The Conglomerate Family Became A Villain [EN]: Chapter 197

197. Tokyo Agreement (1)

To put it simply, it was disappointing.

The Japanese construction company executives seemed unprepared and only repeated basic platitudes [commonplace remarks or ideas].

In fact, they had their reasons too.

They came to this meeting without knowing exactly what it was about.

If they had known that a huge investment of $3 billion was at stake, they would not have come empty-handed like this.

Even if they didn’t have an investment consulting team, they would have brought a considerable amount of data and professional interpreters.

However, they thought of today’s meeting as just a simple introductory meeting and tried to lead it with general-level English, not professional English.

This was not what Jung Hyun-woo wanted.

“It seems like you need some time to prepare a more detailed proposal.”

At his words that they needed time, the Japanese construction company executives frowned.

“Understood. We will try to propose a project that matches the investment amount when we visit Japan next time.”

Noda, the managing director of Sekisui Construction, who could be said to be an expert on the United States, bowed his head.

Others thought the same.

‘I think we need to create a comprehensive investment plan.’

‘If it’s $3 billion, isn’t that like developing a mini-new city, like those in the Middle East?’

‘It’s a project we can’t afford to miss.’

Jung Hyun-woo said to Managing Director Noda.

“Unfortunately, there is no next time.”

Managing Director Noda and other Japanese construction company executives widened their eyes at his words.

“No next time?”

“Are you saying this is the end of your visit to Japan?”

“Are you perhaps saying that you are giving up on investing in Japan?”

Jung Hyun-woo lowered his voice and answered their questions.

“I have no intention of postponing the investment. Since today is Thursday, let’s meet again on Tuesday.”

He was telling them to prepare an investment plan that could satisfy him by Tuesday.

It was an investment plan worth $3 billion, not a university report.

‘Are you saying we should prepare a $3 billion investment plan in just 5 days?’

‘This is a race against time.’

‘The one who creates the most realistic plan in a short period of 5 days will win.’

The eyes of the Japanese construction company executives began to gleam with competitive spirit.

“Before we end the meeting, I will present a few criteria.”

Yu Tanaka expected Jung Hyun-woo to talk about the advice he had given.

‘He’ll probably ask for a plan to build a new urban development around Tokyo or Osaka.’

In the 1980s, the biggest profits in the Japanese construction business came from developing new urban areas.

Jung Hyun-woo slowly moved his gaze from left to right and said.

“First, we will invest in four cities: Tokyo, Yokohama, Osaka, and Nagoya.”

Since a large sum of $3 billion was being invested, it was difficult to create a viable plan focusing on just one city.

The Japanese construction company executives nodded in agreement.

‘We’ll invest in the four major cities, but in the end, Tokyo will be the main focus.’

‘The success or failure of this investment depends on how we plan the Tokyo portion.’

‘Huhu, Shimizu Construction will be more advantageous in Osaka and Nagoya.’

It was when the Japanese construction company executives were organizing their thoughts.

Jung Hyun-woo talked about the second criterion.

“The investment amount is $3 billion, but the project size will be over $15 billion.”

At his words, Managing Director Noda raised his eyebrows.

“Does the fact that the project is $15 billion mean that there is a loan involved?”

Jung Hyun-woo looked at him and raised his voice.

“Wouldn’t it be unusual to do a real estate business with only cash?”

Managing Director Noda nodded at his question.

“That is… correct.”

The Japanese construction company executives sighed softly as the project size increased to $15 billion.

“Hoo…”

“$15 billion?”

“Unbelievable.”

Their common thought was one.

‘This is not a project that will end at my level.’

It was a project that would require the president of the construction company, or even the entire group, to be involved.

Jung Hyun-woo’s expression did not change even after talking about the astronomical amount of $15 billion.

Sera got the impression that he was dominating today’s meeting.

‘Today’s Charlie seems more impressive than he does in the United States.’

She was the only one with a smile on her face at the table where a tense atmosphere was flowing.

“I will tell you the third condition.”

The Japanese construction company executives perked up their ears to the third condition of the project worth over $15 billion.

‘If we can win this project…’

‘It’s not impossible to go from executive director to president.’

