Cao Dewang: VAT is the biggest burden on the enterprise. Half of the operating profit is taxed.

Abstract Cao Dewang, born in May 1946, Fuqing City, Fujian Province, founder and chairman of Fuyao Glass Group, China's largest glass supplier; China's first generation of private entrepreneurs, known as the "Glass King", and is committed to the year-round He was called "China's first good" for charity. ...
Cao Dewang, born in May 1946, Fuqing City, Fujian Province, founder and chairman of Fuyao Glass Group, China's largest glass supplier; China's first generation of private entrepreneurs, known as the "Glass King", and at the same time He was called "China's first good" for charity. Since the first donation in 1983, Cao Dewang has accumulated personal donations of 8 billion yuan.
►December 19, a message about Cao Dewang and his company “detonated” the network: Cao Dewang is preparing to invest $1 billion to build a glass factory in Fuyao in the United States.
In addition to this simple investment news, the main challenge to the domestic public "nerve" is Cao Dewang's public remarks: In a video interview with a media a few days ago, the glass king and charity king expressed their right in the United States. The investment is optimistic. He believes that in manufacturing in China, "except for manpower, everything is more expensive than the United States."
The remarks came out after Li Ka-shing’s fear of selling mainland assets reappeared: “Does Cao Dewang run?”
On the evening of the 19th Beijing time, Cao Dewang, who was far away from Europe, accepted an interview with the company's secret (ID: high3c) for an hour and a half.
In the interview, I talked about the overwhelming public opinion on the "escape" in the recent network. The 70-year-old Cao Dewang appeared quite uncomfortable on the phone and refuted the "escape theory". "I am Chinese, and my career must be in China."
While emphasizing that he has no intention of "escape", Cao Dewang made a detailed comparison of the manufacturing costs and competitiveness of China and the United States, and talked about his views on the status quo and future of China's manufacturing industry.
"Does I have to say that the situation is good, everyone is happy? I seek truth from facts to point out objective problems. They must criticize me and say that I am too pessimistic about the Chinese economy." Cao Dewang said that he publicly talked about Chinese corporate tax. The problem of being too negative and too costly is not complaining or running.
"Just to remind the government, but also remind entrepreneurs, remind everyone of the sense of crisis, tell everyone to be careful." Cao Dewang said.

"The US electricity price is about 3 hairs, and China is more than 6 hairs."
Company Secret: What kind of opportunity is it based on investing in the US?
Cao Dewang: Fuyao is doing auto glass. I have been making auto glass for 30 years. The top 8 automakers in foreign countries are my customers. When I signed the contract, they just bought my glass in China because I didn’t have any other countries. factory.
In 2009, Volkswagen asked us to be a supplier in Russia before 2012. We have built a factory in Russia in 2012. In 2012, GM asked us to build a factory in the US before December 2016. And must be available in the United States in January 2017.
At this time, Fuyao is already the largest automotive glass supplier in GM. To be precise, the decision to go outside to build a factory is the one we promised. If we don't agree to the business, we can't do it.

Company Secret: How is the investment of $1 billion made up?
Cao Dewang: Invested more than 600 million US dollars in the auto glass factory built in Ohio, and built more than 300 million upstream material factories and warehouses in the other two states, adding up to a total of 1 billion US dollars.

Company secret: The funds for the construction of the factory are all Fuyao's own commitment?
Cao Dewang: Of course, as a supplier you have this responsibility. However, these big companies abroad are very kind, not like doing business with many Chinese people. People are going to take a big order with you for two or three years, so that you can make money first and then build money to build a factory. Like GM, we signed the order in advance, and we promised that the factory will be built in 2016.

Company Secret: Can you talk about the process of investing in the field inspection in the early stage?
Cao Dewang: Since 2013, we have been visiting the United States. All states know that our Fuyao is coming to the United States to set up factories. The investment promotion bureaus of several states have gone to Fuyao and throw out very favorable conditions, hoping to attract us.
For example, I built a factory in Ohio, 180,000 square meters, 675 acres of land, sold me 15 million US dollars, the Ohio government gave us various subsidies, the current first subsidy is about 15 million. Calculating it is equal to buying land without spending money.

Company Secret: What do you think after the field trip and comparison?
Cao Dewang: I think Americans are really – their determination to restore a manufacturing power is bigger than our Chinese people. From the president to the heads of various government departments, they all came forward to develop the "platform" of manufacturing.
After the investigation, I felt that I should have come long ago, not always in the country.

Company Secret: Why do you say this?
Cao Dewang: The cost of manufacturing in China is too high. The US natural gas is equivalent to 7 cents per cubic metre, and China sells 2 2 yuan. This is still the premise that the government is very favorable to me; the electricity price is about 3 cents in the US and more than 6 cents in China; On the expressway, the United States does not charge, and China's toll fee is 5 cents per ton.
This does not include tax burdens. The United States has only 35% of income tax, and in addition to 25% of income tax in China, there are dozens of VAT. Counting other taxes and fees, the comprehensive tax burden of China's manufacturing industry is 35% higher than that of the US.

