Chapter 101: That Time I Built a Car Assembly Plant in South America (2)

TL: Skye

Seoul, Seongbuk-dong, Seongbuk District.

In this neighborhood, famous since the old days as an enclave of chaebol families, stood an old mansion.

It looked worn at a glance, but not a soul dared look down on this house.

Its owner was Jeong Suman, founder of Hyunhwa Group and both the legend and the living history of the Korean business world.

The founder of a group that ranked second in that entire world, he looked down carefully at the documents his chief of staff had brought.

[Proposal to Attract Investment from Hyunhwa Motors Group]

"......"

Jeong Suman's eyes moved slowly.

A CKD assembly plant.

A die and mold plant.

Localization of parts production.

Long-term technology transfer.

As he read down the document, the corners of Jeong Suman's mouth curled up ever so slightly.

"That's His Excellency for you. He's read the direction exactly right."

Deep respect colored his voice.

Outside of the United States, no destination had received more of Hyunhwa Group's overseas investment than San Marcos.

The reason was simple.

Because Choi Yu-jin was its president.

Jeong Suman had watched from the very beginning as the man raised an oil refinery on empty land, laid roads, built industrial parks, and issued sovereign bonds to pull in capital.

And he was certain.

'He has to be that man reincarnated.'

In Jeong Suman's mind there was always the shadow of one person.

The man who led the Republic of Korea's economic miracle.

The iron-blooded leader who lifted a nation with his bare hands, laid the highways, and built the heavy and chemical industries.

Of course, for all his achievements, the man had racked up just as many sins.

But Choi Yu-jin, over there, was different.

Within three years in power he had implemented direct elections and established a democratic government, and he never once dirtied his hands with anything improper, like taking political funds from corporations.

In a way, one could even call him an upgraded version of that man.

Thanks to that, San Marcos now boasted the highest economic growth rate in the world.

And what about power?

'In that man's day there was an opposition party to push back against him. San Marcos doesn't have one at all.'

A one-party dictatorship built through direct elections.

Ironic as it was, that was the political structure of San Marcos.

Jeong Suman was convinced that, North Korea aside, probably no other country on earth had constructed power like this.

And so he respected him.

Sincerely.

"Chief Kang."

"Yes, Chairman."

"Does Taeho have anything on his schedule this evening?"

"Nothing besides the CEO council meeting this afternoon, as far as I'm aware."

"Tell him to come by when it's over."

"Yes, sir."

That evening.

Vice Chairman Jeong Taeho stepped into Chairman Jeong Suman's study.

Jeong Suman's eldest son, and the man overseeing the entire Hyunhwa Motors division.

At forty-three he had features every bit as sharp as his father's, but his business style was another matter entirely.

Where the father was a man of instinct and loyalty, the son was a man of numbers and data.

"You wanted to see me."

"Sit down."

Jeong Suman slid the documents across.

Jeong Taeho took them and began to read.

He read fast.

In under a minute he had grasped the essentials; he closed the file and looked at his father.

"Father, do you know how much we're currently investing in San Marcos?"

"Do you imagine there's anything in this company I don't know about?"

"And you still want to pile automobiles on top of it?"

"I do."

Jeong Taeho opened the file again.

"We already have plants in Brazil and Mexico. Ground-breaking on the new Georgia plant in the States is confirmed as well. Add San Marcos to that and we're looking at redundant investment."

"Taeho."

Jeong Suman laid a hand on the documents.

"What's a worker's monthly wage at the Brazil plant?"

"...Around 1,200 dollars on average."

"And around 5,500 in the States."

"......"

"San Marcos is 500 dollars."

Jeong Taeho closed his mouth.

"Half of Brazil, a tenth of America. And."

Jeong Suman raised a finger.

"No unions."

"......"

"You had a rough time with the Brazilian union strike six years ago, didn't you? And the UAW gives you nothing but headaches in the States."

"...Yes."

"San Marcos has no strikes. And it never will."

Jeong Suman said, leaning back in his chair.

"I understand your thinking, Father. But San Marcos has no automotive industrial base whatsoever. No skilled workers, no parts supply chain. It's a different world from Brazil or Mexico."

"It's like that everywhere, at first."

Jeong Taeho hesitated a moment before speaking.

