Go back in time and be a chaebol

Chapter 2696 The Older Brother Who Got Scammed (Third Update, Please Subscribe)

Every day, all sorts of people come to Moscow through customs.

A significant portion of them were tourists, and of course, some were businesspeople.

They came to this country, naturally, to make money.

Although this place is shrouded in a thick iron curtain, it doesn't mean there are no business opportunities here.

After passing through customs, as Gao Huaiyuan pushed his suitcase forward, he looked at Tian Xinghan beside him, who was full of curiosity, and said:
"You have no idea how many business opportunities there are here."

Tian Xinghan nodded, and then said:

"That's about right. When I was in Central Asia, I saw that everything was in short supply in the market."

Although he studied architecture, Tian Xinghan was unable to work in the field after leaving Iran because he did not have the relevant licenses. However, the labor department eventually found him a job at a trading company with the Soviet Union.

This job was practically tailor-made for him. First, he spoke Russian, and second, he had lived in Central Asia during the Soviet Union for several years.

"That's for sure. Countries around the Soviet Union are all like that. They always lack a lot of things. Do you believe it? Cuba is even short of sugar."

Gao Huaiyuan's words made Tian Xinghan raise an eyebrow, and he said:

"Huh? Cuba?"

Before he could figure it out, Gao Huaiyuan said again:

"But it's precisely because Cuba is short of sugar that we come here to sell sugar."

That's right, they're here to sell candy.

Although Malaysia itself does not produce much sugar, it has invested in large sugarcane plantations in countries such as Sumatra and Aceh.

After the independence of the former Indonesian countries, tropical agriculture became their preferred mode of economic development with the help of overseas investment.

In essence, these countries are providing economic support to Southeast Asian countries—supporting their low-end, labor-intensive industries.

The same applies to plantation economies, such as those dealing with sugarcane.

"What does Cuba's sugar shortage have to do with the Soviet Union?"

While harboring doubts, Tian Xinghan said:
"Cuba was an ally of the Soviet Union, and the Soviet Union mainly imported sugar from them, right? So Cuba's sugar shortage directly led to our sugar shortage as well, is that right?"

Because he was new to the trade, Tian Xinghan was still a novice.

"Haha, that's true, but to be more precise, the Soviet Union was tricked by Cuba."

As Gao Huaiyuan reached the door and hailed a taxi, he said:
"About 14 years ago, the Cuban authorities promised to deliver 210 million tons of sugar to the Soviet Union the following year, 300 million tons the year after that, 400 million tons the year after that, and 500 million tons annually for the next three years."

Castro believed that 500 million tons was a high figure, so the Soviet Union could decide to keep the import volume at 400 million tons. However, Castro firmly hoped that the Soviet Union and Cuba would include this 500 million ton standard in the agreement.

At that time, Cuba's output was approximately 390 million tons, but slightly over 500 million tons. This wasn't a major problem, considering that Cuba's sugar production frequently exceeded 50 million tons in the 500s.

Tian Xinghan, who was already on the bus, listened very attentively as Gao Huaiyuan recounted everything:

"So the Soviet government believed it and, together with Czechoslovakia, drastically reduced sugar beet cultivation, because experts assessed that growing sugarcane in Cuba was easier and cheaper than growing sugar beets in Eastern Europe. Unexpectedly, Cuba directly defaulted on its contract, delivering only 175 million tons of sugar in 1968. Despite not delivering enough sugar to the Soviet Union, the Cuban government turned around and accused the Soviet government of extorting Cuba through an energy blockade."

Tian Xinghan's eyes widened in surprise:
"This, this can't be possible."

Gao Huaiyuan shrugged and said:
"Otherwise, why do you think we'd be here?"

Tian Xinghan frowned and said:
"And what about Moscow? Did they just give up like that?"

What can they do?

Gao Huaiyuan continued:

"Moreover, defaults are common in these countries, which is why the Ministry of Trade and Industry does not recommend that companies do business with these countries, because the biggest problem with these countries is their lack of credit."

They always try to renege on deals whenever possible, and if they can't, they always try to take advantage of others. In short, even now, these countries haven't figured out the rules of international trade.

Promises and credibility are extremely important, because their lack of integrity leads to increasingly limited opportunities. In fact, they're basically all on our blacklist now; if they want to buy a nail from us, they have to pay first.

Then he turned to look at Tian Xinghan and said:
"You'll definitely be dealing with these people in the future when you work at the trading company. Be careful to guard against them. Even if you've paid them, make sure they pick up the goods themselves, instead of us delivering them."

Although Gao Huaiyuan did not explain, Tian Xinghan immediately understood the key point. He nodded and then asked.

"I understand. Then... what about the Soviet Union?"

"The Soviet Union—to some extent, they were still very trustworthy. After all, they understood what it meant to not lose sight of the bigger picture for the sake of small gains. After all, the Soviet Union was different from those small countries. They needed Western markets and technology, so they had to abide by Western trade rules."

Just as Cuba defaulted, the Soviet Union had no choice but to turn to Western markets.

