Chapter 6: Discussion on Trade (Part 2)

Ji Situi said with disdain, “This is the great achievement of my Qing Dynasty, not the prosperous age of the Ming Dynasty.”

“Although I don’t want to get involved in some tasteless disputes, I must say that this is a fact. A society that can produce the sprouts of capitalism must have more active commercial activities, and this reflects a higher level of per capita purchasing power and living standards.” Immediately, a Ming Dynasty fan supported the view of the Minister of the Chemical Industry Department.

“There is another factor, which is that the likin tax in the late Qing Dynasty was extremely heavy, while the Ming Dynasty had almost no customs duties. Therefore, the flow of goods in the late Qing Dynasty was actually very poor—everyone tended to have a localized natural economy production,” Ji Situi continued.

Du Wen spoke eloquently, “The result of the increase in commercialization in the late Ming Dynasty was the aggravation of exploitation and social turmoil, and the same was true for old China for a hundred years. In addition, the low commercialization rate of the Qing Dynasty was related to the suppression of the power of landlords and gentry, the increase in population, and the insufficient carrying capacity of the urban population under the old transportation environment.”

“Don’t talk too far,” Ma Qianzhu stopped Du Wen’s further high-flown talk, and Du Wen obediently shut up.

“I think the so-called sprouts of capitalism in the Ming Dynasty are exaggerated. How much consumption level do the common people have? Everyone has seen it since D-Day. How much purchasing power do you think such a society has?”

“Your analogy is not very good. The consumption level of Lingao in the 21st century is not high either.”

“Even Lingao in the 21st century is a commercial society, not a natural economy society. The difference is huge.”

“It’s meaningless to use Lingao from any time and space as an example,” Wen Desi said. “Just like those foreign capitalists who expected to get rich in China by ‘every Chinese buying one of my things’ in the early days of reform and opening up. Ninety percent of the Chinese people still won’t buy his things. Consumption power has always been concentrated in large cities since ancient times. Our position is actually the same as these capitalists. The market seems vast, but we can only choose those capable areas to sell. Guangdong, Jiangnan, and the capital are our commodity sales markets—other places can be automatically ignored. The common people in the Central Plains and the northwest don’t even have a chance to be a ‘peaceful dog,’ and they won’t consume our products.”

Luo Duo said, “These places can be automatically filtered out. Let’s just talk about the possible targets mentioned by Chief Wen! Without the likin tax, would the flow of goods be better? The fundamental problem is that the common people have no money. What can they consume? This has nothing to do with consumption habits. If you have no money, you will naturally save. The reason why they don’t consume is one word: poor!”

“I don’t think so. You can tell by looking at the local landlords. No matter how much of a local tyrant they are, it’s no problem for them to eat fine grains and meat every meal. But what about their consumption level? Most landlords still often eat sweet potato porridge. They only eat meat during festivals.”

Du Wen said, “Under the conditions of a clan-based small-peasant economy, in many cases, the value of labor plus diligence and thrift is the only way to accumulate primitive capital. The habit of agricultural labor makes people avoid the values of speculation and risk.”

Yu E’shui nodded and said, “So, to take the domestic sales commercial route, we must start by transforming consumption habits. But how do we achieve this?”

“Cultivate a middle class. The purchasing power of the bottom class is very limited.”

“Too simple, a typical middle-class panacea.” Du Wen sneered at such a shallow statement. “In my opinion, to change this habit, we must at least do three things: first, change the natural economy of ancient China and change the value of agricultural free capitalism; second, create a ‘middle class’; third, raise the overall per capita economic level. The third point is a too slow process in ancient times or before the second industrial revolution. The transmigrators should not expect the national per capita economic level to increase by several times in their lifetime. The second point should be noted: it is not the capitalist or landlord class, but it is still quite difficult to create a jujube-shaped society by overcoming the natural laws of social Darwinism. And in ancient times, when the per capita economic level was limited and could not be raised quickly, a jujube-shaped society was still destructive to social stability. In short: a natural economy society is a very stable system. It is impossible to change it without paying a great price of social turmoil.”

“When I hear the queen recite her isms, my head is destined to ache. But after removing those gorgeous words, I still think you are right,” He Ying said.

Ma Qianzhu said, “No personal attacks. If you have a point, talk about the point. Everyone should focus on the issue.”

“I also agree with Luo Duo’s statement. We still need to look at consumption habits from an economic perspective,” Wu Nanhai said. “When you have money, you will naturally consume. You still need to find consumption habits. The parents who are willing to wait half an hour every day just for that one-yuan bus ticket are often willing to spend thousands of yuan to enroll their children in a so-called art class.”

