eurekapd Chapter 305 Industrial Transfer
Chapter 305 Industrial Transfer
That evening, at the Saionji family's Otemachi headquarters, in the top-floor conference room.
Outside the window, the Tokyo skyline was tinged with a dull orange-red in the autumn twilight. The lights of Tokyo Tower in the distance had not yet come on, its steel frame silhouette resembling a gray nail driven into the dusk.
An unfolded map of Asia lay on the long table. To the right of the map, several documents were held together with paperclips. Endo stood beside the table and pushed a cost estimate sheet printed on an A3 sheet of paper in front of Satsuki.
"This is a table comparing the monthly salaries of blue-collar workers in major industrial areas of Asia, compiled overnight by the Comprehensive Department."
Endo's fingers moved between the rows of numbers above the table.
"In Japan's Kanto region, the average monthly salary for blue-collar workers in the manufacturing industry is 280,000 yen. In Ulsan, South Korea, it's about 80,000 yen. In Chonburi Province, Thailand, it's about 35,000 yen."
My finger stopped at the very bottom row of the table.
"The area around Shenhai in China is approximately 8,000 yen."
Endo looked up and glanced at Satsuki.
"If we calculate based on a production line of 300 people at the same scale as the Fukaya plant, the annual savings in labor costs alone would exceed 700 million yen."
Satsuki didn't look at the calculation table. Her gaze remained fixed on the map on the table, her finger hovering over the location of the Yangtze River estuary.
"Endo, spread out those alternative plans you sent back last week."
Endo pulled out three proposals with different colored covers from the pile of documents held together by paperclips and lined them up.
Blue cover – “Processing with supplied materials and compensation trade model: Export solution for processing with supplied materials”.
Green cover — “Sino-foreign joint venture model: a plan to establish a joint venture with local state-owned enterprises”.
Red cover — "Wholly Foreign-Owned Enterprise (WFOE) Model: Wholly-Owned Subsidiary Solution".
Satsuki picked up the blue-covered proposal, opened the first page, scanned two lines, and then closed it. She pulled a red marker from the pen holder and drew a big X on the cover.
"Processing trade," Satsuki pushed the blue cover aside. "The ownership of the equipment is transferred to their processing plant, and we only take back the finished products. It's like giving away the machine tools for free, and all we get in return is the difference in processing fees. Once they learn the process, they can easily ditch us and take orders themselves."
Endo nodded and put the cross-marked proposal aside.
Satsuki picked up the green cover again. Turning to the third page, in the "Shareholding Structure" section, she tapped her finger heavily twice on the clause stating "51% Chinese shareholding, 49% foreign shareholding."
"A joint venture." Satsuki raised her eyelids and looked at Endo. "Board seats are allocated according to shareholding ratio. The Chinese side holds the majority stake, and the factory manager and financial director are appointed by the other side. If our quality control standards are to be implemented, we have to get past them first. The calculation method for equipment depreciation, the timing of profit distribution, and even which brand of cutting fluid to use in the workshop, all require repeated wrangling with a partner whose business philosophy is completely different from ours."
Satsuki also drew an X on the green cover.
"The essence of Sino-foreign joint ventures is to exchange controlling stakes for market access. This model is sufficient for companies that do not bring real money and only want to use cheap local labor for OEM manufacturing."
Satsuki put down her marker.
"But we are different."
She picked up the red-covered proposal. There were no crosses marked on it.
"Wholly foreign-owned enterprise." Satsuki opened the business plan and pressed her finger on the "Composition of Registered Capital" section. "Endo, double-check the framework of this page with me."
Endo took a half step forward and looked down at the form.
"The registered capital consists of two parts. The first part is US dollar cash. It is directly wired from the New York offshore account of Saionji Trading Company to the foreign investment special foreign exchange settlement account of Huaguo Bank Shenhai Branch. The second part is capital contribution in kind. The customs appraisal value of complete sets of industrial equipment is recorded as fixed assets."
Endo's finger tapped on the annotation below the table.
"According to the other party's current foreign investment access policy, local governments have the right to provide substantial preferential treatment in terms of land transfer fees and income tax for wholly foreign-owned manufacturing enterprises that are export-oriented and generate foreign exchange earnings."
