Chapter 662 New Cooperation with Buffett

Chapter 662 New Cooperation with Buffett

Chapter 662 New Cooperation with Buffett
Although I have a very good relationship with Citibank, business is business, and different businesses are often not universal, especially in different places, with different people in charge;
In other businesses of his own, he cooperated a lot with other heads of Citibank, and everyone got along well with him. However, if a certain project caused a branch of Citibank to lose money, they would not be happy about it, and this was human nature.

The bank’s requirements are also normal. If a project has been making losses, then if it wants to obtain financial support again, it must have other valuable things as collateral.

Many of Yang Wendong's properties in Hong Kong are very valuable, but banks in the United States or Los Angeles will not recognize them. They will not cause trouble for themselves.

After thinking for a while, Yang Wendong found that the most valuable thing he had in the United States was Walmart's stock, because Walmart was already listed.

Therefore, Yang Wendong arranged for an American lawyer to communicate with Citibank and pledge Wal-Mart's stock, thus obtaining funds to support Best Buy.
Wal-Mart's market value is not very high now, so the collateral funds are limited. However, Best Buy also expanded from small to large, so it did not need a lot of funds at the beginning.
The best combination is that Walmart will develop rapidly in the next many years, and its stock value will become higher and higher, even doubling in two or three years. In this way, it can continuously increase the mortgage value and obtain more funds in the future, which is also in line with Best Buy's future expansion plan.

By the late 70s and early 80s, when various entertainment electronic products such as personal computers and home game consoles appeared, Best Buy would inevitably be able to make a profit, thus achieving self-sustaining growth and rapid development.

Yang Wendong did not personally participate in such a trivial matter as negotiating a loan with Citibank. There was no need, and his subordinates could do it.

When both parties have almost finished discussing the mortgage and amount, show the draft agreement to him and inform him. Then someone will naturally review it. When everything is fine, the deal can be officially completed.

While Best Buy was negotiating with Citigroup, Yang Wendong came to Omaha, the headquarters of Berkshire Hathaway.

Buffett and Berkshire CEO David accompanied Yang Wendong on a tour of the factory in Omaha.

"Mr. David, our cooperation in Hong Kong is going very smoothly. Berkshire has become a supplier for many brands in Hong Kong, and I am also working hard to expand the Japanese market." Yang Wendong said, "So I hope that our joint venture in Hong Kong can further expand its scale and become one of the largest textile factories in Asia."

Historically, Hong Kong's textile and clothing industries were very strong. At their peak, they even surpassed Italy and entered the top ten in the world. This is a world-class ranking of countries, and Hong Kong alone seems out of place in it. The history of the development of Hong Kong's textile industry has even become part of the business courses of German universities.

But in fact, it is just hard-earned money, and all the products are low-end. To exaggerate a little, they can only be competitive by exploiting workers. The working hours of many textile factories in Hong Kong are from six or seven in the morning to eleven or twelve at night. Many bosses even lock the factory gates to prevent employees from leaving. As a result, a fire occurred, causing considerable casualties.

Yang Wendong had no way to deal with this matter. This was the tragedy of having no skills. In the past, some places in the mainland even calculated how many fingers they had to exchange for foreign exchange. But even so, having these industries was already the best choice for many poor areas. If they didn't have them and could only farm, it would be even more miserable. Not every place could find a job driving screws.

Forced change will not work, but industrial upgrading can be carried out. However, Yang Wendong cannot do technology. Even if he has the energy, he will put it in the electronics industry. The simplest model for the textile industry is naturally to introduce foreign capital. It happens that the US textile industry is in decline, and he needs to invest in Buffett, so Berkshire is the best choice.

After Berkshire's high-quality textile products entered the Hong Kong market, the cost of raw materials for the mid- to high-end textile industry was significantly reduced, which gave many factories in Hong Kong the opportunity to upgrade their industries. After all, capable people will seize the opportunity when there is an opportunity, while those without the ability will be eliminated.

In recent years, some OEM factories in Hong Kong have also begun to produce mid- to high-end clothing, and many have even established their own clothing brands for external sales. Of course, Changxing Trading has also helped a lot in this regard, and it has also been a great help to Carrefour's overseas expansion.

Therefore, this investment will achieve multiple goals for Berkshire, Yang Wendong and others, Hong Kong industry, and Hong Kong workers.

David nodded and said, "Eric, even if you didn't say it, I would have considered it. The results in Hong Kong are indeed very good, and the board of directors is also planning to expand investment in the Asian market."

"That's good." Yang Wendong said with a smile, "I'll arrange for someone to contact Berkshire Hathaway if you need any funds."

