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In March 1996, at the invitation of the Japan Business Federation, Su Ning led a delegation to Japan for an inspection tour.

Suning naturally knew that this was a Japanese company's attempt to further ease tensions, after all, Pacific Capital had already cornered them.

They not only encountered setbacks in their investments in the Chinese market, but also made slow progress in international energy and minerals, and the culprit behind all of this was Pacific Capital.

The delegation consisted of 15 people, including senior executives, technology experts, and lawyers from Pacific Capital.

This marks the first time that Japanese industry has formally invited this "troublesome" competitor.

The delegation's first stop was the Toyota Motor Corporation headquarters in Toyota City, Aichi Prefecture.

And he was personally received by Shoichiro Toyoda.

The 70-year-old head of the Toyota family was polite but kept his distance.

"Mr. Gan, welcome to Toyota." Shoichiro's handshake was firm. "I heard you're interested in the automotive industry?"

“Yes, new energy vehicles are the future,” Suning answered directly. “Toyota is a global leader in hybrid technology.”

"Thank you for your recognition, sir."

During the tour of the production line, Toyota showcased their "lean production" system.

On the assembly line, a new car rolls off the line every 57 seconds.

“Very efficient,” Suning commented, “but the level of automation could be even higher.”

The accompanying Toyota engineer was somewhat displeased: "Sir, our system has been optimized for forty years."

“Forty years is too long.” Suning pointed to the welding robot. “The control software for these robots is still based on technology from the 1980s, right? Actually, we can provide more advanced solutions.”

Zhang Yilang glanced at Su Ning: "Mr. Gan, are you here as a guest, or to promote your products?"

“Yes, it is.” Su Ning laughed. “Isn’t business cooperation just about promoting each other?”

The luncheon delved into the topics.

"Is Toyota willing to build a new energy vehicle factory in China?" Su Ning asked.

“We are considering it,” Zhang Yilang said cautiously, “but we need a suitable partner.”

“Pacific Capital is a good partner,” Suning said, slicing sashimi. “We’ll provide the funding and market channels, and you can provide the technology.”

"How exactly will we cooperate?"

"A joint venture, with each party holding 50% of the shares. Technology will be shared, and profits from the Chinese market will be split equally."

Toyota's technical director couldn't help but interject: "Hybrid technology is our core asset, and it's impossible for us to share it."

“Then let’s license it.” Suning turned to him. “We can offer the highest market price for the patent fee.”

"It's not about money..."

"What's the problem?" Su Ning pressed.

Zhang Yilang raised his hand to stop the technical director: "Mr. Su Gan, technical cooperation takes time. Let's start with something simple—for example, you can act as an agent for Toyota's sales in some parts of China."

“The profit margin for agency sales is too thin.” Suning shook his head. “What I want is technological cooperation, not to be a distributor.”

"This……"

"Don't forget! Hybrid technology first appeared in the United States. We at Pacific Capital also have this technology, but we don't want to waste each other's resources due to unnecessary competition."

"Yes! The Toyota board of directors will definitely consider this carefully."

"Then we await your good news."

"Hi!"

The two sides failed to reach a substantive consensus during the first meeting.

……

The second stop was Panasonic in Kadoma City, Osaka Prefecture.

Panasonic President Yoichi Morishita personally explained their battery laboratory.

“Mr. Gan, this is the latest lithium-ion battery production line.” Morishita pointed to the cleanroom. “The energy density is 20% higher than the previous generation.”

"Whose patent is it?" Suning asked directly.

“Panasonic owns the core patents,” Morishita said, “but some material patents are shared with Sony.”

"If we want to build a battery factory in China and use your technology, what conditions are required?"

Morishita had already made preparations: "In the joint venture, Panasonic will hold no less than 51% of the shares, and the technical team will be led by the Japanese side. The sales regions for the products need to be divided—the Chinese market will belong to the joint venture, and the overseas market will belong to Panasonic."

