Siheyuan, Shazhu: I have both parents in this life

Chapter 368 He Yaozu's First Business Deal

In July 1986, the number of customers at the Yellow River Electrical Appliance Mall was noticeably sparse.

Li Chengru stared at the sales reports for the past few days, his brows furrowing more and more. Finally, unable to sit still any longer, he made a phone call to He Yuxin.

"Mr. He, this is strange. Sales have dropped by 40% this month. I sent people to check the market, and several department stores are selling electronics from a certain country at shockingly low prices. A 20-inch color TV is 20% cheaper than our cost price. This isn't doing business; it's blatant sabotage! Should we buy some of their products and resell them?"

"I'll go ask the trading company."

"Then you'd better hurry, or we'll have to close down," Li Chengru said.

"What's the rush? Even if we close down, we'll still pay salaries. The company has enough money in its accounts."

"That's not a big deal."

"You still need to work on your temper. You calm things down with the people in the company, and I'll go and take care of it."

"it is good."

He Yuxin hadn't even called Xu Xiaohui yet when another call came in.

"Mr. He, we can't keep going like this. A certain brand is going crazy, lowering prices again and again. We can't even cover our costs! We used to have no trouble selling our goods, but if this continues, our warehouses will be overflowing. One production line has already been shut down this month. If this continues, we'll even have to worry about paying our workers' wages!"

"It's that serious? Why didn't you do this sooner?"

"I was thinking of waiting and seeing, but who would have thought that those who placed orders would rather pay the penalty for breach of contract and cancel their orders."

Have you asked other manufacturers?

"I haven't asked about that."

"Then why don't you go and ask around to see if they're all the same?"

"well!"

Immediately afterwards, calls came in from refrigerator factories, electronics factories, and even Xiangdu Automobile Factory, all in the same situation.

A certain brand, taking advantage of the cost reduction resulting from the appreciation of the yen, is dumping its products on the domestic market at ridiculously low prices, leaving domestic manufacturers with almost no breathing room.

Xu Damao also received many calls, and then he went to He Yuxin: "Yuxin, do they think we're easy to bully and want to bleed us dry before the yen reaches its peak? Yuxin, we have to fight back!"

He Yuxin shook his head. "Brother Mao, how should we fight back? Are we just going to lose money and gain publicity? That's not how we do things. Let's ask my brother."

"Okay, we can't just let it go like this."

He Yuxin dialed the phone number in Hong Kong.

After listening to his younger brother's report, He Yuzhu asked, "Is it that serious?"

"Yeah, bro."

"It's similar in Hong Kong. Price wars are unacceptable; many companies here have already suffered losses. I thought that stricter customs in mainland China would make us less vulnerable, but I didn't expect it to be this severe. Customs is far too lenient. The foundation of factories in mainland China is much weaker than that in Hong Kong; they can't keep up. This is a self-destructive tactic. In the end, more factories on our side will collapse. What will happen to the workers? What will happen to the supply chain?"

"So we're just going to watch like this?" He Yuxin asked urgently.

“Watching? Of course not,” He Yuzhu said.

"Brother, you must have a way. Just tell me and I'll take care of it."

"You need to get all the affected manufacturers to join forces with their domestic counterparts to compile a detailed written report on the severity of the impact on them, the risks of workers losing their jobs and factories going bankrupt, and then submit it to higher levels. Don't just report it to the city or province; make sure their respective ministries and industrial bureaus are aware of it, and then report it up layer by layer. This is an impact on the entire national light industry that the grassroots level cannot resolve! We must make it clear to those above that this is not normal commercial competition; this is an attempt to strangle our nascent light industry foundation."

"So we're not going to do anything?"

"Go ahead and do it. We still need to do things that benefit ordinary people. We need to make the trading companies drive down prices hard. Of course, the distributors need to cooperate. They want to talk directly to the manufacturers, and there's nothing we can do about it."

"That might be a bit difficult," He Yuxin said.

"We'll do our best, but the Huanghe family can't cover this up completely."

"Okay, I understand."

Next, reports were quickly sent up like snowflakes.

First, in the special economic zone, after Mei Sheng organized people to conduct research, he wrote a detailed report and submitted it.

However, it did not attract enough attention until reports began to come from all over the country. Only then did the relevant economic departments take the lead in forming an investigation team to go down to the grassroots level to investigate the situation.

This dragged on for a month or two, and by the time the investigation team arrived, the situation was completely different from what had been reported.

Many factories dare not stop production, and products are piling up in warehouses; factory workers have no motivation because they cannot get paid.

The situation was quickly compiled and reported.

At a high-level economic work conference, this was the direct focus of the discussion.

The room was filled with smoke, and the debate was extremely heated.

"It's a market behavior! Since we've opened up, we must abide by market rules! If others have a price advantage, we must acknowledge the gap and find ways to improve our own competitiveness! Always thinking about protection will only keep us like flowers in a greenhouse!" This is one viewpoint that emphasizes.