Naturally, they only need to make a plan, and the other details will be implemented by the people below. In the end, they just need to know the result.

"Eric, you are indeed a genius in business." Buffett also praised him and then asked, "But Berkshire still has a big problem. Even if the Asian business develops well, it does not use American products. The performance of American factories is still very poor. Do you have any way to solve this problem?"

Yang Wendong shook his head and said, "There's really nothing I can do about this. The US government is now promoting free trade around the world, and the emergence of containers has also reduced transportation costs. Wages in the US are high and unions often cause trouble. Under these conditions, the US textile industry is bound to decline and it's impossible to alleviate it." The oil crisis that will break out next year will lead to increased transportation costs. In theory, it will help the US manufacturing industry a little, but it can only be a short-term solution. In addition, clothing is also dependent on petrochemicals, so the impact is bound to be significant.

It is said that in history, after Buffett took control of Berkshire, he spent a lot of effort to save its many factories in the United States, but ultimately failed, and Berkshire gradually transformed into an insurance company.

"That's a shame." Buffett also sighed and said, "I still want to save Berkshire's several factories in the United States. There are tens of thousands of jobs. If they are gone, it will be a pity."

"Tens of thousands of people?" Yang Wendong thought for a moment and said, "In fact, there is another way to try, that is to create a terminal brand yourself, and build a brand similar to Gap and The North Face;

The profits from terminal sales are still considerable, and theoretically they can support the factories in the United States, at least in the short term.”

Berkshire is very large in the United States, but it mainly supplies clothing materials rather than terminal brands. This is why it was impacted by the Japanese textile industry in the early days. Real brands are generally not afraid of shocks unless they do not manage their business well.

"Build your own brand?" David replied, "This is another field. If you want to succeed, you have to pay a huge price. You need to build terminal brands in many cities across the United States, which is very difficult."

Buffett agreed: "Yes, this is very costly, and there are only a handful of brands that can succeed."

Yang Wendong smiled and said, “Of course, but I think if you really want to save American factories, this is the only way, otherwise it is impossible;
In terms of cost, American textile factories cannot compete with Japan. Now Japan cannot compete with Hong Kong. In the future, Hong Kong may not compete with other poorer countries. This is the trend of international free trade and container trade, and no one or country can stop it. "

In fact, if Berkshire really creates a terminal brand in the United States like The North Face and Lauren, it will be a good thing for Yang Wendong;
One is that he is also a shareholder of Berkshire. Even though Buffett has strong financial strength, it is better to have a normal chain clothing brand business.

The second is that although what he said seems to make sense, once the brand is built, driven by capital, no matter how much Buffett wants to save Berkshire's factories in the United States, these clothing brand orders will eventually go to countries with low costs;
Now it will be Hong Kong, and later it will be the Mainland, and they are likely to be their own factories, which will be beneficial to themselves and Hong Kong and the Mainland;

You have to know that in the early days of the mainland's reform and opening up, it was difficult to invest in more complex industries because the local area did not have sufficient industrial conditions. On the contrary, industries such as clothing and shoes were very suitable, and labor-intensive industries could also create a large number of jobs, killing two birds with one stone.

After thinking for a moment, Buffett said, "Eric, I know you have retail and clothing businesses in Hong Kong. How about you invest in this terminal brand in the United States?"

"It's hard for me to do this." Yang Wendong shook his head and said, "My capital needs to be invested in many things in the United States, and it is limited. Besides, I am not an American. It is not a problem to have a small business, but if it is really big, there will be conflicts.
Another point, if I succeed, why should I purchase high-cost raw materials from the United States? From my perspective, it is not right. If you want to save Berkshire's factory, then Berkshire can only do it itself;
Although Berkshire is losing money now, its revenue in the early years was still very high. Rather than continue to lose money, it is better to take a gamble and build its own brand. Even if it does not reach a very high level in the end, at least it can have a small industry, right?"

As a Hong Konger, he would invest in some retail industries in the United States, but only in emerging industries such as the electronic retail industry, because new industries will not conflict with other capitals. Although he may be envied, it is at least better than eating other people's cake.

Just for Best Buy, if it wants to expand rapidly, it will cost a huge amount of money, and there is also the special food retailer KFC.

Even if he didn't know the future, he would never have gone through so much trouble and would have simply invested only in companies like Walmart.

Buffett hesitated for a while and said, "How about we form a joint venture? You don't need a lot of money. I just want to get some advice from you."

"Okay, I can invest a small amount of money." Yang Wendong finally agreed for Buffett's sake.

PS: Please give me a monthly ticket
(End of this chapter)