Huaxi Village, which mass-produced millionaires in the 90s of the last century, now seems to be a "dream in ten years". However, this "dream in ten years" can also bring a warning to these enterprises and organizations that are huge in size and complex in structure, but they are not "too big to fail". ”
Author / Mu Mu
Speaking of Huaxi Village, perhaps there are still some fragmentary memories left in the minds of the post-80s generation. At that time, the village was often shown on television: the roads in the village were neat, the trees were shady, and rows of beautiful villas stood among them... In the dubbing, it is said that the per capita income of Huaxi Village has exceeded 100,000 yuan.
In front of the TV, most of the post-80s generations in ordinary families in small and medium-sized cities still live in courtyard houses or tube buildings with their parents, and their parents' monthly income in state-owned enterprises is only three digits, and they have to queue for many years to get a house of dozens of square meters in the unit.
It would not be an exaggeration to say that it is a "fairy village" that everyone in the country envies.
01
The tide of reform has risen, and the poor villages have come to doers
The story of this "fairy village" starts with one person, who is the first village party secretary - Wu Renbao.
When the liberation had just begun, when the whole country was in a depression and the economy was in difficulty, Wu Renbao resolutely gave up the opportunity to work in the government and devoted himself to the grassroots.
More than ten years later, he became the village secretary of Huaxi Village.
Unwilling to see the villagers live a hard life, he first vigorously developed agriculture, and then broke the kettle and established the first small hardware factory in Huaxi Village, which can be said to be a turning point in the fate of Huaxi Village.
You must know that this was a risky act at the time, and if you are not careful, you will likely be criticized for "taking the capitalist road".
In the blink of an eye, when the reform and opening up arrived, the rural areas in various localities began to open the "household contract responsibility system" and the production was contracted to the households, but Wu Renbao "did not take the usual road" and decided to implement a new type of joint-stock collective economic system in Huaxi Village.
Wu Renbao fell in love with three major industries, metallurgy, nonferrous metals and textiles.
In the 90s, he also set foot in heavy industry, steel companies, and tobacco and liquor companies with unusually high profits, and even established Huaxi Group, and also owned the country's first village-run listed company - Huaxi shares. Therefore, when the tide of the market economy model was set off in the country, the Huaxi Village model was established as a "unique" sample.
This step can be said to have steadily stepped on the rhythm of the times, catching up with the rapid development of the national economy, the continuous expansion of overseas trade, Huaxi Flange Pipe Fittings Factory once monopolized more than 50% of Japan's import share, and has been in short supply for a long time. Huaxi Iron and Steel is also the only steel enterprise in China that has passed the European certification, and some media reported that 1/5 of the import volume of the United Kingdom and the United States came from Huaxi Village at that time. In 2005, the operating income of Huaxi Group's steel sector reached 14.928 billion yuan, accounting for 57.59% of Huaxi Group's main business income.
Huaxi Village's cotton spinning factory has also caught up with the prosperity of the garment industry, while constantly adjusting the industrial structure, it has also introduced advanced equipment and technology at home and abroad, continuous technological improvement and upgrading, to open up overseas markets, and the textile industry has also become one of the main sources of profit for Huaxi Village.
In this way, with the leader's keen business sense and the collective efforts of the whole village, Huaxi Village went out of China and into the world.
In those years, Huaxi Group was incomparable.
The village not only built a row of villas, but also built a promenade to connect the villagers' houses with the factory, just to "go out on rainy days without umbrellas". The old secretary Wu Renbao will also take the villagers to travel abroad in batches, and in the millennium, he led a wave of villagers to Singapore, Thailand, Malaysia and other Southeast Asian countries through Hong Kong.
Around 2006, there were less than 20,000 people in the village, but there were as many as 210 holding companies, so it is not surprising that "mass-produced" millionaires. In August of that year, Huaxi Group ranked second in the Forbes Chinese version of the "Top 100 Enterprises in China" list, and at the end of the year, Huaxi Village's sales revenue exceeded 40 billion yuan, and the 45th anniversary celebration parade attracted the attention of the whole country.
On the occasion of the 50th anniversary, after four years of working day and night, the super five-star Longxi International Hotel was unveiled, and the village issued hotel vouchers to each villager - you can enjoy a buffet of hundreds of dishes several times a year, experience star-level accommodation, and even sit in the 72-storey revolving restaurant overlooking the beautiful scenery of Huaxi Village.
Why does Huaxi Village, which is so rich, be burdened with tens of billions of debts?
