Korean TV series: King of Peninsula 1997

Chapter 583: The Pitfalls of Shipping, a Foreshadowing of the Financial Crisis

On the first day of 2007, Li You returned to Seoul and called a small meeting.

Those who attended the meeting were all important people in the Kinmen Group, including Ding Qing who was on a business trip, and Li Zicheng who was busy buying and selling oil and developing heavy industry in Suriname.

There is also Long Da who is Li You's eye at Kinmen Real Estate, Chen Daojun who manages all affairs of Kinmen Electronics, and Yoon Hyun-woo who built Taowu Delivery into the number one shopping platform on the Korean Peninsula.

There is also Chen Daojun’s biological father, Chen Runji, who is in charge of Kinmen Entertainment, and Kinmen Entertainment’s deputy Park Huichang.

These people are the ones Li You has confirmed are the ones who won’t let their mouths leak.

The meeting was held in Li You’s office at the headquarters of Kinmen Group.

After all these people arrived, Li Youcai arrived late with Mou Xianmin and Chen Yajun.

One of these two people manages Xiancheng Daily, and the other operates Kinmen Securities for Li You. They also need to know the content of the meeting.

"President Nim"

Li You nodded and waved his hand, "Everyone find a place to sit."

Fortunately, the office was big enough, and as he watched these people find a place to sit, Li You finally spoke.

"You should also know what I did in Busan," Li You sat back in his seat and leaned back on the sofa.

"The position of Busan mayor has fallen into the hands of our Kinmen people, but there will be big storms coming to Busan."

Ding Qing had been an executive of Kinmen Trade for so many years, and he immediately thought of Daying Ocean.

"Is it about Daying Ocean?"

When he asked this question, almost everyone present became solemn.

"Yes," Li You nodded, "Chairman Zhu Mengyong of Daying Group is going to take action against Daying Ocean."

"But..." Ding Qing was just like a supporting actor, "Why?"

Daying Marine is the largest shipping and shipbuilding company on the Korean Peninsula, with more than 10,000 employees.

This is also why, after Daying Haiyang was taken away from Daying Group by Zhu Mengyuan, Zhu Mengyong, the chairman of Daying Group, was tolerant to the outside world.

Because Daying Ocean is so important, so important that it is an enterprise that truly relates to the national economy and people's livelihood of the Korean Peninsula.

Not to mention outsiders, even Zhu Mengyong, the president of the camp, did not dare to act rashly against the Daying Ocean for so many years.

"Why?" Li You shook his head. "Because Daying Ocean has been severely weakened due to both internal and external reasons."

"Can't we have a share?" Li Zicheng said.

Ding Qing also quite agreed. You know, Daying Marine is the largest enterprise in Busan and also the pillar enterprise of Busan. Its ships are basically loaded and unloaded at Busan Port, and most of its shipyards are also located in Busan.

If the Daying Ocean collapsed for no reason, half of Busan would collapse, but if the Daying Group wanted to take back control of the Daying Ocean
Now that the mayor of Busan is one of our own, it is not unrealistic for him to get a piece of the pie from Daying Ocean.

Li You also knew that they would ask this question. After all, there was one thing they knew very well.

The number of people in the Korean Peninsula underground world currently controlled by Li You has decreased since last year. However, it does not mean that there are really fewer people in Kinmen, but that many people have become regular employees instead of full-time gangsters.

These reduced numbers of people are distributed in various industries. They not only receive regular salaries, but also a gray salary from the Golden Gate Group.

The same is true for Busan. Daying Ocean seems to have nothing to do with the Kinmen Group, but in fact.
Many of those miserable and tanned sailors and dock workers who do heavy physical work are "non-staff members" of the gang.

"No need," Li You shook his head, "At least not now."

"Daying Ocean is now in a quagmire. As a top financial group, Daying Group's internal relationships over the years are even more complicated than Shunyang Group's."

Li You held a cigarette but did not light it. "After Zhu Rongyi died, it was not the eldest son Zhu Mengyuan who inherited the family business, but the second son Zhu Mengyong. However, Zhu Rongyi handed over the most important Daying Ocean to his eldest son Zhu Mengyuan. This is a very strange thing in itself."

"Zhu Mengyuan is a man who has more political scheming than business acumen."

