Black Gold 1983

Chapter 26 Technology as Equity

The father and son talked more and more deeply, from equipment procurement to underground support, from personnel training to safety regulations, and they became more and more enthusiastic as they talked.

The tea in the enamel mug was refilled again and again, and the sun outside the window moved from the east to the west.

"Regarding the pit timber, I remember there's a forest farm near Shigou Village. Buying directly from the forest farm is much cheaper than going through the county's timber company."

"Dual-circuit power supply is not feasible at the moment, but I can prepare a diesel generator in advance so that in case of a power outage, at least the water pump and fan can be turned on."

"Safety training..." Renye paused for a moment, then looked at Ren Shouyi: "Dad, I'll have to trouble you with this."

"You don't need to go down the mine. Just help by teaching the workers some basic safety knowledge and operating procedures for underground work. You know these things better than anyone else."

"You'll be the chief engineer at the mine, and you'll be in charge of setting all the rules and safety regulations underground. As for the external procedures, like equipment adjustments and hiring, I'll handle all the miscellaneous tasks."

"What's that old saying? 'Like father, like son.' With us working together, we're bound to succeed!"

Renye spoke eloquently, his eyes full of anticipation. In fact, he was more than capable of handling a small coal mine of this size on his own.

In his past life, he had never worked alongside his father.

I suppose this is a regret hidden deep in my heart.

In his memory, his relationship with his father was always like two parallel lines, gazing at each other from afar, never intersecting, separated by an indescribable estrangement and barrier.

Ren Shouyi put down the enamel mug, remained silent for a while, and then said in a low voice, "We'll talk about it later."

Renye knew that this was the maximum concession his father could make.

He smiled and said, "Dad, there's actually another problem, one that's harder than equipment or safety."

"What?"

"Shares".

The room fell silent for a moment.

Ren Shouyi didn't interrupt, waiting for him to continue.

"The biggest problem with this kind of shareholding mining operation is the disputes among shareholders."

"At that time, there will be dozens, or even hundreds, of shareholders, all talking at once, each with their own agenda. Some want more dividends, some want to invest less money. Today Zhang San comes to you, tomorrow Li Si comes to bother you, and the mine will have to be shut down."

Ren Shouyi nodded.

Having served as a team leader in the mine for so many years, his biggest headache wasn't the things happening underground, but management.

"Therefore, I need absolute say. No matter how many shareholders there are, only one person can make the final decision. To achieve this, I must have the largest shareholding."

Ren Shouyi snapped out of his previous planning and his mind raced: "To gain absolute control, we must take the majority of the shares."

He paused, his brows furrowing. "But this will cost at least ten thousand or eight thousand. Even if our family borrows from everyone we can, we still can't raise that much money."

Renye smiled and shook his head: "We really can't raise that much money, and I don't plan to contribute any."

"Not planning to pay anything?" Ren Shouyi was taken aback. "You think you can get something for nothing? Those villagers aren't stupid."

Renye smiled and said, "To be precise, we don't need to put up a single penny, but we can use non-monetary equity investment."

"Non-monetary equity investment? What is non-monetary equity investment?"

Renye turned the old newspaper to a new page and wrote a few words in pencil: technology, management, qualifications.

"To put it bluntly, it means not paying money upfront, but converting technology, management, and connections into shares."

Ren Shouyi frowned even more, clearly unfamiliar with this concept.

Renye knew that this kind of thing was indeed very novel in the early 1980s.

Let alone the farmers in Shigou Village, even the cadres at the mine had few real contact with them.

In the early stages of reform and opening up, there was no clear precedent for whether intangible assets such as technology and management could be valued as equity.

The first truly meaningful case of technology-based equity investment in China is generally believed to have occurred in Shenzhen two years later.

At that time, Shenzhen Development Technology, which later became known as "Shenzhen Technology", was established. The Chinese side invested two million US dollars, holding 66% of the shares, while the foreign technical team contributed their core technologies, export channels, and mature management experience as equity, acquiring 34% of the shares.

This was the first real "intellectual property as equity" case in China since the founding of the People's Republic, completely breaking the old rule that only cash and physical assets could be used as equity, and can be described as a groundbreaking move of the times.

Almost simultaneously, the state officially issued the "Decision on the Reform of the Science and Technology System," which clearly stated that "technology can enter the market as a commodity" and "technology rights can be used as equity at a discounted price." This truly transformed the policy pilot into a universal system.

But that was two years later.

It was early 1983, and most people had never heard of the term "technology as equity".

Renye knew he was taking a step ahead, but this step ahead was precisely his greatest advantage.

"Becoming a shareholder without paying anything? That's against the rules, isn't it? Would other shareholders be happy about that?"

Ren Shouyi listened, his eyes shifting from confusion to focus.

"We didn't spend a single penny. But we used our brains, our technology, and our ability to help the mine make money. That's non-monetary equity investment. We're sticking together with Shigou Village, it's mutually beneficial, and no one loses out."

Ren Shouyi remained silent for a while, seemingly processing the information.

"You mean...we'll take the lion's share under the guise of technology and management? Then how will the profits be distributed?"

Renye nodded slightly: "My plan is to split the equity into two parts: 'capital shares' and 'technology shares'."

"The 5000 shares raised from the villagers are considered capital shares, accounting for 70% of the total profit."

"Our technology and management shares account for 30%, calculated separately from our capital shares."

"For example, if the mine makes a net profit of 10 yuan a year, 7 yuan of which is distributed as shares to the villagers, each receiving 5000 shares. The remaining 3 yuan is our profit."

If this were told to Li Yue'e, she would be completely baffled and wouldn't be able to process it for a long time.

But Ren Shouyi was different. He had been to school, and after frowning and pondering for a moment, he figured out all the intricacies of the matter.

They immediately knew which stocks were capital-driven and which were technology-driven, and how to distribute the profits.

"Your idea is very bold, but it's hard to say whether the villagers in Shigou Village will accept it."

"So this matter depends on you." Renye said, handing Renshouyi a cup of tea as he did so. "I'm talking about reason, you're talking about friendship. When reason doesn't work, friendship can take its place."

He talked to his father at length today, and what he really wanted was for Ren Shouyi to step in and help him resolve this big issue. He said that if this matter was resolved, everything else would be fine.

Ren Shouyi raised his eyelids slightly but didn't reply.

Back then, Ren Shouyi worked in the West Second Mining Area for nearly five years. At that time, the coal gangue piles, transportation access roads, and temporary coal storage yards that were part of the mining area's infrastructure all occupied the land of Shigou Village.

To compensate the village, the mine allocated a number of temporary worker positions, allowing the labor force of Shigou Village to work in the mining area.

During those years, Ren Shouyi managed as many as 30 or 40 temporary workers in Shigou Village.

The people of Shigou Village have done a lot of auxiliary work underground, such as pulling the conveyor belt, clearing the tunnel, and moving support materials.

During holidays, village officials would bring local specialties to visit homes to offer New Year's greetings, hoping to secure more temporary worker positions for the following year.

"Many of the people from Shigou Village that you worked in the West Second District back then are still in the village. Their land and their livelihood are still tied to that mining area."

Ren Shouyi remained silent for a while, then lit a cigarette and took a puff.

"Shigou Village, though called a village, is really more of a clan. There are about two hundred households in the village, and nine out of ten of them are surnamed Ma. The history of the Ma family is quite long."