Chapter 26: Trade Agreement

The workers surged forward like a tide, completely ignoring Li Luoyou and his party who were swaggering down the middle of the road. The steward quickly led the group to the side of the road and found a roadside tea stall for them to sit down at.

The stall owner knew the steward and hurried over to greet them and offer tea.

“No need for tea, we’re just resting our feet and will be leaving soon,” the steward said. “Don’t trouble yourself.”

Seeing this group of dirty workers walk past him without a care, he was very displeased.

He sat there with a wooden face, saying nothing. After sitting for a while, the number of workers on the road gradually decreased. Just as Li Luoyou was about to get up, he saw the steward suddenly rush out. He returned a moment later.

“Third Master has already set up a banquet at the trading post to welcome you, Master.”

That evening, Liu San and personnel from the foreign affairs, commerce, and intelligence departments arranged a banquet at the trading post restaurant to welcome the great Shopkeeper Li.

Before taking their seats, Liu San introduced everyone to Li Luoyou one by one.

The main attendees of the banquet were members of the “Liu Work” group and the main responsible persons of related departments. Li Mei was also present—she was invited first because it was related to her department, and second, because when it came to the art of socializing at a banquet, there was no one more formidable among the five hundred.

As the elders were attending a formal occasion, they had all changed into formal attire, no longer using their combat uniforms as their main dress. However, in Li Luoyou’s eyes, this formal attire was not much better—it was hard to distinguish them from their “fake kun” subordinates, though the material was slightly better and a little cleaner. No wonder the Australians had no distinction between high and low.

Li Luoyou, with a smile on his face, kept saying, “Long admired.” Looking at these men in their monk-like short jackets, he suddenly realized they were all very young, and their chins and upper lips were all clean-shaven. He couldn’t help but wonder if they were all “eunuchs.” But then he thought that they spoke normally, so that couldn’t be it.

The invited guests included Li Luoyou, Quaker, and two others. Saoye and the others were entertained at another place. Gu Baocheng had not dared to join the table at first, but Li Luoyou saw that the Australians did not pay much attention to hierarchy, and if he insisted on the Ming etiquette, he might be laughed at, so he told him to join the table.

Compared to the luxurious banquet hall, the banquet itself seemed very simple. The elders unanimously agreed that although this had the nature of a quasi-state banquet, it should still be “simple and frugal.” Thus, the banquet featured dishes like scrambled eggs with tomatoes and stir-fried broccoli, vegetables that did not yet exist in this time and space. The cooking was exquisite, which gave Li Luoyou a refreshing feeling. Only Quaker’s gluttonous desires were not satisfied—he had barely eaten any meat.

Li Luoyou saw that the interior of the trading post was magnificent and comfortable, but the banquet was extremely simple. Not only were the dishes light and palatable, but there were no ceremonies of the head chef presenting dishes for rewards, nor were there any songstresses or young boys singing and playing drinking games. He thought they were not given to luxury and felt a certain admiration.

The waiters at the banquet were all young women, all dressed in starched, crisp black high-collared dresses with a cinched waist, and a white, ruffled apron over them—but it only covered the front, with only a pair of crossed straps at the back. The skirt was short enough to reveal their feet, and their black shoes and socks were visible, which made Gu Baocheng blush when he saw them. Their hair was not styled in any way, either cut short at the shoulders or tied into a ponytail at the back of the head with ribbons of various colors. On their chests, they all had a small, shiny silver plate. It took Li Luoyou a while to realize that the two characters written on it were “Health.”

The black and white attire looked clean and neat, and compared to the women of the Great Ming, it had a different kind of beauty.

But these young women were dressed so beautifully, yet they neither accompanied the guests in drinking nor sang songs. They were only used to serve dishes and wine. Wasn’t that a waste?

The drinks at the banquet were all Lanling wine and kvass. Not only was there no rum, which Quaker loved, but even the famous wines sold by Zichengji in Guangzhou were not available. Apart from Liu San’s toast at the beginning, there was no more urging to drink.

