Sail across the sea

Chapter 471 It’s better to seek help from others than from yourself
After leaving Zhong Jiangang's office, Pei Hengxue asked Gao Fan in a low voice:

"Xiao Gao, do you think Zhong Jiangang might tip off those Japanese businessmen?"

Gao Fan said, "Judging from his expression just now, I think he does have this plan. He spoke so righteously in front of us."

"Then why did you tell him this?"

"This isn't a message I'm going to tell him; it's something the Ministry of Geology and Mineral Resources asked me to convey."

"I understand, this should be considered as stirring up trouble."

Pei Hengxue nodded.

The joint law enforcement operation to crack down on rare earth smuggling is more symbolic than practical, and its purpose is merely to demonstrate the country's determination to levy resource taxes on foreign rare earth manufacturers.

Arresting a few small mine owners involved in smuggling is no big deal, but arresting foreign businessmen who bribed them would be problematic. The country's main task right now is to expand its opening-up policy; arresting foreign businessmen would definitely damage the country's image of openness.

Let Gao Fan deliver a message; local officials like Zhong Jiangang will surely relay it immediately to the foreign businessmen, telling them to lay low. Then, the law enforcement team will pretend to be unaware, and the matter will be over.

"Xiao Gao, do you think that since we've raised the export price of rare earths, Japanese companies will reduce their purchases of rare earths?" Pei Hengxue then turned to talk about something he was concerned about.

Gao Fan said, "Generally speaking, when the price of something rises, demand will definitely decrease. However, rare earth elements are industrial raw materials with high value, but the amount used in the production process is very small, so manufacturers have a relatively strong ability to withstand price increases."

“I think so too,” Pei Hengxue said. “Currently, our yttrium oxide price is over $9, while Japanese companies are quoting $12. Many customers still prefer to buy Japanese products, which shows that they are not price-sensitive.”

Gao Fan said, "People will definitely like cheap things. The reason why people accept Japanese products now is ultimately because they don't understand us well enough, they are worried about the performance and quality of our products, and there are also some prejudices against Chinese people."

"However, I believe that after they try our rare earth products, their attitudes will gradually change. Then more people will buy rare earths from us, and we will gradually erode the market share of those few Japanese rare earth companies."

“This process may take ten or twenty years, so Director Pei needs to be patient.”

Pei Hengxue laughed and said, "It's alright, it's alright, I can wait. Actually, our situation is already very good right now. We have orders for more than 200 tons. If each ton is worth an average of $9, that's more than $2000 million, or 7000 million RMB. When have we ever seen so much money at Zeyan Institute?"

"Director Pei, don't forget to pay back the money. Our initial investment was lent to us with government guarantees, and we must repay it as soon as we have the funds."

"I am very sure of that."

"Another key point is to continue increasing investment in scientific research and improve smelting efficiency."

"The comrades are full of enthusiasm. Everyone says that in the past, without money, they couldn't do anything even if they wanted to. Now that research experience is guaranteed and benefits are better, it's the perfect time to make contributions."

"Zeyan Institute truly lives up to its reputation as a fighting collective with a glorious tradition," Gao Fan praised, giving a thumbs-up.

Pei Hengxue looked smug: "Of course. When the Zeyan Institute was established, it was also under semi-military management. We all came to this remote mountain village with a heart full of patriotism." News of the Chinese government's joint law enforcement operations in rare earth producing areas to combat rare earth smuggling quickly reached Japan. Just as Gao Fan had predicted, this news sent a clear message to several Japanese rare earth smelting companies: the Chinese government's attitude towards resource protection was extremely firm.

"All of this is because China built its own rare earth refinery capable of producing 4N grade rare earth oxides. This gave them insight into the profit margins of the rare earth smelting industry. This time, the special resource tax is intended to take a cut of our profits."

In a small conference room at the Nippon Yttrium Corporation, Sales Director Kenji Ono introduced news from China to everyone.

“The Chinese are just too shrewd,” muttered executive Hisao Nishida.

“I don’t see it that way,” another executive named Kazumasa Katayama retorted with a laugh. “I think they’re way too slow to realize that rare earth exports are too cheap.”

"That's just some soil from the mountains. It's enough to make the Chinese happy to sell it for $10,000 a ton."

"Yes, their average income is less than $200, but a ton of soil can sell for $10,000. They should be very content."

"So, is it possible for us to force them to restore prices to their original levels?"

"You should ask Ono-kun about that."

After chatting happily for a few minutes, the group turned their attention to Kenji Ono, waiting for him to speak.

"It's probably impossible for our company alone to get the Chinese government to abandon the special resource tax. We'll have to see if the Ministry of International Trade and Industry is willing to help us," Kenji Ono said, turning his gaze to President Hiroshi Sato.

Sato Hiroshi coughed lightly and said, "I spoke with officials from the Ministry of International Trade and Industry on the phone, and they said they couldn't help. They have expressed their concerns to the Chinese authorities, but the Chinese authorities said it was just for environmental protection reasons and that domestic and foreign companies are treated equally."

"Currently, China and the United States are engaged in several in-depth collaborations. The Americans are unwilling to help us, and we cannot find an effective weapon to deal with China."

"The Americans are probably thinking most about how to join forces with China to suppress Japan right now," Hisamasa Nishida said loudly. "The Toshiba incident that just happened is proof of that."

"The Japan-US relationship is not the focus today. Let's get back to the main topic," Sato Hiroshi said, frowning as he interrupted Nishida Hisamasa's complaint.

At this time, Japan's economy is at its peak, and the trade deficit between the US and Japan is hitting new highs. The wealthy Japanese have made a bold statement, claiming that they can buy the entire city of New York.

Within the United States, anti-Japanese sentiment continues to grow, with politicians vandalizing and burning Japanese goods in public to project a hawkish anti-Japanese image. The top leadership is also considering how to curb Japan's arrogance and, incidentally, exploit it.

Under these circumstances, Japan's Ministry of International Trade and Industry (MITI) would not easily provoke trade friction with China, lest it make enemies on all sides. The issue of rare earth ore prices does not hold much weight in Japan's overall economic strategy, and it would be very difficult for Yttrium Corporation to use the power of the government to pressure China into abandoning its special resource tax on rare earths.

It's better to rely on yourself than on others; that's the keynote that Hiroshi Sato set for this meeting.

(End of this chapter)