September 30, 9 a. m., Henglong Building top big Meeting Room.
Today is the last day before National Day, Saturday.
Today's Henglong is particularly lively.
The heads of various departments, the general managers of each project, and the core backbone of the marketing team were all seated Meeting Room.
Zhao Chen stood on the stage, with eight words written on the big screen behind him:
"National Day huge benefit, liquidation operation"
Below is a line of small print: 10% off, limited time only 7 days.
Song Zhongping was sitting in the first row and forgot to put down the tea cup in his hand.
Chen Qiming pushed up his glasses and stared at the numbers on the screen.
Liu Mingyu is holding a notebook with the pen tip hanging in the air.
Marketing Director Li Guowei was the first to raise his hand, his brows furrowed into the character Sichuan:
"Chairman Zhao, 10% off? Is this too cruel?"
Zhao Chen looked at him:
"What do you think?"
Li Guowei swallowed:
"The inventory in our old properties is really not easy to sell.
But with a 10% discount, profit margins will be compressed for the first time.
The cost price of some projects is just there, and if you discount it further, you may lose money."
He paused and lowered his voice:
"Besides, will your colleagues... have any explanation?"
Zhao Chen raised his eyebrows slightly:
"What statement?"
Li Guowei hesitated for a moment:
"If we do this, other developers will definitely follow suit.
But some companies have large assets and high debts and cannot afford to keep up.
When the time comes that they can't bear it any longer, will they hate us to death?"
Song Zhongping sneered from the side:
"Hate us? Why don't they think about it when they get the land for themselves?"
Li Guowei shakes his head:
"Mr. Song, that's not what you said. If we cut this off, the entire market's expectations will change.
Originally, everyone was carrying it, and no one lowered the price first.
Now we are the first to rush out, and the others will be passive."
He looked at Zhao Chen:
"When the time comes, our peers will scold us for 'disrupting market order' and 'malicious competition'.
We might even have an appointment with the industry association."
Marketing Vice President Supervisor answered in a low voice:
"Mr. Li is right. I heard that some real estate companies have begun to unite and boycott whoever lowers prices first. If we do this, we may be isolated."
Chen Qiming pushed up his glasses:
"I'm not afraid of isolation, I'm afraid of public opinion. If I'm labeled as 'destabilizing the industry,' future land acquisition, approvals, and cooperation with peers will all be affected."
Meeting Room was quiet for a few seconds.
Zhao Chen said nothing.
Song Zhongping leaned on the back of the chair and spoke:
"I have never done marketing, but I know one thing - if we put down the inventory in our hands, it will only be harder to sell."
He looked at Li Guowei:
"Whether colleagues scold or not, can they be used as food? Whether they can handle it or not is their business.
We can't bear it anymore, who will help us?"
Li Guowei smiled bitterly:
"Mr. Song, I'm not afraid of scolding. I'm afraid... that we will become the target of public criticism."
He looked at Zhao Chen:
"Chairman Zhao, have you ever thought about Henglong's reputation in the industry after this time?"
Zhao Chen was silent for two seconds.
Then he spoke:
"Let me ask you a question."
Everyone looked at him.
Zhao Chen said:
"At this time last year, how many people said I was Prodigal Son? That I only knew how to operate capital? That I didn't understand industry?"
No one answered.
Zhao Chen continued:
"What now? Are those people still talking?"
He looked at Li Guowei:
"This is not the first time that my colleagues have scolded me. When we reduced debt last year, how many people were waiting to see the joke?
What's the result? Now I have cash in my hands and they have bad debts. Who has the last laugh?"
Li Guowei was silent.
Zhao Chen said:
"Word-of-mouth is determined by strength. If you have money and can survive, word-of-mouth will naturally come.
You have no money, you are about to die, and no one will pay attention to you even if you shout "industry conscience" ten thousand times."
He paused:
"Those who accuse us of disrupting the market are worried that we are running too fast and leaving them behind.
If they can't bear it, it's their own problem."
Chen Qiming nodded:
"Chairman Zhao What you say makes sense. Business competition is not about treating guests to dinner."
Song Zhongping answered:
"And those existing housing units are already a hot potato.
We clear it, but they still have to carry it. When the market goes down, who knows who will feel uncomfortable."
