Chapter 583 - Deep Cooperation

Of course, "settlement over three festivals" didn't mean unlimited credit. The Ministry of Finance and Delung Bank intended to have a certain credit limit, equivalent to export credit. The limit would be adjusted anytime based on import-export status. However, this credit was interest-free.

As for the settlement currency, it was designated as Lingao circulation notes.

This made Li Luoyou somewhat awkward, and Advisor Han at a loss—refusing shining white silver and insisting on some circulation note nonsense? Besides Lingao, there was nowhere else to find this stuff.

Li Luoyou said: "I don't have circulation notes. Does your group not accept silver?"

"The settlement currency here is circulation notes. Silver or gold is just a commodity," Chen Ce said. "It doesn't matter if you don't have circulation notes. You transport mainland goods to Lingao for sale, and we pay you in circulation notes."

This former bank credit review clerk had volunteered to become Director of Bank Planning after Delung's separation and restructuring. Having done credit review for 7 years, becoming Credit Management Director would have been normal given his professional level. But he really didn't want to continue endless paperwork, so he applied for the Planning position instead.

"This—" This was novel. Not wanting white silver, but wanting goods. What kind of business logic was this? Business stressed real gold and silver; getting gold and silver was best—took no space, didn't rot, convenient to spend or hoard.

Those refusing cash were either able to swap for more profitable things locally, or the place had no cash. Australians' thinking was truly strange.

"Is your meaning this," Li Luoyou organized his thoughts, "I ship goods to Lingao to sell, earning circulation notes to buy your goods?"

"Exactly."

"Isn't this superfluous?" Li Luoyou shook his head. "Why not just barter!"

"Alright, then you say how many catties of ginseng for one mirror?"

He was instantly speechless. Without money as an equivalent, calculating prices was impossible!

"If so, I must set up a local shop and build a warehouse." Li Luoyou hesitated. "Extra expenses—"

"We provide the land for your shop. You only pay for construction, which we will also build." Li Mei was generous. "Additionally, we have a guaranteed purchase catalog. Anything you bring, we buy at classified prices regardless of quantity."

She handed over the latest guaranteed purchase catalog listing thirty-one goods and prices.

"For these thirty-one goods, all import taxes are waived, and we buy them all at guidance prices."

Li Luoyou looked. Coal was surprisingly first, followed by many metals: pig iron, wrought iron, copper, lead, zinc, tin... then people's livelihood materials like grain, cloth, cotton, oil, timber... Seeing the end, his eyelid jumped—horses, donkeys. What did Hainan need horses and donkeys for?

"Most of these are bulky and cheap, extremely troublesome to transport." Li Luoyou still had the traditional maritime merchant mindset, liking high-value, small-volume items.

"Profit isn't large, but your cost isn't large either." Li Mei continued analyzing. "Most can be bought all over the South; profit is made just by shipping here. Plus the volume is huge. Even earning a few cents per pack adds up to a large sum. Isn't a guaranteed profit business good enough? We set guidance prices adding ten percent gross profit to Guangzhou market prices."

Calculating this way, his profit wasn't low. And shipping only to Lingao meant dozens of trips a year; small boats could do it. Unlike going to Nanyang or the Western Ocean, requiring waiting for monsoons, ocean-going ships, and hiring expensive navigators.

"As for goods outside the guarantee, you are free to bring them for sale. Currently, Customs waives import tax on most commodities." Li Mei said.

The general commodity transaction was thus settled. It was also confirmed Li Luoyou would open a Liaohai Trading branch in Lingao, specifically responsible for local business contact.

"Additionally, we will provide you with export credit."

"Export credit?"

"In case your limit isn't enough and cash on hand is insufficient, but you need large stock, we can provide extra export loans at favorable rates. However, restricted export catalog goods cannot get loans."

With Li Luoyou's reach, a simple note could mobilize over a hundred thousand taels of silver in Guangdong anytime. He was originally disdainful of red tape like credit limits, but since they only accepted so-called circulation notes here, this system became very useful to him.

Both sides negotiated details of the Liaohai Trading branch. Li Luoyou thought besides contact, this branch could do some retail business. Given Lingao's situation, retail had future potential; consider it laying foundations.

During negotiations with Li Mei and others, Li Luoyou had figured out Australian business habits. Australians had no sentiment in business, only rules. No hints; everything had to be stated clearly face-to-face. Everything must be written down. So details about this branch were discussed exhaustively.