“No, no. Economic conditions are only one factor. For example, everyone thinks that selling soap is a direction. In fact, whether it is for their own use or for their servants, the ones who actually use soap are basically the lower-class working people. And this habit of thrift is often not out of a sense of responsibility, but purely out of habit—even those who work as servants in foreign households will naturally make unnecessary savings for their masters.”

“Our soap is considered a luxury item. It’s for the ladies. Oh, famous courtesans can also use it. The Eight Beauties of Qinhuai should be famous by now. Giving them a trial use would be a living advertisement, right?”

“How many pieces can we sell then?!”

“Actually, the demand for soap should be very large. Most service industries have a considerable demand. Whether it is brothels, restaurants, pharmacies, bathhouses, theaters, art galleries, or mines, cloth workshops, etc., these are already huge markets. Even if there is no soap, using soap powder is the same concept. What’s more, the cost of soap is not high, and the resources of a middle-class household are sufficient. Is it true that only ladies have the demand? There are many practical users.”

He Ying said, “Although what you said is not wrong, having a demand does not mean that your product can meet this demand. If there is no soap, there are other things. In addition, the function of soap does not disappear just because it is not there. It is just replaced by other methods, such as pig pancreas and soapbeans. Especially soapbeans are almost free. No matter how cheap soap is, can it compare with the soapbeans picked from the trees for free?”

“In the final analysis, it’s still the word ‘poor’! The reason why such consumption habits are formed is not without reason,” Wang Luobin said. “The information that Yu E’shui mentioned, time, physical strength, comfort, and convenience are all ‘free.’ As long as you can save even one copper coin, you can squander these ‘free’ elements at will. And even now, the consumption concept of some elderly people is to only look at the price and not the quality. Therefore, I think that for the commercial route, instead of considering what advanced future products to use to open up the market, it is better to use technological advantages to lower the cost of producing popular products at that time and earn profits through price advantages.”

“To give an example, if a transmigrator can make better paper at a lower cost, this is a huge business opportunity. Or if there is a better way to make better and more fuel-efficient lamps, this is also a huge business opportunity. Even a good idea to make porcelain objects more functional and artistic is also a huge business opportunity. If there is a new iron smelting process, improved ironware, and improved iron quality at a better price, isn’t this a business opportunity? Even for luxury goods, as long as you grasp the creativity, the profits of the high-end market can also promote good business opportunities.”

No matter how self-sufficient a natural economy society is, it still needs to import goods. The common people are not not consuming, but there are no better products for them to consume. The rising import figures after the opening of the five treaty ports in the late Qing Dynasty can illustrate this point. Why could kerosene and matches squeeze into the Chinese market? The Chinese did not suddenly become rich in those few decades of the late Qing Dynasty. It was just that things like kerosene and matches were much better to use than the previous products, and the cost of use did not increase much.

The process of breaking the small-peasant economy and natural economy in the real world of China was like this. There were not many new concepts, but the dumping of cheaper and slightly better foreign goods broke the original small-scale economic system.

“So, in fact, we don’t need too many fancy foreign trade goods.”

“Well, in my opinion, once the three acids and two alkalis are put into production, our most advantageous mass product will be paper.”

The consumption of paper is very large, and the consumption levels are many, from writing imperial edicts to wiping one’s bottom, all kinds of paper are indispensable. With the chemical pulping technology mastered by the transmigrators, it is enough to make all the paper workshops in the country go bankrupt in this time and space—provided that the transmigrators’ commercial network can reach the whole country.

“Sewing needles and matches are also possible. We can just focus on the sales of these three products,” Ma Qianzhu said. “The current main trade item, glass products, can still only be considered a luxury item.”

“Luxury goods should be viewed in two ways,” Wen Desi said. “Glass mirrors are now a luxury. According to the Guangzhou market, a goose-egg-sized mirror sells for over a hundred taels. Only those rich people can afford such a price—don’t be fooled by the shipment volume. Guangzhou was the most prosperous city in southern China at that time, and there were just more rich people. We need to look at the market on a larger scale. Let those middle-class families also be able to afford it.”

“Lower the price?”

“It’s not just about lowering the price. It’s about differentiating the product grades,” Wen Desi had been thinking about this problem for a long time. The total profit level of a small number of high-profit luxury goods cannot be compared with a large number of mass consumer goods. Just look at the world’s top 500 companies in the 20th century, and you will know that the top positions in terms of enterprise scale, profit, and sales figures are basically occupied by those enterprises that provide ordinary mass consumer goods.

“Mirrors have no technical difficulty. After we have mastered the glass manufacturing technology, mass-producing glass mirrors is only a matter of time and raw material supply,” Wen Desi said. “Let’s take this opportunity to develop a complete series of mirror products. From the large full-length glass mirrors sold to the rich, to the small, rough-edged mirrors that ordinary people can afford, we must produce them all.”