“VAT is the biggest burden for the company”
Company Secret: You also recently said that "China is cheaper than the United States except for people." What do you think is the most expensive and biggest burden in the "expensive" things you mentioned earlier?
Cao Dewang: VAT. How high is the value-added tax in China? To put it simply, a mobile phone that sells 6,000 pieces of money will pay a total of 1020 VAT. Of course, there are projects that can be deducted. What are they? According to the current tax system, the purchase fee can be deducted, the wage can not be deducted, the depreciation fee can not be deducted, the management fee and the transportation fee can not be deducted, and the part that cannot be deducted is about 40% to 50%.
According to the current level of profit of China's current general enterprises, in the end, about half of the operating profits were eventually collected. Manufacturing profits are very meager.

Company Secret: What about the US?
Cao Dewang: There is no VAT in the United States, only 35% of the income tax, plus a total of about 40% of other taxes and fees, the comprehensive taxation of China's manufacturing industry is 35% higher than the United States. The problem is mainly in the value-added tax.

Company Secret: You used to refer to small and micro enterprises, saying that "small and micro enterprises are the peripheral nerves of the national economy." Based on your years of experience in doing business, what are the main impacts of VAT on small and micro enterprises?
Cao Dewang: Small and micro enterprises are even more difficult. The existence of value-added tax makes many small and micro enterprises unable to grow and develop in the long run, and it is difficult to do business with large enterprises. In this way, a vicious circle will be formed, and many small and micro enterprises will be killed in the cradle. We are proud of ourselves as a small and micro enterprise. I quite understand the difficulties.

Company Secret: As a manufacturing entrepreneur, what do you think should be the problem of domestic VAT that you are talking about?
Cao Dewang: Like the United States, the value-added tax is abolished and changed into income tax. At the same time, the income tax is raised, the money is paid, and no tax is paid without making money.
On the other hand, it is necessary to crack down on those tax frauds. Those who evade taxes and tax evasion must be severely punished. What is the relationship between letting him go bankrupt? We in China are not strict enough on these.

"The Chinese labor force has no outstanding advantage."
Company Secret: We have always had a perception that China's labor costs are low and cheap labor is an advantage.
Cao Dewang: The situation is different now. All the costs mentioned above have been combined. Even when the labor force is cheaper than the United States, China has no outstanding advantages. Moreover, the labor force is now only cheaper than the United States. Compared with neighboring countries, there is no competitive point. It is similar to Russia, Poland, and Central Europe. Even white-collar workers in China are higher than these countries.

Company Secret: What do you think is the main reason why China's manufacturing industry loses its labor advantage?
Cao Dewang: There is one reason why I think that the domestic infrastructure is too fast and the real estate development is overheated. These aspects require a large number of migrant workers. Do you know how real estate construction sites are recruiting workers? Many of them are recruited by the day, counting money by day, such as 10 hours a day, giving workers 400 yuan, they do not pay taxes.
But the manufacturing industry is different. We have to pay taxes and buy insurance. The labor price is raised like this.
There is also a very obvious phenomenon. Now, after the students graduate, the preferred occupation is to be a civil servant. The civil servant is not on the job, and the second best choice is to enter the financial institutions such as banks. There are fewer and fewer high-quality workers.

Company Secret: Compared with the US labor situation?
Cao Dewang: The price of the US blue-collar labor is about eight times that of China. This is the result of the “de-industrialization” that the United States has previously implemented. It lasted about 50 years from the 1970s to the present.
In the 1980s, young people who graduated from American universities did not go to the factory. Where did they go to Wall Street and Silicon Valley? Before the US financial crisis, the service industry accounted for about 65% of the national gdp.
The first problem that has led to the current recovery of manufacturing in the United States is the problem of the labor structure. Young workers do not have old workers.

Company Secret: Is the consequence of this “de-industrialization” somewhat close to the current labor situation in China?
Cao Dewang: No, the United States is going to industrialization, and China has never really realized industrialization. What we learned from the United States is directly the current "de-industrialization." But now the United States has recognized this problem and is vigorously resuming manufacturing.

Company Secret: Then, from the perspective of entrepreneurs, does the domestic manufacturing environment still have the advantage of attracting and retaining investment?
Cao Dewang: I will say a phenomenon: Many good companies have moved to Europe and the United States now, and small and medium-sized enterprises, some moved to Vietnam, and some moved to Cambodia. Take textile enterprises as an example. In Vietnam and Cambodia, one ton of cotton is 40% cheaper than domestic ones; electricity prices, water prices, and gas prices are cheaper than domestic ones, and workers' wages are lower than domestic ones.

"I would rather donate money to charity than real estate or finance."
Company Secret: Given the issues you mentioned earlier, what do you think the government should do?
Cao Dewang: I hope that the government will continue to support the promotion of the development of the real economy. In fact, the recent government voice has also played a positive role in the development of the real economy. In terms of specific practices, the government should pay attention to small and micro enterprises, pay attention to the real economy, and finance and finance should be inclined to the industries supported by the state. Solve the problem of VAT in manufacturing.

