Huaxi Village, once known as China's "No. 1 Village in the World", once had a problem with food and clothing, and the villagers lived in villas, drove luxury cars, and started with BMW Mercedes-Benz. However, since Wu Renbao's death, Tuhao Village has become Lao Lai Village overnight. And last year, Huaxi Village was sold at a price of 1 yuan, why did the first village in the world become reduced to this?
The year 2010 was the peak of Huaxi Village, and the villagers may want to go back to that period. That year, Huaxi Village's revenue exceeded 30 billion yuan, and the villagers' minimum bank deposits exceeded 6 million. The iconic Longxi International Hotel was also built at this time, this super five-star hotel is one of the most luxurious in China, not only has a ton of Jinniu Town store, but also has a top helipad, which can accommodate thousands of people at the same time, 5,000 people stay, not only the dishes and chopsticks are gold, the floor is also inlaid with gold. In addition, Huaxi Village has also made a large amount of architectural reproduction, imitating famous buildings such as the Great Wall and the Sydney Opera House. In the summer of 2010, Huaxi Village spent 90 million yuan to import helicopters from the United States to vigorously develop the air tourism business.
But after 2016, the situation in the village took a sharp turn for the worse, and it was burdened with a foreign debt of up to 40 billion yuan, but only 7 billion yuan was left in the account. The return on investment of the villagers has also been greatly reduced, and the promised high interest rate of 30% for three years has turned into a meagre 0.5%. The villagers panicked and braved the heavy rain to run en en masse, which attracted the attention of the whole country. Many people speculate whether this "No. 1 village in the world" has come to an end?
If you want to talk about the rise and fall of Huaxi Village, you have to start with the Wu family. As the so-called success is also the Wu family, defeat is also the Wu family. In the past, Huaxi Village Group relied on steel, textile, tourism, energy, chemical and other industries to eat. Before 2010, these industries were still popular money-making projects. However, in the blink of an eye, there is a serious overcapacity in the Chinese market, especially in the steel, chemical and textile industries. So, Wu Renbao began the road of transformation. However, this change caused Huaxi Village to have a huge debt in the future.
On the eve of the real estate market about to take off, Wu Renbao saw the opportunity and invested heavily in the upstream real estate industry such as steel and building materials. As a result, Wu Renbao made the right bet, the real estate soared, Wu Renbao began to borrow a large number of loans, expand the scale of raw material production, and Huaxi Village ushered in an unprecedented period of rapid development. When Wu Renbao died in 2013, housing prices in Shanghai had risen to 30,000 yuan per square meter. But the late Wu Renbao would have expected that with the country's policy regulation and control of housing not speculation, the sudden cooling of the real estate market directly impacted the foundation of Huaxi Village, and also made Evergrande, Country Garden and other real estate companies thunder one after another. Huaxi Village, as an upstream company, is naturally inevitably hit hard.
Since Wu Renbao handed over the baton of Huaxi Village to his fourth son Wu Xien, Huaxi Village has entered the next round of decline. Huaxi Village used to make a lot of money from steel and weaving, but after the global financial crisis in 2008, the global manufacturing industry was not doing well, and Huaxi Village was also involved. Seeing this situation, Wu Xien made a bold decision to switch from the original heavy industry to the emerging innovative industry. Therefore, he set up an investment company in Shanghai and introduced many masters in the financial industry, hoping to achieve another leap in Huaxi Village. But the high-risk, high-reward game is not so easy to play, and this transformation has not brought the expected revival to Huaxi Village.
In 2018, Huaxi Group caused a backlog of building materials produced in large quantities due to the cold housing market, which could not be sold or received money, and the capital chain fell into a serious crisis. All of a sudden, Huaxi Village's debt skyrocketed to 40 billion, the villagers were saddled with a debt of 13 million per capita, and only 7 billion was left in the group's account.
But Wu Xien bet on an AI industry right. A few years ago, he spent 1 billion yuan to buy a technology company specializing in "optical chips", hoping to enter the chip industry. However, due to the limited scope of application, this technology did not bring any luster to Huaxi Village at first, and the stock price did not improve. However, with the popularity of ChatGPT, this "light chip" has suddenly become a hot baby, and the future is bright. As a result, Huaxi shares, which had been silent for many years, suddenly became the sweetheart of the capital market, and the stock price soared!
But in July last year, Huaxi Group thundered again. Transferring 80% of his own equity to the state at a price of 1 yuan is actually a free gift. According to insiders, this transfer is simply a show, and the essence is that Huaxi is on the verge of bankruptcy and has no power to return to the sky. Huaxi shares experienced a wave of stock prices due to chips, soaring from 7.3 yuan to 13.9 yuan. Some people also analyzed that this surge is inexplicable, and there may be a certain amount of cattiness behind it. I checked the stock price on April 28, and Huaxi shares seem to have returned to the original point, and it has remained at about 7.2 yuan. Obviously, that brief boom is a thing of the past.
On the surface, the Huaxi Group's backward industry and failure to upgrade in time seem to have become the culprit of its decline, but the real bane was laid as early as 20 years ago. Wu Renbao's West China miracle is indeed indispensable, but the truth is far more complicated than you think. At that time, the strong support of the local government was the key to the success of Huaxi Village, and Huaxi was able to borrow money that others could not borrow, and all the resources were given to them. Huaxi Group has almost become the Wu family's family business, and important positions are occupied by his children and grandchildren, which is not hidden from the outside world. This way of nepotism caused the villagers to complain and feel that the ascending channel was all blocked. The essence of collective co-operation lies in the unity of everyone and the common advance and retreat. Huaxi Village is supposed to be a united family, but when the people inside have their own thoughts and suspicions of each other, such an outcome is not difficult to predict. The decline of Huaxi Village is just another proof of the old truth of history: hereditary is a dead end.