Still, I Will Live As The Son-In-Law Of A Conglomerate [EN]: Chapter 149

149. 44th. Breaking the Seal part.1 (3)

After marking all the locations for discount stores, Na Chang-seok and the store development department staff discussed department store development with me before taking the business plan I had prepared and leaving. In the office, now empty except for the two of us, Tae Jae-ho and I sat on the sofa to catch our breath.

“Everyone is so competitive.”

“They have to be. Aren’t those guys the scouts for the logistics and distribution sector? Haha.”

That was true. The territories of Hi-Mart and Haedong Department Store would only expand if the store development department staff went out to the provinces, selected locations, bought land, and built store buildings.

“Those guys are the ones I took around to look at land, and seeing that they don’t complain to Director Lee means they like you.”

“Thank you, Vice Chairman.”

Tae Jae-ho waved his hand at me.

“What thanks? I should be the one thanking you. The survey results won’t be out for another week or two, but even just looking at the map, those were good plots of land.”

Tae Jae-ho, who was looking at me with a genial expression, opened his mouth.

“But why aren’t you paying attention to other department stores? There are quite a few stores on the real estate market right now.”

The current department store market was also a time when those with a lot of cash were leading the game. Several chaebols [large South Korean business conglomerates], including the Daenong Group, were putting all their department store buildings up for sale to pay off their debts.

I said to Tae Jae-ho, who was giving me a questioning look.

“It will definitely be quite profitable. But isn’t a department store a business that instills good feelings in customers?”

“Instills good feelings…”

“Yes. From the moment they enter the department store, they should feel a sense of superiority, as if they have become special people. And when they leave, they should feel a sense of regret at leaving that sense of superiority behind.”

Tae Jae-ho changed his expression after hearing my broad vision for department stores.

“Is there anything else? Something more specific.”

“In short, uniformity will be important for future department stores.”

“Uniformity?”

Looking at Tae Jae-ho, who was blinking, I smiled faintly.

“To put it simply, the brand image of department stores will become important. In that sense, I hope that the design and store size standards for our future department store branches will be based on the Gangnam branch.”

“Why?”

“Although domestic demand is frozen right now, the Gangnam branch is located in the heart of the wealthiest middle class in the country, and it is the best in the country in terms of facility size, quality, and tenant brands. It wouldn’t be an exaggeration to call it the epitome of a luxury department store.”

Unlike me, who was expressing confidence, Tae Jae-ho seemed to have different thoughts.

“The Roel Group is going to sweep up the other department store buildings next to its Sogong-dong headquarters and other regional branches. Are you sure that’s okay?”

“It’s okay, Vice Chairman. The Gangnam branch is a store connected not only to the Seoul metropolitan area but also to other regions.”

“Other regions…”

Tae Jae-ho, who had been hesitant, suddenly clapped his knee.

“I see! Customers from the provinces can come up and shop via the bus terminal!”

As expected of someone who was like a brother to my grandfather, his vision was unusually broad.

In its previous life as Shinseong Department Store Gangnam Branch, Haedong Department Store Gangnam Branch had customers from the provinces accounting for 25 percent of its sales. I said to Tae Jae-ho with a smile.

“The Gangnam branch has a larger and wider potential hinterland than the Sogong-dong Roel Department Store headquarters. It will be sufficient as the design standard for Haedong Department Store, Vice Chairman.”

“I see. If we open stores with the same design as the Gangnam branch in other locations, people from the provinces will feel like they’ve come to Gangnam for as long as they’re in our department store, haha.”

Perhaps it was because he looked like Bodhidharma [a Buddhist monk traditionally credited as the transmitter of Zen Buddhism to China], but Tae Jae-ho had a different sense of understanding people’s psychology than other people of his age. Gaining confidence from that, I continued.

“So, unlike our competitors, we should focus on opening our own very large stores. If we thoroughly manage our brand, it will help us attract overseas luxury brands in the future, so we should stick to opening our own stores, Vice Chairman.”

Luxury brands are very picky about the brand image of the department stores they enter because of their brand value. Knowing that the profitability of department stores would be determined by luxury goods sales in the future, I insisted on opening our own very large department stores.

‘Roel Group, try to pick up as much as you can. I’ll show you that one well-nurtured store is a hundred times better than mediocre ones.’

I raised the corners of my mouth, not doubting that Haedong Department Store would be the ultimate winner in the department store industry.

***

After that, I talked to Tae Jae-ho about other agendas in the distribution business sector.

“I’ll also talk about acquiring 50 percent of Central Square’s shares at the vice-chairman meeting. If we pay enough to cover all the debts and guarantee management rights, Chairman Shin might consider it.”

“Thank you, Vice Chairman.”

Shin Ho-jin’s Central Square currently had more than 400 billion won in debt. If we paid enough to clear that debt, Shin Ho-jin could get rid of his debt, and we could avoid being tenants.

“By the way… I heard that Chairman Shin is very interested in computer programming?”

“Yes. I heard from Central Square employees that Chairman Shin himself designed the Central Square computer network.”

Shin Ho-jin, who came from a family full of geniuses, was good enough to write computer programs and homepages on his own, even though he majored in business administration. Tae Jae-ho stroked his chin at my words.

