Chapter 37: The Past of Foreign Affairs

  This entrepreneurial model is a step further than the relatively "advanced" official supervision and merchant management of today. After reading this chapter, Lao Touzi also hesitated, but under Tan Yanqing's persuasion, he agreed to try it out - "The previous management methods used by Zuo Zongtang, Li Hongzhang, and Zhang Zhidong later on have limited effects, so why not try a new path? Maybe we can create another world!" Tan Yanqing explained to Lao Touzi.

  There are not many good economic talents available, so Shen Jing and Kou Qing took on the heavy responsibility. The advertisement for finding a manager has been published in the newspaper, and once they find a suitable candidate, they will slowly hand over the management of the textile factory to their successor. Kou Qing had already contacted British merchants in Hong Kong about purchasing looms. Since Li Hongzhang was once in charge of the Shanghai Machine Weaving Bureau, Tang Bowen invited American engineer Danco, who had previously tested machines for the Shanghai Machine Weaving Bureau, to work with Tan Yanqing. This American had brought Chinese fabric patterns to America and Britain to test on weaving machines to select suitable ones. His arrival will greatly shorten the time it takes for Tan Yanqing to build his factory.

  "Gentleman, I still have a thread of doubt in my heart..." Just as Tan Yankai was enthusiastically preparing to build the textile mill, Chen Fei from the translation department found him with some hesitation.

  "Yu Sheng, you can be called a famous saying, you and I are both Mu You, there is no distinction between Gongzi or not, but it doesn't matter, as long as it's reasonable, Yan Kui will naturally follow the good!" Tan Yan Kui said with a smile. Although he was the leader of this Mu You Tang, he didn't have any arrogant air of an official family's young master, and his treatment of others was also very harmonious, which earned him the respect of many Mu You Tang staff members.

  "Zu An, it's a good thing that you're setting up this textile factory with such fanfare, but have you considered how long your father will be able to stay in his position as Governor of the two Guangs? What about when he steps down? To put it bluntly, as long as your father is in office, no one dares to mess with the factory. But what if he's transferred or leaves the two Guangs... Zu An, the waters of Guangdong are deep, and some things need to be thought through ahead of time! You have great talent, and you won't just be running this one textile factory in the future. Whether it's taking the imperial exams, entering officialdom, or starting other modern industries... there are many things to consider. How can you keep an eye on everything? It's best to make some plans ahead of time!" Chen Fei said with a hint of seriousness.

  Tan Yanqian put down the file in his hand, remained silent for a moment, stood up and patted Chen Fei's shoulder, smiling and said: "Brother Yu Sheng has thought it through carefully, I indeed didn't consider this aspect well. Since Brother Yu Sheng recognizes the problem here, do you have any solution to resolve Yanqian's confusion?"

  Chen Fei's words are very realistic - "people leave and tea cools", human relationships are like this, let alone in the dirty officialdom of the late Qing dynasty. Now Tan Yankai can enjoy the halo of being the Viceroy of Liangguang under the old master, and everything goes smoothly, but how long can the old master stay in this position? After the old master retires, he will also have to leave, and the protective umbrella of this textile factory will suddenly weaken. Will its thick profits attract even bigger predators? These are all very realistic problems - the old master is getting older, and even if we put aside the issue of age, who can stay in such a sensitive position as Viceroy of Liangguang for five or six years? Here, Chinese and foreigners live together, and it's hard to say what kind of trouble foreigners might stir up. If something goes wrong, the Viceroy of Liangguang will have to take the blame.

  Moreover, Tan Yankai was very clear in his heart that with the defeat of the Jiawu War, nationalist thought was rising day by day. As one of the most open-minded regions in China, Guangdong would inevitably be the most active region for revolutionary parties - Tan Yankai's knowledge of history told him that the great revolutionary Sun Yat-sen had a special "love" for Guangzhou. Although the final uprising was successful in Wuchang, there were numerous small and large uprisings by revolutionary parties in Guangdong over the past decade or so. Could Tan Zhongyuan sit stably in the position of Governor-General of the two Guangs in such a complex environment?

