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Chapter 1084 Industrial Trap Poison (rd update, please subscribe)

A modern industrial wonder!
Just those few small factories?

For an industrialized country, these may seem insignificant, but for a backward agricultural country, this is a remarkable industrial achievement.

Moreover, the prospects for industrialization described by Zhao Peiqi are very good.

With the fertilizer plant, Iran's agricultural output will be improved. With the cement plant, the construction of cities and factories will be accelerated. With the machinery plant, urban and rural transportation will undergo earth-shaking changes.

Of course, this also means that Iran no longer needs to spend foreign exchange to import these industrial products from abroad.

After forming these industrial capabilities, although Iran is still an agricultural country, it has a basic industrial foundation. For Iran, this is the most important thing!
And what is the total investment for the seven-year plan?

It’s 12 billion US dollars!

If we take out one billion US dollars from it and build five sets of projects in Tehran, Isfahan and other places according to this plan, it will only take a few years to present a miraculous Iran to the world!
An industrialized Iran!
Whenever he thought of this, Hassan's eyes lit up with excitement.

While Hassan was excited, he didn't know that those equipment manufacturers in Southeast Asia were even more excited when they learned about the content of this large order totaling more than 2 million US dollars.

There is only one word left in my mind - dark!

So damn dark!
A set of 2-ton small fertilizer equipment can be priced at a sky-high price of 300 million US dollars. Isn't this like selling cabbage as white powder?

But the problem is... the buyer thinks it is cheap, and the seller thinks it is expensive. This is the legendary win-win situation.

"Sir, a 10-ton ammonia synthesis equipment costs 1700 million, while a 2-ton one only costs 300 million dollars. They all bought small equipment. Who will buy our large equipment in the future?"

On the lawn of the official residence, Zuo Xiaohan, the Minister-General of the Ministry of International Trade and Industry, seemed a little confused when he asked this question.

"After all, small equipment has lower technical requirements, is simpler to operate and has lower costs."

Li Yian walked and smiled:
"Then let them buy five sets! This way the company will make more profit anyway."

Although chemical companies in Nanyang have always been engaged in large-scale equipment, they are also familiar with small synthetic ammonia equipment. Unlike large-scale equipment, the profit margin of small equipment is higher, even as high as 40% or more. In comparison, the profit margin of 10-ton equipment is only about 30%.

"And isn't that exactly what we need? After all, those small devices are meant to make money, or... to form consumer habits, but in the end, they will be eliminated by the market."

In fact, Li Yian borrowed the concept of "Five Small Industries" from another world university for those small enterprises, which was basically a plan proposed during the Fourth Five-Year Plan. The specific content was that the central government allocated 80 billion yuan of special funds to support various provinces and regions in developing five types of industrial projects, including small coal mines, small steel mills, small fertilizer plants, small cement plants and small machinery plants.

Since the central government provided financial support, provinces, cities and localities also had to provide matching funds. Therefore, with the efforts of all parties, the "five small industries" were eventually implemented in various counties. Almost every county in the country established the above five projects, thus forming a relatively basic local industrial system that can meet the most basic needs of industrial and agricultural production.

There are different opinions about the construction of the "Five Small Industries" in later generations. Some people say that it successfully promoted the industrialization process in the country and cultivated a large number of small industrial enterprises. Some of these enterprises became the seeds for the later development of Dongda's industry.

Some people also say that there are many problems with the construction of the "five small industries". Because the county is small, most of the five small industrial projects cannot meet the requirements of economies of scale, that is, the problem of low-level duplicate construction.

However, there is a reality that cannot be ignored: almost all of the "five small industries" eventually disappeared in the market environment. One of the core problems is the high production costs.

"disuse?"

Zuo Xiaohan frowned and said,

"You mean the production cost, sir?"

As the Minister-General of the Ministry of International Trade and Industry, he naturally knew the details of the plan when it was being formulated. He knew that the biggest problem of these small factories was the high production cost, which was also determined by their characteristics - the factories were small, so naturally they could not form economies of scale. Without economies of scale, production costs naturally could not be reduced.

“It’s the cost.”

Li Yian nodded.

"In terms of production cost, the cost of 2 tons of fertilizer equipment is 10% of that of 140 tons, 30% of that of 160 tons, or even higher. This may not seem to be a problem in the short term, because the fertilizers in these countries are all imported and their prices are relatively high, so profits are guaranteed. However, as large commercial ships and large equipment increase in number, they will inevitably face the impact of cheap goods. In the end, the market will eliminate these high-priced products."

