Chapter 85: The Sweet Harbor Tempest - The Sugar Guild

“All we need now is someone with influence who can speak up and take the lead,” Wen Tong summarized.

Zhu An had a great deal of prestige and was the leader of the Haiyi Guild. If they could persuade him to cooperate, it would be twice the result with half the effort.

“However, this storm cannot be considered over without a head rolling,” Chen Tianxiong said. An ambiguous victory carries great danger.

“Besides, even if he were willing to cooperate, we would face the future problem of competing with him for leadership within the joint-stock company.”

A man who had held power for so long, even if he temporarily yielded, would always be resentful. The slightest trouble could spark his dissent, leading to endless future problems.

Feng Guangfeng was a good man, but he was looked down upon by most because of his status, and his influence was limited. They were not familiar with the other people in the sugar companies.

“I don’t think we need to go searching everywhere,” Chang Shide said after thinking for a long time. “Since they sent Feng Guangfeng to contact us, it shows they trust him. We should just befriend him and use him as our agent. We don’t need him to rally support, just to accurately convey our intentions to them.”

They immediately sent Liao Daxing to the Dachang Rice Shop to connect with Boss Zhu.

The next evening, Feng Guangfeng arrived as promised.

“Huanan will not change its purchase price,” Wen Tong said, getting straight to the point. On the issue of whether to make concessions to the Haiyi Guild on the purchase price, the consensus was not to yield, to make it clear to them who was now the master of the Leizhou sugar industry.

Feng Guangfeng’s face turned ugly.

“I implore you, managers, to reconsider…”

“You don’t need to say any more,” Wen Tong interrupted him. “Huanan has been offering two taels and five qian since we started business in Xuwen. Huanan cannot tarnish its own reputation.”

Merchants value their reputation above all else. With this grand statement, Feng Guangfeng was naturally left speechless.

“However, Huanan is aware of your difficulties,” Wen Tong said. “You were incited by Zhu An and had a misunderstanding with our firm. Our master is magnanimous. As long as you all make a clean break with Zhu An, our master will naturally take care of you!”

Feng Guangfeng knew the terms had been laid out: they had to abandon Zhu An. But he still didn’t understand what the benefits were. Even if the other firms agreed to raise their purchase price to the same two taels and five qian as Huanan, with the Haiyi Guild’s reputation in tatters, they probably wouldn’t be able to buy much sugar. Huanan’s reputation for benevolence had already spread throughout Leizhou. Unless they were willing to offer a higher price, which the sugar merchants were unwilling to do.

“Our master’s intention is this: Huanan can purchase sugar on behalf of all the firms. The price will still be two taels and five qian—it’s not easy for the sugarcane farmers either. If the skin is gone, what will the hair attach to? Everyone needs a way to live, don’t they?”

The words were beautifully spoken. Feng Guangfeng could only nod and agree. He himself had felt that the Haiyi Guild’s price-suppressing tactics were too harmful to the farmers and not very honorable.

“You just need to bring the silver. For however much silver you bring, Huanan will help you buy that much sugar. Huanan will not take a cut; we will do it for free.”

Feng Guangfeng’s mind worked quickly. This was a solution. But would Huanan really work for free? He immediately had another thought:

“Then, the standard two percent commission per shi of sugar, the firms will naturally offer it as a token of appreciation for Huanan’s hard work!”

This was a very clever move. With tens of thousands of shi of sugar being traded, a two percent commission was a huge benefit.

“That’s for later—” Wen Tong nodded. “However, this proxy purchasing has conditions.”

The condition was that each firm had to use cash to buy the sugar from Huanan; no credit was allowed.

“That’s easy,” Feng Guangfeng nodded repeatedly. “The firms always use cash for purchases anyway.”

“Good.” Wen Tong said that after each firm paid, Huanan would issue them a warehouse receipt recording the amount of sugar, calculated at a rate of two taels and five qian per shi.

However, the sugar companies could not collect the goods themselves after paying. All the sugar would be transported out of Leizhou and sold by Huanan. After the sale, the payment would be settled according to the amount on the warehouse receipt.

“The current price in Guangzhou is three taels and eight qian per shi. It may rise, it may fall,” Wen Tong said. “Regardless of the fluctuation, Huanan will settle the accounts with each sugar firm at this price. Whatever amount is on the warehouse receipt, that’s how much silver will be paid.” He added.

Feng Guangfeng was shocked. This was a clear indication that Huanan wanted to monopolize the sugar sales in Leizhou. Even the Haiyi Guild had never touched this area. Huanan was indeed ambitious.