  From a psychological perspective, Tan Yankai did not want the old man to stay in the position of Governor-General of Guangdong and Guangxi for too long, preferably just three or four years before being transferred elsewhere. He did not want the old man to stain his hands with the blood of too many revolutionaries due to his position, although Tan Yankai knew that the sacrifices and bloodshed of the current revolutionaries were not particularly valuable. However, the sacrifices made by these people for the nation and country were ultimately worthy of respect.

  "Does Brother Yu Sheng have any solution to this?" Tan Yanqun said somewhat absent-mindedly, after all, whether or not a conflict would occur with the Revolutionary Party was a very crucial issue. As far as he knew from history, within at least thirty years in the future, the organization of the Revolutionary Party was still very loose, and in fact, until the Nationalist Party left the mainland, the internal factional divisions had not been completely resolved. Many local forces, big and small, were using the party's name to occupy a region and oppose the central government. Not to mention the Revolutionary Party before the Beiyang period, they were mostly bandits and local tyrants, with only a few being orthodox patriots who worked for the country and the people, just a motley crew.

  "We have nearly 500,000 taels of silver in hand, which is enough to operate a large textile factory. However, if we want to ensure that the factory is not affected by external interference, we must raise funds from the public and even official channels. This way, our newly established textile factory will be a place where multiple interests converge, making it extremely difficult for anyone to sabotage it.

  Moreover, raising funds has an additional benefit - we can expand the scale of the textile factory again, and its categories will become more comprehensive. As you know, textile production cannot do without cotton yarns. Having only weaving machines is not enough; we also need spinning machines. Take Shanghai's machine-weaving bureau, for example - it is already very well-established.

  Why don't we take this opportunity to raise funds and expand our capital? Let's build a massive and comprehensive textile factory from the start!" Chen Fei said.

  "This idea is great! Brother Yūsei, how much capital do you think can be raised?" Tan Enqi was very fond of this idea. After expanding the capital, the capital increased greatly, which would allow them to take a big lead over others at the starting line. Although he couldn't have the whole cake to himself, if the cake were several times bigger, even if his own share was smaller, he could still get profits several times higher than before. In addition to sharing business risks and avoiding envy from some people, it would also allow him to skip the initial stage of primitive capital accumulation.

  "This is really hard to say! Of course, the more funds raised, the better. However, this textile factory must be strictly under the control of the group, otherwise, if the shares held are too low, it may become a scapegoat for others... This place in Guangdong is a rich and prosperous land, with many wealthy people who can't imagine, as the son of the governor, An will raise funds, as long as the articles of association are reasonable, I believe there will be no shortage of people willing to invest, with guaranteed credit, it's not worried that the funds won't be raised. What's more wonderful is that after these local tycoons join in, they can bring a large number of suitable talents to the factory, with so many shareholders' eyes on this, anyone who wants to take advantage of it alone is impossible, so in order to get greater benefits, we can only serve the factory wholeheartedly... However, the key here is how much shares An wants to hold?!" Chen Fei said with a smile.

  Tan Yanqian walked back and forth in the Mufriend Hall for a while, saying: "Raising shares to gather funds is a very good method. We invest 500,000 taels of silver and must absolutely hold at least 51% of the shares. This is the bottom line that cannot be crossed... In this way, the members who can enter the board of directors will inevitably be the most powerful people in the Guangzhou area. With their help, the management personnel of the textile factory should not be a problem either. This method is very good, and Brother Yusheng is indeed a great talent!"

  Tan Yanqing needs to set up the textile mill quickly, because he needs more funds to complete the initial capital accumulation stage in the shortest time possible, and then gather more funds to start more industries. The ultimate goal is to take over the Wuchang Steel Factory when Zhang Zhidong can no longer support it, which will require a large sum of money, estimated to be at least 5 million taels. This poses a dilemma for Tan Yanqing. Chen Fei's idea is very good, as it can ensure that the textile mill can continue to operate normally even after Tan and his son leave Guangzhou due to government arrangements, while also ensuring the rapid establishment of a modern large-scale textile enterprise.

