Note 9: Another one bites the dust?


Dear Internet

Was reading up news on Business Times today and came upon this article which was reporting on the struggles of TT International recently.
https://www.businesstimes.com.sg/real-estate/tt-internationals-big-box-in-jurong-east-put-up-for-sale-by-receivers

I used to have a customer who worked for Big Box under TT International. He was extremely arrogant and his negotiation tactics were primitive at best. And at the risk of having a cheap shot at him, I felt he didn’t know the dire situation that his company is in at that point in time.  If I remember clearly, he was asking for generous terms of trade and threatening to buy from parallel stocks or support other competitors if I don’t give in. Being younger then him by decades, he wanted to use his contacts and age to pull me down. Obviously, I am not too happy with what he was trying to do. I am also aware that my finance team is very much cautious of the situation in the parent company. However, due to sensitivity, I decided not to bring it out during my discussion with them.
That’s was 4 years ago, and now finally, we see that the emperor has no clothes. TT International has to sell off Big Box, but what has been funding the operation from then at that point in time till now? My theory is the availability of cheap money.
Speaking of this, I am particularly interested in the impact of cheap money in the current economy and the amount of distortion that it has caused. One of my favourite case studies now is the bike sharing companies that we see. Unfortunately, I do not have the time to work out the numbers, but from a top down perspective, I am just unable to see how it earns it’s profits, other than hoping it can play the Amazon strategy, but that will be a long stretch.
Cheap money will inevitably be gone, and what will happen when cheap money is gone? My guess? Companies that only has cheap money as a strategy.

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