Chapter 30 Industry-Finance Integration: It's a True Lie

After Delong collapsed, Tang Wanxin told investigators: "After 2001, my daily job was to deal with crises." Generally, small and medium-sized dealers, through the process of building a warehouse-lifting-shipping, get a sum of money and then get away with it.And Tang Wanxin obviously disdains to be such a "stock thief". His business dream is to practice the utopian integration theory of "taking capital operation as the link and integrating industry and finance as the core" to create a Chinese-style enterprise aircraft carrier. .At a group strategy meeting in 1998, Tang Wanxin set the goal for Delong as "becoming a world-class company and entering the world's top 500."

To enter the world's top 500, it is obviously impossible to cash out and leave.Therefore, in his many years of experience as a business owner, despite constantly changing hands and dumping goods and driving up stock prices, Delong has always maintained a high shareholding ratio in its subsidiaries, and some companies have even increased their shareholding ratio.One can imagine the danger of this practice of being a banker. On the surface, the market value is getting bigger and bigger, but behind it is that Delong must constantly transfuse blood in order to maintain a high stock price. His behavior is tantamount to self-mutilation.The Chinese stock market is originally a very emotional market, and Delong has gained fame through concept hype, and everyone knows that the high stock price is in danger.Therefore, after 2001, in order to prevent the stock price of the "Delong family" from plummeting, Tang Wanxin fell into a hard fight. He had to take desperate risks time and time again. Demonic atmosphere.

Delong, who seems to have a huge capital scale, actually lacks only one thing, and that is money. If Delong wants to maintain an astonishingly high stock price and carry out large-scale industrial integration, it needs huge and continuous funds.According to calculations, Delong needs 1 billion yuan to maintain a high stock price every year, and 3 billion yuan to pay interest for financing. working normally.This is a chilling number. The unhealthy financing system and weak capacity of the gray and deformed Chinese capital market obviously cannot satisfy Tang Wanxin's desire. The last time the "Delong family" raised funds from the stock market through allotment of shares was in 2000, and a total of 870 million yuan was raised before and after.Therefore, the financing channels that Delong relies on mainly come from many irregular and even illegal operating methods.

The first method of operation is to use listed companies as "shell resources" and borrow large amounts from banks.The commonly used method is: the listed company first lends the funds needed for the next step of merger and acquisition. After the merger is completed, the next-level merged company borrows from the bank, which in turn is guaranteed by the listed company.In the "Delong family", there are a large number of serious related party transactions among listed companies.It has worked closely with more than 40 listed companies.Phenomena such as mutual guarantees, fund transfers, and repeated pledges among these companies abound.Later, according to relevant announcements, the total amount of funds of listed companies occupied by Delong exceeded 4 billion yuan.

The case of Chongqing Industry reflects its typical approach: this is a local state-owned holding company that went public in 1997. Its main business is not outstanding and its debts are relatively small. In the words of the banker, it is a "clean shell". In 1999, Delong reached a transfer agreement with the major shareholder Chongqing International Economic and Technical Cooperation Corporation, and obtained the actual control of Chongqing Industrial at a cost of 39.6 million yuan.The one who came forward to complete the acquisition was a shadow company named Zhongjing Sitong. Its registered place is a house in an office building with only 15 square meters in Beijing.In fact, only 10 million yuan was paid for the 39.6 million yuan required for the merger and acquisition of China Economic Stone, and the remaining nearly 30 million yuan was actually the indirect misappropriation of funds from Chongqing Industrial.After Delong took control of this listed company, he quickly used it as a funding platform for the next round of mergers and acquisitions.It successively initiated the establishment of an insurance life company and participated in listed companies in Jiangsu, Sichuan and other places, provided a large number of guarantees for related companies in the department, and also successively made mortgage loans to banks in Chongqing, Shenzhen and other places.In April 2005, when the "Delong System" collapsed, Chongqing Industry released its annual report stating that due to the large amount of capital being occupied by major shareholders, illegal guarantees for bad debts and debts, etc., the actual debt of the company was 957 million yuan, and the company's earnings per share It was -14.08 yuan, and the net asset per share was -9.86 yuan. Both the earnings per share and the net asset per share were the highest financial indicators in the Chinese securities market at that time.

The second method of operation is to entrust financial management.Delong raised huge amounts of funds from the private sector through financial institutions at relatively high interest rates, which is similar in nature to private equity funds.In order to raise as much funds as possible, Delong controlled a number of trust financial institutions, the most important ones were Jinxin Trust, Xinjiang Financial Leasing, Islamic Trust, Deheng Trust, Zhongfu Securities, etc. Leasing, insurance, funds and other fields, carry out entrusted wealth management business through various legal or illegal methods.Subsequent investigations showed that Delong raised a total of 25 billion yuan through these means.This gray and irregular mode of operation has gradually transformed Deron into a financial monster of an astonishing scale and extremely dangerous.In order to support this financial platform, Delong offered an annual interest rate of 12%-22% for a long time. The high financing cost made this game doomed to a disastrous fate from the very beginning.

