Le Money network Wang: How to do the finance in the agricultural industry

December 12, the world's first large-scale conference to explore the industry Internet, 2014 CVW. The industry Internet conference was held in Beijing and was synchronized through the big screen of New York Times Square. The conference was made by the Asia Letter Group, the cloud base and the Chuang-Zhuang economic and Technological Development zone jointly hosted more than 5,000 global it and traditional industry leaders and elites who are concerned about the development of Internet and traditional industries, and explored the evolution of "Internet access to traditional industries", "traditional industry internet" and the technological model and business innovation of industrial Internet.

In the afternoon of the Financial @ internet forum, Wang, founder and CEO of Le Qian, made keynote speeches about their financial experience in the field of agriculture.

The following is the full text of his speech:

Wang: Hello, I'm from le money net. This website is April 18 this year on-line, the time is very short, in many internet finance's these website middle, should say is the successor. But what we do is not the same as everyone in front of us, we mainly do 300 to 30 million, in the face of small and medium-sized micro-enterprises loans. Ma always mentioned that consumer finance is the outlet is also a pain point, but for a long time China's small and medium-sized enterprises from the banks do not get funds. Because the national development and Reform Commission and the Bureau of Statistics have a caliber, what is called Small and medium-sized micro-enterprises? The annual income of 200 million and a bit is called small and medium-sized enterprises, we think that if the calculation according to this indicator, the solution of China's 85% employment problems, 85% of the tax revenue of enterprises, not access to the main financial institutions of services, they are difficult to borrow from the bank. We think it is a pain point to solve this problem.

Making loans for small and medium sized enterprises frankly speaking and we just know the peer-to-peer is different, this mode in fact many large data is not in the way, small and medium-sized micro-enterprises themselves to provide you with a lot of financial statements may be false, may be accounting to deal with, do the accounts of the company, to deal with the tax can be, The business owner's own demand is that the tax can be more provincial, to save the tax on the line, at this time you go to see his account will have a lot of problems. We are doing this when we feel that in all small and medium-sized enterprises, it is a wide range, we must find a field to do. In all of these areas, we finally selected three areas, we have started to do is agriculture, agriculture, we use the financial classification of the way to do, this time sounded like a very tall, in fact, very simple. We will tell you the simple way.

Why do we do agriculture? First of all, we think that in agriculture this area is the only one in China without a closed-loop supply chain, other industries have closed-loop, or largely closed the loop. As long as the closed-loop industries such as our institutions are not in fact competitive, and the banks, and other institutions, our capital costs must not spell the bank, the bank can not spell insurance, we do not have such an advantage. Maybe we should find some industry without closed loop, the industry without closed loop means that your closed loop is very difficult. We found that the whole industry of agriculture is not closed, in the local area can form small closed loop. So we found in the selection of the region to do agriculture in China is actually inseparable from a place, the northeast. The Northeast is the granary of Chinese agriculture, especially the Sanjiang plain. I do not know whether you know these data, 2008 I wanted to do a thing, I want to make China's rice to do the platform of electricity, China's rice market share is how much? 1 trillion, this is China. In the 1 trillion stage, we found that in fact all the provinces in China except Heilongjiang Province, Rice is basically not self-sufficient, the whole of China's rice more than 50%, in addition to self-sufficient provinces, are dependent on Heilongjiang output, and Heilongjiang 85% in Jiamusi and so on generation, including Wuchang rice and so on, all around here. Finally, we began to do in Jiamusi, and finally why do we choose to plant?

The final result of the first planting is actually relatively stable prices, such as food, you grow rice, corn, this is the country's price is guaranteed, will not produce fluctuations, not like the Apple phone, basically stable, there is a fallback price. The biggest risk of a second grain is that in the case of no good weather, we use financial instruments to hedge, very simple, is the financial instrument of futures, the other is insurance. We use insurance and futures to lock down the products of our future farmers, thus reducing our risk. Again we think the core of the whole plantation is in the seed, not in the other. The seed company says you're going to increase production by 30%. Need to use his fertiliser, his pesticides, his herbicides, everything is guaranteed to make you increase 30%. So we start with the seeds, and we end up with North East, one of the largest seed companies in the industry, to begin this supply chain. Another is from the downstream, we find a food processing enterprises, is also a large local jiamusi local food processing enterprises, we from both ends. One is the seed to do dynamic pledge, one is food processing to do dynamic pledge, the next step of fertilizer, pesticides, agricultural machinery, a series of will do in.