Knowing East Gate Market was the best location, he explicitly requested land there.

"Possible, but area is limited." Li Mei agreed immediately. "Only 200 square meters of building land."

"How big is that?"

"About one-third of a mu."

"How to build a counter room with that?" Li Luoyou was very displeased. He didn't want to build three or four stories—a pigeon coop without even a courtyard. "I'll pay to buy."

Li Mei said: "East Gate Market land prices are high..."

"How much per mu? I'll buy ten mu!"

"Depends on which plot."

"What?" Li Luoyou thought these Australians were truly profiteers.

"East Gate Market is now a Class I Zone. Land price is highest." Li Mei timely unrolled the market plan. "See, these streets are Grade A in Class I. Highest price. And plots are generally small; there isn't even a ten-mu plot to buy here." Her finger tapped the map. " If you want a large plot, better buy here. Road just finished, slightly secluded now, but will be bustling in a few months. Great appreciation potential."

"Appreciation?" In Li Luoyou's concept, except for rent-collecting fields and productive forests, ordinary land didn't fluctuate much. And he was buying land to build a branch; even if it rose to tens of thousands of taels per mu, so what? Sell the branch?

After some haggling, Li Luoyou bought a ten-mu plot beside a newly developed street in East Gate Market. One mu was a free gift from Li Mei representing the Commerce Ministry.

Chen Ce then proposed establishing a joint exchange service.

Li Luoyou pondered. Bills issued by Delung Bank Guangzhou were becoming popular in Guangdong. Their method was simply the allied business model, jointly honoring payments among merchants with large cash flows. Indeed very convenient for users.

However, this joint exchange had great risks. Li Luoyou thought. A bill was ultimately a piece of paper used for fund flow. The momentum existed now; some merchants passed received bills on without cashing them. Convenient, yes, but someone would surely think of issuing empty bills to increase floating capital—100 taels principal acting as 1000 taels flow. This drum-passing game relied on credit; once an issuer or acceptor had problems, a crash risk emerged.

This matter required caution. He considered repeatedly and decided to refuse. Refusal wasn't just due to financial risk, but political risk. Australians could protect themselves in Lingao—he was quite sure of that—but their mainland assets were hard to say. If the government turned hostile and confiscated Lingao assets on the mainland, the loss borne by an ally would be devastating.

Of course, whether the government would turn hostile and to what degree was another matter. After all, neither Delung nor Guo Yi's properties ever claimed to be Australian business. If Australians did their homework and spent money well, it was possible the government would ignore these properties or be loudly hostile publicly but lenient privately.

But since the wind direction was unclear, he didn't need to rush in.

So he politely expressed refusal.

This reply surprised Chen Ce slightly. In his view, joint exchange had risks but brought greater benefits to Li Luoyou—definitely a "win-win."

However, even after repeated elaboration on risk control and potential profit, Li Luoyou remained unmoved, changing the subject.

This slippery fellow! Liu San was anxious. Three of four goals reached consensus. Only this business Delung valued most was rejected! Wasn't this his negotiation failure? He repeatedly signaled Li Mei to join the fray.

Li Mei was a business veteran. Seeing this, she knew talking was useless and would only reveal their weakness. The opponent would suspect Delung had problems and was desperate for a strong partner to inject capital.

If Great Manager Li thought that, never mind cooperating with Delung, he might reconsider even the trade agreement.

So Li Mei interjected, slowly shifting the topic to doing business with Quark.

Quark also got a trade agreement: Quark had the right to ship any Indian and European goods to Lingao, enjoying partial tax exemption like other traders.

The collective stipulated every ship must bring not less than one-third of total load in Indian saltpeter and lac. Besides that, he must bring unlimited quantities of woolen cloth, combed and processed wool, tanned sheep and ox hides, cotton cloth, cotton, and jute. Additionally, annually ship 500 chests of Indian opium to Lingao, packaged at the 20-pound standard. Total 10,000 pounds.

"Opium cannot exceed the limit. Fixed at 500 chests. Excess confiscated." Li Mei said. "Also opium is not tax-exempt."

"No problem." Quark thought opium wasn't a scarce item. British merchants shipped it to Ming decades ago; at most two or three hundred chests a year.

"Also, there are several deals to do with Mr. Quark, but it's not time yet." Li Mei said.

"Good, we'll talk later." Quark was very excited.