The success of a huge project was a shortcut to success.

“The third condition is to meet the financial conditions.”

He was saying that securing financing was not his responsibility but the construction company’s responsibility.

“Hmm…”

“That is…”

When the Japanese construction company executives trailed off, Jung Hyun-woo hardened his voice and asked.

“Are you saying it’s impossible?”

Yoshida, the executive director of Shimizu Construction, coughed lightly and answered.

“No. We will try to match it.”

Since the Shimizu Group owned Shimizu Bank, which had a history of nearly 100 years, it could help Shimizu Construction.

Those in the same position as Managing Director Noda of Sekisui Construction could not help but frown when Shimizu Construction came out.

‘Are you saying you’re going to push through with money?’

‘Tch, are you saying you’re going to take this project with the power of the Shimizu Group?’

‘That’s not going to happen.’

They thought they couldn’t lose to the Shimizu Group.

“Representative, we will try too.”

“We will submit a business plan by Tuesday.”

“Please trust Kajima Construction!”

From various places, they expressed their intention to accept the three conditions Jung Hyun-woo had said.

Jung Hyun-woo smiled and said.

“Good. Then let’s meet here again at 9 a.m. on Tuesday.”

Tuesday, five days later, was December 30th.

The Japanese construction company executives got up from their seats with stiff faces.

“Understood. We will visit you again on Tuesday.”

“See you on Tuesday.”

“We will present conditions that the representative can be satisfied with.”

They were determined to work all night this weekend.

After everyone left.

Sera asked Jung Hyun-woo.

“Are you really going to start a $15 billion project?”

The total project cost was $15 billion.

This was a large project that could not be easily started even in the United States.

‘It’s enough money to build a nuclear-powered aircraft carrier and equip it with the latest fighter jets.’

Jung Hyun-woo smiled and answered.

“I’m going to give the Japanese newspapers big news.”

“You’re really going to do it.”

“I came to Tokyo because I was really going to do it.”

Sera sighed briefly.

“Hoo… Then are you going to build a new city too?”

She had overheard Jung Hyun-woo’s conversation with Yu Tanaka from a short distance away.

“No.”

Sera raised her eyebrows and asked.

“No?”

Jung Hyun-woo leaned back on the backrest and answered.

“Japan’s bubble economy will last for 5 years at most. It’s impossible to build a new city in 5 years.”

Unless Japan’s bubble lasts for more than 10 years?

Starting a new city development now was too risky.

‘We need to recover the investment by at least the Olympics [1988 Seoul Olympics].’

He was planning to time the recovery of funds invested in Japan with the 1988 Seoul Olympics.

‘It would be nice to wait until the last minute, but I don’t know exactly when the bubble will burst here.’

Unless you are an economics expert, few people know the exact timing of the bubble’s collapse.

“Then you’re going to invest in buildings?”

“We need to invest in buildings, land, and mansions. $15 billion is a lot of money.”

Sera looked at him and said.

“The scale is getting bigger and bigger.”

Jung Hyun-woo acknowledged her words.

“It’s gotten a lot bigger compared to when we were developing the Zero series.”

He didn’t expect the scale to grow this much even when he was developing the Zero series.

‘I was aiming to secure as many shares of the Daewoon Group as possible.’

Only a few years had passed, but he had accumulated enough wealth to make the Daewoon Group’s shares seem insignificant.

“Tuesday’s meeting, should I tell Mr. Pierce too?”

“I should.”

Jung Hyun-woo had decided on today’s meeting content on the spot, so John Pierce had no idea.

‘John will be surprised when he finds out.’

A mega-project worth $15 billion, not $3 billion.

‘Even if he opposes it, it’s already too late.’

He was planning to push ahead with this project even if John Pierce opposed it.

* * *

December 26th.

John Pierce had been raising his eyebrows since morning.

“$15 billion?”

Jung Hyun-woo answered in a calm tone.

“After listening to Mr. Tanaka, it seems that there are hardly any cases in Japan where real estate is purchased without taking out a loan.”

Mortgages were often used in the United States as well, but in the 1980s, Japan used financial products even more than the United States. Therefore, Yu Tanaka’s advice was not strange.