There may be some misunderstanding, and it may be widely accepted that farming profits are low, and I tell you this is totally wrong. In China, if we take Heilongjiang as an example to remove human costs, simple farmers do not calculate human costs. Do you know how much is the profit margin of 15 acres? 180%, can you find such a profit in the traditional industry? Even if we remove the so-called labor costs, we assume that this person according to the city's wages, the minimum profit of more than 80%, the traditional industry can not find such a profit margin, why? In fact, there is a thing we often overlooked, in the past, farmers take land is not required cost, land is the state through a variety of ways contracted to him, basically no cost, he gets low cost, so will lead to high profit margins. But why do people think farmers are bitter? In fact, this is another issue that we considered when we were doing agriculture, because our agriculture has long been a small and dispersed state, you say its profit margin is high, again high is also a few acres, like the Northeast is very generous, a say who has how many, at least 15 acres, this is very generous, I am a southerner, have three points good, How much profit can be produced? We are looking at the asset opportunities behind a huge farmland transfer, in the past 15 years, China's real estate industry, or urban real estate industry by leaps and bounds in 15, is based on intensive management of urban land, the so-called government store, and then the government sold land, through the middle of the difference in operating the city, This is the reason for the boom in the real estate industry in the past 15 years. Now the agricultural land began to circulate, in fact the same way, but also the need to transfer the agricultural land to the corresponding high-quality enterprises in the hands of the best to produce the highest benefits. A small piece of land in the south a small fast farm machinery can not be cultivated, now through this entrepreneurial operation, we have a partner in Henan a county, and then asked them, they in a county on the 800,000 acres, through the agricultural land circulation. This is a huge asset securitization opportunities, many people are doing finance, know that assets are the most valuable, money in fact, if it is idling, will not produce any value, must be accompanied by assets, so we think that the future of farmland assets will be very valuable. This is what we think of agriculture.

Now this project we call the Northeast Granary, it from the seed, planting to the grain of the processing, the next is fertilizer, pesticides, now we are doing land assets of agriculture, these products are in the full line of doing. Two other industrial chains what are we going to do? Logistics, chemical, chemical is a large amount of capital, the capital demand is very large, logistics needless to say, we think logistics is the next ten years in China, another gold industry, because it is born with what? Data, measurable, data available, this is the most basic thing in the supply chain. The biggest problem in our agricultural supply chain finance is that there is no data. In the past, we talked to the agriculture officials, and I said, could you give me the data of a block in one area over the last 30 years? No, no data. How do I measure the potential yield of this land in the future? In the past our agriculture was not quantitative management, fuzzy management, about how much, about how much, which is very terrible to finance. At present, we are also doing the so-called production in the Northeast region, that is, the quantity of agricultural machinery, an agricultural machine can cover how many areas, and will not produce mechanical fatigue, we are doing data collation work, frankly speaking today these work difficult.

After talking about agriculture, we're actually not just doing supply chain finance, other major types of asset compounding we are also doing the so-called stimulus debt products, just Ma mentioned the installment is a personal incentive debt, in fact, we are doing some, but we do not face the individual, we are facing the enterprise in doing. For example, we and the Information Network group, we released a product last week, this is a solution to some of the city, we think we do not have the ability to solve all the cities in China, some of the city's young people, urban white-collar workers or business owners, when they pay the housing, in fact, we think the biggest obstacle is not to pay first, he has a future. Li Ka-shing has two words, is the life the most difficult money is the first 1 million, 1 million to 2 million, 2 million to 4 million, is very easy, the back is through financial management or other ways can produce relatively large profits. But your first 1 million is the hardest, and this group of people is encountering his first 1 million. Our partnership with the Information Network group is that we are here to address this part of the money, put his down payment into two parts, part of his own pay, such as 300,000 can buy a good room in Chengdu, but 300,000 if a young man in Chengdu to fight at least 10 years, he can save the next 300,000, He only needs 5 years after we go in, we offer another general down payment. People would say, how do you control your risk? Because we have been joking that you only talk about products, only talk about the benefits of not talking about risk, which is bullying to finance. In fact, we have a lot of details of the control of risk methods, which I tell you the most typical point, eventually, if the people who buy the house is not money, who will return? Information Network Group to assume this responsibility. This is and now all the market can see a variety of different products, it is finally relying on a comprehensive enterprise group to do the final bill, which we do a large class of asset preparation products.