“Chairman Shin was a smart man with an unusual side to him. More than 20 years ago, he painted the Yushin Group logo on another company’s ship because he didn’t want to be looked down upon by overseas buyers. And there…”

My eyes widened at the story of how he set fire to a ship to expedite the shipment under the guise of fire suppression, and when that wasn’t enough, he landed a Landing Craft Tank [a type of amphibious assault ship] full of trucks loaded with cargo on the beach like a landing operation to deliver goods to buyers.

“Is that true?”

“That was possible in those days. It was a time when dollars poured in as long as we delivered goods made in this country to overseas buyers on time.”

“I see.”

It was like a dream. It would be impossible now… Tae Jae-ho said to me, who couldn’t hide his admiration for Shin Ho-jin.

“That’s why your father used to call Chairman Shin a man with the heart of Hamlet and the imagination of Don Quixote. With Chairman Shin’s sense and skills, he’ll have something in common with Managing Director Na and the other friends when it comes to e-commerce.”

“Thank you for letting me know, Vice Chairman.”

‘I can’t just watch someone who used to visit our family rust as a building owner. I look forward to working with you, Uncle.’

Hoping that Shin Ho-jin would take the hand we offered, we wrapped up our discussion of the distribution business.

***

That was the story of the existing business. Tae Jae-ho and I began to discuss new businesses while eating snacks.

“I think it would be good to acquire Daeyang Shipping. I’m thinking of acquiring all of the shares for 300 billion won and merging it with Haedong Corporation’s shipping division. What do you think?”

“Daeyang Shipping is the company under court receivership, right?”

Tae Jae-ho nodded at my question and said.

“The financial structure and performance are good, but the company is under court receivership due to the owner family’s inheritance issues. It has a fleet mainly of bulk carriers and specializes in transporting minerals and grains. What do you think, Director Lee?”

What was there to say? It was the company I had picked as my top choice when I was drawing up the group’s business structure at home.

Wasn’t it a company that we had to acquire in order to transport the iron ore, copper, coal, and zinc that Bae Jae-hoon’s trading division would be pouring out from the mines it would be developing in various overseas locations? I answered immediately.

“We must acquire it, Vice Chairman. And.”

I continued to give my opinion to Tae Jae-ho, who was satisfied with my answer.

“We must also secure terminal shares in major domestic ports such as Incheon, Pyeongtaek, Gunsan, and Gwangyang, as well as overseas ports such as Hong Kong, Singapore, Rotterdam, and Long Beach. We can’t ignore the cargo handling fees.”

It would cost a lot of money right now, but if we didn’t secure port shares from now on, we would have to pay more money to our competitors in the name of fees than we would be spending now. We had to acquire them.

“I see. And… quite a few ships will be put up for sale in the domestic shipping market soon.”

“What’s going on?”

When I asked, pretending not to know, Tae Jae-ho looked at me as if he were looking at a cute grandson and answered.

“Rumor has it that the IMF [International Monetary Fund] will notify us to reduce the debt ratio of large corporations to 200 percent and the debt ratio of banks to 500 percent. It’s an opportunity for us.”

Tae Jae-ho’s eyes sparkled like a tiger’s, living up to his name. Looking at him, I clicked my tongue inwardly.

‘Those gangster-like IMF bastards… they’re the same now as they were then.’

I wanted to tear the chin of that white Michel Camdessus, the president of the IMF, up and down. He had said that Korea was reliable at the beginning of the year, but now he was denying everything and denouncing Korea as a garbage country.

‘Just you wait, Camdessus. You’ll have to kowtow to the ground when you come to our country later.’

I suppressed the emotions that were boiling inside me and said with a bitter smile.

“Then… you’re saying we should acquire the ships that existing shipping companies own.”

“That’s right. I think we can get good ones for 30 to 40 billion won per ship. What do you think?”

After thinking for a moment, I said to Tae Jae-ho.

“I think we can raise up to 1 trillion won from Haedong Merchant Bank or the banking sector to acquire the ships that will be put up for sale.”

“Only that much? I was thinking of spending at least 2 trillion won.”

Disappointment was evident in Tae Jae-ho’s eyes, but I had my own thoughts.

“We’re going to offer those who sell us their ships to have Haedong Merchant Bank and Haedong Securities acquire their 10-year subordinated bonds. We need to take over the shippers as bait.”

Tae Jae-ho laughed heartily as he looked at me with a sinister smile.

“Haha, you’re going to take care of the work and make financial profits. A 10-year subordinated bond will be counted as capital long enough for this crisis to end, so they’ll be quite tempted.”

Subordinated bonds are bonds that are classified as capital under current accounting standards because of their low repayment priority. The downside of most subordinated bonds is that they have high interest rates, but I was thinking of calling for a very low interest rate compared to the current interest rate.

Tae Jae-ho’s eyes were sparkling as if he was happy just thinking about it.

“Now that I think about it, I should talk to Vice Chairman Cho about this. It’s related to finance.”

“I’ll tell Vice Chairman Cho since we have to see the other vice chairmen as well.”

