Chapter 3: Selling Government Bonds
A crisp slap stunned Su Han, Zhang Lei, and Huang Zheng. Huang Zheng, covering his face, glared at Zhou Ming, "You dare hit me?"
Zhou Ming nonchalantly cleaned his ears and chuckled, "Oh really? Who knows? But now, all three of us saw your face hit my hand. What should we do about that?"
Huang Zheng was momentarily thrown off by Zhou Ming's logic. He regretted having sent the security team away and was shocked that someone dared to strike him in the factory.
Fuming with anger, Huang Zheng shook with rage and pointed at Zhou Ming, "Fine, you're good. If I find out who you are, I'll make sure you pay!"
Zhou Ming raised an eyebrow, "Is that so? My strong arm seems uncontrollable; what if it hits your face again?"
Seeing Zhou Ming raising his hand, Huang Zheng hurriedly fled, defeated.
With Huang Zheng gone, Su Han thanked Zhou Ming. Zhou Ming waved his hand, "It's nothing. But Su Han, you should've come to us with such a big issue. Do you no longer consider us friends?"
Su Han lowered her head, not speaking. Zhou Ming continued, "Su Han, we're currently powerless, so we don't have a good way to deal with Huang Zheng. But him constantly sending the security team to trouble you isn't right. Maybe you should consider shutting down the restaurant for now. We'll find a way to make money first. Once we have money and power, we can deal with Huang Zheng."
Su Han looked at Zhou Ming in shock, "Zhou Ming, you want to deal with Huang Zheng?"
"Of course," Zhou Ming said confidently. "Since you've been wronged, I have to help you get revenge."
"Thank you, Zhou Ming," Su Han said gratefully. "But if I close the restaurant, what can I do? I can't just start another business; Huang Zheng has said he'll make trouble no matter what I do. Besides, I've borrowed a lot of money from relatives to open this restaurant. My brother also needs money for school. Although Huang Zheng keeps making trouble, if I save carefully, I can still save some money. If I close the restaurant..."
Though Su Han didn't finish her sentence, Zhou Ming understood her concern. He said, "That's not necessarily the case. I have a business idea that can make you the most money in the shortest time, and nobody can interfere."
Su Han blinked her beautiful eyes in confusion, "What business are you talking about?"
"I'm going to trade government bonds," Zhou Ming said.
"Trade government bonds? Is that even possible?" Su Han and Zhang Lei's eyes widened in disbelief.
Their reaction was understandable. At that time, few people knew the value of government bonds, and even fewer knew they could be traded. Su Han and Zhang Lei's families had government bonds but didn't know their worth.
In reality, government bonds are a type of national debt, issued by the government to borrow money from the public to balance the national treasury. They were invented by the British in 1877. Since the debtor is the government, which guarantees the bonds with its fiscal revenue, there is almost no risk of default, making them a stable investment channel.
However, as a person who has been reincarnated, Zhou Ming knew that trading government bonds was extremely profitable, especially in the late 1980s, when interest rates on government bonds were significantly higher than in later years, often exceeding ten percent, and sometimes reaching fifteen percent. In simple terms, a 100-yuan government bond could yield 110 to 115 yuan upon maturity. Longer-term bonds would yield even more.
In fact, trading government bonds was most popular during this time. Zhou Ming remembered that a person in Jiangnan became a millionaire by trading government bonds. In an era when even a ten-thousand-yuan household could be honored, a millionaire's status was nearly as high as that of a group leader dining with provincial leaders.
Given the current time, the trend had likely started but would take a year or two to reach their location. By then, when people realized they could make money trading government bonds, the opportunity would likely be gone.
"Of course, it's possible," Zhou Ming explained to Su Han and Zhang Lei. "If we have 10,000 yuan worth of government bonds, and we exchange them at the bank, we could at least get 1,000 yuan in interest. Isn't that a business with no risk and high returns?"