“A controlling stake is impossible.” Suning refused decisively. “At most, it would be 50 for 50. Moreover, the technology must be completely transferred, not just the right to use it.”

"Mr. Gan, do you know how much we invested in developing these technologies?" Morishita asked seriously. "More than three billion US dollars, and twenty years of research."

"So we're willing to pay," Suning said. "A billion dollars in technology transfer fees, plus patent fees for each battery. That's not a low price."

Panasonic executives exchanged glances.

The CFO said in a low voice, "A billion dollars is indeed tempting, but there are risks associated with technology transfer..."

"The risk is that we could become competitors," the technology manager added.

Morishita finally said, "We need the board to discuss this."

……

The third stop was Sony's headquarters in Tokyo.

Sony President Nobuyuki Idei showcased the latest CCD image sensor.

“Mr. Gan, this is the core of a digital camera,” Idei said. “70% of the world’s digital cameras use our sensors.”

Suning picked up the sample and examined it closely: "How many pixels?"

"Eight million," Chujing said proudly. "Currently the highest in the world."

“But pixels aren’t the only metric,” a technology expert from Pacific Capital said. “What about signal-to-noise ratio, dynamic range, and power consumption?”

The Sony engineer was taken aback: "You guys are very knowledgeable."

“We’ve hired twenty engineers from you, so of course we know,” Su Ning said matter-of-factly.

The atmosphere in the meeting room was awkward. Unexpectedly, Suning made no attempt to hide his domineering CEO aura.

Chu Jing shook his head with a wry smile: "Mr. Gan, you really are direct."

“There’s no point in going around in circles in business negotiations.” Suning put down the sensor, “We want to build an image sensor factory in China. Sony will provide the technology, and we will provide the funding and market access.”

How is the technology calculated?

“Patent licensing or technology-based equity investment,” Suning said. “I prefer technology-based equity investment—Sony will contribute its technology as a 30% stake in the joint venture, while we will contribute all the capital for 70%.”

“The ratio is too low,” Chujing shook his head. “It should be at least 50 to 50.”

"Technology becomes outdated," Suning said realistically. "What's valuable now may be worthless in three years. 30% is already very high."

"This……"

"You're all savvy people in this industry! You know best whether what I'm saying is right or wrong."

"Hi! We'll consider it carefully."

The negotiations lasted two hours and a preliminary agreement was reached: to establish a working group to continue the discussions.

……

The fourth stop was Toshiba Semiconductor in Kawasaki City.

This is the most sensitive stop.

Toshiba has just lost a semiconductor lawsuit in the United States and is now scaling back its operations globally.

Toshiba President Taizo Nishimuro's attitude was very cold.

“Mr. Gan, I know what you want—memory chip technology,” Nishimuro said bluntly. “But let me tell you clearly, it’s impossible.”

"Why is it impossible?" Su Ning asked.

"Because this is Toshiba's last advantage," Nishimuro said. "You've taken home appliances, you have computers, and if we give you semiconductor technology too, what will Toshiba have left?"

“We can save money,” Suning said practically. “The technology licensing fees will give Toshiba much-needed cash flow. And the Chinese market is big enough for you to continue developing the next generation of technology.”

"And then what? Once you've mastered this generation's technology, the next generation will be asking for it again?" Nishimuro shook his head. "We're not playing this game."

"What about collaborative research and development?" Suning changed the subject. "We provide the research and development funding, and we share the results."

"How much?"

"One billion US dollars, for a five-year term." This figure moved Toshiba's top management, whose semiconductor division was losing hundreds of millions of US dollars annually at the time.

The finance manager whispered to Nishimuro, "President, this condition... is worth considering."

Nishimuro remained silent for a long time.

Finally, he said, "We can talk, but there are a few conditions: First, the R&D base must be located in Japan; second, the Japanese team must lead the R&D; third, the core technology patents belong to Toshiba, and you only have the right to use them."

Does the right to use include production in China?

"It includes, but you have to pay patent fees."

“Okay.” Suning nodded. “The team will handle the details.”

