Chapter 1300: Copying the Business of the Gulf Oil Company

'Mr. Xia, after the afternoon's tour, I saw the driving force behind the mainland's vigorous development, and I have decided to invest in the mainland. However, I would like to hear your opinion.'

'Mr Richard, perhaps you could also invest in the aluminium, steel, petrochemicals, and chemicals industries.'

Xia Yu combined what he knew about the Mellon consortium and made a very pertinent suggestion.

Richard King Mellon looked at Xia Yu with some surprise and said with a smile, 'I remember that you have already invested in companies in the steel, petrochemicals and chemicals sectors here. Aren't you afraid that I will compete with you?'

Xia Yu smiled slightly and said frankly, 'Why should I worry? This is a country with a billion people. I alone cannot eat up all the market. Even if you don't come, there will be others in the future. Competition is always there. Only competition can force my company to become even better, go beyond the mainland, and go global.'

Richard King Mellon laughed, 'You're right. It seems I was thinking too much.'

'However, the petrochemical, chemical and steel industries are not suitable for investment on the mainland, but the aluminium industry is.'

Xia Yu's eyebrows rose slightly, and he asked, 'Why? I'm a little curious.'

Richard King Mellon explained, 'In the current international environment, basic industries are in a downward trend. The US steel industry is having a very difficult time, and the foreign market is even more difficult to do business in, not to mention that you already have your steel company here, which is enough to fill the market in the south of the mainland.'

'In the chemical industry, the development conditions and market on the mainland are not mature enough for the time being.'

'As for the petrochemical sector, Gulf Oil's strategy is to abandon foreign operations and comprehensively shrink back to the United States. Although I am the majority shareholder of Gulf Oil, it is difficult for me to change the company's strategic plan.'

Xia Yu's heart stirred, and he said, 'I seem to have seen related news in the past. Gulf Oil has gradually liquidated its assets outside the United States over the past few years.'

Richard King Mellon did not hide it and frankly admitted, 'Yes.'

'Twice last year, it sold petrol stations in Belgium, the Netherlands, Luxembourg, Sweden and Norway to Kuwait National Petroleum Corporation.'

'In the near future, we plan to sell more than 1,500 petrol stations in Western Europe, as well as the refinery in Bertorio, Italy, with a processing capacity of 4 million tons per year.'

'In the future, the company's refining, marketing and chemical operations in Western and Northern Europe will be completely liquidated.'

This is the public business strategy of Gulf Oil Company, so Richard King Mellon did not hide it at all, and even hoped that the news would spread more widely to attract more buyers and recover more funds.

After all, Gulf Oil's situation was not very good at the moment.

As the oil pillar of the Mellon consortium, Gulf Oil is one of the 'Seven Sisters of Oil' and currently the fifth largest oil company in the United States and the seventh largest in the world. Last year's annual turnover was 29.8 billion US dollars, but the profit was only 700 million US dollars, a profit margin of only 2.35%.

This is the fourth year in a row that Gulf Oil's profits have declined.

Xia Yu's eyes narrowed slightly as he smiled and said, 'Mr Richard, now that you've mentioned it, I'm suddenly interested. How about Gulf Oil selling me all of its Western and Northern European operations at once?'

Richard King Mellon was taken aback by Xia Yu's sudden proposal. He looked at Xia Yu for a few seconds and saw that Xia Yu was serious. He smiled and said, 'Of course, as long as the price is reasonable.'

Xia Yu gave a faint smile and whispered, 'Of course, I won't let my friend suffer. I'll have someone contact Gulf Oil later. Could you please notify the management in advance?'

'No problem,' Richard King Mellon smiled and nodded.

Although Xia Yu was very interested in the business of Gulf Oil, he avoided letting Richard King Mellon see through him and simply skipped over the topic, returning to the beginning.

'Mr. Richard, let's get back to the original topic. So you plan to invest in an aluminium company on the mainland?'

'Yes, at the moment it seems like the most suitable market.'

'I'm still a little worried about the development environment on the mainland.'

'We can only form a joint venture and will not be able to obtain a controlling interest, which will pose a huge risk to the company's operations.'

Richard King Mellon nodded and raised his own concerns.

