Chapter 319 The Shekou Industrial Zone is still a wasteland.
Director Tang of the Special Economic Zone Management Committee explained to Qin Xiangxiang in detail the three core preferential policies that would be given to Feiyan United Textile Factory if it established a branch factory in the Special Economic Zone.
"Director Qin, we've allocated you a plot of coastal industrial land in the Shekou Industrial Zone, about 100 mu (approximately 6.7 hectares). The Shekou Industrial Zone currently boasts the best infrastructure and the most standardized management in the Special Economic Zone..."
"We'll offer the most favorable price per mu (unit of land area), 5,000 yuan per mu, Director Qin. Currently, the market valuation of land in the Shekou Industrial Zone is between 15,000 and 20,000 yuan per mu. This price of 5,000 yuan is quite reasonable; it's just a symbolic fee..."
The land price offered by Director Tang was equivalent to one-third of the market price, which showed considerable sincerity in order to successfully establish Feiyan Textile Factory in Pengcheng Special Economic Zone.
"Furthermore, we allow installment payments for this land price in our special economic zone. You only need to pay 30% of the land price upfront..."
The price is 5,000 yuan per mu, and the total price for 100 mu is about 500,000 yuan. Installment payments are allowed, with a down payment of about 150,000 yuan, which is a price that Feiyan Textile Factory can afford.
However, this price is actually quite exorbitant. Compared to other parts of the country, 150,000 is not a small sum. But considering that in the special economic zone, Feiyan Snack Stall can generate a net profit of 150,000 a year, enough to cover the down payment for 100 acres of land... If this land price discount is missed, the actual appraised value of this land is between 1.5 million and 2 million, requiring a down payment of at least 450,000.
And land prices are increasing year by year! You'll never get another chance like this.
Feiyan Textile Factory made a killing by acquiring this land; they could recoup their investment by selling it in a few years.
"Feiyan Textile Factory enjoys a 'three-year exemption and two-year half-reduction' tax policy in the special economic zone. The three-year exemption means that starting from the year the factory starts to make a profit, the enterprise income tax is exempted for the first three years and reduced by half for the next two years. In addition, during the two years of the 'two-year half-reduction', the local government will return 50% of the portion of the tax revenue."
"Director Qin, there's one more crucial point: in the special economic zone, importing equipment is much easier! We'll provide you with a special channel; all equipment you import for the construction of the branch factory, including textile machinery and transport vehicles, will be exempt from import duties."
"Finally, there's the special economic zone's foreign exchange retention policy. For the portion of the export earnings earned by the branch factory that exceeds the base amount, Feiyan Textile Factory - Special Economic Zone Branch will enjoy a 70% foreign exchange retention rate!"
Director Tang dropped a bombshell that attracted the most attention: "foreign exchange retention." Qin Xiangxiang had started doing foreign trade with the textile factory in the 1970s. In the 1970s, enterprises retained very little foreign exchange, initially as little as 3%, and the rest of the foreign exchange had to be handed over. Later, with the special incentive policies for Feiyan Textile Factory, the foreign exchange retention was only about 7% to 10%.
In the special economic zone, 70% of foreign exchange is retained! That's a very generous amount, and most of the foreign exchange profits go to the enterprises.
"These retained foreign exchange reserves can be used directly to import raw materials, purchase imported equipment, or provide employees with opportunities to study and conduct research abroad..."
After listening to Director Tang's words, Qin Xiangxiang was in a state of mental blankness. You see, at the beginning, her small wish was just to get a factory office window in the special economic zone and obtain an import car quota.
Now, the policies for building the branch factory offered by Director Tang are too favorable. Whether it is preferential land prices, exemption from corporate income tax and import tariffs on equipment, or foreign exchange retention, they are all top-notch conditions. This is not just a big carrot in front of a donkey, but a "big ham"!
However……
On the other hand, this is going too far. Qin Xiangxiang quickly calculated the cost of building the factory. The land cost was about 500,000 yuan, the infrastructure and factory construction would cost at least 1.5 million to 1.8 million yuan, the equipment investment would be nearly 2 million yuan, and other miscellaneous raw material purchases and labor costs would be around 200,000 yuan.
