The Chaebol Returns To The Presidency 1967 [EN]: Chapter 108

108. Gulping Down Toyota!

Tiger Global Asset Management.

They had purchased a floor in a building in Myeongdong and were using it as their office.

The President, wary of being seen, visited CEO Jung privately late at night.

With all the employees gone, only CEO Jung and his secretary remained in the office.

“Your Excellency, to think you would visit such a humble place yourself.”

“How could I not come when this is the future financial center that will command the world?”

“We are trying to save costs, so instead of buying a building, we are just using one floor, making it seem humble. I apologize.”

“Everyone starts like this. You can gradually expand. I’ve come to discuss the investment destinations for the National Wealth Fund.”

“Ah, is that so?”

The President looked at a memo and explained.

“First, invest in domestic oil companies and American oil majors like Exxon and Shell. Although America is reeling from the oil shock, the Seven Sisters, who control international oil prices, will be experiencing their greatest boom ever.”

The Seven Sisters refers to the seven major oil companies that have formed the international oil cartel [a group of companies colluding to control prices].

“I know it well from experience. American oil companies are ruthless businessmen who sell crude oil to countries that pay more than their own.”

“Haha, in global business, it’s hard to expect patriotism. Buy as much as you can. You’ll get high returns for four years.”

“Understood, Your Excellency!”

“Secondly, buy the 15 Japanese companies I gave you last time. It would be great to acquire them outright, but Japan is negative about hostile takeovers, so they will be sensitive to securing shares.”

“…….”

“Divide and conquer, buying steadily for three and a half years until you become the second or third largest shareholder whenever there is a big drop. Pick up what others discard. Once the oil shock is over, the corporate value will jump several times. The dividend income alone will be substantial, and the profits from Japan will be transferred to Korea.”

“Understood. I will focus on accumulating during the oil shock period.”

“And there are two companies whose management rights you should actively buy. This should be done with the Tiger Fund, not the National Wealth Fund.”

“Which companies are they?”

“Toyota and Sony.”

“Toyota is a tremendous company. Will they really give up management control?”

“Due to the soaring oil prices, Toyota is currently in a management crisis. Who would buy a car when gasoline prices have skyrocketed several times over?”

“Ah, that’s right!”

“They’ll be short on cash, so offer them a business item and demand to be the largest shareholder through capital increase [issuing new shares to raise capital, potentially diluting existing ownership].”

“Understood.”

“And they are currently considering a partnership with Shinjin Motors, the largest automobile company in Korea. Match them with Gear Motors.”

“Um, isn’t Gear a bit small?”

“But they have a genius engineer named Kim Sun-heung. Partner with Toyota and have them transfer automobile technology.”

“Understood.”

Knowing that the partnership between Shinjin Motors and Toyota fell through during Chairman Wang’s time, he diverted it to Gear Motors.

“And Sony produces radios and TVs and is currently expanding its business globally. They are planning to invest in American record and entertainment companies. However, they are not yet a global company, are small in scale, and lack funds. They will likely be very interested in the fund money.”

Sony’s president, Ibuka, was someone he had met during Chairman Wang’s time.

Unlike most Japanese, he was very open-minded, and they surprisingly got along well.

“Next is a list of American companies to buy.”

“Ah, are you buying American companies too?”

Apple, Amazon.com, Google, NVIDIA, Facebook, eBay, Microsoft, Dell, Nike, Discovery, Tesla, National Geographic….

CEO Jung asked.

“I’ve never heard of these companies. Where can I buy shares or invest in these companies?”

“Hahaha, these are company names that will be established in the next 5 to 10 years and become global companies in the 21st century.”

“You mean they don’t exist yet? Then how do I invest…?”

“Register the trademarks first and sell them to them later. It’s not just products made in factories that make money; company names and trademarks do too.”

“Ah!”

It was a lucrative business item that only a 회귀자 [a regressor, someone who has returned from the future] would know, requiring no initial investment costs other than trademark registration fees.

He was also planning a domain registration business in preparation for the coming PC era.

The two of them refined the investment list late into the night.

*

Toyota Headquarters.

CEO Jung shook hands with Toyota’s CEO Sakura.

It was to discuss investment from the Tiger Fund.

Toyota was a global company that would grow to become the number one in the Japanese stock market in terms of total market capitalization and the ninth largest company in the world based on the 2021 Fortune 500 [a list of the 500 largest U.S. companies by total revenue].

However, it was faltering due to the oil shock.

CEO Jung said.

“Even in an era of high oil prices, Americans cannot avoid driving cars because the country is so vast. This is the time to enter the largest market, the United States. This crisis is an opportunity.”

“That’s a good idea. I think so too.”

“Right now, the best car is one with high fuel efficiency. Japan has sufficient technology to make light and small cars.”

“Our engineers think the same way, but we doubt how long this high oil price will continue. Once we invest in facilities for automobiles, we have to operate them for several years, but if we return to a low oil price era right away, we won’t be able to recover the investment and will suffer losses.”

“I predict that the high oil price era will last for at least three years.”

“Ah, you see it that way.”

“Reducing costs will reduce the risk.”

“That’s true, but there are limits to cost reduction.”

“How about producing small cars in Korea?”

“In Korea?”