The other side immediately retorted: "Is this normal market behavior? This is dumping! This is malicious attack! Our national industries have just started to show signs of improvement, and how many factories have invested heavily in technological upgrades? They are about to be crushed by this unfair competition! Who will bear the consequences of worker unemployment, bank bad debts, and local economic contraction? This is not just an economic issue!"

Both sides stuck to their own versions of events and refused to back down.

The meeting was held several times in succession, and the atmosphere became more and more tense each time.

Weeks later, the "confidential" documents were delivered to the relevant executive departments via different systems.

In the trade of important equipment and bulk commodities with a certain country, the settlement of transactions in US dollars was gradually and in batches. The approval process was invisibly lengthened, which increased the payment cycle for companies from that country. Customs inspection of imported goods from that country suddenly became extremely slow, especially for electronic products, home appliances and auto parts. The efficiency of inspection was much slower than before, and companies from that country had no choice but to accept the situation after their complaints were fruitless.

Of course, this does not solve the problem at its root.
It can only slow down the rampant dumping of goods by a certain country at low prices.

There are people in China who are involved in finance and have seen a lot, but they are afraid to take risks because of the limited funds available in China.

Xiao Rizi's action alerted He Yuzhu.

He sought out Qian Haozheng.

"Zheng, I feel something's off about the foreign exchange market. Have you guys noticed anything?"

"Boss, there have been a few speculative funds that have been quite active lately, but they're all targeting small-time investors."

"Is it just about funding?" He Yuzhu asked.

"No, it also includes physical entities."

"Is it the home appliance industry?" He Yuzhu then asked.

"Boss, how did you know?"

"They've pushed us to the brink, resorting to dumping to recoup their losses. If I hadn't known, we wouldn't have had a chance to fight them," He Yuzhu said.

"What about us?"

"Keep a close eye on things, and allocate some additional funds just in case."

"it is good."

After Qian Haozheng left, He Yuzhu picked up the phone and called President Liang of the Bank of China in Hong Kong.

"Old Liang, it's me, He Fei!"

"Mr. He, it's rare for you to call me first. What's up?" President Liang asked.

How much yen do you have in reserves?

"It's not much, maybe a hundred billion or so," said President Liang.

"How much more can be adjusted? What about domestically?" He Yuzhu asked.

"I need to ask about this. Why is Mr. He also speculating on Japanese yen?" President Liang said.

"Yes, we've made some moves, but now there's a bit of trouble; we need Japanese yen," He Yuzhu said. "Well, a small amount probably won't be enough, right?" Bank Manager Liang said.

“You can bring me as much as you have in China. If you think it’s a loss, I’ll leverage it twice. I can mortgage my assets in Hong Kong,” He Yuzhu said.

“That’s a huge deal. I can’t make that decision myself. I need to consult with my superiors,” said President Liang.

“Okay, but we need to be quick, or it will be too late,” He Yuzhu said.

"Okay, okay, I'll ask for you in a bit."

Seven days later, in Hong Kong, at the top-floor trading center of the Yellow River Group.

On the electronic screen, the yen exchange rate curve resembled an electrocardiogram of a dying patient, with each sharp fluctuation affecting the nerves of dozens of traders in the room.

The sounds of telephones ringing, keyboards clattering, and suppressed commands mingled together. He Yuzhu stood before the curved glass curtain wall, his calm back contrasting sharply with the tense atmosphere inside.

Qian Hao walked over quickly, his voice low: "Boss, the first batch of funds from the Bank of China, 150 billion yen, has arrived. The remaining 350 billion yen will arrive in three batches within 72 hours. All mortgage procedures have been completed."

"Hmm." He Yuzhu's eyes remained fixed on the screen. "What about HSBC and Standard Chartered?"

"It's settled. We'll use our No. 3 berth in Kwai Chung and two industrial land parcels in Tseung Kwan O as collateral to borrow another 80 billion yen. The terms are 1.2% monthly interest and redemption within three months."

“Okay.” He Yuzhu nodded. “Use all the funds to establish short positions in batches. Be careful with the pace, don’t let them notice too early.”

"clear."

Huge sums of money, like an undercurrent, quietly flowed into the market through layers of offshore accounts and trading seats. In the first few days, the yen's fluctuations remained within the existing range, but selling pressure increased significantly.

Tokyo, foreign exchange trading department of a major bank.

"Minister, the selling pressure these past two days has been a bit unusual; it doesn't seem like the behavior of retail investors."

"Follow up and take the bait. It might be a short-term profit-taking move."

But the orders kept piling up, seemingly without end. The exchange rate began to decline slowly but steadily.

Inside the Yellow River Trading Room, Qian Hao stared at the screen: "Boss, they've started supporting the market. Several major banks are taking over."

"Keep selling. One-third of your position."

More sell orders flooded the market, accelerating the rate of decline. Anxiety began to creep into the market.

Overseas speculative capital keenly sensed the opportunity and joined the sell-off, attempting to grab a share of the profits.