The atmosphere at the banquet was relaxed, and the conversation was all small talk. At least everyone present could understand Li Luoyou’s Cantonese, and he could surprisingly understand about seventy to eighty percent of the “Australian language” they spoke. Communication was not difficult. Li Mei was an expert at banquets and was very good at regulating the atmosphere. The atmosphere soon became cordial and friendly. As the banquet progressed, Li Luoyou once again confirmed that the so-called Australian language spoken by this group had a strong Liaodong military accent, which made him even more puzzled.

Li Luoyou was considered very knowledgeable among the natives of this time. When he talked about his several trips to the South China Sea and India, everyone listened carefully and asked questions from time to time. But when Li Luoyou mentioned Australia, the faces of the several elders present became less animated.

Apart from a brief description in a captured manual, no one knew what this so-called “homeland” of Australia was really like. Was it like the 21st century or the 19th century?

Seeing their hesitant expressions, as if they had some unspeakable secret, Li Luoyou became even more convinced of the rumor: this group of Australians had fled to the Great Ming in an iron ship after failing in a court struggle in their home country.

And hearing that most of the Australians who came to Lin’gao were single, and mostly young men, it was very likely that their fathers had failed in a rebellion and, on the verge of being wiped out, had sent them overseas to seek refuge and find another way. The reason they came to the Great Ming was probably because of the “same language and same race”—it had long been rumored outside that the Australians were descendants of the Song people from the Battle of Yamen.

Thinking of this, he reminded himself not to ask any more questions about Australia, so as not to embarrass them and, more importantly, to avoid bringing up their sad past. However, since so many of these men had come alone, they would have the need to start a family. Li Luoyou didn’t quite believe the rumor that the Australians were fighting over women. In his opinion, if the Australians just wanted a woman to warm their beds, do their laundry, and cook their meals, it would not be difficult to achieve, whether by buying one with money or forcing one with weapons.

The so-called shortage of women among the Australians was probably just a shortage of women worthy of their status. Li Luoyou thought that among these Australians, there must be many who were sons of high officials and dignitaries in their home country. Even for a concubine, they would probably have high standards. In a poor and remote place like Lin’gao, how could they be interested in the daughter of a small country landlord?

Thinking of this, he was already planning how to cater to their tastes in this regard.

After the meal, Liu San invited them to move to the lounge. The lounge was similar to the banquet hall, equally tall and spacious, with a crystal glass chandelier hanging from the ceiling. On the surrounding walls hung large paintings—they were not landscapes or flower-and-bird paintings, nor were they Western oil paintings, but seemed to be a combination of both. They depicted either great mountains and rivers or pine trees in the snow. The one directly opposite the screen was magnificent; amidst the misty mountains, a great river rushed into the sea, where a red sun was just rising, its rays illuminating the sky. In the center of the rays was a ship, and upon closer inspection, it was the Australians’ great iron ship. Across the painting were four large characters written in ink: “Beautiful Rivers and Mountains.”

The grandeur of this painting was immense! Li Luoyou was suddenly alert.

The blue-brick floor was covered with a large Persian carpet. Li Luoyou felt a pang of pain just looking at it. This was the highest quality Persian carpet, sold not by the piece but by size. Now, not only was it filthy, but it was also covered with many small burn marks.

As for the chairs, he didn’t know where they had come from. They were not a set, and they were arranged strangely, in a semicircle. Behind the chairs was a beautifully carved, thirteen-panel rosewood screen inlaid with mother-of-pearl and gold and silver threads. It was very large. Logically, such a large screen should be placed in a much grander hall to look proper. In a room like this, it felt crammed in.

In fact, this room had been arranged by Dugu Qiuhun in imitation of the layout of the Ziguang Pavilion in Zhongnanhai. But the rooms in the trading post building were not suitable for such a layout, which resulted in this strange appearance. Although it was arranged like a state guesthouse, there were no “state guests” at the time. The staff of the East Gate Market administration office often used this room as a lounge and smoking room, and a fine Persian carpet had been ruined as a result.

Each chair had a name card inserted in it, so everyone sat down according to their name cards, saving the trouble of the elaborate ceremony of declining and accepting seats.