"Over the years, Daying Ocean has become weak inside."

"But if it is taken back by Daying Group," Chen Yijun, a third-generation Shunyang who witnessed the power struggle between her father Chen Dongji and uncle Chen Rongji, asked, "Even if Daying Ocean is strong on the outside but weak on the inside, Daying Group only needs to inject capital continuously to stabilize the situation. Under normal circumstances, an industry like Daying Ocean, which is related to people's livelihood, will not collapse."

"You also said that, that's under normal circumstances," Li You sighed softly, "which brings us to another thing I want to talk about today."

"financial crisis."

When these words came out, those who knew how powerful he was were shocked.

"Financial crisis?" Ding Qing opened his eyes wide. "It's news from the United States? It's us again?"

Others had similar reactions.

The last Asian financial crisis dealt a heavy blow to the Korean Peninsula's economy, and the country almost went bankrupt.

The Shunyang Group, which had some influence, was completely exposed after the financial crisis, and everyone saw that it was only able to survive because of Chen Yangzhe.

"This time it's global," Li You sighed slightly, "it's not targeted at us."

"How could that be?" Chen Yijun frowned. As an executive of Kinmen Securities, she was most familiar with this aspect. "The situation is very good now, and all industries are thriving."

"The crisis is here," Li You shook his head, "You probably don't know how serious the expansion of subprime loans in the United States is.

In order to stimulate the economy, the US government lowered the threshold for home purchases through policies such as the American Dream Down Payment Act, and issued high-risk loans to low- and middle-income people with poor credit qualifications. The scale of such subprime loans was almost negligible at the turn of the millennium, but it had soared to $1.4 trillion in 2005.

His words gave everyone some ideas, but most people never caught this ray of inspiration. Only Chen Daojun, who founded the Miracle Company and was a big shot in the financial field, realized the problem.

"Since the terrorist attacks that year, the U.S. has been offering loans at low interest rates for a long time, and the threshold has also been lowered. Those who can't pay back the money and have no credit can also borrow the money. This is a typical high credit risk," Chen Daojun frowned. "So those people on Wall Street are transferring these high risks to the global financial market?"

"That's right," Li You nodded. "Those people on Wall Street are still issuing subprime loans and packaging them into mortgage-backed securities and collateralized debt obligations. They cover up the risks through complex layering and then attract global investors to buy them."

Seeing the bewildered faces of several people, Li You smiled and said, "To put it simply, they disguised this high-risk loan that was unlikely to be repaid as a low-risk IOU with investment value, and then used various means to sell countless IOUs to the whole world."

"They made money, but those who bought the IOUs lost everything."

"I talked to a real estate tycoon in the United States last night," Li You talked to Willump on the phone last night about some things and reminded Willump implicitly to prevent the old guy from suffering too much loss and to avoid making another good relationship.

"According to him, since last year, U.S. housing prices have ended their five-year upward trend and have been falling. In some areas, housing prices have fallen by more than 10%," Li You said softly, and everyone listened carefully. "The default rate of subprime loans has also soared. The default rate of subprime loans has exceeded 20%."

"Ahem," Chen Yijun choked on his water. "I remember the international warning line is 2 percent? If it exceeds this number..."

"That's right," Li You spread his hands and said helplessly, "and it will cause the value of the IOUs held by financial institutions to begin to collapse.

Currently, the real economy in the United States is shrinking, while the virtual economy accounts for too high a proportion, and the scale of financial derivatives far exceeds the support capacity of the real economy. "

"I can't make anything," Ding Qing hugged his chest, "and the IOUs are piling up."

"That's what I mean," Li You nodded. "From the perspective of the United States last year, that is, 2006, the gap between the rich and the poor has further widened, and low- and middle-income people can only rely on credit to maintain consumption."

Li You said leisurely: "The U.S. dollar has to be used as an international currency. In this way, the risk will be quickly transmitted to the entire world through capital flows and trade chains."

"Starting from the middle of this year," Li You reminded them, "signs of a financial crisis will begin to appear."

"We must prepare in advance to get through this wave."

"But we can hold on," Li You turned the topic back to Daying Ocean. "In the coming year, after taking over Daying Ocean, which is suffering from heavy losses, what should Daying Group do?"

