Tokyo, 1991: Starting as a bank clerk

Chapter 246 Kansai Fiber Industry Collaborative Alliance [Basic Content 5k+]

Kiryu Yaya had previously reviewed relevant data on the fiber industry.

Since the second half of 1990, orders for small and medium-sized garment factories in the Kansai region have generally declined by 30% to 40%, with some even seeing their orders halved.

He had dealt with the colleagues in charge of these companies and heard too many complaints relayed from business owners about "orders being cut" and "customers lowering prices".

During an economic downturn, downstream consumption slows down, and brands cut orders first, with contract manufacturers bearing the brunt.

This is an economic law.

However, Marui Fiber's data shows a trend against the odds.

In the fourth quarter of last year, shipments not only did not decline, but actually increased compared to the first half of the year.

There was even an abnormal peak in monthly shipments exceeding the average level of the first three quarters, which did not return to normal until January of this year.

Even more strangely, several names that had not appeared before were added to the customer list on the shipment ledger.

The bank statements show that the payment cycle for these large orders is extremely short. Settlement was completed within a week after delivery, and some were even prepayments.

This is extremely rare in the garment manufacturing industry.

Under normal circumstances, it's common for brands to have a payment period of three months or even half a year.

How could there possibly be customers chasing after you to pay?

More importantly, the timing of those abnormal orders coincided precisely with the application and approval window for the equipment loan from Osaka Credit Union.

Kiryu Yaya put down his pen, looked up, and his gaze fell on Terada the accountant. He asked casually, "Mr. Terada, may I ask which client referred that large order from the end of last year? Marui has always done OEM manufacturing; he's never received such a large number of orders before, has he?"

"Furthermore, I know the overall data for the textile industry in the Kansai region. Since the second half of 1990, the order volume of small and medium-sized garment factories has generally declined by 30% to 40%, and some have even been cut in half."

"However, Marui Fiber's shipments in the fourth quarter of last year not only did not decline, but actually increased significantly compared to the first half of the year. Monthly shipments even exceeded the average level of the first three quarters."

Kiryu Yaya's voice was unhurried: "This kind of growth against the trend is rare in the entire industry."

As the question was asked, Terada, the accountant, paused at the edge of the table.

He glanced at Makiko Marui, and after she nodded, he took off his reading glasses and slowly said, "Mr. Kiryu is right. Marui Fiber's data for the second half of last year did not match the overall industry trend."

He lowered his hand and looked at the stack of shipping ledgers: "Those new orders were all distributed by the group through an affiliated trading company."

"Marui is only responsible for production; payments are settled centrally by the group. The payment cycle is very short because the money is advanced from the group's accounts first."

Kiryu Yaya's gaze sharpened slightly: "A group? What group?"

Terada, the accountant, looked at Kiryu Yaya and slowly said, "Kansai Fiber Industry Cooperative Association."

Kiryu Yaya frowned: "There's such an organization?"

Terada, the accountant, put his glasses back on and spoke more slowly than before: "This isn't exactly news in Osaka's textile industry."

"The Kansai Textile Industry Cooperative Association is an industry association established in 1969."

"At that time, the textile industry in the Kansai region was undergoing a round of restructuring, and many small and medium-sized factories were facing problems such as shrinking orders and tight cash flow. The emergence of the consortium did help many companies stabilize their situation."

"The initial model of the group was very simple: to integrate the production capacity of several small and medium-sized factories, accept orders from external parties, and then the brand would give the orders to the group, which would then distribute them to member factories for production."

"The group can handle large orders that individual factories cannot, so the factories do not have to go out to find customers themselves. The group finds orders for them, saving the factories time."

"At that point in time, the existence of the combination did help small factories that did not have independent sales channels to keep them running."

Kiryu Yaya nodded without commenting.

From the current perspective, it is indeed a fairly common non-governmental cooperative organization.

"But the problem is that Terada's tone softened a bit: "The group later became dissatisfied with just being an intermediary. They started to build their own cash pool and required that payments from member factories be settled through the group's account."

"The factory is only responsible for production. The money goes into the portfolio's account first, and then the portfolio distributes it out proportionally."