  After Tan Yanqing's plan to change the way he ran his factory by raising funds through stock offerings and joint ventures was approved by the old master, it was immediately put into action. First, advertisements were placed in newspapers in Guangdong and Guangxi, and a special advertising section was opened in "Qiangxue Wenzhai" to promote the textile mill's stock offering, hoping to attract powerful "heroes" from outside through the influence of "Qiangxue Wenzhai". In just a few days, Kou Qing returned to Guangzhou and, after learning about the details, came up with an idea: Tan Yanqing's call for stock offerings would definitely receive a warm response. With the current 500,000 taels of silver, it was estimated that it would be difficult to occupy more than 50% of the shares. If, due to control of equity reasons, it was not possible to absorb excess funds, it would be a bit too wasteful. Thus, there were two options: one was differential pricing for stock offerings, where no matter how much money others invested, Tan Yanqing's share capital would always be fixed at 51%; the second option was to expand shares after the factory started production, with the price of expanded shares being much higher than the original offering price.

  Kou Qing's two methods are not bad, the first is to make a false investment, and then fill it back when you have money later. This kind of thing is very common in joint ventures in China now, high-level carnivores don't even need to put out their own money, they can occupy a considerable number of shares in the company just by relying on their reputation, and they may not even need to pay for these shares later. The second method seems similar to the new stock issuance in the future stock market in Tan Yanqing's view. He is not a finance major, but he also knows that new issuances are mostly negative for the stock market. However, in this era, as long as your signboard is hard enough, if you can invite Empress Dowager Cixi to join the board of directors, even if the price of the new issuance is high, someone will still come to subscribe strongly.

  Tan Zhonglin listened to Kou Qing's proposal in detail, and after a moment of contemplation, he said: "Let's not discuss these two methods for now. The question is whether your textile factory can make money or not? If it doesn't work out, it'll be like Left Commander's situation - all bark and no bite!"

  "Father, before returning to Fuzhou, I stayed in Shanghai for a few days and personally visited the Shanghai Machine Weaving Bureau. I also saw Zhang Zhidong's newly established Hubei Weaving Bureau in Wuchang. The difference between the two is that the Hubei Weaving Bureau is completely government-run, while Li Hongzhang's Shanghai Weaving Bureau is government-supervised and merchant-run. In my opinion, both are not worth taking, as they have turned factories into official yamen. However, the latter has less influence. Now, cotton yarn has soared to 65 taels per bundle, and the profit from cloth is even thicker than that of cotton yarn. Every year, the British alone export 50 million taels of textiles to China, but don't forget they are transported from the other side of the world, thousands of miles away. The transportation cost is already considerable, so as long as the textile factory operates efficiently and wants to make a profit, it's completely not a problem!" Tan Yankai said with a smile.

  "Gentlemen, the third young master is right. As far as I know, Britain has 130,000 looms, while America has surpassed it with 150,000 more. This is how all major powers are emphasizing the textile industry, constantly adding new looms to expand production and occupy the market... Currently, our Qing dynasty's largest weaving mill is the Shanghai Machine Weaving Bureau, but it only has about 400-500 looms, and there isn't a single spinnery. The third young master's move is exactly filling this gap, and if managed properly, it can be profitable!" Kou Qing said affirmatively from the side.

  "There are more looms in the United States than in Britain, and the British import five hundred million taels of textiles; what about America? Isn't it even more?" Tan Zhonglin asked.

  "The British occupy the best part of China's Yangtze River basin, and it is impossible for other countries to intervene. For example, the textile machinery purchased by Zhang Zhidong's Hubei Weaving Bureau was from Britain, and so was the case with Shanghai's Weaving Bureau. This is because both Hubei and Shanghai are within the traditional sphere of influence of British power in China, and it is intolerable for other countries to intervene. The powers rely on their strong ships and cannons to protect their interests from being invaded, and at the same time they are also on guard against the espionage of other powers... China's national strength is weak, and even the Beiyang Navy cannot guarantee that national interests will not be invaded..." Tan Yankai said in a low voice.

