Journey 1995:Non-Stop

Chapter 358 Inside Story
"At first, I thought I could try being a second-level agent, but now it seems difficult, very difficult," Yan Hui sighed. "There are so many intricacies involved."

“Yes.” Li Shengli nodded. “It’s good that you asked me. And I’m sure you won’t do anything here in Linzi, otherwise I wouldn’t be able to tell you anything.”

“I’ve always been a very straightforward person, and I feel like we get along well! Brother Li, tonight is all on my mind, no matter what. I brought a case of Moutai with metal caps, which I got directly from the distillery through a friend, and I came here specifically to see you,” Yan Hui said gratefully.

"You're really something, managing to get inventory directly from the factory?" Li Shengli asked, somewhat surprised.

“We in the chemical industry may not have many other skills, but we have partners all over the country. There’s a very powerful manufacturer in our area. The boss’s surname is Tang. Next time I go there, I’ll introduce you to him. He’s a man who really knows how to enjoy life,” Yan Hui said with a smile.

"Alright, give it a try!" Li Shengli nodded in satisfaction.

According to Li Shengli, becoming a primary distributor for steel mills isn't that difficult, but a key requirement is sales volume. Achieving high sales targets requires excellent distribution channels and bidding capabilities, creating a barrier to entry; it's not simply a matter of having money.

Yan Hui has connections at many construction sites, but he wouldn't dare say he could manage so many from the start.

Generally speaking, you can start as a second-tier agent, even if you earn less.

But the reality is not that simple.

Steel mills do not allow their primary distributors to sell steel across cities; this is a strict rule, and anyone who violates it loses their distributorship. Beneath this seemingly unreasonable regulation lie several survival strategies employed by steel mills.

First, if steel can be freely transferred between regions, it will cause a imbalance in supply and demand in both the transferring and receiving regions, significantly reducing the stability of demand for goods from primary agents, which is exactly what steel production needs most.

Secondly, steel mills naturally set different prices for different cities. This is due to factors such as transportation costs, but more importantly, it's about competition among industry players. For example, Linyi, located in the heart of Shandong Province, has access to Fujian steel at low prices due to certain individuals doing special things. Therefore, Laiwu Steel's prices in Linyi are exceptionally low. If steel from this area could be freely transported to other cities, then steel mills wouldn't need to sell.

Finally, this is also a form of protection for the steel mill's major primary distributors. It protects both parties.

Under these circumstances, Yan Hui has two options if he wants to become a second-level agent.

If he wants to become a primary agent of Laiwu Steel, when he becomes a secondary agent, should he choose to become a secondary agent of Laiwu Steel or another steel mill?

If you become a secondary agent for another steel mill and do well, it's easy to offend people if you suddenly switch to becoming a primary agent for another steel mill later.

If he starts as a secondary distributor for Laiwu Steel, he'll have to source his goods from a local primary distributor. As far as he knows, there's only one primary distributor in Quancheng, while Laiwu Steel allows two. If he becomes someone else's subordinate, his situation will definitely be thoroughly investigated by the distributor.

In this industry, while not entirely transparent, everyone's approximate capital and strength aren't entirely unknown. This first-tier agent should be able to ascertain Yan Hui's capabilities with a little inquiry, and then he'll know Yan Hui wants to become a first-tier agent. In this situation, Yan Hui will inevitably encounter significant resistance and make enemies. Therefore, the best approach is to directly negotiate with Laiwu Steel for the first-tier agency, and once that's secured, start operating immediately. Once he's secured the first-tier agency, no one can stop him.

This logic might be incomprehensible to outsiders, but Yan Hui, who had obtained a lot of inside information from Li Shengli, understood it. Li Shengli only told Yan Hui this information because he was certain that Yan Hui wouldn't be a competitor.

Steel trading, like most conventional trade, is a life-or-death struggle. Once Yan Hui becomes a first-level agent, the first thing he will do is to expel second- and third-level agents, which is somewhat similar to Yan Hui's business in Jianye back then.

At that time, Yan Hui's supply chain was the most stable and the price was the most reasonable, which made other agents very uncomfortable, as Yan Hui made the lion's share of the profits.

It was precisely for this reason that Yan Hui offended people, leading to his tragic later fate. Of course, if Yan Hui had been more cautious and hadn't made any mistakes, his business would have only grown larger, forcing more people to rely on him for survival.

That evening, Yan Hui and Li Shengli talked about their time at Jianye. They didn't go into the details, but Yan Hui briefly recounted his experience of starting from scratch after his company went bankrupt.

"We've known each other for so long, and this is the first time I've heard that you have such an experience! Mr. Yan, you're really something!" Li Shengli sobered up a bit.

People of this era, eight out of ten who work in steel and building materials are among the most daring. Going back further, many of them are descendants of some kind of local power, some more powerful and some less so.

Li Shengli has rarely seen someone like Yan Hui, who came from out of town and took off without anyone knowing what opportunity he seized.

"These kinds of experiences are very enriching; otherwise, I wouldn't be so calm now, and I wouldn't have had the chance to meet a big boss like Mr. Li," Yan Hui remarked.

"I'm just a rough guy, what boss or whatever! Once Boss Yan secures the first-tier agency in Jinan, we'll make money together!" Boss Li laughed heartily.

Due to restrictions imposed by steel mills, steel from different regions cannot be freely transferred across provinces, but this does not mean that funds cannot be transferred across provinces.

No one can guarantee that there won't be a batch of goods that urgently needs a few million in bridging loans. In such situations, it's normal to help each other and make money together. These kinds of things are not uncommon, and the need for funds is often urgent. Business opportunities are fleeting, and outsiders dare not easily get involved.

Generally, when this happens, it means that a very good business opportunity has emerged even with a fully stocked inventory, making it impossible to pass up. In this situation, anyone who injects capital can potentially earn 10% in just three days.

"Of course, I'll need your guidance then, Mr. Li," Yan Hui immediately replied. At this crucial moment, it was essential to quickly establish his position and show that he was "on the same side," which was precisely Mr. Li's purpose in being willing to be friends with Yan Hui.

Trust is very difficult to build in the business world. Mr. Li doesn't have many old friends he can trust easily, or rather, old friends can change. So, they often drink together. Through drinking, everyone can get to know each other's general situation.

(End of this chapter)