His gaze fell on the stack of shipping ledgers on the table: "Initially, this 'unified settlement' mechanism did improve efficiency. Brands only needed to deal with one supplier, instead of handling dozens of small factories separately."

"The factory doesn't need to worry about customers delaying payments, because the logistics company will advance the payment."

"But later, the group started using this pool of funds for other things."

Kiryu Yaya's gaze sharpened slightly: "What is it?"

Terada, the accountant, carefully explained, "The consortium will use the funds in the pool to allocate orders and payments among different member factories."

"When a factory needs a loan, the group will create a nice order record on its books."

"If a factory is experiencing cash flow problems, the portfolio company will arrange an 'emergency order' and advance the funds to it."

He looked up, his gaze falling on Kiryu Yaya's face: "In this way, the group will have the accounts and cash flow of nearly thirty factories in their hands."

"Which factory should borrow how much money, and how to prepare the financial statements for each factory, is all decided by the portfolio company."

The old fan in the corner of the workshop was still humming, carrying the smell of fabric and machine oil.

Kiryu Yaya was silent for a few seconds, then asked, "Were Marui Fiber's orders and payment records for the fourth quarter of last year also part of a combined arrangement?"

Terada, the accountant, did not answer immediately.

He turned and glanced at Makiko Marui, her aged eyes filled with an indescribable complexity.

Makiko Marui stood there, as if she wanted to say something, but ultimately remained silent.

Terada, the accountant, looked at Kiryu Yaya again and finally admitted, "Yes."

Kiryu Yaya pursed his lips, understanding what Terada the accountant meant.

His meaning was very simple.

The 20 million yen loan from Osaka Credit Union was actually obtained by Marui Fiber through the Kansai Fiber Industry Cooperative Association, which inflated last year's performance and indirectly embellished the financial statements.

If it weren't for this action, Marui Fiber might have faced the same situation as Watanabe Fiber, with declining orders and a lack of financing.

A life-or-death crisis along the way.

Strictly speaking...

This is falsifying accounts.

Moreover, it wasn't just Marui Fiber that was doing this; it was all the factories under the Kansai Fiber Industry Cooperative Association that were falsifying their financial statements and fraudulently obtaining bank loans.

To put it in modern terms...

This is systemic risk.

Although Marui Fiber only has a loan of 20 million yen, its more than 30 members are all in the fiber industry, which gives it a high degree of consistency.

Therefore, once a downward cycle begins...

These thirty-odd companies will fall one after another like dominoes.

The amount of loans involved could be as high as several billion.

Just then, a system notification popped up in front of Kiryu Yaya:

[New life options have been triggered]

The financial irregularities at Marui Fiber Industries have revealed just the tip of the iceberg beneath the surface of the Kansai fiber industry consortium.

You realize that this is not an isolated case of corporate accounting fraud, but a systemic risk event involving nearly thirty fiber companies.

At this moment, you have three choices:

[Fork 1: Remain silent, step aside first, and suspend the acquisition plan on the grounds of "needing further evaluation" to avoid being drawn into the risk vortex of the portfolio.]

(Difficulty: ★)

[Branch 2: Report to the bank, and report the abnormal operating model of the Kansai Fiber Industry Cooperative Group and clues about Marui Fiber's false orders to the section chief in the form of an internal risk warning. The bank will then decide whether to intervene in the investigation.]

(Difficulty: ★★)

[Bifurcation 3: While advancing the acquisition of Marui Fiber, we will also contact the Kansai Fiber Industry Cooperative Association to gain a deeper understanding of its operating model and member structure.]

(Difficulty: ★★★)

Kiryu Yaya's gaze swept over the first fork and stopped at the second and third forks.

Branch two: Report to the bank.

This option seems safer and more in line with his identity as a bank employee.

If he reports the unusual operating pattern of the Kansai Fiber Industry Cooperative Association to Section Chief Yamada, the bank will immediately initiate a formal review process.

The 20 million yen equipment loan from Osaka Credit Union is just the tip of the iceberg.

If the investigation goes deeper, the credit lines for all thirty factories under the group's name may be reassessed.