In order to find funds, Deron has almost reached the point of doing his best.Under Tang Wanxin's deployment, Delong listed 18,732 companies with national annual sales revenue of more than 50 million yuan as key customers, distributed them to many securities and financial institutions under them according to regions, and carried out development by means of blanket search.When an enterprise needs a comprehensive financial service, banks, trust companies, securities companies, leasing companies, and insurance companies that have business agency or equity ties with Delong will come to the door respectively, in the name of different financial institutions. Collaboratively deliver services.They sign contracts with enterprises in the name of entrusted financial management. There are two such contracts, one for inspection by the regulatory authorities, and a "supplementary contract" indicating the guaranteed minimum income promised by Delong, which is confidential .Generally speaking, the minimum guaranteed return provided by Delong is 3%-12%. Later, with the tight capital chain, it rose to 22% at the highest point.For "work convenience", Delong also specially designed a "Financial Product Manual", which is loose-leaf, "Which financial company needs to be used, and which financial service the other party needs, we can replace it at any time."

Delong's behavior is actually an illegal "underground private placement", which is explicitly prohibited by China's securities regulatory authorities.In the Chinese capital market around 2000, this was almost an open, gray game under the sun, and Tang Wanxin just made it to the extreme.In order to conceal the essence of illegal operations, Tang Wanxin proposed a new concept of mixed operation.Later he admitted in prison: "The purpose of my concept of mixed business management is to unite and call on everyone to engage in entrusted financial management. I can't directly say that everyone should engage in entrusted financial management on a large scale. If I said it directly, everyone would have no confidence. Every day The "old three stocks" engaged in entrusted financial management investment do not know when they will be sold. In this way, we were dragged into the war by the crisis and dragged into the vicious circle of entrusted financial management. The business of entrusted financial management is getting bigger and bigger. It's too big, I can't hold it back."

Tang Wanxin's words completely exposed the "true lies" behind the integration of industry and finance.Later, data showed that Deheng Securities, which it controlled alone, signed 2,579 entrusted wealth management contracts, involving 415 companies, institutions and 722 natural persons.After the collapse of Delong, countless enterprises and individuals were dragged down by it.Among them, the Jiangsu and Zhejiang regions with the most developed private enterprises and the most abundant private capital have become the "hardest hit areas".Many hard-working entrepreneurs from Jiangsu and Zhejiang trusted Delong credulously, handed over their hard-earned funds to him, and ended up losing everything.According to the "21st Century Business Herald", among them the worst is Zhejiang Nice Group, the largest private company in the field of daily chemicals. It competes with the global leader Procter & Gamble in the daily chemical market and has achieved proud results.The founder, Zhuang Qichuan, trusted Tang Wanxin and entrusted 600 million yuan of funds to Zhongfu Securities, a subsidiary of the "Delong Family", for financial management. As a result, he was deeply dragged down and affected Chiyu.

In December 2000, the "Chinese Science Department" incident in Luliang broke out, and the stock market fell into panic. The "Delong Department", which is also known as the two "kings of Zhuang", along with the "Chinese Science Department", was inevitably affected. The financing platform Jinxin Trust was affected by the run-on storm, and there was an unpaid gap of 4.1 billion yuan at one time.That is to say, from this time on, Delong internally carried out large-scale fund allocation. It later formed a "position meeting" system, which was held on time at 3 pm every day, rain or shine, until April 15, 2004. Until the "Long Line" is completely lost.Tang Wanxin is the general dispatcher of the "position meeting". He personally presides over the meeting every day. Each financial institution writes down the degree of crisis and data and "position" of the day on the blackboard, and then Tang Wanxin decides which position to take one by one according to the degree of risk Which crisis to solve is accurate to every 1 yuan.Tang Wanxin's decision-making process usually ends in 10 minutes, and then shreds the statistical report of the "position meeting" of the day to prevent it from being lost to the outside and leaving records.

An even more embarrassing fact is that, in order to achieve the goal of industry-finance integration, Delong turned all those companies with good business performance into financing machines, and finally dragged them into the quagmire.Minsk Theme Park in Shenzhen is an example.When Tang Wanxin operated this project, all walks of life were very optimistic about it. CITIC Tourism, a subsidiary of CITIC Group, contracted the right to operate tickets for the next three years at a price of 500 million yuan, and a Hong Kong travel company contracted it for 130 million yuan. Delong received 630 million yuan in one-time income from the right to operate group tickets, which is 2.2 times its investment, which can be described as a very beautiful financial performance.Tang Wanxin transferred all the money to his financial integration.Later, he successively borrowed 867 million yuan from seven banks in the name of the Minsk theme park, and the money flowed to other projects without exception.Minsk Theme Park has been performing well, with an annual profit of more than 50 million yuan. However, according to a person who once served as the general manager of the project: "Except for a small part of these incomes used for daily expenses, the rest is handed over to the headquarters of Delong. , serving Delong’s overall strategy. Because Tang Wanxin’s positioning for Minsk Theme Park is a financial company, which is to realize the benefits as soon as possible.” Therefore, when the well-operated Minsk Theme Park becomes a After financing tools, the huge financial costs made it unsustainable.After the Delong crisis broke out, the Minsk theme park's equity was frozen, and the relevant banks took it to court, and it had to declare bankruptcy.