02
Ten years like a dream, the "fairy village" is burdened with tens of billions of debts
The model of the Huaxi Village Collective Plan dictates that the wealth of each villager is at the disposal of the collective. Although the per capita income here is nominally one million, except for the daily expenses of the family, the rest of everyone's income is placed in the respective account books of the village committee and is jointly managed by Huaxi Village. The more precipitated funds in the account books, the higher the villagers' annual income, and the funds put into the village will snowball.
This is true when the economy is on the upswing, but when extensive development begins to hit a bottleneck and economic growth slows, especially in areas related to Huaxi Village's pillar industries, things are different.
In the nineties of the last century, the steel industry flourished, and steel projects were started in a swarm all over the country, and everyone knows the story later. The steel industry has serious overcapacity, prices have fallen off a cliff, a large number of enterprises have gone bankrupt and collapsed, and the steel business that has made Huaxi Village "lie and earn" in the past has been declining, and Huaxi Village's Huabei Iron and Steel and Nangang have begun to enter a state of loss.
Not to mention the textile industry, another pillar industry,
In recent years, the global consumer market has been sluggish, domestic labor costs have been rising, textile mills have moved from the southeast coast to the central and western regions and even Southeast Asia, and the operating profits of the textile industry in Huaxi Village have begun to shrink year by year.
Huaxi Village is not unaware of the crisis.
As early as around 2003, Huaxi Village began to transform, trying to transition from heavy industry to the tertiary industry, they have invested in warehousing and logistics, guarantees, small loans, but also invested in pawn, banks and other financial institutions, since 2005 has set up a financing guarantee company and a pawn company, in 2009 the establishment of a group finance company, to participate in equity investment. In 2008, it even began to invest in ocean offshore engineering, in 2011 it invested in minerals, in 2012 it entered the agricultural wholesale industry, and in 2015 it built a financial holding group.
In 2016, Huaxi Village's financial investment business income reached 2.769 billion yuan, but it still failed to save the entire ship.
Wu Renbao, who has made a bet on the long-term development of Huaxi Village, believes that traditional factories will one day fall, but tourism will bring endless wealth to children and grandchildren.
As a result, Huaxi Village has invested heavily in the construction of five-star hotels, Huaxi Estate Museum, Golden Pagoda and other projects, among which the Huaxi Village Museum, which is designed with reference to the Palace Museum, covers a total area of 10,000 square meters and costs a huge amount.
However, these heavily invested projects have not only failed to bring the expected benefits to Huaxi Village, but have instead increased the debt burden. Although these projects are extremely luxurious, they have no cultural and historical heritage, and no natural scenery, and people's curiosity alone cannot win sustainable tourism income.
According to media reports, the marine engineering project alone has caused Huaxi Village to lose hundreds of millions of yuan. In the years since, Huaxi Village's diversified investment risks have continued to rise, and its own debt scale has also increased. As of March 2016, Huaxi Group had total assets of 54.193 billion yuan, total liabilities of 38.907 billion yuan, and an asset-liability ratio of 68.78%.
Around 2020, Wuxi State-owned Assets Supervision and Administration Commission intervened and began to sort out the group's assets. After the new shareholders came in, they began to liquidate the companies with poor performance, and a large number of enterprises closed down and liquidated. The subsequent epidemic has made the tertiary industry in Huaxi Village even worse.
In 2022, Huaxi Group's attributable net profit will be 209 million yuan, a year-on-year decrease of 38.82% to; In the first half of this year, it is expected to achieve an attributable net profit of 39.49-54.3 million yuan, a year-on-year decrease of 45%-60%.
Last year, the news that Huaxi Village, the "No. 1 in the world", had a debt of nearly 40 billion yuan, which made several generations of Chinese people sigh.
Some people attribute the "fall" of Huaxi Village to the death of Wu Renbao, thinking that once he left, Huaxi Village had no backbone.
Some people also believe that it was the family-style management that led to the failure of Huaxi Village, and there were voices on the Internet that many of the board members of Huaxi Group were related to Wu Renbao. A closed, solidified, lack of competition, and a management system that does not distinguish between public and private will inevitably lead to the decline of Huaxi Village.
Although the dream of "the first village in the world" in ten years carries a sense of fate of "watching him rise a tall building, watching him feast guests, and seeing his building collapse", it can also bring a warning to these enterprises and organizations that are huge in size and complex in structure, but not "too big to fall down".
Looking back on the development process of Huaxi Village for decades, it is not difficult to find that it has steadily stepped on the beat of the times when the economy took off, which can be described as "good wind with strength, send me to the clouds", unfortunately, it failed to turn around in time when the wind direction changed, lack of innovation, blind self-confidence, and invested heavily in industries that could not bring long-term vitality to themselves, and did not keep up with the development of new technology and new technology.