Zhao Chen looked at Chen Qiming:
"Mr. Chen, have you settled the accounts?"
Chen Qiming Open the report in front of you:
"After calculation, there are a total of 283 units of old real estate in stock, with a total value of approximately 620 million.
At a discount of 9%, the capital withdrawn is 558 million yuan, which reduces the profit by 62 million yuan."
He paused:
"There are 456 new housing units in stock, with a value of approximately 1.15 billion.
According to the 9.5 conversion, 1.09 billion will be withdrawn and the profit will be reduced by 57 million."
He closed the report:
"A total of 1.65 billion was withdrawn, reducing profits by about 120 million."
Marketing Vice President Supervisor whispered:
"The profit of 120 million is just cut off?"
Zhao Chen looked at him:
"Do you think 120 million is a lot?"
The man was stunned for a moment.
Zhao Chen said:
"That's not how the account is calculated."
He walked to the whiteboard and picked up his pen:
"How long have those inventories been lying on the books?"
Li Guowei thought for a while:
"Of the old buildings, the longest one is three years old.
Annual maintenance costs, capital costs, management costs, add up..."
Chen Qiming answered:
"The average is about 3% per year. After three years, costs have eaten up nearly 10% of profits."
Zhao Chen nodded:
"So the 10% discount is not a loss, it's capital preservation."
He looked at everyone:
"Also, have you ever thought about whether you can sell it in the future if you don't sell it now?"
Song Zhongping frowned:
"Chairman Zhao means..."
Zhao Chen said:
"The market has changed. House prices will not rise as much as they did in previous years.
The house that can be sold now is money. The house that cannot be sold is the baggage that is rotten in the hands."
He looked at Li Guowei:
"Can those unsaleable units increase in value if they are kept for another three years?"
Li Guowei was silent.
Zhao Chen continued:
"Where are the parking spaces? How many parking spaces do we have?"
Chen Qiming turned a page:
"Totaling all the projects across the country, there are about 8,000 parking spaces that have not been sold. The total value is about 450 million."
Zhao Chen said:
"Parking spaces are the hardest thing to sell. If you sell one Suite, it will be good if you can get a parking space."
What will happen to the rest in the future?"
No one answered.
Zhao Chen said:
"So this time National Day is not only selling the house, but also liquidating it.
All old properties in stock are 10% off. New properties are 15% off. Parking spaces are sold in packages, and the price can be negotiated."
He paused:
"There is only one goal - to get rid of all the things that are not easy to sell."
Li Guowei Take a deep breath:
"Chairman Zhao, this is too strong. Will the old owners make trouble?"
Zhao Chen looked at him:
"What's the fuss about?"
Li Guowei said:
"Our new properties are discounted, but they bought them at the original price. They feel unbalanced."
Zhao Chen nodded:
"That's a good question."
He looked at everyone:
"So there are two red lines in this event.
First, discounts for new properties are limited to properties with poor floors and properties that are not expected to sell well in the future.
Second, the inventory of old properties is inherently unsaleable and does not conflict with the houses purchased by the old owners."
He paused:
"If someone comes to make trouble, tell him - the value of the house you bought has increased, and the price of the house he bought has dropped. This is the law of the market.
Not convinced? You can buy another set to spread the cost."
Song Zhongping laughed:
"That's a strong statement."
Zhao Chen looked at him:
"It's not toughness, it's truth."
He returned to the stage:
"Let me tell you again the purpose of this time."
He held up a finger:
"First, get rid of inventory. Get rid of all the hard-to-sell items while the market can still accept them."
Second finger:
"Second, reduce debt. Every penny withdrawn will be used to pay off debt.
After National Day, Henglong's debt ratio will drop a few points further."
Third finger:
"Third, travel light. With no baggage in hand, you can eat whatever you want in the future."
He looked at everyone:
"Any more questions?"
Meeting Room was quiet for a few seconds.
Li Guowei Take a deep breath:
"Okay, I understand. Let's do it then."
Zhao Chen looked at him:
"Are you still worried?"
Li Guowei shakes his head:
"No more."
Zhao Chen scanned the audience:
"Who else has questions?"
No one spoke.
Zhao Chen nodded:
"Then it's settled. National Day Seven days, everyone takes turns. Sell as much as you can."
He paused:
"After seven days, I want to see the results and adjourn the meeting!!"