"The key is," Endo looked up, "that we didn't bring just one or two scattered secondhand pieces of equipment. Instead, we brought complete production lines from five factories—stamping, injection molding, precision casting, motor winding, and electroplating—connected end to end, enough to support a complete closed loop of white goods manufacturing."
Endo closed the proposal.
"This ability to transfer complete industrial chains, coupled with the hard currency of US dollars, are the two things that the other party is most eager for in attracting investment."
Satsuki leaned back in her chair.
"So our bargaining chips aren't about begging the other party to grant us a business license." Satsuki slowly drew a line on the map south of the Yangtze River estuary. "They're about using these chips to directly ask the other party for a price."
Her fingertip stopped at the location marked "Pudong" on the map.
"The Pudong development project was officially launched this April. That land is still farmland and tidal flats. The land leasing system has just begun to be piloted, and prices are in their most primitive, initial stage."
Satsuki raised her finger and looked at Endo.
"What we want is not to rent a ready-made factory building in someone else's development zone. What we want is a whole contiguous industrial land. The area is large enough to accommodate five production lines, supporting warehousing areas, independent living areas, and dedicated freight channels."
Endo held the pen above the notebook, waiting for final confirmation.
"The land is designated for industrial use, with a lease term of fifty years." Satsuki spoke slowly. "The road planning, factory construction standards, and environmental protection facilities within the park will all be implemented by Saionji Construction in accordance with Japanese industrial standards."
"No less than 70% of finished products will be exported, and the remaining 30% will be sold domestically to cultivate local distribution channels."
Satsuki closed the red-covered proposal.
"In addition, the entire management team must be dispatched from Japan." She added a final point: "The original factory managers of the five factories that were initially disassembled and resealed all have complete process documents and quality control manuals. Their last task before retirement is to go to the assembly line in Pudong and screw in the Japanese lean production system screw by screw."
Endo finished writing down all the terms and closed his notebook.
"Miss, the liaison office in Pudong, the General Affairs Section, has established initial contact through the Shinkai Office of Saionji Trading Co., Ltd. The invitation letter arrived three days ago."
Endo took a letter from the side pocket of his briefcase and placed it on the table.
The letterhead was printed with the national emblem in red and the Chinese characters for "Shanghai Pudong New Area Development and Construction Command".
……
September 23rd, late at night. Yokohama Port, Daikoku Wharf, heavy bulk cargo terminal.
The sodium spotlights in the harbor bathed the entire pier frontage in a murky orange hue. The sea breeze, carrying the acrid smell of burning diesel fuel, poured in through the gaps in the breakwater.
At the dock, the 30,000-ton ocean-going roll-on/roll-off ship "Mingyuan Maru" lay quietly at its berth. The red antifouling paint below the waterline was faintly visible in the beam of the searchlight, while the white ship name and port of registry lettering on the side were somewhat blurred by the damp salt spray.
Satsuki stood on the observation platform at the highest point of the breakwater. The autumn night sea breeze blew her hair to one side. Fujita stood two steps behind her, the wind lifting the hem of his coat, which he then pressed down with his hand.
Endo stood to Satsuki's right, holding a metal clipboard in his hand. Two documents were fixed to the clipboard—one was a "Special Goods Export Release Certificate" issued by Yokohama Customs, and the other was the invitation letter from Pudong.
At the dock's edge, four overhead gantry cranes started operating simultaneously. The sturdy steel cable winches emitted a dull creak as the spreader's hooks gripped the lifting rings on top of the first row of rust-proof wooden crates.
The side of the wooden crate was printed with the English words "SA Industrial ——FRAGILE / HEAVY MACHINERY" in black stencil paint, along with a customs code. Inside the crate were the cast iron bed and hydraulic master cylinder of the first batch of Komatsu H2F-400 stamping machines dismantled from the Fukatani plant.
The crane's boom slowly rotated. The first wooden crate lifted off the dock, arcing through the air before hovering above the outstretched stern ramp of the roll-on/roll-off ship. It then slowly descended, landing on a pre-welded support frame inside the cargo hold.
A dull thud emanated from inside the ship's hull, spreading throughout the berth through the resonance of the steel plates.
