Chapter 345: Strategic Significance

The office fell quiet for a moment. Bank Manager Sun took a sip of tea and flipped through the asset proof Fang Hong had given him.

He only gave it a cursory glance—one look was enough to get the general picture. They had already communicated in advance beforehand, and over the past month they had also investigated the Principal's transaction records.

Bank Manager Sun closed the file and said, "President Fang, I'll just be straightforward."

Fang Hong stayed silent, gesturing for him to go on.

"Your film and television company is very profitable, but it doesn't really have assets. Film and television can't serve as a basis for a loan. Copyrights can, but their value isn't much, and that has to be discounted accordingly—and we're quite cautious about this area."

Bank Manager Sun laid out the situation: Jade Rabbit could get a loan, but not a large one.

He paused, then continued, "Then there's your Chang'e company—it's completely in the red, and it's only been operating for a short while. We can't assess this company's ability to repay."

"By regulation, to lend to a business, the company has to have been established for at least two years."

Chang'e hadn't even been around for two years—it was only founded last year. The track record was too short.

"What if I take out a personal loan, with equity pledge and the like?" Fang Hong asked.

"Besides equity, do you have any personal assets? A house, a car—anything, as long as it's a fixed asset, that works. On that front I can be flexible." Bank Manager Sun flipped through the file again and didn't see any personal assets listed for this man.

He saw the Principal's transaction records were quite good, and his credit had no issues either—he was a quality client. Leveraging was no problem.

"None!" Fang Hong shook his head.

That made Bank Manager Sun glance at him in surprise. A boss this big, and he doesn't own a house?

I mean, you could go buy a five-hundred-million-dollar house if you wanted.

"Given your situation—combining equity pledge, liquid funds, credit, and guarantees—the most our bank can lend you is 1.8 billion." Bank Manager Sun gave a number.

It was higher than the figure Meng Jun had given back then. Essentially, in the bank's eyes Chang'e wasn't worth much, because the company had been established for a short time and was still in the red.

Jade Rabbit had been around for over four years, its operations were in very good shape, its debt ratio wasn't high, it had large liquid funds, and it had assets like copyrights and equipment, plus a plot of land.

In the bank's eyes, Jade Rabbit was worth more than Chang'e.

You could say Chang'e has big volume and big potential, but that's not what the bank considers. It only evaluates your loan based on your existing operating situation and asset situation.

Put bluntly, they don't take on risk. If you go under, they just look at whether you have anything to cover the debt. Chang'e clearly doesn't.

After all these years of effort, Fang Hong was only worth 1.8 billion in the bank's eyes—he didn't know whether to laugh or cry.

Of course, by valuation, his assets would certainly be worth tens of billions—Jade Rabbit alone is worth that much!

Of course the bank can't be compared to a valuation. A valuation is just an estimate—sometimes it's just talk, not real money.

The bank is the one actually handing over real money.

"Alright, thank you, Bank Manager Sun." Fang Hong stood up and shook hands with him.

"President Fang, if you need anything, you can contact me directly." Bank Manager Sun still wanted to lend him the money—after all, the man had good credit, and Jade Rabbit's operations were in good shape too.

"Sure!"

Fang Hong nodded, then signaled Gao Zhun to see the guest out.

Liu Tianxian had heard their entire conversation. After the man left, she sighed, "Your Jade Rabbit is way too cheap!"

She'd recently heard Huayi Media's market cap was almost pushing twenty billion—the gap wasn't small.

But in her eyes, Jade Rabbit was stronger than Huayi Media.

"What did you expect? After all my years of effort, in their eyes I might not even be worth as much as you." Fang Hong laughed at himself.

"How could that be?!" Liu Tianxian was surprised.

"They look at visible assets—fixed assets, cash flow, stocks, that kind of thing. It's these visible things they use to evaluate you.

The invisible stuff—how many films you've made, how much box office a film can pull in—they don't look at that, because it's uncertain, can't be estimated. Call it a film if you're being nice; call it data sitting on a hard drive if you're not." Fang Hong explained to her.

"Still better than me, right?" Liu Tianxian said.

She didn't really understand this stuff either. She'd just heard that some company was worth so much, a film was worth so much—tens of billions, several billions, that sort of thing.

But when it comes to real money, it gets devalued, becomes worthless. That's reality.

In the financial markets, investors really do invest by valuation—but that comes with equity, with dividends, with you having to make money for them.

Bank lending requires collateral, not equity. Two different things.

"Not necessarily. You have a house, you have a car—in the bank's eyes those are very valuable. And you yourself are very valuable in the bank's eyes. A person's value, in the bank's eyes, is also a visible thing." Fang Hong said.

Liu Tianxian roughly understood. Like her—as soon as she made money, she bought houses, bought cars. Recently she'd bought another manor and a luxury car. Those were things you could see and touch.