Everyone's eyes lit up and they understood what Li You meant.

"With this wave, we can deal a single blow to the Daying Group and make it unable to recover," Mou Xianmin muttered softly, and then her beautiful eyes stayed on Li You.

"The shrinking demand and industry recession caused by the financial crisis are inevitable," Li You smiled at her. "The financial crisis will cause a sharp drop in global trade volume, and the decline in global trade will impact the demand for shipping, which will directly reduce the amount of seaborne cargo. It's good enough for the Korean Peninsula's exports to be cut in half."

"The financial crisis will accelerate the shipping industry in the Korean Peninsula through shrinking demand and debt leverage.
In particular, the process of Daying Marine, the leading shipping company on the Korean Peninsula, from expansion to decline.

The recent deterioration in short-term operations is also due to the large investments in shipyards and fleets, but the increased financial burden also exposed the Korean Peninsula's shipping industry's over-reliance on export growth, which must also be taken seriously. "

"Old Ding," Li You threw a cigarette to Ding Qing, "you need to pay more attention to this."

"I don't need to say much about cutting costs, reducing unnecessary expenses, and optimizing operational efficiency," Li You also lit a cigarette. "The key is to promote foreign trade. Logistics may also need to adjust the service structure, such as strengthening international logistics cooperation and taking advantage of policy support such as export tax rebates. We need to look to China for this."

"This will minimize the impact of the financial crisis on Kinmen's trade. You guys know how to do it, so I won't go into details. Just remember not to leak the news and keep it secret."

"Okay, I'll hand in a plan later," Ding Qing was rarely smiling, but was thinking seriously while smoking.

"I will handle the real estate issue myself." In fact, for the Korean Peninsula, real estate may be the industry that is relatively least affected.

Li You knew that in the early stages of the financial crisis, housing prices in the real estate industry on the Korean Peninsula would fall, especially in big cities like Seoul, where the withdrawal of foreign capital and credit tightening would lead to a sharp drop in transaction volume.

However, in order to cope with the crisis, the Korean government will definitely launch an economic stimulus plan, such as lowering interest rates and relaxing restrictions on home purchase loans. Although this will pose hidden dangers in the future, the low interest rate environment can be used to promote market recovery, and housing prices will soon continue to rise.

“Here at Kinmen Entertainment,” Li You looked at Chen Runji and Park Huichang, “You two should also be mentally prepared.

The financial crisis will lead to a slump in domestic consumption. The entertainment industry is a non-essential consumption sector, and it will inevitably be impacted. For example, investment in performances and film and television productions will decrease, as will advertising revenues. Television stations and entertainment companies will face budget cuts.

"But it doesn't matter," Li You shrugged. "Since President Kim Min-jung set the policy of building a country based on entertainment, the entertainment industry will always be at the forefront. Even after the financial crisis, cultural exports may grow against the trend. You should increase overseas promotion during this period."

"The most important thing is the financial industry," Li You looked at Chen Yajun and... Chen Daojun seriously.

"Daojun, your talent and ability in the financial industry are unmatched in the entire Korean Peninsula," Li You thinks highly of Chen Daojun, and his ability is worthy of being the protagonist of a cool drama.

"The first to be affected is the sharp drop in the Korean stock market. I predict that the Korean stock market composite index may drop by more than 60 percent within a year.

The Korean won will inevitably depreciate significantly because of the US dollar.”

Chen Daojun's face was solemn. "How much is the expected depreciation?"

"The won has depreciated by at least 30 percent against the U.S. dollar, exacerbating the pressure of foreign debt."

Chen Daojun nodded silently, "I will cooperate with Sister Yijun."

He intentionally or unintentionally mentioned the title in front of Li You, expressing the blood relationship between the two of them.

Who knew that Li You simply nodded and said, "Okay."

"From now on, Golden Gate Securities will reduce high-risk investments, increase liquidity reserves, lend prudently, and avoid excessive leverage."

"The delivery of Taobao items will also be affected," Li You glanced at Yin Xuanyou who had been silent, "after all, sea trade is affected, which is part of the industrial chain."

"However, cloud platforms can still continue to be used to make profits."

"Yes, President Nim."

(End of this chapter)