine. From the perspective of human rights and freedom, they will not support you, but they will not oppose you either.
Precisely because of this indifference, the management of traditional Chinese medicine and Chinese medicine is not so strict, which is in sharp contrast to the situation in China.
Lin Sanqi asked another question:
"Mr. Qiu, I heard that many Chinese medicine companies in our country have also set up factories in Hong Kong, such as Tong Ren Tang, Guang Yu Yuan, Darentang, Pien Tze Huang, Hu Qing Yu Tang, etc. Where are their pharmaceutical factories located?"
Qiu Minli thought for a moment and said slowly:
"I have a rough idea of some of them, but I can't remember them all. For example, not far from here, at 9 Lok Road in Tsim Sha Tsui, is the Darentang Pharmaceutical Factory. Baicaotang is in the Wing Wah Centre Industrial Building at 18 Tai Lee Street. Weiyuantang's pharmaceutical factory is in Jardine's House in Causeway Bay.
If you know anything about Hong Kong, you'll know these places are all within the city limits. So if Lingnan Hall wants to set up a factory in Hong Kong, there's no need to look for an industrial zone; just find a building. If you're too bothered, just rent the entire building.
Lin Sanqi nodded repeatedly. Renting would definitely be cheaper than buying, and would be more suitable for a startup company like Lingnan Hall.
"But Mr. Xiaolin, it's easy to find a site to set up a factory in Hong Kong, but there are two issues you must consider carefully."
"Mr. Qiu, please speak!"
"One reason is that housing prices in Hong Kong are not cheap. Whether you buy or rent a house, a pharmaceutical factory needs at least a thousand square meters. Our five workshops together occupy more than two thousand square meters, and we also need a warehouse area, etc. The annual rent is not a small amount.
Besides, pharmaceutical factories need to hire workers, right? Pharmaceutical production is a technical job, not just any uncle or aunt can do it, so labor costs are very high. For example, the average monthly salary of a craftsman in our pharmaceutical factory is around 30,000 yuan.
If you're a master ingredient chef or a management employee, you need to earn at least 60,000 to 70,000 yuan a month, and you'll also receive a big bonus at the end of the year. If your product's profits are high enough, you can still afford it. Otherwise, the rent and labor costs alone can bring the pharmaceutical company down."
Lin Sanqi seemed to be thinking about something, and then asked:
"Mr. Qiu, if it's convenient, could you tell me approximately how much of your pharmaceutical costs are spent on rent and labor?"
For a pharmaceutical factory, the three major costs are definitely raw materials; the second and third are rent, water, electricity and labor expenses; and the fourth is management and sales costs.
Qiu Minli made a rough estimate and replied hesitantly:
"In general, the cost of raw materials accounts for about 60%, and the rent and labor you mentioned account for about 30%."
When Lin Sanqi heard this, he felt relieved. The bulk of the goods were made from raw materials of traditional Chinese medicine, but for this Lin Sanqi was purchasing nothing, and the cost was the same as that of several generations of rice.
In other words, a piece of raw material can be directly regarded as "profit", so small costs such as rent and labor will not have any impact on Lingnan Hall at all.
This advantage is incomparable to others, which means that Lingnan Hall is already in an invincible position.
Lin Sanqi also has another advantage. He doesn't need so many workers to run a pharmaceutical factory.
He could have let the families of the traditional Chinese medicine practitioners there in 1960 make the medicine, and then directly travel through time to 2013 to sell it under his own brand, which would have meant that the Xiangjiang Pharmaceutical Factory only served as a "packaging workshop".
If he had to make some noise to cover up his tracks, Lin Sanqi could also hire a small number of workers to perform some processes that did not require high technical skills and did not involve core secrets, thus saving a lot of labor costs.
Compared to the high rent and labor costs, Hong Kong companies' profit tax (corporate income tax) is very low. Generally, it is paid according to a two-tier taxation system:
For profits below HK$2 million, the tax rate is only 8.25%;
For profits of more than HK$2 million, the tax rate is 16.5%. Even the highest tax rate is much lower than that in the mainland.
Moreover, if a person has only one company under his name, he can enjoy a tax rate reduction of half, that is, a tax rate of 8.25%.
The key is that Hong Kong shareholders do not have to pay taxes on dividends. After Hong Kong companies pay capital gains tax, the profits can be put directly into their pockets.
If Lin Sanqi was even more ruthless, he would register an offshore company in the Cayman Islands or Bermuda Islands, produce in Hong Kong, and export to the mainland.