After they were seated, the maids brought in fine porcelain coffee sets. This was high-grade bone china supervised by Xiao Bailang. The recruited Foshan porcelain workers used the production process he provided, selecting the best kaolin clay, screening it, adding bone ash, and finally firing it at a very high temperature in a gas kiln. The shapes and patterns were all imitated from the modern era, and the results were flawless.

This bone china was currently produced in very small quantities. Apart from a small amount sent to Guangzhou for use in the Ziminglou, to explore the domestic high-end porcelain market, the rest was kept for their own use in Lin’gao.

The coffee was made from the first batch of coffee beans harvested from Wu Nanhai’s tropical crop garden, roasted by hand. It was very fragrant. Wu Nanhai had named it “Golden South Sea.”

Quaker and Li Luoyou had encountered this beverage from Arab and Indian merchants and were not surprised by it. It was the porcelain that caught their eye. Quaker couldn’t put it down. Li Luoyou felt that the shape and texture of this porcelain were not like those made in the Great Ming. Could the Australians also make porcelain? Then he thought that since they were descendants of the Song people from Yamen, it was not surprising that there were a few porcelain craftsmen among them.

After drinking the coffee, the conversation finally turned to the main topic.

Before the negotiation, Liu San had already confirmed the several key points of the negotiation at a working meeting of the “Liu Work” group, and had reported them to the Executive Committee and the Senate Standing Committee for approval.

First, Li Luoyou would be responsible for the transportation and sale of the transmigrator group’s goods.

Second, Li Luoyou must assist the transmigrator group in setting up firms in the local area, and if necessary, they could set up joint ventures.

Third, Li Luoyou would purchase various designated goods for the transmigrator group. The prices of the goods would be negotiated once a year for bulk purchases, and the Lin’gao side would have the right to choose to pay with goods or money.

Fourth, Li Luoyou’s branches on the mainland and overseas would provide acceptance services for Delong’s drafts.

But before presenting their demands, everyone wanted to first hear what this great shopkeeper needed from Lin’gao.

Li Luoyou made no secret of his intentions. After complimenting the transmigrator group on their “strong ships and sharp cannons,” “rare in the world,” he directly requested to purchase arms from them.

The quantity was not large, and even the specific types were simply limited to cannons, muskets, and pistols.

Liu San hesitated for a moment. He had not expected this to be Li Luoyou’s real purpose in coming to Lin’gao. Of course, he was here to seek trade opportunities, but for the object of trade to be arms and weapons? This was not like selling paper and matches. Arms not only consumed a large amount of strategic materials but were also a high-consumption item in terms of industrial capacity.

Moreover, arms were very sensitive strategic materials that would greatly affect the balance of power on the mainland. It involved the foreign policy of the transmigrator group, which was not something Liu San and the others could decide.

He had not expected Li Luoyou to raise a question beyond Liu San’s authority right from the start. The elders present looked at each other, not knowing what to do.

Li Luoyou was a man of the world. Seeing their troubled expressions, he knew this was a difficult matter. But he had come to Lin’gao mostly for this purpose and was unwilling to let it go. He said:

“If there are any difficulties, please speak freely.”

Liu San composed himself. “This matter is beyond our authority. We must ask our superiors for a decision.”

Li Luoyou nodded in understanding. “How long will it take?”

“There will be a result in three to five days.”

“Good. If it is inconvenient to sell guns and cannons directly, can you help me set up a cannon factory?” Li Luoyou raised his second request—in fact, this was his real purpose. Since selling weapons was a major matter, helping to build guns and cannons would probably also require a decision from “the higher-ups.”

“I will report all your requests,” Liu San said with a wry smile. “This matter concerns military and state affairs. I hope you can understand, Master Li.”

“Of course, of course.”

Next came Li Luoyou’s request for trade privileges. Lin’gao was a free trade zone. Currently, all import taxes were waived, and some exports were also tax-free. Anyone could trade here without any problem. Li Luoyou was not a small merchant who had come by boat. He had great resources and strong capabilities, and what he wanted were trade privileges.

Specifically, it was the exclusive export rights for “Australian goods,” mainly Australian glass mirrors. Li Luoyou planned to transport them to the South China Sea and India for sale. And for the latter, he was also preparing to sell them to Europe through the window of Goa.