But he couldn’t even say “no.” It wasn’t that he didn’t want to, but he didn’t dare. Since the other party was making such a bold demand, they were clearly confident. The thought of the rumored eleven heads sent a chill down Feng Guangfeng’s neck.

However, thinking deeper, the firms wouldn’t lose out. If they transported and sold the sugar themselves in Guangzhou, the price would be about the same. Although the market might rise, it could also fall—that was uncertain. Transporting it themselves would also incur shipping costs and other expenses, which were not small. In case of a shipwreck or pirates, the losses would be disastrous, even a total loss.

This condition was especially favorable for the smaller firms. They had no ability to transport and sell on their own and had to rely on the larger firms, which not only charged a handling fee but also took advantage of them during the process, either by attributing all losses to the smaller firms or by charging various fees.

If they could settle the deal in Leizhou at a price of three taels and eight qian, most firms would likely be happy to accept.

In comparison, Huanan’s risk was much greater. Even if the price in Guangzhou remained stable, Huanan would have to cover the shipping and other expenses. If the price fell, they would suffer a great loss.

Since they were offering such terms, they were clearly betting on a significant rise in the sugar price. But the price of sugar, apart from the harvest, was greatly influenced by the demand from “foreign firms.” It was difficult to predict the annual demand for sugar from those foreign barbarians.

Feng Guangfeng thought for a moment and then said cautiously, “This is, of course, a great benefit for all the firms. But the price of sugar fluctuates greatly. If the market is not ideal, your master will surely suffer a great loss. How can this be?”

“You don’t need to worry about that.” Wen Tong began to compliment him. “Among the twenty-one firms of the Haiyi Guild, it’s rare to find someone as understanding as you, Boss Feng, who can consider both himself and others!”

“You’re too kind, you’re too kind.” Although he knew it was flattery, Feng Guangfeng, who had always been looked down upon in the Haiyi Guild, was naturally pleased to be praised. “Manager Wen, you flatter me.”

“When Zhu An wanted everyone to lower the price, you were the only one in the Haiyi Guild who spoke up for the sugarcane farmers. That was truly not easy.” Seeing it was effective, Wen Tong continued to compliment him according to their pre-arranged “script.” “As the saying goes, ‘if the skin is gone, what will the hair attach to?’ The people of the Haiyi Guild don’t even have this much foresight. It’s a real waste of your good intentions, Boss Feng.”

Hearing this, Feng Guangfeng was deeply moved. He had repeatedly suggested within the Haiyi Guild that they should not harm the sugarcane farmers in their fight against Huanan—it would be detrimental to the entire Leizhou sugar industry in the long run. For these words, he had been met with cold shoulders and even harsh words. He had never expected Huanan to appreciate his views so much. A mixture of feelings welled up in him, and he was speechless. He felt as if he had found a kindred spirit.

“As for why Huanan is doing this, there is a reason.” Seeing the change in his expression, Wen Tong knew his words had had an effect. He said sincerely:

“Our master’s intention is simply that since the sea ban was lifted, more and more ships are going abroad to trade. All sorts of goods are being transported out, and those foreigners are also coming to do business themselves. Some of the overseas traders, to make a small profit for themselves, deliberately cut prices. Once one person lowers the price, it’s not easy for others to raise it. The foreigners are also smart. They see this, and if you ask for a high price, they’ll just find someone else. There’s always someone willing to sell. Our own people cutting each other’s throats, isn’t it a pity?”

Feng Guangfeng had been to Guangzhou a few times himself. Although he hadn’t directly dealt with “foreign firms,” he knew that what Wen Tong said was true.

“So, Huanan wants to unite with the sugar industry colleagues in Leizhou to advance and retreat together,” Wen Tong said. “This is our original intention.”

Feng Guangfeng nodded. “If we are to advance and retreat together, we should share the profits and losses. With the current arrangement, Huanan’s risk is too great.”

“Indeed. But Huanan is new here, and we’ve had a conflict with our colleagues. Although it was Zhu An’s doing, there are still some hard feelings that need to be resolved gradually. If people are not united, even if it’s for the good of everyone, there will inevitably be misunderstandings. So this time, Huanan will bear more of the risk.”

“It’s rare for Manager Wen to be so frank!” Feng Guangfeng’s impression of Huanan improved greatly. “I will do my best to persuade the Haiyi Guild. It’s just that—” he asked cautiously, “do the firms only need to pay for the sugar purchase, or are there other expenses?”

