Chapter 55 Figures in corporate history: President of "Jianghu"

In September 2004, Chen Jiulin was on the cover of "Chinese Entrepreneur" magazine.Under the heroic title of "Buy an Oil Empire", the editor deliberately printed the following suspense on the cover: "Can Chen Jiulin make CAO the fourth oil giant in China through overseas acquisitions?" The magazine Unexpectedly, only 4 months later, it had to do another long cover article: "Who Brought Down China Aviation Oil?" ". Chen Jiulin is considered a business prodigy. In 1997, at the age of 36, he was appointed by China Aviation Oil Corporation to go to Singapore to take over the management of China Aviation Oil (Singapore) Co., Ltd.Founded in 1993, the company lost money in the first two years, and then went dormant for two years, almost an empty shell.When Chen Jiulin arrived in Singapore, only one person came to pick him up, and he was also Chen Jiulin's only subordinate.The venture capital given to Chen Jiulin by his superiors was US$219,000. Seven years later, he handed over the report card: The net assets of China Aviation Oil (Singapore) increased by 890 times to US$150 million. Procurement gradually expanded to international oil trade. The company was listed on the main board of the Singapore Exchange in 2001 and became a well-known hot stock.It has become a sample of Chinese state-owned enterprises' overseas entrepreneurship, and the company's operating performance and management mechanism have been listed as teaching cases in the National University of Singapore.It has also been awarded the title of "Most Transparent" listed company in Singapore, and was selected by the US Applied Trading System (ATS) as the "most unique, fastest growing and most efficient" oil company in the Asia-Pacific region.Chen Jiulin himself was elected as the fourth president of the Association of Chinese Enterprises in Singapore. In October 2003, he was selected as the "New Asian Economic Leader" by the "World Economic Forum" in Davos.Chen Jiulin's annual salary is 23.5 million yuan, which not only created the most state-owned enterprises in China, but also topped the managers of listed companies in Singapore, and was known as the "Emperor of Chinese Migrant Workers".

The facts revealed later showed that Chen Jiulin's achievement was actually another myth of a monopoly.China Aviation Oil Corporation has almost occupied the entire market of aviation oil supply in Mainland China, and enjoys exclusive import rights at the same time. This has directly led to the relatively high price of aviation fuel in China, which is 60% higher than that in Japan and 2.5 times that of Singapore. Sometimes, the price of aviation fuel in the Mainland is more than double the international average price.Sadly, despite having this monopoly operating advantage, China Aviation Oil, which has a rigid system, has still been unable to make profits for many years.

Chen Jiulin is the one who makes the monopoly produce benefits.When he first arrived in Singapore, this branch was only responsible for the aviation fuel transportation business within the group.In order to obtain the purchasing right of the group's imported aviation fuel, Chen Jiulin called on the leaders of the head office one by one.In order to convince a certain leader, he once braved the heavy snow and waited at the door of someone's house until 11 o'clock in the evening.In this way, the group finally failed Chen Jiulin's tenacity and agreed to give the Singapore company a quota of tens of thousands of tons of imported jet fuel.However, Chen Jiulin still faced the difficulty of tight funds. At that time, it cost 6 million to 10 million US dollars to purchase a ship of jet fuel. Chen Jiulin, who had no credit, actually persuaded BNP Paribas to give him a tentative financing line of 10 million US dollars.In this way, he made his first business and made a profit of 300,000 US dollars.Since then, Chen Jiulin has successfully broken into the monopoly game.In order to get more orders from the head office, Chen Jiulin successfully lowered the price of oil products through bulk transportation and comparative purchases. Obviously, compared with other operators in the group company, he is a person who understands business strategies better people.Thanks to his efforts, the cost of imported oil for China Aviation Oil Group has been continuously reduced, and the profits obtained from it have also increased significantly. The Singapore company has also obtained more and more purchasing rights, and shoulders the responsibility of stabilizing oil prices and reducing procurement costs for the group company. important task. In 1998, China Aviation Oil (Singapore) received an order for 21 ships out of 26 cargoes from the head office, and the oil products purchased through it accounted for 92% of China Aviation Oil’s total imported aviation oil. . In March 2000, China Aviation Oil Corporation formally issued a letter requiring all subsidiaries, including joint stock companies, to purchase aviation fuel overseas through China Aviation Oil (Singapore) in the next few years.In this way, Chen Jiulin turned a shell company with a book capital of less than 200,000 US dollars into a large trading enterprise with an annual turnover of 915 million US dollars.Since 2002, Chen Jiulin has entered the investment industry and acquisitions, trying to transform from a trading company into an industrial and trade entity integrating oil industry investment, international oil trade and imported aviation fuel procurement.In April of that year, China Aviation Oil (Singapore) successfully obtained the equity of CLH 596, Spain's largest oil facility company, through bidding at a cost of 60 million euros. In July, it acquired a 33 percent stake in Shanghai Pudong International Airport Aviation Fuel Co., Ltd., becoming the company's second-largest shareholder. In 2003, it acquired a 20.6% stake in Singapore Petroleum Corporation (SPC), the only listed company in Singapore controlled by the state, operating oil and gas exploration, refining and sales of crude oil and refined oil.Business throughout Southeast Asia.After several battles, Chen Jiulin became famous.