“There is an automobile company with good technology and lower labor costs than Japan. If we ship directly from Korea to the United States, we can save more than 20% on costs.”

“That’s possible if quality control is maintained.”

“Our Tiger Fund wants to invest in Toyota. It would be useful to use it to create a small car production line in Korea.”

With the number of bankrupt companies increasing recently, Japanese banks were blocking loans and recovering funds, so this proposal was like welcome rain to Toyota, which was blocked from borrowing.

There was no reason to refuse when a fund investor was willing to take on the investment risk.

“We welcome it. How much can you invest?”

“Even the largest shareholder is possible.”

“The largest shareholder?”

“That’s right.”

Sakura became serious.

“I’m sorry, but we have no intention of selling the company.”

“Then how about the second largest shareholder?”

“Um, I’ll consider it.”

“Investment has its timing, so please decide quickly.”

“Of course.”

A week later, they received a call.

They said they could increase the total number of shares by 20%.

The Tiger Fund became the second-largest shareholder of Toyota.

However, Korea’s National Wealth Fund secretly bought Toyota shares, reaching 13%.

Since the Tiger Fund was part of the National Wealth Fund, Korea’s National Wealth Fund was effectively the largest shareholder of Toyota.

They had swallowed Toyota.

*

This time, CEO Jung met with the president of Sony.

As the President had said, Sony was seeking to diversify its business.

CEO Jung proposed to the president of Sony.

“How about creating a 50:50 joint venture with Tiger Fund’s investment?”

It was an attractive proposal for Sony, which was aiming to enter the entertainment industry by acquiring CBS Records in the United States.

Originally, they were trying to form a joint venture with CBS.

If they grew in size, they could acquire the record company outright and buy another American film distribution company to firmly establish themselves in the United States.

CEO Jung presented even more tempting conditions.

“It’s a 50-50 joint venture, but the company name will remain Sony.”

“Ah, would that be okay?”

“Of course. However, how about producing Sony’s TVs and future electronic products, that is, manufacturing, at a Korean factory? Labor costs will be reduced by more than 20%.”

“Not all of them, but line expansion is possible.”

In that way, they secured half of Sony’s shares and agreed to produce Sony’s latest products at the Gumi Electronics Industrial Complex in Korea.

In the same way as Toyota, they secretly bought Sony’s shares with the National Wealth Fund.

In fact, Korea became the largest shareholder.

Korean engineers quickly acquired Japanese electronic technology.

And Samson Electronics produced domestic transistor radios, cassette tape radios, cameras, and black and white TVs on par with Japan.

They gradually increased the localization rate.

They succeeded in establishing Japanese technology for automobiles and electronic products in Korea.

The National Wealth Fund bought 10-20% of the remaining 15 Japanese companies.

Although diversification is the principle of the fund, they knew which companies would prosper in the future, so they focused on betting only on companies with the highest growth rates.

Korea had stuck a straw into Japan’s lucrative companies.

Preparations were steadily underway to meet the upcoming era of electricity, electronics, and telecommunications in the 80s and 90s.

*

National Assembly Building (former Cheongwadae [the former presidential residence of South Korea]).

The President of Brazil and his entourage were touring the National Assembly Building of Korea.

It was to meet the President, discuss economic cooperation with Korea, and learn about the National Assembly system, a symbol of Korea’s successful political reform.

Not only Brazil but also Southeast Asian and South American countries came.

It was similar to when Korea visited the Swedish Parliament in the past.

The Brazilian President listened to the guide’s explanation and nodded.

“It feels like I’ve come to a library to study.”

“If you don’t study and are not diligent, you will be left behind.”

“It is very impressive that the National Assembly and the President’s office are only 300m apart.”

“In the past, the National Assembly and the President were enemies, but in fact, both the President and the National Assembly members are workers elected by the people. Rather than opposing each other with factions, the lawmakers vote according to their own philosophy, so there is no more factional fighting, showing the possibility that the National Assembly can become a strong partner of the President.”

“The President of Korea seems to have a very big heart.”

“In an interview, the President jokingly said, ‘How about having presidents on a rotational term basis from each region or party?'”

“Hahaha, that’s right. If it’s a sequential service position, there’s no need for parties to compete and fight with various conspiracies and schemes to seize power.”

*

The rooftop of the President’s office.

The President sat on the pavilion with CEO Jung and talked.

“Korean parents do everything they can to send their children to college, even if they can’t eat or dress well themselves, selling cows and houses. It doesn’t end with sending them to college. They get them married, buy them houses, and take care of their children until they die.”

“That’s right.”

“But now it’s not an agricultural society but a nuclear family industrial society. In the 21st century, nuclear families will also break down, and an era will come when people live alone.”

“Ah, complete individualism.”

“Yes. So now the parents’ generation cannot receive support from their children and have to live alone. But they give everything to their children, and they end up living in poverty in their old age. The elderly poverty rate is over 50%.”

“Wow~ Half? That’s a really serious social problem.”

“So the country hurriedly created the National Pension, but it can’t keep up with inflation, so it’s only enough for pocket money. The fundamental problem is not being solved.”

“Um, that’s a really big problem.”

“So I thought about an old-age plan product from the National Wealth Fund.”

“Ah, a fund?”