"There's political risk. San Marcos is a dictatorship. I understand your personal trust in President Choi Yu-jin, but if the regime were ever to change, our entire investment could go up in smoke."

Jeong Suman's eyes sharpened.

"You only say that because you don't know what kind of man His Excellency is."

"......"

"That man raised a nation out of nothing in just five years. In a lifetime of doing business, I have never seen anyone like him."

Heat crept into Jeong Suman's voice.

"A change of regime? His approval rating is ninety-nine percent. Why on earth would that country's people throw him out?"

"Because it's a dictatorship..."

"No."

Jeong Suman cut him off flatly.

"The people follow him with all their hearts. I know because I went and saw it with my own eyes."

Jeong Taeho couldn't argue any further.

He had spent more than thirty years watching his father, long enough to know that once the old man came at something like this, there was no turning him back.

"But Father, this is Hyunhwa Motors business. My jurisdiction. At the very least, board approval..."

Right at that moment.

A vibration buzzed in Jeong Taeho's pocket.

He pulled out his phone, checked the screen, and his expression stiffened.

"Why would this man call at this hour..."

"Who is it?"

Jeong Taeho looked at his father.

"Kim Dohyeon. The Blue House Chief of Staff."

*

The same hour.

San Marcos, the president's office in the Presidential Palace.

"I'm sorry? An overseas tour? Here?"

Park Munsu, the Korean Ambassador to San Marcos, nodded.

"Yes, official word just came down through the Korean Foreign Ministry. It's a request for an official visit to San Marcos by the President of Korea."

"Hold on. Hold on a second."

What was he talking about?

I was the one planning to fly to Korea to meet Chairman Jeong Suman, and now the Korean president was coming here first?

Why now, of all times?

"Can we find out why he's coming?"

"It appears the Blue House got a look at the proposal you sent to the Hyunhwa side, Mr. President."

"How?"

"Up until the day I left the NIS, intelligence on San Marcos was still classified Level One. A proposal going in through official channels rather than to Chairman Jeong Suman personally? They could confirm something like that easily enough."

"Fair point..."

When one of Korea's biggest corporations is pouring trillions of won into some obscure island nation, there's no way the government doesn't take a look.

"So the Blue House, having confirmed the contents of the proposal, moved first. Hyunhwa Motors is a company with a powerful union. If Hyunhwa announces it's building a car plant on top of everything else, domestic public opinion could get noisy. They seem to have judged it better for the president to visit in person and wrap the whole thing in the frame of official bilateral cooperation. That, or kill the deal outright."

"...So to sum up, they're either going to push it through or shut it down."

"I believe that's the correct way to see it, sir."

"What do you think, Ambassador? Will they block it?"

"Frankly, it's not a bad picture for Korea either. A president personally championing overseas investment plays well politically, and with the government at its back, Hyunhwa's burden shrinks as well. But we can't afford to be purely optimistic. As you know, the domestic economy is sluggish, and it's a sensitive time when it comes to jobs."

"Hmm..."

Honestly, not bad.

No, far better.

'Even a Jindo dog gets a thirty percent head start fighting in its own yard.'

Because for our side, the side that had to negotiate, the Korean president coming to us was the more favorable arrangement.

"There is one problem."

"What's that?"

"If the Korean president visits, it will be difficult to limit discussion to the automobile matter alone. A number of bilateral agenda items will come up, which means a great deal more for Your Excellency to prepare."

"...Naturally."

The man was a president, for heaven's sake. He wasn't going to fly all the way out here, talk about one car plant, and go home.

And nine times out of ten, that agenda meant...

"An FTA, I take it?"

"Correct."

Honestly, there was nothing else it could be.

It was also the very topic the president had gently floated back when I visited Korea.

And that, in turn, meant the workload ahead was about to pile up into a mountain.

I turned my head and looked at Isabella.

"Chief, gather the senior secretaries by tomorrow evening. The agenda is an FTA with Korea. Tell every ministry to mobilize everything it has and map out exactly where we stand."

"Yes, sir."

Isabella hurried out of the office with quick little steps.

*

The Grand Conference Room, Presidential Palace.

The senior secretaries packed themselves in around the table.

"During my last visit to Korea, the president asked whether we'd be willing to sign an FTA. Odds are he'll open direct discussions on this visit and push hard the moment he gets home. Which is why I called all of you here today."