The principle of taxation in Hong Kong is territorial collection. If the profit does not come from Hong Kong, you can apply for offshore exemption. If approved, you do not have to pay taxes, which can save Lin Sanqi a lot of taxes.
Finally, there is another huge advantage of setting up a factory in Hong Kong, that is, the money earned by the pharmaceutical factory can remain in Hong Kong, or can be freely circulated abroad.
If the money is earned in the mainland, it cannot be taken out through legal channels. The maximum amount of foreign currency that an individual can exchange is only 50,000 US dollars, and corporate overseas investment has also been stopped. If you don’t believe it, ask the richest man Wang.
So from the perspective of financial security, it is definitely better to keep the money in Hong Kong, where you can enter or exit freely. After all, Hong Kong is also a part of our country, so it can't be considered a prison, right?
So now for Lin Sanqi, the biggest cost of setting up a factory in Hong Kong is actually just the rent.
There is something to do!
Lin Sanqi, who was relieved, smiled a little more and said to Qiu Minli:
"Mr. Qiu, I have an unsolicited request. We are already strategic partners in comprehensive cooperation. Could you help Lingnan Tang find a location to open a pharmaceutical factory? It doesn't have to be too large, no more than one thousand square meters will do."
Qiu Minli's eyelids twitched. "Boss Xiaolin, do you really think you're going to open a pharmaceutical factory in Hong Kong?"
As the saying goes, competitors are enemies.
Since Lingnan Tang is in the mainland, it has a strategic partnership with Miaochun Tang; but if Lingnan Tang enters Hong Kong, it will directly become a competitor of Miaochun Tang.
Lin Sanqi saw Chairman Qiu Minli's concerns and clarified:
"Don't worry, Mr. Qiu. Our company has set up a pharmaceutical factory in Hong Kong. Initially, we will mainly produce four products. One is Angong Niuhuang Pills, the second is Pian Zai Huang, the third is a medicine similar to Yunnan Baiyao, and the last one is an aphrodisiac.
I believe these four medicines will not conflict or compete with your Miao Chun Tang products, so don't be afraid of us stealing your business. Our Lingnan Tang Chinese Medicine Clinic will not be opening in Hong Kong."
Lin Sanqi thought that although there were many wealthy people in Hong Kong, the market was only so big after all.
In comparison, the mainland has an area of 9.6 million square kilometers, which is a huge market that is enough for Lingnan Tang to make a lot of money. Why should it come to Hong Kong, a snail shell, to fight with others?
Qiu Minli was shocked when he heard this:
"Boss Xiaolin, did I hear correctly? Angong Niuhuang Wan, Pian Zai Huang, and Yunnan Baiyao are all state-level secret prescriptions. Do you have the ability to get them?"
Lin Sanqi gestured, and Yin Lianyi took out a few small boxes from her briefcase.
"Mr. Qiu, you are also an expert in Traditional Chinese Medicine. Please taste these samples produced by our company. Do you think they are authentic?"
To be honest, Qiu Minli thought that Lingnan Hall could not have the connections and ability to obtain the three confidential prescriptions, but when he thought about the precious Chinese medicinal materials that Lingnan Hall could obtain that others could not, he hesitated.
Half-believing and half-doubting, Qiu Minli opened the sealed pill himself.
Half an hour later, Qiu Minli and several doctors at Miaochuntang looked at each other, and saw shock in each other's eyes.
"Authentic, absolutely authentic, more authentic than any other similar Chinese patent medicine on the market today."
"Yes, the ingredients used in Lingnan Tang's Angong Niuhuang Wan are more authentic than those in Tong Ren Tang, and if nothing unexpected happens, it is made entirely according to ancient methods."
"This Pianzihuang is also unique. Both the medicinal flavor and smell are stronger than those from the Zhangzhou factory. I guess the medicinal effect is also better!"
All the doctors at Miaochun Hall were full of praise, and everyone at Lingnan Hall had a relaxed expression.
Qiu Minli reluctantly put down the pill and smacked his lips:
"Boss Xiaolin, I'm convinced. Lingnan Hall's heritage is far beyond the reach of Miaochun Hall. I have an unsolicited request. If you want to set up a factory in Hong Kong, you can leave the site selection and all the formalities to me. After all, I have more connections in this area.
But I have a small request. Hehe, if possible, when your medicines are mass-produced, can I become the general agent of your Lingnantang medicines in Hong Kong? Don't worry, we will follow the market price."
Lin Sanqi and Lin Tianhua looked at each other and saw the joy in each other's eyes.