The problem is that once the bank gets involved in the investigation, Marui Fiber's sales process will be frozen.

Until the investigation concludes, not only will ownership transfer be impossible, but even normal equipment maintenance may be restricted.

It will take at least three to five months for the bank to complete its investigation, determine the nature of the crime, and go through its internal procedures.

By then, Marui Fiber's skilled craftsmen will likely have gone their separate ways.

By then, it will be very difficult for him to find a fiber factory in Osaka that can operate normally.

Fork Three acquired Marui and made contact with this synergistic combination.

Marui Fiber's orders and accounts are problematic, but the equipment and workers are genuine.

Kiryu Yaya only wanted the latter.

Choosing branch three does not mean he will not report the matter to the bank.

The point is to let him successfully acquire Marui first.

Incidentally, he could also make more contact with this fiber industry collaborative group if he could obtain the list of its members.

Reporting it to the bank later would be a truly momentous event.

From any perspective, bifurcation three is the optimal choice.

Not to mention, its rewards are the most generous.

Then Kiryu Yaya looked at Marui Makiko and said, "Ms. Marui, my intention regarding the acquisition of Marui Fibers remains unchanged."

Marui Makiko's eyes lit up slightly, but then showed a hint of hesitation: "But—you saw it just now, those orders from the fourth quarter—"

Kiryu Yaya did not evade the question: "Your and Terada's sincerity has earned my respect. You could have kept this from me, which would have allowed the deal to be finalized more quickly."

"But you two still chose to tell me."

"In that case, I should also do something to show my appreciation."

"However, the acquisition of Marui Fibers can continue, but the specific transaction structure needs to be adjusted."

Marui Makiko confirmed, "You mean—"

Kiryu Yaya gestured to Miyazawa Keiko beside him: "First of all, the real acquirer is Ms. Miyazawa, who is sitting next to me."

Marui Makiko paused slightly, her gaze shifting from Kiryu Yaya's face to Miyazawa Keiko.

She had assumed that Miyazawa Keiko was Kiryu Yaya's colleague, but now she was taking a closer look at the young woman in the light beige knit sweater.

Accountant Terada also looked up, adjusted his reading glasses, and his gaze held a hint of scrutiny.

Keiko Miyazawa took a small step forward, her tone calm and natural: "I am Keiko Miyazawa, the current president of the Miyazawa Group."

"Miyazawa Group?"

Marui Makiko looked puzzled, clearly having never heard of it.

But Terada, the accountant, suddenly looked up and stared at Miyazawa Keiko in surprise: "Are you the president of the Miyazawa Group? I met Mr. Miyazawa Takashi once before."

Keiko Miyazawa looked at him with equal surprise.

Terada, the accountant, smiled and said, "One year, the Osaka Chamber of Commerce and Industry held a small and medium-sized enterprise exchange meeting. At that time, I was working there as an accounting assistant, and Mr. Miyazawa was the speaker that day."

Keiko Miyazawa nodded: "I see."

After saying that, Terada, the accountant, introduced the Miyazawa Group to Marui Makiko: "The Miyazawa Group is a conglomerate that started in the Kansai region with transportation. It has a considerable scale, ranging from logistics to tourism development, from hotel management to real estate leasing."

"Mr. Takashi Miyazawa was once the youngest permanent director of the Kansai Chamber of Commerce and Industry."

After saying this, he bowed slightly to Keiko Miyazawa: "I have heard about your father's situation. I hope you will accept my condolences."

After hearing this, Keiko Miyazawa paused for a moment, then gave a slight bow in return, saying, "Thank you."

She didn't linger on that topic, but naturally turned to Makiko Marui: "Ms. Marui, regarding the acquisition, we'll proceed as Kiryu-kun suggested. I'll prepare the funds, and once the transfer is complete, the payment will be in place immediately."

Upon learning of Miyazawa Keiko's identity, Marui Makiko was somewhat pleased: "If Ms. Miyazawa could take over Marui Fiber, that would be wonderful."

After saying that, she looked at Kiryu Yaya, knowing that he was the one who truly made the decision: "I wonder what your proposed plan is, Mr. Kiryu—"

Kiryu Yaya smoothly steered the conversation back on track: "The acquisition price is forty-five million yen."