When Li Yian was born in a small county town, some of his classmates' parents worked in the local fertilizer factory. In the early years, the fertilizer factory was very prosperous, but later, due to the high production costs of the fertilizer factory and the loss of bank loan subsidies, the fertilizer factory soon went bankrupt. In the end, the equipment was dismantled and sold for scrap metal, and the factory became a residential area. "From the perspective of industrial development, scale and large-scale are the key to reducing costs. Small and scattered industries have no future."

Zuo Xiaohan thought for a moment and said.

"That's not the case. It can help them lay a certain industrial foundation and train a group of skilled workers. It is very beneficial to them."

"That's true, but..."

Li Yian took a puff of his cigar and sighed.

"Such a company is a waste of money..."

However, this is also what Li Yian needs - in fact, those small businesses are "debt traps". It seems that in the short term, those countries have gained a certain industrial capacity, but because of production costs, they need to continue to provide financial subsidies to maintain production.

Ultimately, Li Yian had no idea how much those factories promoted the industry, but they were like blood-sucking machines, draining away precious construction funds bit by bit. This was also the biggest problem facing the five small industries. They seemed glorious in the short term, but only time would tell what lay behind the glory.

After all, even in Dongda, only a very small number of small factories have completed the final transformation. Not every country has the potential for industrial upgrading, but it is clear that those countries definitely do not have it.

So it's a trap for them.

"This……"

Zuo Xiaohan said.

"We have already reminded you of this in the production cost accounting."

"That's right. Now that we have reminded them, it has nothing to do with us. When these countries develop their industries, they either seek quick success and instant benefits without considering the actual situation, or they are eager for quick success and instant benefits and only care about the present. In short, we give them a plan and let them see the short-term effects. The biggest effect of their short-term effects is to help us cultivate consumption habits. With the consumption habits of fertilizers, machinery and other industrial products, the market will be further expanded, and our market will also emerge. When their enterprises are overwhelmed in the future, our products will naturally replace them... So, this is a real win-win situation!"

Looking into the distance, Li Yian said.

"We won the market and they lived a modern life."

As for modern industrial countries, there is no need to think about it. Not to mention now, even in the 21st century, there will be only a few industrialized countries in the world. However, in the world of the 1950s, those newly born countries all had such a beautiful dream.

They always think that their country is a plantation today, Birmingham tomorrow, or the Ruhr…

Those new national leaders and political elites who are ambitious, incompetent, poorly educated, eager for quick success and instant benefits, have no self-awareness at all and are just fantasizing and dreaming.

But it’s also okay. For Nanyang, their fantasy is business, wealth, and countless resources.

Zuo Xiaohan, who had been following you, thought for a while and then said:
"Sir, this seems to be the industrial trap you once mentioned."

"Yes, industrialization. This term seems very beautiful and something that people yearn for. But sometimes, many people will be intoxicated by the dream of industrialization, so much so that they forget everything else. But they forget one thing - industrialization cannot be achieved overnight. Money cannot buy modernization. Similarly, you cannot get what you want in a hurry. They always think that as long as a factory is built, industrialization is achieved. If only it were that simple..." Li Yian said, pursing his lips.

"There are countless industrialized countries in the world. In fact, Nanyang... If we hadn't introduced intellectual resources from Germany, Japan and other countries, we would have been very likely to fall into an industrial trap. We could build factories, but factories need technicians and skilled workers, and we didn't have any of these at the time. Fortunately, it was just after the war, and countries like Germany and Japan were in ruins. Not only did we have the ability to hire professionals from all walks of life, but an unprecedentedly large market also opened its doors to us. We had people and markets, and then we had the miracle of Nanyang and the subsequent development. If it had been a few years later..."

Li Yian did not continue to speak. In fact, he had always been very clear that the development opportunities in Nanyang were extremely rare. It could be said that it just happened to seize several key time points. The shortage of civilian supplies after World War II made it easy for Nanyang products to open up markets in various countries. With engineers, factories, workers, and markets... With these four things, it was impossible for Nanyang not to develop.
The question is, do other countries have this opportunity?

"Yes, sometimes when I recall the experiences of the past few years, I feel a sense of trance, as if I have always believed that there is a will of heaven. It seems that God has always been taking care of Nanyang, allowing us to go so smoothly at every step, every time..."

As he spoke, Zuo Xiaohan turned his gaze towards you,

It is not God’s care, but your Excellency…it is your Excellency who is guiding Nanyang.

"Perhaps, this is God's will..."

Li Yian smiled and said, what is the will of heaven, what is God?
It's clearly me, I am the one who dominates everything!
I am God!
When this thought came to mind, Li Yian proudly held up the cigar, took a puff silently, and then just stared into the distance...

(End of this chapter)