  Tan Zhonglin was also silent for a while before saying, "Twenty-three years ago, I heard from a friend in the scholarly community about an impeachment case. At that time, Li Hongzhang was serving as Governor-General of Huguang and had been ordered to investigate a man named Peng Rujun. I still remember that Li Hongzhang showed great disdain for this person in his memorial to the throne. After discovering that Peng Rujun had embezzled 10,000 taels of silver and left Hunan to impeach him, he also exposed some of Peng's other misdeeds in Sichuan. Do you know what ultimately happened to Peng Rujun and Li Hongzhang?"

  Tan Yanqin and Kou Qing looked at each other in dismay, not knowing what the old man meant by suddenly bringing up these stale matters. However, Tan Yanqin knew that the old man wouldn't mention this for no reason, so he must be hinting at something.

  Tan Zhonglin shook his head and smiled: "Although I am not happy to engage in foreign affairs, it does not mean that I do not know anything! This Peng Rujun is just a corrupt official, and Li Hepeng also knows very well what kind of person he is. However, when Li Hepeng set up the Shanghai Machine Weaving Bureau, he actually appointed this Peng Rujun!"

  "Ah?!" Kou Qing and Tan Yanqian were shocked after hearing this. Someone like Peng Ruizhong had such a bad record, if it was someone else, it wouldn't be difficult to bribe their way back into use. But Li Hongzhang first impeached him and then used him for such an important task, it's really unbelievable.

  Tan Zhonglin stood up and said with a cold smile: "It was this Peng Rujun who, eight years later, proposed to the then Governor of Nanyang, Shen Baozhen, and the Governor of Beiyang, Li Heti, to establish a machine weaving bureau in Shanghai. He also proposed an eight-article charter and 24 articles of regulations... Li Heti replied within a few days, agreeing to the request and plan, and even gave preferential policies similar to those for foreign cloth. Hmph! Now that I think about it, Li Heti's prompt agreement was not just because Peng Rujun personally went to Hebei Baoding to present the memorial, but also because Li Heti had been brewing this idea for a long time and urgently hoped someone would come forward to run this textile factory... That year, I was also scared by Left Chancellor's cotton mill, and after thinking about it for many years, I still didn't understand why Li Heti would do such a contradictory thing. I only knew that foreign cloth was very popular in our Qing dynasty, but I didn't know that we had to spend 50 million taels of silver to import foreign cloth this year!"

  "What happened to Peng Rujun in the end? When I was in Shanghai, I didn't hear about such a person. Moreover, the Shanghai Machine Weaving Bureau is also a well-known factory of our Qing Dynasty. I've only heard of Zheng Guanying and Ma Jianzhong, how could Peng Rujun not have any reputation at all?" Kou Qing said with doubt.

  "Think about it, Peng Rujun had submitted a memorial to Li Hongzhang proposing the establishment of a weaving bureau as early as the fourth year of Guangxu, but it wasn't until the end of the 15th year of Guangxu that construction officially began. I remember when I was in Lanzhou, the imperial court's gazette didn't even mention this matter until February of the 16th year of Guangxu, a whole eleven years later. As for Peng Rujun, he was also ousted by Li Hongzhang. Li had thought that by partnering with Zheng Guanying, he could rest easy, but he hadn't expected Peng to be so corrupt, reaching new heights in just eight years. It seemed that within less than a year, 300,000 taels of silver from the one million shares had vanished without a trace, leaving Li furious and the two men going their separate ways. The Shanghai Weaving Bureau didn't make any progress in its first five years, and it's laughable that Li Hongzhang, a prominent Beiyang official, couldn't even get a factory off the ground in five years. Who would have thought that this was just the beginning of an eleven-year ordeal? You wouldn't know the reasons behind all this!" Tan Zhonglin said with a wry smile.