"But... will the bank exchange these bonds?" Zhang Lei asked with concern. "The factory distributes these bonds every year, but I've never seen anyone exchange them at the bank."
Zhou Ming smiled, "That's exactly why we can make money. If everyone knew, we wouldn't be able to profit."
Su Han then understood Zhou Ming's plan, "You mean we can buy government bonds at their face value or even lower, then exchange them at the bank for their face value plus at least ten percent interest, right?"
Zhou Ming gave her a thumbs-up, "Exactly, Su Han. You're very smart; no wonder you're the owner of Xiao Han Restaurant."
Su Han gasped, her eyes filled with astonishment. If Zhou Ming's plan worked, making ten yuan on every hundred yuan, a thousand yuan would make a hundred yuan, and ten thousand yuan would make a thousand yuan. Most importantly, it wouldn't take much time—just the effort to visit the bank. If it really worked...
Zhou Ming looked at Su Han and Zhang Lei, understanding their doubts, "I know you're skeptical; it's normal. This business seems too easy to be true."
Zhang Lei nodded vigorously. To him, factory workers barely earned a hundred yuan a month, and even factory leaders, unless in particularly profitable departments, wouldn't make more than six hundred yuan. Now, Zhou Ming could earn more than a factory leader's salary just by visiting the bank with enough capital. It seemed impossible!
Zhou Ming understood their doubts, given that the factory still operated in a planned economy, with no market or financial concepts.
He said, "It's okay if you don't believe me. Seeing is believing. Your families work in the factory, so they must have government bonds, right?"
Su Han immediately understood Zhou Ming's plan, "You want us to exchange our government bonds at the bank?"
"Yes, the county bank is only half an hour away," Zhou Ming said.
"Alright, I remember my brother-in-law has many. My sister always complains about the factory issuing these useless bonds! I'll go get them now," Zhang Lei said.
Zhou Ming replied, "Good, but remember, don't tell anyone about this. Once others find out, we won't be able to profit."
"Got it," Zhang Lei said.
---
At that time, banks were not as widespread as in later years, so 760 Factory didn't have a bank. They had to go to Nanhui County, but fortunately, it was not far, and they arrived within half an hour.
Zhou Ming, Su Han, and Zhang Lei arrived at the Agricultural Bank of Nanhui County with their government bonds. Su Han looked nervously at the nearby police station and asked, "Zhou Ming, are you sure these government bonds can be exchanged for money? What if the bank refuses and calls the police?"
"How could that happen? Government bonds are money we lent to the state. It's perfectly normal for the state to pay us back."
Zhou Ming entered the bank first, leaving Su Han and Zhang Lei stunned. Zhou Ming's words had exceeded their understanding. To them, the state seemed omnipotent and shouldn't need to borrow money. If it did, it should just print more money.
Inside the bank, Zhou Ming queued at the counter and handed over the bonds, "Hello, I'd like to exchange these government bonds."
The bank clerk carefully counted the bonds and used a calculator before telling Zhou Ming, "Your government bonds total 300 yuan—100 yuan for the three-year term and 200 yuan for the five-year term. The total amount with interest is 468.20 yuan."
Zhou Ming nodded, confirming the amount was close to his mental calculation. He took the money and left the bank with Su Han and Zhang Lei.
"How about now? Do you believe that government bonds can be exchanged for money?" Zhou Ming asked, waving the money.
Zhang Lei stared at the money in disbelief, "Wow, it really can be exchanged! And so much—almost two months of my salary!"
Su Han was ecstatic, jumping with excitement, "Zhou Ming, you're amazing! How did you know government bonds could be exchanged for money?"
"Don't forget, I studied economics in college," Zhou Ming said.
"Now I understand. Zhou Ming, you're amazing—so smart. We can't match you," Su Han said. "Shall we go back and collect the bonds? I know many people in the factory who have unused bonds at home!"