“None at all, apart from the standard two percent commission,” Wen Tong said. “I know this profit was originally the benefit of the sugar companies. But Huanan has not collected it for the past few months, so we must ask for your concession.”

“I can make the decision on this matter,” Feng Guangfeng nodded. “However, the matter of Huanan being the sole distributor of all sugar involves many parties and will surely face some obstacles.”

Wen Tong suggested that all the heads of the sugar companies should gather for a meeting to discuss the regulations and address any doubts on the spot, to avoid wasting time with back-and-forth messages. Feng Guangfeng thought this was a good idea but was afraid he couldn’t invite everyone—some were timid, and Huanan’s “reputation” was now considerable.

“No problem, the meeting won’t be held at the Huanan Sugar Company,” Wen Tong had already thought of this. “How about ‘enjoying some entertainment’ at Sister-in-law Ai’s place in two days?”

“Excellent!” Feng Guangfeng nodded repeatedly. This “private establishment” had connections to the county yamen, and no one would dare to cause trouble there. It was as good as having the yamen guarantee everyone’s safety. He couldn’t help but admire Huanan’s thoroughness and elegant way of handling things. In comparison, his colleagues in the Haiyi Guild were either hidebound traditionalists, ignorant dandies, or frogs in a well, full of arrogant self-importance. Even someone like Third Master Zhu, with his knowledge and skills, was blinded by money. The contrast was like heaven and earth. He sighed and took his leave.

For the next two days, Feng Guangfeng ran around, persuading his wavering colleagues to attend the meeting. Not everyone accepted the invitation. The timid ones still refused to attend, simply saying, “You go and discuss it, I’ll follow whatever you decide.”

A few others, who had been close to Third Master Zhu in the past, were not in a position to openly switch sides and politely declined.

But no one openly refused.

After Wen Tong and the others sent out the invitations, eighteen of the twenty sugar companies responded—Riyicheng had no place in the future blueprint of the Leizhou sugar industry. These sugar companies would be the first shareholders of the future Leizhou Sugar Co., Ltd.

This de facto first general shareholders’ meeting was held three days later in the flower hall of Sister-in-law Ai’s house. Huanan spared no expense, booking the entire courtyard and all the girls.

After some wining and dining, Chang Shide began to speak, explaining the full benefits of Huanan’s proposal to the attendees. They could enjoy high profits without taking any risks, all for the cost of advancing the silver to Huanan.

Of course, to get everyone to hand over their hard-earned silver to Huanan, there had to be some guarantees. So Chang Shide proposed that the attending sugar companies jointly organize a “Leizhou Sugar Industry Guild,” register it with the county yamen’s household registration office, and get a license. All of Huanan’s conditions would be written down in black and white in a contract. Each contributing firm would receive a copy as proof.

“Does this mean that for however much silver I pay, Huanan will issue a warehouse receipt for that much sugar?”

“Huanan is only acting as a proxy for purchasing,” Chang Shide explained. In theory, you could exchange however much silver you had for that much sugar, but since the pressing season was already half over, it depended on how much sugarcane the farmers still had to sell.

According to Wen Tong and the others’ estimates, the farmers still had about one hundred and thirty to one hundred and forty thousand shi of sugar. With the transmigrator group’s resources, it was impossible for them to buy up all the remaining sugar. In fact, apart from relying on the Guangzhou station to mobilize funds, they were now increasingly using spot sales to recover their sugar payments. It was only by using both methods that they could basically meet the cash flow for their purchases.

To achieve the goal of monopolizing the sugar sales in Leizhou, they had to mobilize the local capital as well. This was the main reason they were so eager to form this sugar guild and offer such favorable terms for proxy purchasing and sales.

The people present, of course, were unaware of the transmigrators’ little scheme. The strength Huanan had shown in handling several crises had given these local sugar merchants a false sense of their “omnipotence.”

“Alright, I’ll put down fifty thousand taels first. I want the warehouse receipt for twenty thousand shi tomorrow!” The speaker was a member of a large firm, Liu Yulin, the owner of Risheng Hao.

“Done,” Chang Shide nodded. He turned to Liao Daxing. “Write it down, Risheng Hao, twenty thousand shi.”

Liu Yulin’s statement was unexpected by the other sugar merchants. Although twenty thousand shi was only half of Risheng Hao’s usual volume, to hand over fifty thousand taels to Huanan just like that was a bold move. A buzz of discussion immediately filled the room.