The pharmaceutical factory hasn't even opened yet, but a sales channel has already been found. If others are so confident in Lingnantang products, then I should be even more confident.
Now that the pharmaceutical factory is ready to be built, the only thing left is to find the most important source of Chinese medicinal materials, such as where the musk comes from.
If the source of musk and bezoar is not resolved, it will be a big problem whether they are produced in Hong Kong or sold in the mainland, and they will not be able to withstand investigation.
Feng County, Shaanxi Province.
Feng County is located in the heart of the Qinling Mountains and is where musk deer have been breeding for generations.
Since the 1980s, Fengxian County has started artificial breeding of musk deer and has gradually formed a set of mature and highly operational breeding techniques.
After 40 years of hard work, Fengxian County has built 351 standardized musk deer breeding farms, with a total of more than 10,000 artificially bred musk deer. Its musk production accounts for 80% of Shaanxi's total and more than 60% of the national total.
It is known as the "Hometown of Musk Deer in China".
Lin Sanqi, Lin Tianhua, Yin Lianyi and Meng Peng appeared in Fengxian together this time, accompanied by a local medicinal materials dealer Dong Shuangniu, to investigate the possibility of building a new musk deer breeding base in Fengxian.
In a ravine in Yanwan Town, Liu Genhua, the proprietress of the local musk deer breeding base, was introducing the musk deer to Lin Sanqi and his group:
"Let me tell you, you outsiders think musk deer farming is too simple. I bought 100 musk deer, and half of them died in the first year. A musk deer cub costs 13,000 yuan, and we lost over 600,000 yuan in one go. That's a huge loss for us."
Lin Sanqi looked at the deer-like animals in the distance and was a little surprised:
"Oh, a musk deer cub costs over 10,000 yuan, how much does this adult musk deer cost?"
Liu Genhua began to settle the accounts in detail:
"The current market price of an adult forest musk deer is 35,000 yuan. They can produce about 15 to 20 grams of musk each year. Each gram of musk is sold to buyers for 400 yuan, so the annual sales are about 7,000 to 8,000 yuan.
But don’t think that these seven or eight thousand are the net profit. They also have to take care of the musk deer’s food, drink, defecation and urination.
This kind of animal is very difficult to raise. It needs to eat three meals a day. In the morning, it eats dry leaves, and in the afternoon, it eats a nutritious meal. The nutritious meal contains carrots, apples, pumpkins, etc.
They eat seventy to eighty kilograms of leaves a day, and only eat sweet and astringent leaves. They don't like sour or spicy ones.
In the summer, my wife would search the mountains for leaves that musk deer like to eat, and when she found them, she would taste them herself, and she even got poisoned once.
Yin Lianyi was a little surprised when she heard this: "He's not very tall, but he can eat a lot, and yet he has such high demands?"
Liu Genhua rarely complained to others, so she slapped her thigh and complained:
"Not only do forest musk deer have high requirements for food, they only eat fresh food and will never eat anything left overnight. They also have new requirements for water. They only drink mountain spring water, but drinking raw water will cause diarrhea. We have to boil it and cool it before we dare to give it to them.
And you see, a musk deer can only be kept in one cage. Usually, male and female musk deer live separately and live a solitary life because they are afraid of people, noise, noise, etc. If you honk your car horn a few more times outside the door, they will die immediately.
Musk deer are amazing jumpers, easily leaping two meters. The cage needs to be reinforced and covered with a protective net. One cage for each musk deer—just calculate the construction costs alone—and it's a mountain of water."
Liu Genhua's husband, an honest old farmer, also smiled at this time:
"They are too difficult to take care of, and they are very prone to illness. A simple cold can kill them. That's why our breeding base has been run by just the two of us over the years, and outsiders generally don't come."
Lin Sanqi then remembered that no wonder they had disinfected their entire bodies before entering the base, even spraying disinfectant on the soles of their shoes.
It seems that if Lin Tianhua had not been introduced by his local friend Dong Shuangniu, they would not have been able to get in.
Lin Tianhua then asked, "Sister Liu, how much musk can your breeding base produce in a year? And how much profit can it make?"
This is a business secret, so Liu Genhua naturally refused to tell the truth and could only say vaguely:
"The calculation is simple. Let's say a male forest musk deer produces 15 grams on average. We have 60 male forest musk deer in our breeding base, which together can produce around 1,000 grams of musk. Depending on the quality, one gram can usually be sold for three to four hundred yuan."