As Chen Weiming was leaving Toshiba, he whispered, "Boss, will this allow us to obtain the core technology?"

“No,” Su Ning said, “but we can get the opportunity to contact the core team. The people are on our side, and the technology will gradually come over.”

"Those little Japanese devils are really too cunning."

"So when dealing with them, you have to keep one eye open, even when you're sleeping."

……

The fifth stop is the Ministry of Economy, Trade and Industry (formerly the Ministry of International Trade and Industry) in Kyoto.

This is the last item on the official itinerary.

Japan's Minister of International Trade and Industry held a closed-door meeting with Suning for one hour.

The minister stated bluntly: "Mr. Gan, Japan welcomes investment, but not plunder. We hope that your company's cooperation in Japan will be constructive."

“I have always been constructive,” Suning responded. “What I bring are real investments.”

“But your goal is clear—you need technology.” The minister stared at him. “Technology is the foundation of Japan’s nation.”

“Technology depreciates if it doesn’t flow,” Su Ning said. “Why is Japanese automotive technology ahead? Because of competition in the US market. Why was Japanese semiconductor technology once ahead? Because of competition in the US market. Now, competition in the Chinese market can also promote technological progress.”

That's sophistry.

“That’s true,” Su Ning said. “Mr. Minister, in this era of globalization, no country can monopolize technology. Cooperation leads to win-win results, while blockades only lead to falling behind.”

No agreement was reached during the talks, but both sides clarified their bottom lines.

That evening, the Japan Business Federation (Keidanren) hosted a farewell dinner.

Yasuo Watanabe raised his glass: "Mr. Gan, how was your experience visiting five companies over the past seven days?"

“Very fruitful.” Suning clinked glasses. “Japanese companies are indeed technologically advanced, but…”

"But what?"

“But it’s too conservative,” Suning bluntly stated. “Holding onto the technology and being afraid that others will learn it will be a disadvantage in the era of globalization.”

“Perhaps,” Watanabe said without refuting, “but Japan has its own way of surviving.”

This mentality of the Japanese is unchangeable, and Suning is too lazy to argue with them. Anyway, the market will teach them a lesson.

Before leaving Japan, Suning told his team at the airport, "This trip has confirmed three things: First, Japanese technology is indeed advanced; second, they are indeed unwilling to share; and third, they are under great financial pressure."

"So our strategy is correct—using capital to exchange for technology, and using the market to exchange for time."

The plane took off and left Japan.

Chen Weiming flipped through the investigation report: "Boss, what's the next step?"

"We'll take a three-pronged approach." Su Ning closed his eyes to rest. "First, we'll continue negotiations and secure all the technology licenses we can. Second, we'll increase our recruitment efforts in Japan. Third, we'll accelerate our independent research and development in China. Whether the Japanese give us the technology or not, we have to move forward."

"What if they unite in a boycott?"

“Then let’s have a price war.” Suning opened his eyes. “Japanese companies already have very thin profit margins and can’t afford a price war. In the end, they will still have to come back to the negotiating table.”

Outside the window, the clouds churned.

The commercial rivalry across the Pacific is entering a new phase.

This time, however, the initiative is quietly shifting.

……

October 1996, New York Stock Exchange.

Lemon Technology's stock price surged 12% within the first hour of trading, jumping from $85 to $95 per share.

Inside the trading hall, the shouts of the traders rose and fell.

"The buying is incredible! Who's buying up all this stuff?"

"Pacific Capital's stock price is also rising; it's a ripple effect!"

Is there any major positive news?

At that moment, Thomson, an analyst at Goldman Sachs on Wall Street, was on a conference call with clients.

"Ladies and gentlemen, the latest financial reports from Lemon Technology and Pacific Capital have exceeded all expectations." Thomson spoke quickly. "In the third quarter, Lemon Technology's PC shipments grew by 35%, and its market share reached 28%, surpassing IBM for the fifth consecutive year. Pacific Capital is even more impressive—the average return on its investments in China reached 42%, a staggering figure in the manufacturing industry."