Fang Hong's things, you couldn't see or touch.

The two of them had completely different paths with money. Fang Hong kept expanding his business territory; Liu Tianxian kept expanding her fixed assets.

Of course, once you have a lot of fixed assets, it takes money to maintain and manage them—houses, cars, all of it. There's a certain expense every year.

Liu Tianxian asked, "That literature thing—is it really that important to you?"

For a moment she'd forgotten what it was called.

"Very important. It's a key piece of my cultural and entertainment sector, the foundation of my future presence in the cultural and entertainment field, and it has strategic significance for containing competitors." Fang Hong said it very seriously.

Tencent, besides social, has failed at e-commerce, failed at short video, failed at Weibo, failed at Search, failed at education—failures too numerous to count.

But the one thing it's done well in is big cultural entertainment. He didn't want a strong competitor showing up in his territory down the road.

Nor did he want to, in the future, make an animated Battle Through the Heavens, make an animated Perfect World, and still have to go to Tencent to buy the rights.

You have to know, animation is also an important part of the video track. Tencent can leave Youku and iQiyi in the dust in this area—even dedicated animation platforms like Kuaikan aren't its match. Novel IPs deserve a lot of the credit.

Because novel IPs already have a built-in user base. Once adapted and launched, you don't have to worry about no one watching. Same with film and TV—as long as you make it, people will watch.

Novel adaptations are the trend going forward!

Hearing him say that, Liu Tianxian nodded and said nothing. Mainly because for the moment she didn't know where to get money to help.

Unless she sold all her houses and cars, but even that wouldn't add up to much.

"It's fine. There's still that 1.8 billion, right? I'll think of something from abroad. If that doesn't work, I'll talk to Chen Tianqiao about installments." Fang Hong said.

If he took out a loan from the United States, he'd have to pledge his Tesla stock, because right now Tesla stock had the highest value. He'd only just bought Nvidia stock, so it didn't have that high a value yet.

He could wait it out on pledging Nvidia too!

But there's one problem: once the shares are pledged, they get frozen during the pledge period and can't be sold off—unless you pay back the money.

The point is, next year he definitely won't be able to repay, so if the shares are pledged, his Tesla stock can't be sold off for cash next year.

So this has always been why he's unwilling to touch his United States assets—the Zhong family can't afford to borrow, because pledging the shares freezes them, and then next year the Zhong family will have no money. He's a Chinese citizen, so people are naturally a bit cautious with him; they definitely won't recognize his domestic assets, because they can't control those—they can only control his assets in the United States.

So this is why he's always wanted to take out loans domestically—at least when he sells off, he can inject a large sum of capital into Chang'e Technology.

It's the equivalent of borrowing 5 billion to acquire Shengda Literature, plus several more billions injected for development!

Chang'e Technology only needs to pay interest to domestic banks—it's that simple.

If it's from the United States, he can't sell off, and that ties up the Zhong family too, paying off debt year after year.

When the loan comes due, he still has to transfer funds domestically to repay the United States debt before he can free up the shares.

That time span is long; he definitely can't repay within the next two years, which hinders development. Next year, lacking a large capital injection into Chang'e Technology, funds on both sides will be in a tight state.

So this is why he's always been unwilling to borrow from the United States—the amount is too large, and it's not that easy to borrow.

Borrowing money always involves pledges and proof documents—people will definitely guard against you running off.

If it doesn't work out, talk to Chen Tianqiao about repaying in installments over two or three years, with interest—that's also an option.

Actually, Chen Tianqiao's options are limited too. If Fang Hong won't buy, the other party can only sell to Penguin, so installments are still worth discussing.

Let them fight it out first. Taking over too quickly means facing Internet giants like BAT head-on, which is also troublesome.

Just afraid that fighting it out will leave Shengda Literature badly weakened, and taking it over as a mess wouldn't be good.

At 9 a. m. on June 15, the Shanghai International Film Festival opened at the Shanghai Grand Theatre.

Just like last year, the place was glittering with stars; every major film crew comes here to show their faces, promote their movies, and hold press conferences on the side.

There's reason to suspect the festival scheduled this time slot precisely to let major crews bring their stars for publicity and exposure, adding to the festival's glamour.

Because that's about all this film festival is good for.

Jade Rabbit is the same way, sending both the Now You See Me crew and the Ex-Files crew to promote.

Now You See Me's post-production is already done. The main creative team is Fang Hong, Liu Tianxian, Duan Yihong, Zhang Songwen, Xie Miao, Zhu Yilong, etc. —a fairly lavish lineup.

After all, Zhang Songwen has just become hot, and with another film releasing, the buzz can carry over.

The Ex-Files main creatives are Wang Ran, Li Xian, Cai Wenjing, Mao Xiaotong, and the rest.

These two films promoting during this window is for the summer release; Fang Hong also plans a pincer attack.