All these hastily arranged investments totaled a staggering five million in investment to build the branch factory!
Five million! Five million!
In Shanghai, an average worker earns about 600 yuan a year. This investment of 5 million yuan is equivalent to the total annual wages of 8,200 Shanghai workers.
When Feiyan Textile Factory was first built on the island, it was far from such a large-scale operation, while Shangpu Textile Factory was an old factory built during the Republic of China era.
Now, coming to Shenzhen, the special economic zone, they've made a huge investment of five million yuan right away.
Qin Xiangxiang: "...Things are getting more and more complicated."
Not building a factory would be a loss, missing a once-in-a-lifetime opportunity; but building a branch factory would completely bind Feiyan Textile Factory to the "Special Economic Zone" and to the Shekou Industrial Zone.
Qin Xiangxiang's head was buzzing, but deep down, an answer had already surfaced in her mind.
establish!
This represents 70% of foreign exchange reserves, plus exemptions from import tariffs on equipment and corporate income tax.
Give it a shot; it can't go wrong.
Qin Xiangxiang called both of Feiyan's factories and held an impromptu conference call to discuss the establishment of a branch factory in the special economic zone.
Most people agreed to set up a branch factory.
"We're so fortunate to have benefited from such a great policy..."
"Our factory used to be a pioneer in foreign trade and earning foreign exchange. Even if we move to Shenzhen now, it shouldn't be bad, right? And... Factory Manager, is it true that we retain 70% of our foreign exchange? Did you hear me right?"
Qin Xiangxiang said, "That's right. If this branch factory is set up and can generate two million US dollars in foreign exchange earnings every year, then it will definitely be able to recoup the investment cost in five years."
Qin Xiangxiang said that the foreign exchange earnings of two million US dollars was an extremely conservative estimate. If they earned two million US dollars in foreign exchange and the company retained 70%, that is, 1.4 million US dollars. If the profit margin was calculated at 30%, that would be 420,000 US dollars in foreign exchange retained. According to the official exchange rate, that would be equivalent to 840,000 RMB.
That means you can recoup your factory construction investment of five million (X) in five to six years.
But that's not actually the case. For some "well-known" reasons, only a fool would use the official exchange rate of 1:2 to exchange for foreign currency. That would be crazy.
If you have 420,000 in foreign exchange reserves, and you calculate the exchange rate using the black market or private exchange rates, it's mostly 1 to 5, or even 1 to 7 on the black market. This 420,000 might be equivalent to about 2 to 3 million, meaning you can recover the cost of building the factory in about two years and make a profit.
The most crucial point is the "foreign exchange reserve". Foreign exchange is too precious now, and ordinary people simply don't have much foreign exchange quota. Getting the official exchange rate of 1:2 is harder than climbing to heaven.
However, many people lack foreign exchange. There are plenty of people willing to exchange at a ratio of 5 to 1 or 7 to 1, as long as you have "foreign exchange".
Even just considering the "foreign exchange retention" alone, building a factory wouldn't be a loss.
Everyone at Feiyan Textile Factory clearly knew this.
“Okay, since the special economic zone has such a good policy for building factories, then our Feiyan United Textile Factory will build the Feiyan United Textile Factory - Pengcheng Branch in the Shekou Industrial Zone of the special economic zone.”
This proposal received everyone's support, and building a branch factory in the special economic zone was imperative.
Many people in the factory were relieved:
"Thanks to the factory manager's trip, we learned that the special economic zone has such favorable policies for attracting and building factories!"
"Good heavens, seventy percent of foreign exchange reserves are retained!"
...
Qin Xiangxiang called Li Jianzhi and told him about Feiyan Textile Factory's decision to build a branch factory in Shekou Industrial Zone, Pengcheng, including the 100 mu of coastal land in Shekou Industrial Zone, the price of 5,000 yuan, and the exemption from corporate income tax for the first three years...
"Chief Li, what do you think?"