I looked around at them, then asked.

"Let's start with where things stand. Secretary Aman, what's our current trade volume with Korea?"

"Our trade with Korea currently runs at roughly 4.2 billion dollars a year. Exports of 800 million, imports from Korea of 3.4 billion. A trade deficit of 2.6 billion dollars."

"2.6 billion?"

The secretaries' eyes went wide.

"Yes. We buy more than four times as much from Korea as we sell to them."

"What do we export to Korea?"

"Three main categories. Crude and refined oil at about 400 million dollars, seafood at 200 million, minerals such as nickel and copper at 150 million, and agricultural goods such as coffee and tobacco make up the rest."

"All food or raw materials."

"That's right."

"And what do we buy from Korea?"

"Heavy machinery, steel products, petrochemicals, electronics, construction materials, pharmaceuticals... practically every manufactured good there is. Take home appliances alone, seventy percent of the televisions sold in this country are Korean-made."

Selling raw materials and buying manufactured goods.

The textbook trade structure of a developing country.

What would happen if tariffs were abolished from this position?

"Wouldn't an FTA put us at a disadvantage?"

"If Korean manufactured goods come in duty-free, won't our industries take a hit?"

Aman answered the secretaries' questions with a wry look.

"An industry has to exist before it can take a hit. There's no chance of that anytime soon."

"......"

"Let's be honest. Does San Marcos have a single manufacturing sector capable of competing with Korean goods?"

The room fell silent.

Naturally.

Because there genuinely wasn't one.

Sophia raised her hand and spoke.

"Your Excellency, from a diplomatic standpoint, signing the FTA is the right call. Korea is our largest investor and, after the United States, our most important diplomatic partner. Refusing an FTA could put a crack in the relationship."

"Agreed."

I nodded as I answered.

"The point isn't the FTA itself. It's what we extract through it. Secretary Ricardo, if we abolish the tariffs, what's our actual loss?"

He calculated for a moment, then answered.

"Our current average tariff on Korean manufactured goods is twelve percent. Twelve percent of 3.4 billion dollars in imports means giving up roughly 400 million dollars in tariff revenue."

"Four hundred million dollars."

Not exactly pocket change.

"However."

Ricardo adjusted his glasses and went on.

"On the flip side, once the tariffs disappear, consumer prices on Korean products drop by more than ten percent. From the public's perspective, the same money buys more goods. The cost of living goes down."

"Isn't that a good thing?"

"On the price front, it's not bad at all. Real prices have been creeping up as it is."

"And the tariffs on our exports disappear too. Once Korea drops its duties on our crude and minerals, our price competitiveness improves."

Resa added that, and Isabella spoke.

"We sign the FTA, and in exchange we bundle the car plant into the package. From the Korean government's perspective, announcing the FTA and the plant together counts as an achievement, opening up overseas markets. As for the 400 million in tariffs, once the plant is up and running, employment and tax revenue will cover it and then some."

This time Aman filled in the rest.

"A single car assembly plant generates at least 3,000 direct jobs, and with parts suppliers included, more than 10,000. The income and corporate taxes from that alone..."

"That's enough."

I nodded; there was no need to hear the rest.

On the surface it looked like San Marcos was taking the loss, but in reality the FTA was the lever that would pull in the car plant.

A trade that gave up 400 million dollars in tariffs in exchange for billions in investment and tens of thousands of jobs.

An overwhelmingly profitable deal.

"Then we're signing the FTA. Build the strategy around that, and keep our losses to the absolute minimum. But the car plant investment comes bundled in, no exceptions. The Korean president is coming here in person, and we are not letting this chance slip away. Understood?"

"Yes, sir!"

The secretaries answered in unison.

"Then prepare the data for each of your areas. We need to be ready for every agenda item the Korean side might throw at us. Secretary Sophia, trade data. Secretary Cristian, the industrial tour route and candidate plant sites. Secretary Resa, diplomatic protocol. And Chief Isabella, overall coordination."

"......"

"There's plenty of work to go around, so if there are no questions, we're adjourned."

"Yes, sir!"

The secretaries filed out on heavy feet.

I let out a sigh of my own.

'So much for sleep for a while.'

Flipping through paperwork all night was the same deal whether one was an office worker or a president.

*****

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