Company Secret: In fact, the government has always advocated that funds should be “decoupled from reality”. What do you think is the key?
Cao Dewang: The number of government officials is limited, and the level of interest groups is relatively wide. You (the government) turned the window off, he jumped in from the window, you turned the window off, and he jumped in from the skylight, and it was impossible to prevent it.
Therefore, I feel that this requires a lot of entrepreneurial self-discipline and can understand the meaning of justice, because this is not only the responsibility of the government. I used to say that China is a Chinese Chinese. I think that every entrepreneur in the country should focus on the country and establish a mentality of serving the country and the people.

Company secret: "People's mindset for the country", how do you understand this?
Cao Dewang: It's like finance, IT, real estate. These make money fast and make more money. Why don't I do it? Because I feel that doing these things is not good for the country except for making two money. How many people find me to engage in private equity funds, I never promised to do it, I would rather donate to charity, I am not willing to do this.

Company Secret: Is this trade-off based entirely on your personal value? Or business considerations?
Cao Dewang: It is entirely out of my own values.

Company Secret: What do you think the government should do in terms of policies in the financial, IT, and real estate industries?
Cao Dewang: This is not to say.

"The focus of my career is in China, I have no plans to run."
Company Secret: What is the current proportion of Fuyao's investment in China and abroad? What is the form of investment?
Cao Dewang: In about five years, Fuyao has invested about 7 billion yuan abroad, and there are also seven or eight billion yuan in China. At present, the scale of investment is basically the same. Of course, investing abroad is also a requirement for customers to vote for us. It is our own market needs, and we can't vote. Investment in the country has always been there, and the investment forms are mainly to build factories and build production lines.

Company Secret: Will Fuyao further increase investment abroad?
Cao Dewang: This is not easy to say, look at the specific situation.

Company Secret: Your recent investment in the United States and comments on the matter have sparked various voices. Many people want to know, will the glass king next focus on the development of the country?
Cao Dewang: There is no doubt that it is placed in China because my headquarters is in China. I have one of the best listed companies in China, and I have double-digit growth every year. I was listed in Hong Kong last year. Fuyao now has a net worth of 30 billion yuan. I have invested in these foreign countries. What can I count?
Of course, from the perspective of enterprise development, I want to shape a multinational group. The reason why I openly say that China’s tax burden is too high and the cost is too high is not that I am complaining, nor that I am going to run.
I just want to remind the government, but also remind entrepreneurs to remind everyone of the sense of crisis and tell everyone to be careful. My friend said that I should close my mouth. I am too straightforward. I have been embarrassed recently.

Company Secret: Do you think your approach will trigger the demonstration effect of domestic enterprises, or follow the trend?
Cao Dewang: People who are doing well should go out. But I also warn everyone, what do you go out and what you can get out of, these are best to think clearly, money is not good to earn.
I have been investing in the United States for 20 years, and I have invested in the United States in 1995. By 1998, I had lost nearly $10 million in four years. Fuyao is different now. I have the scale of a multinational group. I have my own technology, my own capital, stable orders, and recognition in the US market. For a company like me, I think you can go out.

Company secret: Some people say that Li Ka-shing said, "Don't let Cao Dewang run away." How do you want to respond to this voice?
Cao Dewang: Don't let Cao Dewang run away. I think there is such a layer of understanding: We should think about it, why should Cao Dewang want to "run"? Solve the problem I said before, don't you not run?
In addition, what I want to say to them is that in fact, Cao Dewang did not "run" and would not run. My career must be in China because I am Chinese.
I tell you a little bit about reality. I am a member of the Chinese People's Political Consultative Conference in China. I have a certain political status. I have won numerous awards and the amount of charitable donations has reached 8 billion. Most people in the country respect me. If I consider the money, then my stock is very strong. Will I solve the problem if I sell the stock?
My own son has not taken over. I went to the United States. I am 70 years old. I can't speak without driving. I can't enter the mainstream society. What am I doing?

Company Secret: Based on your years of experience in dealing with the US market, will the new political structure formed after the US election affect China's manufacturing industry?
Cao Dewang: Trump is a businessman. For the revitalization of the US economy, I think he may become a good president. Of course, it is hard to say from the standpoint of China, but I don’t think there is anything terrible. No need to be afraid.
When I was in the United States, I was asked by an interviewer. Trump’s economic policy toward China may be very strict. You are afraid that he will not hesitate to sanction you.
I told him that I am an entrepreneur. I am doing business in the United States. The first thing I do is to study what Americans need. Second, can I do what he needs to meet his needs?
If I can do it and the quality can meet his requirements, it doesn't matter what TPP he has. why? You Americans need it yourself, you won't do it, then of course you have to buy it. This is what I understand, our policy with the United States: Hello, I am not good, I am not good.
Source: New Beijing News Company Secret Reporter: Zhang Quanwei


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