Endo handed the clipboard to Satsuki. The wind was too strong, so he used his free hand to hold down the corner of the paper.
"Miss, we need your signature on the release form. Customs has completed the verification, and the port has confirmed that all 37 heavy containers in the first batch have passed security inspection without any omissions."
Satsuki took a fountain pen from Fujita. The cap was pulled off, and the metal nib flashed under the sodium lamp.
She lowered her head and wrote her name in the designated signature field on the release form. Her handwriting was delicate, and her strokes were swift and decisive.
Endo took back the signed release form, stacked it together with the invitation letter, and put it into a waterproof plastic bag.
The boom of the second crane began to rotate. Another wooden crate bearing the SA logo lifted off the ground and rose into the night sky illuminated by sodium lamps.
Satsuki looked up and watched as the huge wooden crates disappeared one by one into the shadows of the ship's hull.
These industrial gems from Japan are being loaded into boxes onto ships, ready to be transported to that great Eastern power across the sea.
Stamping presses, injection molding machines, mold fixtures, electroplating tanks, winding equipment—these silent, heavy metal machines were fixed on the factory floors in Saitama, Kawaguchi, Tokorozawa, Ota, and Maebashi just three months ago, operating day after day for Japan's home appliance supply chain.
Now, with their base bolts cut off and sealed in wooden crates, they are being fed into the stomach of this ocean-going freighter, one by one.
"Endo." Satsuki's gaze did not leave the wooden boxes suspended in mid-air.
"Has the list of negotiating team members been finalized for this trip to Pudong?"
"Two legal counsels, two finance staff, and one engineering evaluator. Including you and me, that makes seven people in total," Endo replied. "In addition, the General Affairs Division suggested that Director Ikeda of Saionji Trading Co., Ltd.'s Shinkai office accompany us as the local liaison officer throughout the trip. Ikeda has been stationed in Shinkai for three years and has a stable personal relationship with the local government's investment promotion department."
Satsuki nodded.
"Do the people in Pudong know what we brought over there?"
"During the initial contact, Ikeda only revealed that 'Japanese companies intend to invest in and build an export-oriented manufacturing base in Pudong.'" Endo paused for a moment, "The specific equipment list, investment scale, and land area required were not disclosed in advance."
"We'll reveal everything when we meet." Satsuki handed the pen back to Fujita. "We need to show our cards in person."
The boom of the last crane rotated into position. The last wooden crate was pulled off the concrete ground of the dock by steel cables, wobbled twice, stabilized, and then slowly rose, over the ship's side, and sank into the cargo hold.
A short beep came from the dock dispatcher's walkie-talkie, followed by a confirmation call from the ship's first mate in a mix of Japanese and English.
"All thirty-seven boxes are loaded. The tail ramp will be closed shortly."
The hydraulic stern ramp of the roll-on/roll-off ship hummed as the metal hinges turned, and the massive steel plate slowly rose, finally closing with the stern with a dull locking sound.
The smokestack of the "Meiyuan Maru" began to emit even thicker black smoke. The vibrations from the increased engine speed were transmitted through the seawater to the concrete structure of the breakwater, causing the ground beneath Satsuki's feet to tremble slightly.
The ship's horn blared through the night sky above Yokohama Port. A long, deep blast, so resonant it made the air in one's chest hum.
The pilot boat approached the starboard side of the "Mingyuan Maru" and began to guide this behemoth, filled with excess production capacity from Japan's manufacturing industry, slowly away from the berth.
The transfer of low- and mid-end industries has officially begun its first step.
Satsuki stood on the observation platform, watching the stern lights of the roll-on/roll-off ship gradually disappear into the black sea.
The sea breeze lifted and then pressed down the stray hairs on her forehead.
"Notify the crew."
Satsuki turned her gaze away from the sea and walked toward the black Toyota Century parked at the entrance of the dock.
Fujita quickly stepped forward and opened the car door. Endo followed closely behind, carefully placing the waterproof plastic bag into his briefcase.
Satsuki bent down and sat in the back seat. Before the door closed, her voice came from inside the car, its volume halved by the sea breeze, leaving only a few clear words.
"Go to China."