Why is Huaxi Village in China so rich?

The "No. 1 Village in the World" is famous far and wide. Every family lives in a villa and drives a luxury car. But today's Huaxi Village in Jiangsu Province, "the richest village in China", has lost its glory.

As of the first quarter of 2016, the number of companies controlled by Huaxi Group reached 208, covering five major sectors including steel, textile and chemical fiber, materials, commerce, and others, with total assets of 54.193 billion yuan. Total liabilities are 38.907 billion yuan, and the asset-liability ratio is 68.78%. Among them, interest-bearing liabilities were 24.57 billion yuan.

The debt ratio of nearly 70% shows that with the gradual decline of the traditional industrial model, Huaxi Village, once a benchmark for China's rural economy, has reached a crossroads, and difficult transformation is inevitable.

Huaxi Village is established as a model for rural areas to take the road of common prosperity. Under the leadership of Wu Renbao, the former secretary of Huaxi Village, they closely grasped the pulse of the times and "built fields in the 1970s, factories in the 1980s, and cities in the 1990s"; the villagers performed the myth of farmers getting rich, with each family having a deposit of over 10 million, becoming one of the richest villages in China. . Wu Renbao did have a unique vision and was good at understanding politics. He always followed the trend and created a legend in the countryside. However, he was also too political and was destined to decline today.

Without understanding the market, Huaxi Village Steel Enterprise began to decline from its historical high in 2008. Judging from the gross profit margin data, the gross profit margin of West China Group's steel sector dropped from 2.32% in 2011 to -0.22% in 2012. Today, Huaxi Steel has neither scale effect nor technical guidance capabilities in the entire steel industry, nor does it have an advantage in geographical location. At present, the three major steel companies of West China Group, namely Bofeng Steel, China North Steel, and China South Steel, have all suffered losses.

Huaxi Group began to get involved in the shipping industry during the financial crisis in 2008. Baoli International and Huaxi Offshore Engineering, which are responsible for marine transportation and marine engineering businesses, both suffered huge losses in the first quarter of 2016, with net profits of 59.4971 million yuan each. and 128.0116 million yuan.

The 320-meter-high building and the 1-ton golden cow built with billions of dollars have also become a huge burden on Huaxi Village in terms of daily management costs.

The original Huaxi Village merged with surrounding villages to form the "Greater Huaxi" Thirteen Villages. Among them, villages three, four, five, twelve and thirteen are classified as "Qianzhuang", villages six, seven, eight, nine, ten and eleven are classified as "granary", and villages one, two and three are classified as "heaven". ". Among them, the bank is responsible for the village's economic responsibility; the granary is to develop tourism and meet food self-sufficiency; and the paradise is to build houses for the people. Villagers in the central village enjoy the highest level of welfare, including dividends at the end of each year, free education for their children, and study abroad is fully funded by the village.

In the "Paradise" of Huaxi Village, local villagers live in Western-style single-family villas, while the residential buildings behind the villas are rented by migrant workers. Some people say, "Unless you marry into Huaxi Village, you will have no chance to become a Huaxi villager, and naturally you will not be able to enjoy benefits."

There is also a clear gap between people in this village and those in New Huaxi Village. Bypassing the industrial zone and arriving at the third, fourth and fifth villages of West China, the gradually changing buildings are very conspicuous. The central village, surrounding villages and migrant workers are the three worlds of Huaxi Village.

If Huaxi Village wants to continue its glory, it must take the path of transformation. Otherwise, it will be difficult to read the book of market economy well if it sticks to the old concepts.

(The content of this article was contributed by Baidu netizen Luo Moshan)