After sending the email, Liu Jun began anxiously waiting. After consideration, he also CC’d friends like Shen Huadong. He had no grasp of the current situation at all, so he had no confidence about the content of the incoming replies.
Luo Qing’s overnight email completely moved Liu Jun. Luo Qing said that while he couldn’t see clearly where the current economy was heading, he could see one thing clearly: undeniable inflation. Moreover, given China’s developing economic situation, even if there were slight fluctuations in the future, the general direction of inflation wouldn’t change. So, under the premise of inflation, what should those holding RMB do? Luo Qing gave the example of his early mortgage home purchase. He bought the house early for marriage, gritting his teeth to buy it all at once. Not only did the down payment exhaust his savings, but he also owed a pile of debt. But today, even if he were still in the civil service, that mortgage payment would be nothing—the reason being inflation. Inflation wasn’t entirely without merit; it had a beneficial side effect of helping debtors by defaulting on debts through inflation. Similarly, if Tengfei’s current strength could only support building a heat treatment factory half the expected size, then so be it—a clever woman can’t cook without rice. But if, through borrowing, they could achieve it in one step, then they could advance by keeping pace with the economy’s possibly continued explosive development, or retreat with inflation backing them up. What now appeared to be excessive investment producing huge depreciation would soon be digested by inflation. In one sentence: in an inflationary era, borrowing others’ money for one’s development was the hard truth.
Friends like Shen Huadong sent emails successively on the second afternoon in China. Everyone spoke candidly about their respective concerns, but most used a stock market term: “bearish but not short-selling.” Only Shen Huadong’s email came in late, around midnight China time. Shen Huadong’s email was very long.
“Your mention of the most essential economic life greatly benefited me. Before sleeping yesterday, I went to bed with your question and nearly suffered from insomnia. Since this year, facing the fevered economy, I’ve had face-to-face discussions with visiting economic experts multiple times. But today’s experts mostly float on the surface with few touching ground reality. Too bad you just threw this question to me now, or I’d have more topics. Today I went to the field with your question. I competed with seven other real estate companies to bid on a unique downtown plot in our city. The auction scene was truly fiery. I finally won this land at a floor price of 13,280 yuan per square meter, becoming this year’s land king. This price almost matches current surrounding finished second-hand housing prices, but I’m not worried—I’m optimistic about the long term. The reason relates to an issue I once discussed with you: now there’s investment everywhere, new capacity everywhere—what happens when there’s excess someday? But I considered that even if the world has excess capacity, the top tier is always scarce, and the scarce can always be priced by its owners. Before going to the auction site today, I finally stood before our city map, thinking. Due to new demolition policy constraints, downtown land demolition costs will be higher, government demolition willingness will be lower, meaning downtown plots traded in the next five years will be extremely scarce resources. The planning I learned from contacting relevant officials confirms this. Currently, our company has stockpiled nearly thirty percent of this city’s residential land area. What reason do I have not to take today’s plot, further pushing up my land reserve ratio and gaining greater pricing power? So today I went in with determination to spare no cost. I believe this can also serve as a reference for your new capacity planning. On the other hand, the current hot economy provides abundant funds. My stock market financing is very convenient with sufficient ammunition. The other seven real estate companies are similar, but I have more courage. I just convinced my dad and haven’t had time to celebrate yet. Tomorrow at this time, I’ll probably still be soaking in bars. Also, Qu Wei got married—I just found out.”
Shen Huadong’s bold spirit made Liu Jun realize that regarding building the new heat treatment branch factory, he was unprecedentedly wavering, unprecedentedly lacking confidence. Was it because his experience returning to China to establish factories, going through so many twists and hardships, had made him increasingly cautious? Was it because he cared too little about the big picture and increasingly couldn’t understand the times? Or was his ability limited, unable to keep up with the times’ development?
Company management continuously formed minutes of everyone’s discussions and sent them to Liu Jun. During his business trip, Liu Jun never issued further instructions. He needed time to free himself from his fear of making the next important decision. He was now so timid.