Tech Giants: Starting from Bankrupt Companies

69: Chapter 69: A Choice at the CrossroadsThat night, on the Gulfstream G650 business jet on the return trip.

After the plane climbed to cruising altitude, the argument in the cabin began.

I strongly oppose this. Lin Wan was the first to speak, her tone leaving no room for negotiation. This isn’t an acquisition; it’s suicide. 58.2 billion in debt, with interest alone exceeding 3 billion annually. 30,000 employees—according to national regulations, the resettlement cost after an acquisition averages 200,000 to 300,000 per person, which is another 6 to 9 billion. Restoring production on old equipment will require at least 10 billion in investment. And these investments, in the foreseeable future, are almost impossible to generate positive returns.

She pulled up the data model on her tablet: I’ve done a preliminary calculation: even with national policy support, even with debt rollovers and tax exemptions, this acquisition will drag down the cash flow of Xingchen Heavy Industry by at least 20 billion over the next five years. Xingchen Heavy Industry is currently in an expansion phase; the Red Flag project needs investment, the chip factory needs investment, and our own capacity expansion needs investment—the capital chain will break.

Zhao Qing was relatively calm: But those military industry qualifications are indeed valuable. I just checked; Shenyang Machine Tool holds a full set of qualifications, including the Weaponry Research and Production License, the Equipment Contractor Qualification, and security clearance. If we were to apply for them separately, even if everything goes smoothly, it would take three years, and there’s no guarantee we would pass the highest-level reviews for aerospace, naval, and other sectors.

He paused: More importantly, Shenyang Machine Tool has a complete sales and service network across the country. Although most of it is paralyzed now, the skeleton is still there. If we were to start from scratch to build our own channels, the cost and time would be no less.

Chen Zhiyuan had been looking out the porthole. Below the plane were the myriad lights of the North China Plain, and the place they had just left should have already plunged into darkness by now.

Mr. Su. Chen Zhiyuan finally spoke, his voice low. I’m not looking at this from a business perspective. I just feel... those Old Master Craftsmen, those skills, that experience accumulated over a lifetime—if they just disappear like that, it’s such a pity.

He turned back, a persistence unique to engineers in his eyes: Why could Germany become a manufacturing powerhouse? Because they have a ’craftsman tradition’; one family does the same thing for generations, and the craft is passed down. The Master Liu we saw in the first workshop today, he is a ’craftsman’ of China. But the skills he possesses are for operating old Soviet Union machine tools; they are outdated in the era of numerical control. But if... if we could give him new tools and digitize and systematize his experience, how much energy would that unleash?

Lin Wan shook her head: Engineer Chen, I understand your sentiment. But the business world is cruel. We aren’t acquiring technology; we are acquiring a burden. Those Old Master Craftsmen are on average over fifty-five years old, and their ability to learn new knowledge is limited. And those ’skills’ are mostly individual experiences that cannot be standardized or quantified. How many resources would we have to invest to turn this experience into productivity? What is the return on investment?

The argument continued.

Su Chen had not spoken. In front of him lay two reports: one was the ’Acquisition Risk Assessment’ done by Lin Wan, a thick thirty pages, with the conclusion marked in red: ’Success rate lower than 30%, strongly not recommended.’ The other was the ’Strategic Value Analysis’ organized overnight by Zhao Qing and Chen Zhiyuan, highlighting those military industry qualifications, patented technologies, and the list of Old Master Craftsmen.

The plane flew steadily through the night sky. The lights in the cabin were dimmed, and only the reading lights in front of each person were on.

Su Chen remembered what Master Liu Weiguo said during the day: This machine is old, but the bones are still there. It’s just missing a good heart.

He also remembered Chairman Yang’s question: Can the factory still be saved?

He also thought of something from much further back—in 2015, when Flint was on the verge of bankruptcy, he and Lin Wan were squeezed into a rented room, eating a bowl of instant noodles split into two meals. What was he thinking about back then? It was about surviving, proving himself, and making products that the world would recognize.

Now, he had done it. Flint had become a tech giant with a market value in the trillions.

So what’s next? Just keep making money? Just keep making the company bigger?

The plane hit turbulence and bumped slightly.

Su Chen closed the report, stood up, and walked toward the satellite phone in the front cabin of the plane.

Mr. Su? Lin Wan looked up at him.

I’m making a call. Su Chen said, You guys continue the discussion.

He closed the cabin door and dialed Xu Jianguo’s number. It rang six times before the other party answered.