Another message can be released in advance, is intended to be released next week, this link today can tell you. We and Kodak, bankruptcy after the reorganization of Kodak, as well as Kodak's company Carrie, signed a monopoly agreement, we and Kodak will be the main push a product, we do is typical look at anything to consider financial and asset securitization. I do not know if you have such an experience, everyone with children or with friends, take the children to paradise took a lot of photos, and friends to take a lot of photos, through our cooperation with Kodak you will see in Beijing all the children's paradise will have a device, there are we also have Kodak, also have Carrie to come, Then you wirelessly connect the past directly can print eight-inch photos, eight-inch photos in the traditional printing shop is eight dollars, now we are two dollars, and quality is still the quality of Kodak. This product such as you bought a, he bought one to print, this is not realistic, there are a lot of technical support, such as supplies, such as mechanized maintenance, so we did the asset optimization. The first group of children's playground in Beijing this is a pool where the benefits of this pool are averaged. We tested in Australia, not Sydney, a place where birds don't poop. About the lowest income of 30%, we are the product of the financial packaging, so this is a product we will launch in the near future, and this product will be in 3 years, I believe that in China's various entertainment venues, Scenic area, all kinds of children's paradise can be seen. We will work with Samsung and so on.

Anyway, everyone is very strange, said your thinking is very jump, first to do agriculture, and then to large types of asset preparation, and to such as products on the basis of the asset securitization. Actually this morning I also with a VC friend talking about this thing, I said that our team's advantage is that we are all the media origin, the media comes from the media background of the advantages and disadvantages, the advantage is that everything seems proficient, in fact, everything is rare. What are the benefits of a media background? Perhaps your vision, your bridging thinking will be of great help to your business. We think that if the business of the future is to produce a real breakout, it will be a bridging business and only a bridging edge. KK said a word, that innovation is generated from the edge, we also believe that this. Including the internet finance we do, we are interested in financial products, are actually engaged in bridging the way to get. Because I am a typical bridging person, I first in ICBC, after graduation to allocate to ICBC, then went to Guotai, as investment bank. In the course of the investment banking process because of mergers and acquisitions, to acquire a listed company, I was working on that project, the public company needs some concept, in 99, we made a network company. Thus entered the network, the first in Sohu, the middle of a non-compete, then I went to Sina's finance and technology two channels, and finally went to the financial industry when the editor-in-chief, then went to the Phoenix when the editor-in-chief, finally came out. So I'm a typical bridging product, doing a lot of business and doing a lot of things. In fact, summed up is 13 years of media, 7 years of finance, can support me and my team to do such things.

We think that in the future can not just talk about how your product innovation, in fact, some of the financial become speaking, bridging will bring innovation, but the core is unchanged, risk control how to do is the key. Just now I said that only talk about the rate of return does not talk about risk control, such finance is bullying. In fact, the outside world of internet finance think very low, you understand risk control? Do you know what risk control is? What models do you use? This morning I was talking to a friend about this, and I said that according to my understanding of risk control is very simple, is four. Where is the first money used, such as the horse always their, you really buy mobile phone? You're right to buy a cell phone. Second you have no repayment ability, third you have no repayment will. Some people have repayment ability, but he doesn't want to pay. The fourth one on the basis of these repayment ability and repayment will, as well as the default costs, how to increase his default costs. And this default cost can withstand. I share a case with you, because yesterday we and Beijing's Shijingshan animation industry Park has a cooperation, they find we said there is a cartoon enterprise, do games, anime. Say startups, a couple of kids, and no room. Also not so strong staging capacity, this is not a loan, they need 2 million. Ask me what to do? Our people have found me, and it's as if it's hard to do according to our past standards. And then I said, you show me the team's resume, after reading, I told them to do the risk control, I said first of all the team as long as the product to see profits, this is typical of the Internet play, we all have shares, each has a stake in the person to sign unlimited joint and several liability. What are these people? He may be a graduate of Beihang University, graduated from Tsinghua, we believe he is not willing to for this money, 2 million, more than 10 people, for this money to the future of his good to destroy, he will try to return. This we ask everyone to provide their social information, your QQ number, your dimension signal, your cell phone communication. We are in the period of social wind, may be friends know that they owe money also does not matter, such as business partners know that he owes money also does not matter, but many people are very concerned about whether parents know he owes money, if parents know he owes money he is very nervous, anyway, to find ways to return. We do this after the end, because our platform has a feature, we absolutely do not do pure, must do assets, but the assets are not the same. For example, I mentioned social assets, QQ number, we think that this is an asset. In fact, many people here are millionaires you do not know, your QQ number, micro-signal, and then cooperate with your age, you have a future, then you are millionaires, can be taken out as an asset use. The traditional bank is not, today Internet finance appears, internet finance is to recognize such an asset, and we ask him to provide the copyright of the software, this kind of mortgage method actually solves the problem, this is our new attempt in the risk control. Simply share some, thank you.

(editor: Mengyishan)