Gao Huaiyuan continued to explain.

"When Cuba defaulted, the Soviet Union had already cut down on sugar beet cultivation, which amplified the sugar shortage in the Soviet Union. As a result, Moscow almost pleaded with Cuba to consider supplying more sugar to the Soviet Union."

Even though the Soviet government was buying Cuban sugar at roughly three times the international market price at the time, the Cuban government still prioritized reselling the sugar to the West to earn foreign exchange, usually citing poor harvests as an excuse to appease the Soviet government. And yes, these poor harvests lasted for over a decade.

As the car drove along, Gao Huaiyuan looked out the window at Moscow and continued:

"When Moscow decided to cut sugar beet cultivation, they thought Cuba, as an ally, was a stable source of overseas income."

However, unexpectedly, Cuba, as an ally, was even more unreliable than the Western countries. This is a common characteristic of theirs… they are untrustworthy, they don't keep their promises, and they simply cannot understand why trust is more valuable than gold.

Then he turned to look at Tian Xinghan and said:
"Therefore, in order to ensure the supply of white sugar, the Soviet Union had to pay a higher price to secure the supply of Cuban white sugar. The Soviet Union imported about 400 million tons of sugar from Cuba every year. In exchange for 1 ton of Cuban sugar, it actually paid the equivalent of 36 barrels of oil."

At current international market prices, one ton of sugar is equivalent to the value of only six barrels of oil. This means that the Soviet Union would have a net loss of 120 million barrels of oil. Based on current oil prices, this would be equivalent to the Soviet Union giving Cuba billions of dollars every year.

If the Soviet Union had sold all that oil on the international market, at 1982 prices, that money alone could have bought approximately 2000 million tons of sugar a year; if sugar prices had fallen, it could have bought 3000 million tons.

"Is...is the difference really that big?"

Tian Xinghan looked at Gao Huaiyuan with some confusion and said.

"How could Moscow do such a losing business!"

Looking at Tian Xinghan, who was in utter shock, Gao Huaiyuan said:

"This is the spirit of internationalism in Moscow."

Then, in a teasing tone, he said:
"Actually, I think the simplest way to deal with the Soviet Union is not to curb its expansion. It should be to encourage it."

"what?"

Before Tian Xinghan could react, Gao Huaiyuan said with a smile:

"If there were a few more countries like Cuba, do you think Moscow could hold out? Hmm, Castro is feigning an alliance with Western imperialism to resist Soviet revisionist imperialism."

When Gao Huaiyuan said these words, he laughed mischievously, while Tian Xinghan was so shocked by his words that he was speechless.

Although this is a joke, it is undeniably true to some extent—such a payout simply cannot sustain a business!

At this point, Gao Huaiyuan got to the point, saying:

"Because Cuba was unable to guarantee the supply of sugar, this led to a persistent sugar shortage in the Soviet Union, especially in the summer—when Russian households and industries were stockpiling berries and fruits for the winter."

Therefore, the Soviet Union had to import sugar from the Western market to solve the domestic shortage. Well, that's why we're here.

"We just want to sell them the sugar."

That's certainly why they came here, but doing business with the Soviets isn't easy.

Most of the time they did not pay in foreign exchange; for the Soviet Union, which was short of foreign exchange, they preferred barter trade.

This time, Tian Xinghan and his team came to collect the final payment. In reality, they came to negotiate with the Soviet Union on what goods could be used to offset the payment.

They soon arrived at the Grand Hotel Ukraine by taxi, the most luxurious hotel in all of Moscow, and a hotel specifically for foreign guests.

After they got out of the car, hotel staff, who were actually KGB agents, checked their documents. They were only allowed to enter after confirming that they were foreigners.

After they completed their check-in procedures, Gao Huaiyuan looked at the translators sitting in the lobby and said:
"What do you think of those translations?"

"Are they translators?"

Tian Xinghan glanced at it only once, then said softly:
"These translators all seem a bit off; they're all too young and too pretty."

Nodding, Gao Huaiyuan said:

"That's why we need to hire them, otherwise they won't feel at ease. You can choose one."

Soon, Tian Xinghan selected a young, beautiful Russian translator who could speak fluent Mandarin.

After a brief discussion about the meeting time the next morning, they went upstairs to their room. Once inside, Gao Huaiyuan, like a secret agent, first used an electronic detector to thoroughly search the room.

Only after confirming there were no listening devices did he say:
"Xinghan. Be careful when doing business with them. They will use all sorts of means to get to our bottom line... There may not be any bugs now, but once the negotiations begin, we will have to consider that possibility. After all, this is a business worth hundreds of millions of dollars."

As a novice trader, Tian Xinghan was obviously not very familiar with the way Russians did business, but he had dealt with Russians for several years and had also dealt with the KGB, so he had some understanding of them.

"Thank you, Section Chief Gao, I understand."

Tian Xinghan continued:

"Is there anything else I should be aware of?"

"besides……"

Gao Huaiyuan thought for a moment, then said:

"And... you'll find out tomorrow."

(End of this chapter)