Yin Lianyi, who studied accounting, blurted out immediately:
"The annual output value is about 400,000 yuan. After deducting the costs, I can make half of it, which is 200,000 yuan. Although it's hard work, the profit is not bad."
Liu Genhua smiled bitterly and said, "This is the income in a normal year, but if you encounter a plague or an accident and a dozen or twenty musk deer die, the whole year's work will be for nothing."
Dong Shuangniu, a local medicinal herb dealer, also helped explain:
"Raising forest musk deer is very risky. You can earn 200,000 or 300,000 yuan with some hard work, but musk deer are so difficult to raise and die so easily. Many farmers have gone bankrupt from raising musk deer. Furthermore, the initial investment costs are enormous, making them unaffordable for most farmers."
Liu Genhua interjected, "We invested one million yuan at the beginning, which was our family savings, and we also borrowed from relatives."
Dong Shuangniu continued:
"Musk deer are difficult to raise, and it's definitely not as profitable as advertised. The information you find online is all misleading. Since they make money selling musk deer cubs, not musk, they naturally want to promote how to make money.
Feng County is known as the hometown of musk deer, but the total number of musk deer raised in the entire county is only a little over 10,000, not even as large as a pig farm. If it were really that profitable, given the Chinese nature, we would have rushed in and raised millions of them long ago.
Meng Peng suddenly laughed out loud after hearing this:
"I thought of a joke online that said if the stock market really could make money, then we would have to rely on connections and use backdoors to open accounts."
Dong Shuangniu suddenly thought of something and reminded:
"Speaking of using connections, if Mr. Lin really wants to invest in a new musk deer farm in Feng County, even if the technical difficulties are resolved, it probably won't be that easy."
Lin Sanqi and Lin Tianhua were both a little confused: "Oh? What do you mean?"
"Boss Lin, the truth is, the forest musk deer is a first-class nationally protected species. Don't underestimate this little creature because it's gray and inconspicuous. It's treated just like a giant panda. Think about it, is it likely that you'll be able to raise a giant panda?"
Yin Lianyi smiled and said, "Indeed, if giant pandas were freely available, I would also like to keep one as a pet."
Dong Shuangniu moved his fingers and continued to introduce:
"If you want to raise musk deer, you have to get a lot of certificates, such as a license for domesticating and breeding nationally protected wild animals and a certificate for animal epidemic prevention conditions, both of which are very difficult to obtain.
In addition, if you want to invest in Fengxian County, you must go through the registration procedures for the land used for production facilities, sign a land use agreement and register it with the Land and Resources Bureau and the Agriculture Bureau, pass the environmental impact assessment, apply for a pollution discharge permit, conduct industrial and commercial registration, and go to the Animal Husbandry Bureau to go through the registration procedures for the breeding farm.
The business environment in the north, haha, you know, there are so many certificates to obtain, and apart from this formality, the entire set of procedures cannot be completed without a few years. If the intention is not in place, then it will be a waste of effort.
Lin Sanqi was a little surprised:
"If it's so difficult to get a permit, then how did Aunt Liu and her team get approval for this breeding base?"
Lin Sanqi was thinking, if these two old farmers can raise musk deer, then why can't a regular soldier like him apply for a license?
Dong Shuangniu laughed, and Liu Genhua explained:
"We are actually affiliated with a large breeding base, so all the musk we produce must be sold to them. We cannot sell it privately, so the price is suppressed."
Oh, Lin Sanqi and Lin Tianhua both nodded slightly. This is just like doing a project. The Liu family’s breeding base belongs to the subcontractor, and the general contractor is someone else.
Dong Shuangniu only revealed some inside information at this time:
"You Guangdong people all know how precious musk is, yet you've traveled all the way to Fengxian to set up a musk deer breeding base. What does this mean? It means that as soon as musk is produced, demand will completely outstrip supply. As long as there's money to be made, there will be people who want to monopolize it.
Musk production in Fengxian County is currently largely monopolized by several large domestic pharmaceutical companies, and all breeding bases in Fengxian County are forced to supply them. You can secretly buy some, but purchasing in bulk is out of the question.
So if you come to Fengxian and want to invest in a musk deer farm and produce and sell your own products, you are essentially taking advantage of someone else's business. Even if you have connections and get all the documents, you still won't be able to run the farm stably.
What if someone messes up? It doesn't have to be complicated. Just set off firecrackers around your farm every day. That alone will probably scare all your musk deer to death.
But you can't call the police. They didn't release it inside your farm, they released it outside. It's a blatant conspiracy. What can you do about it?"
(End of this chapter)
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