It's just that the release dates for these two films haven't been announced yet. Now You See Me's promotion has only just kicked off; Fang Hong is waiting for Boss Yang's Blind Detective to announce first, then he'll wedge his way in.

Let Boss Yang have a taste of being wedged in on.

As for offending Liu Tianwang, Du Qifeng and those people—Fang Hong doesn't care at all.

At his level, there's no need to care about others' feelings.

And Ex-Files isn't exactly a blockbuster—it's just brought out to scare Yu Pangzi. Fang Hong knows this film's situation, but others don't.

It's not firing blanks—it's scaring the other side.

Bona also has a film releasing for Qi Xi Festival, called The Unbeatable, a wholly self-funded project.

At 6:30, when it was just getting dark, the red carpet ceremony began.

Guo Xiaosi of Tiny Times, surrounded by a bevy of handsome men and beautiful women including Da Mimi and Guo Biting, walked the red carpet amid fans' cheers.

This red carpet isn't that long—about 15 meters—a few steps and it's done, so they have to walk slowly.

Generally, a few people from one crew walk together, so it's easy to arrange.

In addition, Zhou Naicha's The Rooftop, and Li Xinai also appeared on the red carpet.

Liu Tianwang, Zheng Xiuwen, Du Qifeng's Blind Detective; Xu Guangtou, He Jiong's Monsters University; Fang Long, Jing Tian, Liu Ye's Police Story 2013; and Jing Tian's other film Special Identity, together with Yuzhou Dan.

Jing Tian's long flowing hair, a white dress, beautiful as a white swan—she's truly lovely in this era.

Also Singaporean stars Fan Wenfang and Li Mingshun's The Ace, Pan Shuangshuang's Iron Blood Beauty, Tai Chi Hero, Love Never Dies, and so on.

From this, it's clear Shanghai really is inclusive.

But it's hard to win awards here. None of the films winning in this edition's main competition are mainland productions—basically split evenly among various countries.

Too many crews come to the Shanghai Film Festival, including countless stars with or without works, and also those just showing support:

Fa Ge, Fa Sao, Xu Ke, Shi Nansheng, Zhou Dongyu, Dong Xuan, Bai Baihe, Zhu Dan, Cai Zhuoyan, Zhang Hanyu, Wang Likun, Zou Zhaolong, Bao Beier, Xu Jiao, Yan Danchen, Yu Pangzi and his Hong Kong stars, Big and Little Wang General Manager with the Huayi team, etc.

Also Mo Wenwei on Keanu Reeves' arm; Yu Nan on Tom Hooper's arm, etc.

The foreigners all have female companions; Yu Xian has one too—Tang Yan walks the red carpet on his arm.

"Now walking toward us is international master director Yu Xian; his film The Fault in Our Stars is selling big internationally," the host announced.

Reporters on both sides raised their long and short lenses, snapping photos of the two nonstop, lights flashing constantly.

The audience also burst into cheers, though it was unclear who they were cheering for.

Tang Yan's skin was fair, a pink gauze gown making her look dignified and beautiful. When she smiled, her cheekbones rose high on both sides—this didn't detract from her beauty at all, but rather gave her a distinctive look.

No idea why they paired Yu Xian with such a pretty beauty—probably afraid he has no grassroots support here, no one would cheer, and it'd be awkward!

He's an international friend—a returnee, after all—a bit of special treatment is perfectly normal.

Yu Xian, sharp in his suit, smiled and waved to the audience on both sides like a head of state, his heart bursting with a sense of achievement. The moment he arrived in Shanghai, he received warm reception from the organizing committee.

They even arranged his food and lodging, and arranged such a beautiful beauty to walk the red carpet with him.

Cast back to when he was still a loser, Tang Yan was already famous from Chinese Paladin 3; he thought she was stunningly beautiful back then, and now she was the one looking up at him.

Yu Xian walked and whispered: "Do you know Liu Tianxian?"

"I know her, but not well," Tang Yan said softly, her heart a little excited too—mainly because this was an international master director.

Her current relationship with Liu Tianxian was "gazing at each other across the rivers and lakes." They met and got familiar in '14 filming For Love or Money, and had been close ever since.

"You're prettier than her," Yu Xian said, looking at her.

Those words made Tang Yan's heart suddenly race. She didn't know if it was excitement or nervousness, and couldn't calm down. A blush spread across her pretty face.

She hurriedly looked away and lowered her head, too shy to meet his eyes, her voice stumbling: "Th-thank you!"

Yu Xian was an old hand at this; seeing her like that, he wore a knowing smile, his mood greatly lifted.

With this elevated status, dangling women was a sure bet—one dangling, one landing. In the past, these people had all been goddess-level figures, meant to be admired from afar, never toyed with.

What about dangling Da Mimi?

One more chapter

(End of chapter)