Li Jianzhi laughed: "What else can I say? It's a huge profit!"
"Really? I'm actually a little nervous."
Li Jianzhi sighed, "Look at the land price you got. One mu (unit of land area) is 666 square meters, and you only paid 5,000 yuan per mu, which is about 7.5 yuan per square meter. If, forty or fifty years from now, the residents of Pengcheng know that you got the land in Pengcheng for 7.5 yuan per square meter..."
Five hundred thousand yuan bought a hundred acres of land! In the future, five hundred thousand yuan might only buy a small room.
Putting everything else aside, this hundred acres of land is definitely not a loss.
Qin Xiangxiang said smugly, "Why don't you mention that there's still 70% of foreign exchange retained? Foreign exchange certificates are being speculated on to the sky now!"
"Yeah, my wife is amazing."
Qin Xiangxiang's lips curled into a smile. Thinking about the foreign exchange earnings, she perked up! Her luck was about to change! She was going to make a fortune! She would work hard in foreign trade in Shenzhen!
In order to earn foreign exchange quickly, Qin Xiangxiang did not waste a moment and quickly led people to conduct on-site surveys of the 100 acres of land that the Special Economic Zone Management Committee had allocated to them, and formulated a preliminary plan for the construction of the branch factory.
The overall layout mainly consists of the main factory building, an additional "R&D and design building," and supporting living areas, including employee dormitories, a canteen, a basketball court, an auditorium, a library, and so on.
Their branch factory mainly operates in three areas: first, textile fabrics and garments; second, food processing; and third, toys and cosmetics that Qin Xiangxiang is currently envisioning, namely "Fortune Swallow" and "Peace Swallow," as well as future lipsticks, all of which will have independent production workshops.
After the initial planning was completed, the pressure of funding construction came next. Even though the special economic zone offered very favorable policies, it still required draining most of the Feiyan United Textile Factory's resources... tightening their belts to build the factory.
Furthermore, the twelve people who came to the special economic zone were too few. Even if more than twenty veterans were added, the number of personnel would still be far too small for a branch factory that was about to be built on 100 acres of land. The branch factory in the special economic zone would need to establish a new management team.
We still need to recruit more talent.
“Wang Youyou, you will stay in Pengcheng in the future. You will be the general manager of the factory construction. After I return to Shanghai, you will stay in Pengcheng to supervise the factory construction and report the progress to me regularly.”
Yes, that's right. Qin Xiangxiang plans to hand over the factory construction to someone else and head back to Shanghai.
It wasn't just about shirking responsibility; Qin Xiang wanted to go back to Shanghai to "call for help," as she was hoping the special economic zone factory would earn her foreign exchange.
No matter how good the development policies are in the special economic zone, it is still a "place where talent is scarce" because it doesn't even have a university! But Shanghai is different. It has several prestigious universities. She wants to go and persuade (X) to recruit some talent to come here.
"Factory manager, are you entrusting everything to me?" Young Wang Youyou was both excited and apprehensive. Was such a heavy responsibility really being handed over to him? The factory manager trusted him too much!
At that moment, Wang Youyou wished she could give her all and devote herself entirely to her work to repay Director Qin's kindness in recognizing talent.
Qin Xiangxiang nodded: "The factory urgently needs people right now. You need to be brave enough to take responsibility and get more experience. I'll pick a few more veterans to work with you and supervise the factory construction together."
"Yes, factory manager! We guarantee we'll complete the task!"
Qin Xiangxiang stood on the barren land of Linhai Wuwan in Shekou Industrial Zone, feeling the slightly salty sea breeze. She held a planning map in her hand. "Liu Zhiyuan, your drawing is really good. The future land planning and layout of the factory will depend on you. If there are any veterans with relevant skills, recommend a few more. Also, engineering soldiers... This is hundreds of acres of land that need to be planned and constructed."
The hundreds of acres of land are so tiring to walk around on. Next year, when the factory is completed, she will drive her own "factory manager's car" to inspect the factory area.
The factory area is still a wasteland.
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