It is only natural for him to have such concerns, and Xia Yu also understands. Now that the mainland is reforming and opening up, although it seems to have taken big steps, the various rules and regulations still make it difficult for European and American capital, which is used to freedom of capital, to feel at ease.

Many European and American companies did not come to the mainland at the beginning of the reform and opening up for these reasons, and it was not until 1993, when the mainland entered the second stage of reform and opening up, that European and American capital began to pour into the mainland in large quantities.

Alcoa also took its first tentative step in 1993 by opening a representative office in the national capital.

'Mr Richard, there's really nothing I can do about it. I have to comply with many rules and regulations, but so far my company hasn't encountered any problems,'

Xia Yu said with a shrug.

Richard King Mellon took a sip of coffee and suddenly suggested as he put down the cup: 'Mr Xia, how about this, I invite you to cooperate together, what do you think?'

Xia Yu was a little surprised and asked, 'How do you propose we cooperate?'

Richard King Mellon spoke out the idea that had just popped into his head: 'I will let Alcoa invest in the mainland, but I can take a step back in terms of equity and only take 40%. The remaining 60% will be split equally between you and the mainland government.'

'Do you think this is achievable?'

Under Richard King Mellon's piercing gaze, Xia Yu pondered.

It was clear that Richard King Mellon did not trust the mainland and did not intend to let it take a controlling stake.

But Richard King Mellon himself knew that he would not be able to take a controlling stake, so he came up with this compromise and played a marginal ball.

According to his way of cooperation, Alcoa would be the largest shareholder, and the mainland government would only be the second largest shareholder, equal to Xia Yu, and the influence of the mainland government would be minimized.

In the end, he reached a cooperation agreement with Xia Yu on this project, deepening the cooperative relationship and reducing the company's risks.

As for Richard King Mellon, there was no difference between 49% and 40% ownership.

After figuring out Richard King Mellon's calculations, Xia Yu was actually happy. There was no reason for him to refuse such a cooperation.

He could have simply allowed the mainland's locally registered Kyushu Industrial Group to invest in the company, and the problem would have been solved.

This was a privilege he had obtained, a way of repaying the mainland for its strong support over the years. The Kyushu Industrial Group was not foreign-owned, and could be considered local mainland capital.

So Richard King Mellon had chosen the right person to cooperate with. Apart from him, the mainland really couldn't find a second suitable person at the moment.

'Mr Richard, I don't think I have any reason to refuse,'

Xia Yu responded to his proposal with a smile.

'Then let's say it's settled for the time being, and I'll leave it to you tomorrow.'

'No problem.'

...

In fact, that evening, after Xia Yu returned home, he called Liu Zhongfei and informed him of Richard King Mellon's intention to cooperate, specifying that it was Kyushu Industries Group that was involved. Because of the special nature of Kyushu Industries Group, Liu Zhongfei naturally agreed wholeheartedly.

The following day, the three parties sat down and reached a preliminary cooperation agreement. As for the actual implementation stage, it would require Alcoa to send someone over to negotiate.

Subsequently, the group returned to Xiangjiang. That evening, Richard King Mellon and the others boarded their private jet and returned to the United States.

After a night's rest, Xia Yu ordered the Pacific Oil Company, which had been established and in operation for over a year, to send a team to the United States to negotiate the acquisition of Gulf Oil's refineries, sales, and chemical operations in Western and Northern Europe.

Knowing the historical trend, he knew very well that Gulf Oil had made an extremely wrong strategic decision by shrinking its international business and completely shifting its focus back to the United States, which would lead to its downfall.

However, the value of these international assets would rebound in a few years.

Of course, what Xia Yu valued most was the talent and management system involved in Gulf Oil's business in Northern and Western Europe, which had been accumulated over decades. If he were to build an equivalent business from scratch, it would take at least ten years.

His Pacific Oil Company has just bought stakes in oilfields and oil exploration companies worth nearly 7 billion US dollars last year. He plans to hoard oilfields in the future, and what he needs urgently is the ability to process and sell oil.

If it can be solved with money, or if it is a bargain, isn't it attractive?

Moreover, the cooperation with the Mellon consortium on the mainland and the cooperation with Gulf Oil is enough to explain why Richard King Mellon came to Hong Kong, and it is enough to distract the Rothschild family's attention!