The battle between bulls and bears suddenly intensified, causing exchange rates to fluctuate wildly like a rollercoaster, while trading volume surged dramatically.

"Boss, there's speculative capital following up, around 20 billion yuan in size. They're trying to steal our market share."

"Don't worry about it. Proceed with the original plan and release another third."

The massive sell orders were like boulders thrown into a pond, creating a huge wave. The funds supporting the market gradually became insufficient, and the decline in the exchange rate finally turned into a trend of dam breaking.

Tokyo finally realized this was no ordinary adjustment. An emergency meeting was held overnight, but it was too late. Once market confidence collapsed, it would take ten or even a hundred times the effort to restore it.

Seeing this, speculative investors intensified their selling efforts, attempting to maximize profits.

Inside the Yellow River trading room, He Yuzhu looked at the exchange rate, which had fallen to the expected level, and gave the order: "Close one-third of the short positions and establish long positions."

"Now?" Qian Hao hesitated slightly.

“Now,” He Yuzhu said calmly, “they can’t hold on any longer.”

The liquidation of positions in the Yellow River and the quiet establishment of long positions acted like a stabilizing force in a torrent. Although they failed to immediately stop the decline, they greatly alleviated the market's panic selling.

Overseas speculative capital noticed this shift in power, leading to internal disagreements. One group believed it had bottomed out and began taking profits; the other group judged it as a technical rebound and chose to continue shorting.

The market has once again fallen into a stalemate.

He Yuzhu ignored these noises and continued to buy slowly and steadily at his own pace.

Several days later, the central bank of a certain country finally intervened, announcing a series of measures to stabilize the exchange rate. The already oversold market rebounded strongly in response.

Those speculative funds that were still shorting were caught off guard and forced to liquidate their positions at high prices, suffering heavy losses.

"Boss, don't you want to close the position?"

"No need, there's still space?"

"What about our collateral?"

“Use other funds to repay, in US dollars.”

"clear."

After all this turmoil, the market on Xiao Ri Zi couldn't withstand the pressure, and prices kept collapsing.

Many domestic factories have also learned this trick and started assembling parts directly, since the parts are cheaper now. They then relabel them and sell them at low prices. There's no other way; factories need to make a living. So the authorities can only turn a blind eye to this, although they will still give them a warning. After all, they are manufacturing companies and can't rely on this to survive forever; otherwise, they will always be at the mercy of others.

They certainly wouldn't dare say no, they only said that after this incident, they would continue with research and development.

He Yuzhu also made a move, calling He Yaozu, who had just graduated and was training at the Yellow River, to his study.

“You’re in charge of receiving this shipment.” He Yuzhu handed over a stack of documents. “They’re all home appliances and cars coming from over there, and the prices are extremely low. You’re in charge of buying them and then shipping them to Southeast Asia.”

He Yaozu took the materials, quickly flipped through them, and his throat felt a little dry. It wasn't that he hadn't studied trade, but this was the first time he had actually handled such a large transaction.

"Dad, isn't this a bit much?"

"What are you afraid of? Your mother will be watching." He Yuzhu said calmly, "Go do it."

Xiaoman nodded slightly, saying nothing, but her gaze calmed her son's mind.

He Yaozu nodded in agreement without further hesitation.

For several days in a row, he stayed in the group's trading department, working with several veteran sales staff to check models, calculate shipping costs, and contact the sales channels that had already been established in Southeast Asia. Xiaoman would come over from time to time to take a look and occasionally offer a few words of advice.

Negotiation telegrams went back and forth, and the price was pushed down again and again.

The other party was eager to ship the goods and offered incredibly lenient terms.

When Ho Yiu-cho signed the contract, his palms were sweaty.

Large quantities of home appliances—televisions, refrigerators, washing machines—along with batches of cars, began to be loaded onto ships at several ports and shipped south.

The people in Southeast Asia who received the goods were efficient; the market had already been scouting the goods, and they were immediately distributed to the market as soon as the cargo ships docked.

With consumption picking up over there, this batch of goods is priced low enough to be sold very quickly.

Less than two months later, the final payment was deposited into the account.

When the finance department delivered the report, He Yaozu was in his office checking the next order. He took it and glanced at it; the number in the net profit column made him pause for a few seconds.

Xiaoman was standing at the door at some point.

"You made a profit?" she asked.

“Hmm,” He Yaozu handed over the report, “more than three million US dollars.”

Xiaoman nodded and said, "Next time, you can get another 5% discount on the shipping fee."

She turned to leave, then stopped and added, "Well done, keep it up!"

He Yaozu stood still until his mother's footsteps faded into the distance, then gave a thumbs-up with a "Yay!" gesture.

As the eldest child in the family, he felt a lot of pressure. Although his father didn't demand anything of him, he knew how busy his parents were and wanted to share their burden.

Although he did everything according to plan this time, it gave him a lot of confidence. Now he's looking forward to what kind of task his father will assign him next.

(End of this chapter)