Venetian glass mirrors were world-famous. Not only were they extremely expensive, but their production was also limited. The Australian glass mirrors sold here seemed to be in endless supply, and their price was much cheaper than Venetian glass mirrors, especially the various materials of glass mirror powder boxes that Lin’gao had recently begun to sell on a large scale through Guangzhou channels, which had even greater price competitiveness.

This kind of small, high-value commodity was very light. A single sea vessel could transport a large quantity of goods. Even with the cost of long-distance freight, selling them in Europe could yield a profit of more than 100%.

This kind of small, high-value commodity did not even need to be transported to Europe to make a handsome profit. The sea vessel could exchange them for other goods at various trading ports along the way to Europe. In fact, Li Luoyou had no intention of shipping them directly to Europe. His plan was to sell a portion of these Australian goods to Goa, and then have Portuguese merchants transport and sell them to India, the Red Sea coast, and the eastern Mediterranean region. Another portion would be given to Quaker to transport to Surat and sell directly to the local English merchants. Of course, this secret could not be revealed.

“I am willing to underwrite one hundred thousand of them annually, including fifty thousand porcelain ones, thirty thousand lacquerware ones, and twenty thousand others,” Li Luoyou said. “The price will be fifty percent of your retail price in Guangzhou.”

“That’s too cheap…” Li Mei shook her head directly. Of course, Li Mei could not agree—currently, Zichengji’s purchase price from Gao Ju was sixty percent of the retail price. If they gave Li Luoyou fifty percent, he could turn around and dump them on the domestic market, completely ruining Gao Ju’s business. When Li Mei did business, what she hated and feared most was “channel conflict,” where distributors used regional price differences to dump goods, eventually crashing the price so that no one could make a profit.

“To open up the European channel, a fifty percent price is not excessive. Besides, I have to ship them to Portugal, a journey of ten thousand li, with all the dangers of the sea.”

“Your ship doesn’t need to go to Europe,” Li Mei almost said, “in fact, you’ve never even been to Portugal,” but she thought better of it and decided to save him some face. “You can sell them as soon as you get to Goa or Surat.”

Li Luoyou’s smile froze a little. In the Great Ming, there were almost no people who knew about Goa or Surat. There were many sea merchants in the Great Ming, but they either went to Japan or the South China Sea. They were very familiar with places like Manila and Batavia, but they knew nothing about the Indian route.

“Furthermore, we already have a trade agreement on the Goa route,” Li Mei remembered the route monopoly agreement for the Lin’gao-Goa route signed with Li Huamei last year. This agreement was due to expire in a few months, and the general opinion of the commercial department was not to grant a trade monopoly again, but to adopt a free trade policy. However, this monopoly could be used to raise their price.

The two sides engaged in lengthy negotiations on this issue. In the end, they reached a trade agreement with Li Luoyou. Li Luoyou could transport and sell all products on the list of goods allowed for export by the transmigrator group to regions other than Nan Zhili and Liangguang, including Liaodong. The discount for these goods would be the same as that given to Gao Ju.

“In that case, my costs will be much higher than Gao Ju’s,” Li Luoyou was dissatisfied with this condition. “The money I spend on roads is much more than his.”

“If he wants to transport goods to Liaodong or the capital to sell, he will also have to pay transportation costs. In this respect, your conditions are the same,” Li Mei said. “Distance is profit, distance is price. You and all merchants know this.”

For goods sold to Surat and Goa, the transmigrator group would give an additional 0.5 discount. This discount would be in the form of a rebate. That is, Li Luoyou would pay the full price at the time of purchase, and at the end of a fiscal year, this discount would be returned to Li Luoyou. As for whether to use goods, silver, or circulation coupons, it would be up to him.

For goods sold to Surat and Goa, the trade agreement for the following year must be signed in November of the preceding year, specifying the order quantity and type. The transmigrator group would grant a 10% fluctuation margin. If the order exceeded the fluctuation margin, the rebate discount for the excess portion would be cancelled.

At the same time, it was stipulated that for domestic sales, payment would be settled at the three major festivals according to the commercial customs of the Great Ming. For export sales, payment would be made in cash.