2003: Starting with Foreign Trade

Chapter 96 Cooperation Achieved, A New Beginning (Seeking First Subscription)
April 20, 2005, the twelfth day of the third month of the year of Yi You.

Tan Jincheng signed the most important contract of his life. With this contract, both Tan Jincheng and Zhang Xupeng will embark on a new starting point in their lives.

Just as Tan Jincheng had predicted, James was indeed aiming to drive down prices due to this sudden policy change. However, policies may change, but the market will not, a fact that both sides were well aware of.

Exports are indeed a lucrative market, and Tan Jincheng would naturally not give it up. However, the domestic market should not be ignored either, as its growth is evident with the improvement of living standards.

Jinpeng Trading's rapid growth led James to try to leverage this information gap and the lure of a fixed monthly supply to negotiate lower prices. However, to James's surprise, Tan Jincheng's market assessment was remarkably accurate.

This level of market analysis capability is completely beyond what a small company with fewer than 10 people could match.

Tan Jincheng used a series of data to threaten James with temporarily abandoning some European and American markets and focusing on the domestic and Southeast Asian markets, even at the cost of reducing production capacity and maintaining a contractionary state, which put James in a very passive position during negotiations.

Fortunately, although both sides argued heatedly, they were both willing to make the cooperation happen. A stable supplier is of great benefit to both parties. Not only can the supplier obtain substantial profits, but the client can also do so.

After nearly two hours of negotiation, both parties finally reached a preliminary cooperation agreement. The formal contract will be signed tomorrow after both parties' lawyers have confirmed it. The contract signed with James is a long-term supply contract, and there are many details to pay attention to, unlike the standard contract.

"Tan, you Chinese have a idiom called 'meticulous and calculating,' right? That's exactly what you were doing just now."

"NO NO NO, James, we have a Chinese idiom called 'supporting the younger generation,' which means that elders like you take care of younger people like us in business, giving us the opportunity to make money."

Damn, this tall guy knows a lot, he even knows how to haggle over every penny; how can I not argue with you about prices? Your one cent is more than eighty cents to me, how many clothes do I have to sell to make that much?

This year's exchange rate has also been unfavorable for export businesses. The average exchange rate of the US dollar to the Chinese yuan last year was above 8.23, but this year it has dropped to 8.19. It will continue to decline every year until it falls below the 8 yuan mark.

"Mentoring the younger generation? Interesting, interesting. Okay, I'll remember that phrase." James looked at Tan Jincheng with amusement.

“Yes, Jinpeng Trading’s success today is inseparable from Mr. James’ help. Last year, you strengthened my confidence in doing clothing business. You are just like my uncle,” Tan Jincheng said solemnly.

The initial cooperation has been agreed upon. Why not spend some time flattering and saying nice things without spending any money?

The word "uncle" completely baffled James, highlighting the cultural differences: "Haha, Uncle? Tan, you're the most peculiar young man I've ever met."

It has to be said that although they only met twice, Tan Jincheng did leave a deep impression on James. He showed James's courage and determination when carrying a backpack, as well as his cautious approach when signing contracts. And this year, the negotiations last night and today have broadened James's horizons even more.

In Tan Jincheng, James saw the adventurous spirit of youth, the sophistication and shrewdness of middle age, as well as his unique insights into the market and his forward-thinking nature.

Since the quota was officially abolished on New Year's Day this year, the production capacity of Chinese garment and textile enterprises has been fully released in the post-quota era. In January this year, textile exports increased by 29% year-on-year, which is 8 percentage points higher than the average growth rate for the whole of last year.

Exports to the EU and the US reached US$14.9 billion and US$13.4 billion respectively, changing the ranking of China's export markets for many years, replacing Hong Kong and other countries, and jumping to the top two positions in the export market.

Although the cake is getting bigger overall, if you take too much, then others will naturally get less, and friction will naturally arise. This is an unchanging principle of human nature.

In fact, the friction incidents that caused such a stir in later generations have always existed throughout the history of exports, and they have occurred from time to time. However, due to the passage of time and the lack of development of the Internet, they have been forgotten or never paid attention to by the general public.

But as industry professionals, they certainly know this: where there is friction, there will be negotiation, especially as the market grows. The negotiation process will definitely be faster. Tan Jincheng believes that the negotiation will be completed within this year, and once this year is over, the market will be different.

Everyone was busy making cakes. The bigger the cake, the more people would get, even if the portions were smaller. Verbal battles were necessary, but they obviously couldn't be the main focus.

Once the war of words is over, China's textile production capacity and cheap labor will inevitably lead to a return to the old ways: merchants pursue profits, and ordinary people want cheaper and better products—the market is there.

The advantage is mine.

Tan Jincheng's strong data analysis skills and confidence in the market, coupled with his preparedness for a contraction strategy, convinced James not to push prices down too drastically.

Because all of this is the same as his own analysis! Since his trump card has been almost completely exposed, there is no longer any so-called information advantage.