Zhou Ming said, "Not yet. We don't have money at the moment, so we can't buy many bonds. Plus, if others find out, we won't make any money."
Su Han agreed, "You're right. What should we do since we don't have money?"
"We might not have money, but some people do. That's why I need to get Dazhuang involved—his brother-in-law knows where to get high-interest loans," Zhou Ming said.
"Zhou Ming, you want to borrow money to buy government bonds!" Su Han and Zhang Lei were both stunned.
---
Su Han and Zhang Lei were shocked by Zhou Ming's suggestion. Borrowing money at high interest rates to buy government bonds seemed like a risky move, but Zhou Ming's confidence and the prospect of making a significant profit made them hesitate.
Zhou Ming noticed their hesitation and explained, "I know it sounds risky, but high-interest loans are common in this area. As long as we ensure that the profit from selling the bonds will cover both the loan interest and provide us with a substantial profit, it will be worth the risk."
Su Han's eyes widened, "But where can we find someone willing to lend us money at high interest? We don't know any such people."
Zhou Ming smiled, "Dazhuang's brother-in-law is well-connected and can arrange this. We just need to convince him and make sure we present a solid plan."
Zhang Lei rubbed his chin thoughtfully, "So, you think borrowing money and then using it to buy government bonds is a good strategy?"
"Exactly," Zhou Ming said. "The key is to make sure the interest rates on the loans are lower than the returns from the government bonds. If we calculate everything correctly, we can make a good profit."
"Alright," Su Han said after some thought, "Let's give it a try. If this works, we can use the profit to solve many of our problems."
Zhou Ming nodded approvingly. "Great. Let's go find Dazhuang and discuss the details."
The three of them went to find Dazhuang, who was busy working on a construction site. When they arrived, Dazhuang was surprised to see Zhou Ming and his friends.
"Hey, what brings you guys here?" Dazhuang asked, wiping sweat from his brow.
Zhou Ming explained the plan to Dazhuang. At first, Dazhuang was skeptical, but as Zhou Ming detailed how profitable trading government bonds could be, his attitude changed.
"Borrowing money for such an investment sounds risky," Dazhuang said. "But if it's as profitable as you say, it might be worth a shot. I can help arrange the loans, but we need to ensure we have a solid plan for repayment."
"Don't worry," Zhou Ming reassured him. "We've already calculated everything. As long as we follow the plan, we'll be able to repay the loans and make a profit."
Dazhuang agreed to help and promised to arrange a meeting with his brother-in-law to discuss the loan. With this new plan in motion, Zhou Ming, Su Han, and Zhang Lei felt a renewed sense of hope and excitement.
The next few days were busy. Zhou Ming and Su Han gathered all the government bonds they could find from friends and family. Zhang Lei approached his sister and brother-in-law to gather their bonds as well. At the same time, Dazhuang worked on arranging the high-interest loans.
When everything was ready, they met with Dazhuang's brother-in-law, who agreed to provide the loan under the terms they discussed. Zhou Ming and Su Han were now ready to implement their plan.
They returned to the Agricultural Bank with a substantial amount of government bonds and exchanged them for a significant amount of cash. The bank's clerks were initially surprised by the large number of bonds, but everything went smoothly.
With the cash in hand, Zhou Ming and his friends bought even more government bonds at face value and exchanged them for a higher amount of cash, realizing their profits as anticipated.
The plan worked better than they had hoped. Not only did they repay the loans with interest, but they also made a substantial profit. Su Han was able to keep her restaurant open and even expand it, while Zhou Ming and Zhang Lei had made a considerable amount of money.
With their newfound wealth and financial success, they felt empowered to take on Huang Zheng and seek justice for the wrongs done to Su Han. The experience also gave them confidence to explore other business ventures and opportunities in the future.
Zhou Ming's idea of trading government bonds had proven to be a lucrative and effective strategy, setting the stage for future success and cementing his role as a savvy entrepreneur in their community.