The famous Chen Jiulin has not only become a banner of China Aviation Oil Group, but also regarded as a pioneer in the "going out" of Chinese state-owned enterprises.However, in the state-owned system, where the evaluation criteria are quite strange, he is a controversial alternative.In an interview with the media, Chen Jiulin said very frankly: I am with me in times of crisis, and what I am most worried about is that the "black hat" will be removed one day.In order to prove and consolidate himself with greater success, he started to get involved in the futures business of oil derivatives, speculating in the form of short selling options.Chen Jiulin confidently believes that China Aviation Oil holds a monopoly and stable aviation oil import business, and engaging in futures in this capacity will naturally win more and lose less, and few losers.Therefore, he said to himself, "The Chinese can also become speculators like Soros in the world." However, some futures experts reminded him, "It is an extremely risky and unwise approach for China Aviation Oil to make futures. Even if China If you win the aviation fuel bet, you only earn a small amount of royalties from selling options, but if you lose the bet, you will lose a huge amount. This is a game with extremely unequal risks and benefits.” Chen Jiulin disagrees.It turned out to be a tragedy later on.

In 2003, the United States attacked Iraq, and the global oil price, which had been stable for a long time, suddenly rose, and Chen Jiulin, who was short selling, fell into a predicament. On March 28, 2004, Chen Jiulin learned for the first time that there was a book loss of US$5.8 million in option speculation.At this time, Chen Jiulin had three choices: one is to cut the position, limit the loss to the current level, and then turn the paper loss into an actual loss; the other is to let the option contract expire automatically, and gradually turn the book loss into an actual loss. However, the loss may be greater or less than the current level; the third is the extension, if the oil price falls to the selling price of China Aviation Fuel Options, it will not cause losses and thus earn royalties; otherwise, greater losses may occur.In order to cover up the loss, Chen Jiulin decided to take the risk and choose the third plan.He injects funds and continues to gamble.By October 3, the loss suddenly expanded to 80 million US dollars, which was equivalent to 2.5 times the total profit of the listed company in 2003, and the trading volume of 52 million barrels was already several times the actual annual fuel consumption of the Aviation Fuel Group.Chen Jiulin was forced to seek help from Beijing, and the group company decided to help. Chen Jiulin raised another 107 million US dollars and secretly used it to cover his positions.However, the trend of the oil market is still evolving in the direction of deterioration, and the money Chen Jiulin made up has been eaten up bit by bit.On November 29, China Aviation Oil finally lost its confidence and liquidated all positions at a high price. The actual loss of US$550 million became a reality. The next day, China Aviation Oil (Singapore) sought debt restructuring from the local court.From a hero to a criminal, Chen Jiulin only took 8 months.

After Chen Jiulin's defeat, the domestic media made a comparative guess on him from the perspective of entrepreneurial status: If Chen Jiulin was a private entrepreneur and the China Aviation Oil he operated belonged to him, how would he choose? A loss of US$ or more is not a "catastrophe" for a company with an annual profit of 40 million US dollars, but continuing to gamble is unbearable for business owners who have a stake in their own money and destiny Heavy.However, Chen Jiulin is a leader of a state-owned enterprise, and any mistakes in his operations may lead to his resignation. After all, the relationship between state-owned enterprises and their leaders is very fragile.Reporting a loss may become a "domino" and let him step down; if he continues to gamble, he will step down at most, so why not take the risk?Chen Jiulin's choice may actually be the common thinking of many heads of state-owned enterprises.

Economic observer Wang Wei even used a new term—"jianghu entrepreneur" to describe Chen Jiulin's type of state-owned enterprise operators.This type of entrepreneur "highly caters to market demand and actively blends government resources; cleverly uses multiple identities to benefit and deliberately avoids all rules; both ignores corporate governance rules and avoids government organizational constraints; Cheng lives and works to realize his personal ambitions, If it fails, it plausibly shirks the shackles of the traditional system."Wang Wei believes: "Jianghu entrepreneurs" are a special group that ignores corporate governance rules and evades government control. They are very good at using market actions to hijack government decisions and robbing market interests with government actions.On the one hand, skillfully playing with political skills, using the identity of the government to control resources and segregate the market from a high position, squandering the irresistible domineering in the market; In order to shield the government's intervention, it shows the intolerable banditry in the system.