James's negotiation strategy for this procurement trip was to leverage the information gap to deal with these suppliers. Having worked in the industry for many years, he knew how little importance Chinese small and medium-sized enterprises placed on data analysis, only knowing how to work in isolation, and their business model was almost extensive.

When orders increase, production capacity is expanded. When orders decrease, competition from peers leads to production reduction or even factory closure.

Although James' initial attempt with Jinpeng Trading was unsuccessful, he was not discouraged. Regardless of the outcome, it would be beneficial to him, especially since Jinpeng Trading had offered some concessions, and the price was already within his acceptable range.

You'll make money, but I'll make even more. The advantage is mine. "Tan, you know what? You really have a talent for business. I believe your future achievements will be much greater than this," James said, raising his glass to Tan Jincheng.

Anyone can engage in mutual flattery in business. Since Tan already calls him "uncle," it's perfectly normal for James to offer a few harmless compliments.

"Then I'll take Mr. James's good wishes. After we finalize the contract details tomorrow, I'll make the arrangements for you."

"No, no, there's still a lot to do," James said seriously.

He understood what Tan meant. Although he was tempted, business was more important. He had several suppliers to negotiate with, and he couldn't afford to do things the way he did with Tan.

After the two finished their conversation, it was already 11 p.m. when they returned to the hotel.

"How did it go? What was the result?" Zhang Xupeng, who had been eagerly waiting, asked Tan Jincheng as soon as he saw him.

"Take a look for yourself." He took out the draft agreement from his backpack and casually tossed it to Zhang Xupeng.

Tan Jincheng, who has a moderate alcohol tolerance, felt a little dizzy after letting his guard down. He had been talking with James for almost an hour after the negotiations ended, and the guy kept clinking glasses with him. He wondered if James was taking the opportunity to retaliate because he hadn't achieved his desired result.

Besides, imported spirits are really awful; well, baijiu (Chinese liquor) isn't much better either, coffee is still a better choice.

In a daze, Tan Jincheng recalled his experiences of having coffee with Gu Qingqing several times and shook his head.

"What the hell? Why would I think of her at a time like this?"

Since their last meeting, the two have exchanged text messages from time to time, but haven't been in much contact, mainly because Tan Jincheng has been too busy lately.

"Holy crap! A supply volume of $50 per month, signed for a year? That's a pretty good price per unit." Zhang Xupeng looked at Tan Jincheng in shock.

Having been in the clothing business for half a year, Zhang Xupeng knew how much profit he could make from exporting a single garment. Based on Xiao Tan's previous analysis, the order prices at this year's Canton Fair would not be as high as last year, and the profit margin would be lower, which was indeed the case.

Xiao Tan had previously analyzed that James probably wanted to drive down the price, but she didn't expect that this price was already very friendly for Jinpeng Trading. When did these foreigners become so easy to talk to, or did they suddenly become so kind?

Shouldn't a major client with large orders be very powerful? How did Xiao Tan manage to win him over?
With a monthly supply of $600, that's $5000 a year, which translates to nearly 50 million RMB in revenue. Just this one contract is enough to make a comfortable living this year.

Xiao Tan is absolutely amazing!

"Hey, hey, don't sleep yet. Tell me what you were talking about, and where you went last night. When Lao Sun and Lao Liu came back, they looked lewd. When I asked them what happened, they were both vague."

Zhang Xupeng shook Tan Jincheng, who reeked of alcohol.

"Stop shaking! Don't you know you can't shake around when you've been drinking? What if you throw up?" Tan Jincheng said helplessly as he stood up.

I was just trying to lie down for a bit, but this kid kept chattering on and on.

"Get me a glass of water, don't you have any sense of propriety?"

"No problem, no problem, I'm coming right away. You're my grandpa now." Zhang Xupeng ran off to pour water with a fawning expression.

I don't need to worry about the few small orders I received these past few days. Although the profit margin has decreased, with the tax refund, I can still make a 20% net profit even with my eyes closed. James will earn 1000 million yuan from this order alone. He's made a fortune!
Moreover, today is only the 20th, and there are still half a month until the Canton Fair officially ends. Even if things don't go well, we can still receive a batch of orders that are enough to cover this year's operating expenses, which is perfectly feasible.

Xiao Tan arrived on the 11th, and it has been exactly 10 days since then. In just 10 days, Xiao Tan has exceeded expectations and solved Jinpeng Trading's order volume for the entire year with his amazing operating methods!

Zhang Xupeng looked at Tan Jincheng with burning eyes. This was a profit of tens of millions! He had earned tens of millions in profit from just one contract!

There was a time when I never even dared to think about this. The reason I wanted to do business was partly because of my limited learning ability, and partly because I just wanted to live a carefree life.

For a moment, Zhang Xupeng even forgot to hand over the water cup he was holding.

"Hey, wake up, what's with that look? Let me tell you, even though we're brothers, I still prefer women."

(End of this chapter)