Sail across the sea

Chapter 341: Lao's will not sit idly by
"So we can only go to that Maolin Province by ourselves. Scheie! I have never even heard of this place before!" Oger said bitterly.

Lassiter shook his head. “I think even if we go to Maolin Province, we will probably get nothing.”

"What's your reason?" Ogier asked.

"The official attitude of Maolin Province." Lassiter said, "Letting the people of Canghua come to Beijing is one of the options Mr. Shan gave us. When he proposed this option, he did not remind us about the issue of transportation fees, which shows that in the minds of the Chinese, there is no such thing as transportation fees."

"Maybe he overlooked it," Ogle said.

Lassiter shook his head. "No. I've noticed that Chinese officials are very generous in receiving foreigners. They would never ask us to pay for transportation. Canghua Science and Technology Trade Company's request was reflected through official channels, which means that their officials, I mean, the officials of Maolin Province, recognize this request, which means that they have official support."

"You mean, their officials also support Canghua Science and Technology Trading Company to export vitamins?"

"It's a very obvious thing."

"You're right." Ogel calmed down. "When I was in contact with Chinese officials, I noticed that they had a strong desire to export in exchange for hard currency. The export of vitamin C can bring them hundreds of millions of dollars in hard currency income. They will not give it up easily."

"Unless we can give them the necessary compensation." Lassiter said.

"What kind of compensation?" asked Ogle.

Lassiter shrugged. "How should I know? Perhaps we can ask Mr. Shan about it. I think he is very eager to strengthen cooperation with us."

The old saying of knowing yourself and knowing your enemy is also a fact even in Germany. Ogel decided to find someone to understand the situation first, and the person he could find was Shan Jinwen.

Shan Jinwen received Ogel and Lassiter in his office. After a few pleasantries, Ogel raised his questions.

"You want to ask about Maolin Province's attitude towards this matter?"

Shan Jinwen glanced at the imported cigarettes and gold-plated lighter that Ogier placed on his desk and asked leisurely. As for why Ogier brought these souvenirs with him when he came to China, it was because he was a pharmaceutical representative.

"Yes." Ogier said, "We know that China is a country that values ​​politics very much, and the government's will has an absolute influence on enterprises. Last time you told us that Canghua Science and Technology Trade is a company of Maolin Province, we didn't understand what you meant at the time, but now we understand. Are you trying to remind us to pay more attention to the intentions of the Maolin Provincial government?"

"The government's intention is, of course, very important." Shan Jinwen spoke in an official tone, "Maolin Province's economy is relatively backward, so they definitely value companies that can export and earn foreign exchange.

"I have also learned about it in the past two days. The Canghua Vitamin Factory previously received investment from the American Hatch Group and built a set of equipment with an annual output of 5000 tons. Based on the price of $8 per kilogram of vitamin C, it can generate $4000 million in foreign exchange income for Maolin Province every year.

"I also heard that because their vitamin C is low-priced and high-quality, it is currently very popular in the US market, and the Hatch Group is considering additional investment to expand production capacity."

"Expand production capacity?" Lassiter couldn't help but interrupt and ask, "How much?"

Shan Jinwen said: "I am not sure about the specific scale. Some people say it will double to 1 tons, while others say it may directly expand to 5 tons."

"This is impossible!" Oger asserted, "1 tons is possible, but expanding it to 5 tons all at once is absolutely impossible." "Why?" This time it was Shan Jinwen who asked the question.

"Because..." Oger was speechless for a moment.

Yes, why can’t it be expanded to 5 tons?

Lloyd's annual production of vitamin C is 5 tons, but this is because the global market demand is only 10 tons. Lloyd's has a certain tacit understanding with Wright and Imperial Pharmaceuticals to reserve some share for each other.

However, Canghua Science and Technology does not have such a tacit understanding with them. Faced with a market of 10 tons per year, it can easily increase its production capacity to 5 tons, and then use its low prices to squeeze out Lloyd's, Rui's and others from this market.

This means a fight to the death with Law's.

“If this happens, Lowe’s will not sit idly by,” Lassiter said.

"If this situation really happens, what will Lowe's do?" asked Shan Jinwen.

"Of course we will lower the price until Canghua Science and Technology Trade becomes unprofitable and eventually goes bankrupt," Lassiter said. "Law's has enough strength to support such competition."

"It may be difficult to compete by lowering prices," said Shan Jinwen. "I heard from Director Zhao that in addition to using the two-step fermentation process, Canghua Science and Trade has also independently developed many improved processes. Even if they lower the price of vitamin C to $4 per kilogram, they will still be profitable."

"Four dollars!" Ogle and Lassiter were both surprised.

Damn, if Canghua can really lower the price to $4, there is no way Lowe's can hold on.

Lowe's current production cost is $7 per kilogram. If it wants to fight a price war at $4 per kilogram, it will lose $3 for every kilogram sold. Selling 5 tons a year is equivalent to a net loss of $1.5 million a year, and the purpose is just to compete for a $5 million business. This is not worth it no matter how you calculate it.

"Is the $4 statement reliable?" Ogel asked Shan Jinwen for confirmation.

Shan Jinwen shook his head: "How should I know that? If you are interested, you can ask Director Zhao for confirmation. I heard Director Zhao say that Canghua Science and Technology's several process improvements have all been patented. You should be able to find it."

Ogel nodded and took note of the matter. He decided to call China after returning to the hotel and ask the technical department to check Canghua Technology's patents and then calculate the actual production cost of Canghua Technology based on these patents.

However, that is a matter for later. What he needs to do now is to ask Shan Jinwen for advice.

"Mr. Shan, according to what you said, apart from resorting to law, is there no other way for us to make Canghua Science and Technology stop this crazy behavior?" Ogel asked.

Shan Jinwen shook his head, then frowned and thought for a while, then said: "It can't be said that there is no solution to this matter. I will give you a suggestion, but I can't guarantee whether it will succeed or not."

(End of this chapter)