Director Xu, this is Su Chen.

Mr. Su, is the inspection over? How do you feel? Xu Jianguo’s voice came from the other end of the phone; the background was very quiet, he must have been in the office.

Very heavy. Su Chen said truthfully, Heavier than I imagined.

He paused: But if I take it on, there are three conditions.

The other end of the phone was silent for a few seconds. Please go ahead.

First, debt stripping. Establish a special asset management company to take on all historical debts and non-performing assets. Xingchen will only take high-quality assets—land, factory buildings, equipment, patents, qualifications, and core technical personnel. The debt cannot follow the assets.

Second, absolute autonomy in personnel rights. For the 30,000 employees, Xingchen will reorganize competitive hiring and select them according to the standards of the new company. For those who are not selected, the state needs to assist in diversion and resettlement, provide training and re-employment support, or terminate contracts after providing compensation in accordance with the ’Labor Contract Law’. Xingchen cannot carry this burden.

Third, the military industry qualifications and patents must be transferred free of charge. This is not a business negotiation; this is a national strategic necessity. Since the state hopes that Xingchen will take on this responsibility, it must give Xingchen the corresponding weapons. In addition, the state needs to promise that within the next five years, machine tool procurement by the military, military industry groups, and state-owned enterprises will prioritize Xingchen’s products under equal conditions.

Three conditions, each of which touched upon core interests.

Xu Jianguo was silent for a long time. Su Chen could hear the sound of a pen scratching on paper from the other end of the phone; he must have been taking notes.

Mr. Su, your conditions... are very harsh. Xu Jianguo finally spoke, Debt stripping involves the disposal of tens of billions of state-owned assets, which requires approval at the State Council level. Personnel issues involve the stability of tens of thousands of employees, and local governments are under huge pressure. The free transfer of military industry qualifications... is unprecedented.

But the problem with Shenyang Machine Tool is also unprecedented. Su Chen said calmly, Director Xu, you are asking me to climb a mountain while carrying a mountain. I can carry it, but you have to let me unload the mud and rotten wood on the mountain and leave only the solid rock. Otherwise, I’m not climbing a mountain; I’m being buried alive.

There was another silence on the other end of the phone.

I need time. Xu Jianguo said, These conditions need to be studied in a meeting and need coordination from multiple parties. A week, no, ten days. Give me ten days.

I will wait for you for a week. Su Chen said, After a week, no matter what the result is, Xingchen Heavy Industry will launch its own expansion plan—building three new production bases in the Yangtze River Delta, the Pearl River Delta, and the Chengdu-Chongqing region. By then, there won’t be much point in talking about an acquisition.

This was an ultimatum.

Xu Jianguo took a deep breath: Understood. One week. Mr. Su, in any case, thank you for being willing to consider it.

Before hanging up the phone, Su Chen said something he hadn’t expected himself: Director Xu, Master Liu Weiguo asked me to pass on a message to you.

What message?

He said, ’The machine is old, but the bones are still there. It’s just missing a good heart.’

On the other end of the phone, Xu Jianguo’s breathing clearly paused. After a long while, he said: Tell Master Liu... the country remembers them. Please also believe, Mr. Su, that the country will do its best to give this old frame the strongest heart.

The call ended.

Su Chen stood in front of the satellite phone, looking at the pitch-black night sky outside the window. The plane was flying over the Yellow River, and below it should be the pitch-black Central Plains land.

He thought of many things. He thought of the history of Chinese industry he read in college, the passionate years of the ’First Five-Year Plan,’ and the predecessors who built the ’Two Bombs, One Satellite’ under rudimentary conditions.

He also remembered the ecstasy when Flint first made the drone flight controller, the shock when the Flint-t1 chip was released, and the confidence when seeing the parameters of the Divine Travel battery.

Now, another choice was in front of him.

Returning to the cabin, everyone looked at him.

How was it? Lin Wan asked.

Wait a week. Su Chen sat down, After a week, let’s see what conditions the state can offer.

What if the conditions aren’t met? Zhao Qing asked.

Then we’ll proceed with the original plan and expand ourselves. Su Chen said, But to be honest...

He didn’t finish.

But everyone understood that ’but.’

But, what about those Old Master Craftsmen? What about those skills? What about those roots of Chinese manufacturing that had been silent for too long?

The plane continued south, flying toward the lights of Shenzhen.

And two thousand kilometers away, in those old workshops of Shenyang Machine Tool, the last night shift light had just gone out.