“That’s true, but…”

Still, the loan amount was too large.

The appropriate loan amount that John Pierce was thinking of was about $5 billion.

‘Since Victoria Fund’s investment is $3 billion, a project of about $8 billion can be created by combining it with a loan of $5 billion.’

However, Jung Hyun-woo wanted to borrow $12 billion, which is 4 times the principal, to create a $15 billion project.

In fact, this was reduced from Yu Tanaka’s plan. He had proposed a $20 billion project to Jung Hyun-woo.

Jung Hyun-woo said in a restrained tone.

“Japanese financial authorities are lowering interest rates after the Plaza Accord [an agreement in 1985 among France, West Germany, Japan, the United States, and the United Kingdom to depreciate the U.S. dollar in relation to the French franc, German mark, Japanese yen, and British pound].”

When interest rates fall, not only does the loan interest become cheaper. When low interest rates begin, banks have no choice but to actively engage in lending by lowering collateral and various regulatory ratios. This was the case with Japanese banks after the Plaza Accord.

John Pierce lowered his raised voice and accepted Jung Hyun-woo’s words.

“Charlie, I understand that it is possible to get a loan from a Japanese bank. But isn’t the risk of a $15 billion project too great?”

Jung Hyun-woo put his hands together and asked back.

“Does John think the Japanese economy is a bubble?”

John Pierce widened his eyes and raised his voice.

“Isn’t it?”

He was investing while defining the Japanese economy as a bubble.

‘Wasn’t the basis of this investment to get in and out before the bubble bursts?’

As the main fund manager of JP Securities, John Pierce had opposed Jung Hyun-woo’s huge investment in Japan. He still saw the Japanese economy as a castle built on sand.

Jung Hyun-woo also agreed that the Japanese economy was a bubble. But he knew to some extent when the bubble would burst.

“The Japanese economy is more solid than John thinks.”

John Pierce raised his voice again.

“Even though the Plaza Accord happened?”

Jung Hyun-woo nodded and answered his question.

“Japan will continue to have a trade surplus with the United States next year.”

After the Plaza Accord, the yen rose by more than 20%. This meant that Japanese goods became nearly 20% more expensive. If the price rose by more than 20% and the goods still sold well, it meant that the goods were either too cost-effective from the beginning or were essential goods that people needed.

John Pierce thought that the goods exported from Japan were neither of those.

‘The quality of Japanese products is good, but it’s not worth buying even if the price has risen by 20%.’

Toyota cars could be replaced with Ford cars, and Sony TVs could be replaced with General Electric TVs.

He said with force in his voice.

“I don’t think so.”

Jung Hyun-woo didn’t raise his voice with him. Instead, he tilted his head to the side and asked.

“Does John think Japan will record a deficit next year?”

John Pierce put his hands together and answered.

“Even if the trade balance is not in deficit, the surplus will be greatly reduced.”

He thought that the price of goods could not be ignored.

‘The law of supply and demand is like a truth in economics. If the price has risen by 20%, demand will inevitably decrease.’

Of course, the law of supply and demand did not always match. The situation could change at any time due to the power of the maker, technological innovation, or political reasons.

“If I thought so, I wouldn’t have invested in Japan.”

John Pierce couldn’t help but pause at Jung Hyun-woo’s words.

“Does that mean… Charlie thinks Japan will continue to do well in the future?”

“I’m saying that I don’t know when the Japanese bubble will burst.”

“You’re saying that the Japanese bubble won’t burst for another 2 or 3 years.”

Jung Hyun-woo nodded slightly.

“That’s right.”

This was an answer that could be given because he knew the history of the Japanese bubble’s collapse.

John Pierce frowned and said.

“If that happens, the United States will think about what comes after the Plaza Accord.”

Jung Hyun-woo accepted his words in a dry voice.

“Victoria Fund’s investment in Japan will have to take that into account.”

John Pierce unfolded his narrowed brow when Jung Hyun-woo spoke without a trace of shaking. Then he sighed briefly and said.

“Ha… If Charlie’s words really come true, we should prepare for the second negotiation.”