The voice on the other end of the phone asked, "Thomson, is this data accurate? Does Pacific Capital's investment in China really yield such high returns?"

“We’ve verified it,” Thomson affirmed. “The Japanese projects they secured have created a monopoly in the Chinese market. For example, their color TV projects now hold a 40% market share in China, and their export prices to Southeast Asia are 20% lower than those of Japanese products.”

"What's the target stock price?"

“Lemon Technology, we’re eyeing $120. Pacific Capital, we’re eyeing $75.” Thomson paused, “But be aware of the risks—Japanese companies are uniting to retaliate, which could trigger trade friction.”

At the same time, in the Hong Kong Pacific Capital office.

Guan Wei stared at the computer screen, unable to hide his smile: "Boss, our stock price has risen to HK$68, doubling in three months."

Suning sat on the sofa, flipping through reports: "What concepts are Wall Street speculating on?"

“The China concept.” Mark called from New York, his voice excited. “Boss, Goldman Sachs just released a report calling us ‘the American driver of China’s industrialization.’ As soon as that label was attached, all the money started pouring in.”

"How to say it specifically?"

"The report says that Pacific Capital combines American technology, Japanese experience, and the Chinese market to create a new business model. It also predicts that we will be able to control 35% of China's manufacturing investment within five years." Mark read aloud from the report. "Now Wall Street is looking for Chinese concept stocks, and we are the benchmark."

Chen Weiming interjected, "But wouldn't that be too high-profile? There might be a reaction from Japan."

“They’ve already reacted.” Guan Wei switched to the news page. “TV Tokyo is reporting that we’re using our capital market advantages to squeeze out Japanese companies. The Nikkei’s headline is even more direct—‘American Capital’s China Strategy: A Crisis for Japanese Manufacturing’.”

Suning put down the report and said, "Contact our partner companies in Japan and see what their attitude is."

Ten minutes later, the call came in from Panasonic's CFO.

“Mr. Gan, congratulations on the surge in stock price.” The other party’s tone was complicated, “but our board of directors has some concerns.”

"worry about what?"

“I’m worried that you will use the funds raised to carry out hostile takeovers in the Japanese market,” the Panasonic director said bluntly. “At the board meeting this morning, someone proposed to activate the poison pill plan.”

A poison pill is an extreme anti-takeover tactic.

Suning laughed: "Tell your president that Pacific Capital has no interest in acquiring Panasonic. What we want is cooperation, not control."

"But with the stock price so high, you certainly have the ability to acquire it..."

“Having the ability doesn’t mean you can do it,” Suning said. “How about this, we can sign a memorandum of understanding promising not to acquire more than 5% of Panasonic’s shares within five years. Shouldn’t that put your minds at ease?”

There was a moment of silence on the other end of the phone: "I need to report."

Just after I hung up, Sony called.

“Mr. Gan, we’ve noticed that Pacific Capital has increased its holdings of Sony shares in the secondary market, now holding 4.8%.” Sony’s IR director sounded nervous. “Could you please explain your intentions?”

“It’s a normal investment,” Suning said. “We are optimistic about Sony’s image sensor business.”

"Just an investment?"

"That's the case for now." Suning didn't rule out any possibility of a complete reversal, "If there are opportunities for cooperation in the future, we wouldn't rule out increasing our shareholding."

"The board wants you to make a public statement that you are not seeking control."

“Sure, but Sony needs to be more open about technology licensing.” Suning set a condition: “We are currently negotiating the CCD sensor licensing. If you relax the conditions, I will issue a statement.”

It seems like a typical fair trade, but the Japanese always feel like they've been cheated.

Sony's director, however, said with a wry smile, "Mr. Gan, you always come up with additional conditions in every negotiation."

"That's how business is." Suning glanced at the time. "I'll give you two hours to think it over."

"..." The Sony director felt extremely helpless; Suning's actions were simply too domineering.

...(End of chapter)