"After the acquisition is completed, Marui Fiber's legal entity will remain unchanged, but the shareholder will be Keiko Miyazawa personally."

"The original bank loans, accounts payable, and outstanding receivables will all remain under the original legal representative's name, and the new shareholders will arrange funds to gradually handle them."

"The relationship between Marui Fiber and the Kansai Fiber Industry Cooperative Association will also be handled by us after the transfer of ownership."

After listening to Kiryu Yaya's proposal, Terada, the accountant, did not object to the price but nodded: "The price is reasonable, and from a procedural standpoint, this proposal is feasible."

Terada, the accountant, took off his reading glasses and gently rubbed the bridge of his nose with his thumb and forefinger: "The legal entity remains the same, the shareholders have changed, and the bank loan remains under the original legal entity's name—this is equivalent to taking over the factory's shell and liabilities together, so the debt will not be considered new debt, saving the step of reassessment and approval."

He put his glasses back on and looked at Kiryu Yaya: "Mr. Kiryu, you've thought this through very well."

Kiryu Yaya nodded slightly: "Since we're going to take it over, we shouldn't leave any loose ends."

"I think the Kansai Fiber Industry Cooperative Association, in particular, is very risky."

Makiko Marui stood to the side, and seeing that Yaya Kiryu had agreed to take over, her expression visibly relaxed. She asked, "So—what are the specific procedures?"

"Let's sign a letter of intent first."

Kiryu Yaya stated, "The terms include: the acquisition price, the scope of assets, the method of handling liabilities, the transition period arrangements, and that Mr. Terada and you will temporarily be responsible for the daily operations of Marui Fiber during the transition period."

Marui Makiko nodded: "No problem."

Kiryu Yaya paused for a moment, then said, "Also, I would like a list of members of the Kansai Fiber Industry Cooperative Association, the more complete the better."

Terada, the accountant, did not answer immediately.

He glanced at Makiko Marui first, and only after confirming that there was no resistance in her expression did he slowly nod.

Then he turned and walked to the old desk in the corner of the workshop, bent down, and took out a dark blue folder from deep inside the drawer.

He placed the folder on the desktop and pushed it in front of Kiryu Yaya.

"This list was compiled in the first year of the Heisei era, and it represents the largest number of members in the group's history, five years after its formation."

"There have been some changes since then, but the overall framework has remained the same. If Mr. Kiryu wants to understand the group's operational structure, this document should be more comprehensive than if you try to find out for yourself."

Kiryu Yaya took the folder and looked up at Accountant Terada: "Mr. Terada, why do you have this list?"

Terada, the accountant, paused for two seconds before saying, "Because I was once one of the group's directors."

"In 1958, when the group was first established, I was in charge of auditing the accounts and settling payments for the member factories for a period of time."

"Back then, the group was indeed doing legitimate business, helping small factories get orders and advance payments, keeping many factories running."

"Later, the group's fund pool grew bigger and bigger, and then the secretariat changed its personnel, and the direction was different from before."

"I stepped down from the board of directors in the first year of the Heisei era, but I have kept this list."

"The membership may have changed a bit in the last two years, but it's basically the same."

He raised his eyes and looked at Kiryu Yaya: "Mr. Kiryu, I don't know what you plan to do after you get this list, but if you really want to get involved in the group's affairs, I suggest you be careful."

"The person in charge of this group has a triad background; we ordinary people can't afford to mess with them."

Upon hearing the word "yakuza," Kiryu Yaya showed no surprise.

The early 1990s was a period when organized crime was at its most rampant.

After the bubble burst, the cash flow of many small and medium-sized enterprises broke down, and the forces that were originally hidden in the shadows of the industry surfaced one after another.

He had read related reports in his previous life.

During this period, violent groups were also known as yakuza.

Their cases of infiltrating small and medium-sized enterprises under the guise of "cooperative associations" and "business cooperative associations" are widely distributed throughout the Kansai, Kitakyushu, and Tokai regions of Japan.

The fiber, construction, transportation, and waste recycling industries were the hardest hit.

>