“It would be good to take the second negotiation as a signal to exit Japan.”

In the history of agreements after the Plaza Accord, it was called the Paris Agreement or the Louvre Accord [a secret agreement signed in 1987 to halt the decline of the U.S. dollar].

Jung Hyun-woo did not know the existence of this Louvre Accord itself. However, he was guessing that the United States would not have ended with the Plaza Accord.

“Okay, now that this side’s story is over, I’d like to hear John’s story.”

While Jung Hyun-woo had a meeting on the investment side, John Pierce was running sales for the sale of American real estate.

John Pierce cleared his throat and said.

“Hmm, hmm. I have been talking with several private equity funds in Japan.”

“Private equity funds?”

“I thought they had more investment capacity than securities companies.”

As the name suggests, securities companies had their roots in the stock market, so they rarely actively invested in overseas real estate.

On the other hand, private equity funds reached out to anything that made money, whether it was stocks, real estate, mines, or bonds.

‘You can think of it as being similar to a hedge fund.’

Jung Hyun-woo nodded and asked.

“What were the results?”

John Pierce unfolded his gathered hands and answered.

“I heard positive responses.”

“You’re saying that there wasn’t a specific investment commitment.”

“Japanese people are suspicious and cautious. They want to come to the United States and see the American mansions and buildings with their own eyes.”

Jung Hyun-woo nodded slowly as if he understood.

“You’re saying that photos won’t work.”

“I heard that they plan to decide on the investment scale after seeing it in person.”

“Is there anywhere else to contact besides private equity funds?”

“Besides private equity funds?”

“I mean the wealthy individuals in Japan.”

Jung Hyun-woo wanted even the money of the big players [wealthy individuals] in Japan.

“I tried to get an introduction from Mr. Tanaka, but it seems difficult yet.”

He was saying that Yu Tanaka’s connections alone were not enough.

“You’re saying I need to look into other avenues.”

John Pierce said cautiously.

“Charlie, I think it’s dangerous to go too big from the beginning.”

He wanted to build up transactions step by step. Of course, Jung Hyun-woo wanted to do that too.

But there wasn’t much time.

‘I have to finish everything within the next 5 years.’

In the 1990s, Japan was scheduled to enter the lost decade [a period of economic stagnation in Japan following the collapse of the Japanese asset price bubble in the early 1990s] with the collapse of the bubble.

“When will the first investment be possible?”

John Pierce answered his question immediately as if he had thought about it in advance.

“I will be able to write the first contract around May.”

He was saying that he would finish the investment negotiations and contract writing within half a year.

‘It’s not slow.’

But it wasn’t fast enough to please Jung Hyun-woo.

‘If I push John here, things could go wrong.’

He wanted to do things faster and bigger, but he decided to give up this time.

“Understood. Please do it by June.”

John Pierce was able to put down the burden on his mind when Jung Hyun-woo’s permission was granted.

“Then I will proceed as is.”

This time, Sera asked John Pierce.

“Mr. Pierce, how many people are in the Japanese branch?”

The only Japanese branch employees she had met were Yu Tanaka and Kato Hitori.

“There are only three people yet.”

The number three included Yu Tanaka and Kato Hitori.

“That’s very small.”

“Because I just started.”

“How much are you planning to increase it?”

He couldn’t answer this question right away.

“That, that’s…”

Jung Hyun-woo intervened between the two and said.

“I told you about $15 billion, so the situation has completely changed.”

“Are you saying that we need to increase the number of people significantly because of Charlie?”

“To put it simply, that’s right.”

John Pierce sighed deeply and said to the two.

“Hoo… Not only is the amount $15 billion, but if the project gets that big, there will be a lot of documents and work to handle.”

Sera turned her gaze to him. Then she straightened her posture.

“Mr. Pierce, hire as many people as you need. I don’t want the business to go wrong because I’m saving money.”

John Pierce straightened his posture at her strong voice.

“Understood. I will hire enough people.”

Sera was gentle when talking to Jung Hyun-woo, but she was somewhat firm when talking to John Pierce.

Of course, Jung Hyun-woo didn’t notice this. Only John Pierce knew it.