“I’d appreciate that, haha.”

Looking at Tae Jae-ho, who was laughing heartily, I suggested the last key point.

“And… I think we should be careful about chartering (傭船, borrowing a ship from another shipowner).”

“Why is that?”

“If the supply of ships and the volume of cargo don’t match, we’ll only be filling the shipowners’ pockets even if we work hard to make money.”

Tae Jae-ho’s eyes narrowed as I pointed out the unstable factor.

“Then, what should we do?”

“We can’t completely avoid chartering contracts, but overseas M&A would be advantageous.”

“M&A?”

Looking at Tae Jae-ho, who was blinking, I took out the documents I had prepared from my bag and handed them to him.

“As you can see, the shipping market isn’t very good right now. But as China gradually grows, the volume of cargo will explode.”

“Hmm… It’s a foregone conclusion that China will grow. There’s already talk that it will become the world’s factory.”

“Yes. So, overseas M&A is essential. Among them, we must push for the acquisition of the container ship business of the British P&O Group.”

In my previous life, Maersk Line had acquired the P&O Group’s container ship business, which would change its name to ‘P&O Nedlloyd’. Thanks to this, Maersk Line’s market share soared from 12 percent to 18 percent.

‘I’m going to stop that merger no matter what. Maersk Line started massacring civilians with Swiss MSC after eating P&O Nedlloyd. Under the name 2M.’

I had to mess things up before the Viking descendants, Denmark’s Maersk Line, joined hands with the Italian-Swiss MSC and started acting like gangsters. To avoid Korea being kicked out of the shipping alliance in the future.

As I braced myself inwardly, thinking about the future, I continued to persuade Tae Jae-ho, who was tilting his head.

“As globalization continues, M&A will become more and more fierce in any industry. The shipping industry is no exception. Once you’ve stepped in, you have to be in the top 5 to guarantee survival.”

“Hmm… Does that mean that the acquisition of the P&O Group’s container ship business is just the beginning?”

“Yes. We need to faithfully expand on our own, but we need to acquire Oriental Overseas (OOCL) in Hong Kong and Hamburg Süd, starting with the transaction with the P&O Group, to survive the chicken game [a scenario in game theory where two players head towards each other, and the one who swerves first loses].”

Tae Jae-ho’s eyes widened at my words.

“They’re all bigger companies than Daeyang Shipping, which we’re going to acquire. But you’re saying we can barely survive even if we gather those companies…”

“When the chicken game starts, you need to have both the size and the constitution to survive. M&A is inevitable, Vice Chairman.”

Tae Jae-ho nodded as if he knew what I meant, but he still expressed his concerns.

“M&A is ultimately a transaction of buying and selling, so the price is the problem. Haedong Corporation has plenty of cash and a low debt ratio, but we’re not just in the shipping business, so won’t there be a problem with cash flow?”

I calmly answered the question that Tae Jae-ho threw at me with a worried look.

“Vice Chairman, have Vice Chairman Bae Jae-hoon or the Chairman told you anything about me?”

Tae Jae-ho frowned for a moment, then opened his mouth.

“That you’re a key figure at Standard Capital?”

“Yes, Vice Chairman. Standard Capital trusts me completely. I have enough profit sharing from Standard accumulated. You don’t have to worry about money, haha.”

Tae Jae-ho’s expression became much lighter when he saw me smiling with composure.

“I forgot about that. There’s nothing to worry about if a reliable sponsor is backing you, hehe.”

“Besides, we have enough potential work and profits thanks to the Australian and Panamanian mines. In the future, when the company stabilizes with mine development, we can use this as a basis to pursue M&A and jump into the competition for very large ships.”

“Bigger ships…”

Looking at his hesitant expression, it seemed like he was hesitating to order new ships. Seeing this, I put more strength into my voice.

“I’m not suggesting we do it right away, Vice Chairman. I’m saying we should respond when the Chinese economy starts to grow in earnest. When the shipping industry’s chicken game starts, M&A alone won’t be enough.”

I took a step back because I didn’t want to put pressure on him, but European giant shipping companies such as Maersk Line, MSC, and CMA-CGM killed their competitors by ordering very large ships at the same time as M&A. To survive, we had to match their size, whether it was ships or market share.

Tae Jae-ho nodded and asked me.

“We’ll have to order all those ships from Haedong Heavy Industries’ Jinhae Shipyard, right?”

“There’s no reason to order from anywhere else when we have our own shipyard.”

After finishing my answer, I thought of Gong Deok-pil, the chairman of the now-defunct STP Group.

‘Haedong Corporation’s shipping business will never fail. We won’t do crazy things like Gong Deok-pil, who built a shipyard in Dalian with the advance payments that shipowners gave him to build ships, and we also have Haedong Group as a shipper.’

Haedong Group can create even more cargo volume in the future. With that cargo volume and market share, we could crush 2M or anything else.

‘I have a bigger plan… I can reveal it later. He’ll be overloaded if I say more.’

Even revealing only this much are plans on a huge scale. I could tell just by looking at Tae Jae-ho’s complicated eyes as he took a breath and drank water.

Was this first seal breaking a success?