The trade conditions lifted Quark's spirits. This Englishman had struggled to find goods Great Ming needed. He could only peddle spices, seafood, and rarities from India and Nanyang. His attempts to sell British woolens and Indian cottons had failed miserably. Now finally there was export potential for bulk commodities.

His only dissatisfaction was settlement in circulation notes. But when Li Mei told him he could use notes to buy white sugar at the Commercial Hall, the Englishman rubbed his hands in excitement. White sugar was too hot; no need to ship to England—shipping to Surat would sell it. British merchants could resell to Persia and Arabia besides Europe.

That night, Li Luoyou clicked his abacus, calculating which goods yielded max profit. From a stability angle, the thirty-one guaranteed items were best. Low profit, but they bought unlimited quantities; profit was very stable.

Pity they weren't interested in his best-selling high-profit items—Liaodong goods like ginseng and deer antler, extremely hot on the mainland, but Australians lacked interest.

Key point: they seemed unwilling to sell big cannons. In his view, weapons money was easiest to earn. Portuguese didn't want to sell...

Wonder if Runshitang is interested? Yang Shixiang should be; he knew he'd wholesaled such goods to Yang before. He suddenly thought: since this Australian Liu San is Runshitang's second owner and shares profit, he could open a breach through him.

But this was long-term work. He couldn't stay long in Lingao. Calculating, he suddenly had an idea. He called for Advisor Han and Gu Baocheng. As for Quark, some things he didn't need to know.

"Alright, we've seen it. Australians are different from ordinary Red Hairs, and different from our Great Ming." Li Luoyou said. "Baocheng, sit. Tell me, how are these Australians?"

"Australians value profit." Gu Baocheng hesitated. "But nephew sees that while valuing profit, they also keep credit."

"Correct." Li Luoyou said. "Australians indeed value profit. But this group is different from ordinary Westerners."

Advisor Han said: "If they purely valued profit, they wouldn't have refused to sell us cannons today."

"Whether they are willing is yet unknown." Li Luoyou said. "But seeing today, buying cannons may not succeed—these Australians probably have other designs on Lingao."

"Australians implicitly intend to partition Lingao." Gu Baocheng blurted out.

Li Luoyou tapped his fan on his palm, nodding after a long while: "We can't guess their thoughts immediately. But Australians will likely stay here a long time. There is great business to be done." He suddenly asked Gu Baocheng, "Baocheng, how about you be the manager of this Lingao branch?"

Gu Baocheng apparently hadn't expected such a question. He was instantly dumbfounded. After a long while:

"Since Uncle cultivates me, nephew will naturally serve with utmost sincerity!"

Advisor Han knew Young Master Gu's status in Li Luoyou's heart—more important than a son; incense bearer for his wife's maiden family. Putting him in a remote Australian place like Lingao? He quickly advised:

"Master please think thrice, here is not like the mainland—"

"No matter." Li Luoyou said. "Here is actually easier to do business than mainland branches."

Lingao's commercial and social environment was simpler; only Australians needed dealing with. Unlike the mainland requiring a manager to be slick and handle all walks of life to support the facade. And while Australians valued profit, they weren't unreasonable people; much better than Westerners.

"Here you are the manager; I give you all authority a manager should have." Li Luoyou thought, this child had been by his side long enough, seen much, but his independent ability was hard to say. This wasn't a long-term solution; he needed a place to practice alone. After two days, he was quite satisfied with Lingao's social environment.

"Yes, nephew will be conscientious."

"Mm, you've never stood alone. You'll marry soon; can't be under my wing forever. Lingao's environment is cleaner than the mainland; fewer messy things. I'm assured leaving you alone here." Li Luoyou exhaled. "Just maintain good relations with Australians and handle business contacts well."

He looked at his nephew. "I give you another thousand taels silver principal for this branch. Besides contacting Australians, do whatever business you want. As long as it's not wicked, I support it all. Losing money doesn't matter."

"Yes," Gu Baocheng said respectfully, "Only I ask Master to assign capable stewards and staff to assist."

"Don't worry. Pick anyone I have—you choose. Whoever you pick is yours." Li Luoyou said. "Picking wrong doesn't matter; knowing mistakes allows correction."

Advisor Han understood Li Luoyou's intent and stopped advising—training the young master was good. But he felt necessary to remind: "Master," he whispered, "These Australians have partition intent. If the Court sends troops to crusade, Lingao becomes a Asura hell..."

(End of Chapter)