African Entrepreneurship Record

Chapter 206: Chapter 194 Railway

”What, you also want to get involved in this industry?” Prince Karl Anton asked.

”Not exactly, I mostly want to test the waters in the colonies.” Ernst didn’t hide anything, speaking directly.

”That might be a bit tricky to manage!” Prince Karl Anton said without hesitation, ”Even though I believe in your business talents, this might be hard for you to turn a profit!”

In Prince Karl Anton’s view, if colonies were meant to lose money, what would be the point of getting involved?

”Uncle Karl, when I say test the waters, I mean building just a short distance, not planning a large-scale rollout in East Africa.” Ernst said.

”That doesn’t make sense either! If you just want to build for fun, you don’t need to come to me! You can directly find a German railway company; they should be able to start right away! Plus, I believe given your status, no one would dare to trick you.” Prince Karl Anton said.

In Prince Karl Anton’s view, Ernst is now a major aristocrat and capitalist in the German region; this combination is practically an invincible gold shield.

Moreover, Ernst said he wants to test the waters; no short-sighted German railway company would offend a future prince and business magnate for such small gains.

”Actually, it’s like this, Uncle Karl. I’m really intrigued by the railway market, but I also know railways are different from what I’ve dealt with before.

The technology for railways is quite mature now, and the barriers are high. The main issue is that there are many railway companies in the German region; entering directly now would be thankless.

Yet, I see the future potential of railways. Just because there’s no opportunity now doesn’t mean there won’t be in the future. The problem is, even when there are opportunities in the future, you need to be able to seize them, so I want to lay the groundwork in advance.” Ernst said.

”I roughly understand what you mean! You do want to get into this business now, but you don’t see a promising market in the near future, so you don’t want to enter on a large scale. Instead, you want to start on a smaller scale to gain experience for the future, right?” Prince Karl Anton asked.

”Uncle Karl, that’s exactly what I mean, and I have another purpose. As you know, I don’t have any big businesses in East Africa; it’s mostly organizing immigrants to go there and farm, so the transport of goods in East Africa is primarily bulk commodities like grain and timber.

These goods are clunky and cumbersome, but if they can’t be transported to Europe, then it truly is a loss-making business. My colonies rely on the hope of getting some revenue back from these grains and products.

However, East Africa’s transportation conditions are the biggest obstacle to getting these goods out. Take the rivers in East Africa; none are continuous, and they flow from the highlands to the coast with only a few hundred kilometers navigable.

Since water transportation doesn’t work, I thought of railways. But railway costs are too high; I need to experiment in East Africa before deciding to expand.” Ernst said.

After hearing this, Prince Karl Anton pondered for a moment before asking, ”I have a question. You see, the main industry in East Africa is agriculture, right? Large-scale agriculture does indeed make money, but transporting grain from East Africa to Europe incurs significant maritime costs, not to mention competing with German, Hungarian, French, and Russian grain producers. Can you really make money?

Additionally, I heard from your father that you have to incur separate costs to bring in immigrants instead of using local natives, which is another expense, so what’s the actual point of profit for this East African colony?”

In fact, Prince Karl Anton knew overseas colonies were profitable. Otherwise, how could the British become the overlords of the sea with just that island?

However, as an old German Junker, Prince Karl Anton wasn’t very familiar with overseas colony operations.

After all, in the entire German region, only Austria had experience, which, ultimately, didn’t end well. Austria’s attempts all failed.

In recent decades, the European continent hasn’t been peaceful, with Napoleon stirring up storms, then the Crimean War, and later Prussia had two wars with Denmark and finally had a showdown with the Austrian Empire.

Everyone’s focus was on the continent, including the veteran politician Prince Karl Anton. Recently, however, since the German aristocrat Prince Constantine set sail to East Africa, Prince Karl Anton became quite interested in that colony.

Unfortunately, Constantine has already gone to East Africa, so Prince Karl Anton decided to ask Ernst instead.

”Uncle Karl, the East African colony is a long-term business; the pros and cons don’t show presently. After all, East Africa’s colony is just the leftovers that the great powers aren’t interested in, with no particularly outstanding advantages. Initially, it’s basically all investment, which most people can’t handle.

So, while developing the East African colony, I never expected it to be profitable. I just try to minimize the losses.

Even though grain isn’t profitable, the volume is large, which is one of the few advantages of the East African colony; the land area is large enough.

Although it doesn’t fetch a high price, production costs in East Africa are low; the land is ready, but it just needs development. We only cover the immigrants’ transportation and daily needs, so there’s an abundance of cheap labor.

Currently, making money from the East African colony isn’t realistic, though the future might hold possibilities, but with high overseas risks, it balances out.

However, right now, opening a factory in Europe is definitely a secure and highly profitable business.” Ernst said.

Actually, the East African colony can already maintain a balance of payments, with a slight surplus. After all, East Africa mainly profits from cash crops, and East Africa’s market includes not only Europe but also North Africa and the Middle East.

It’s not that Ernst is holding back; developing colonies in this era is indeed risky. Ernst just found a loophole, choosing a good time and place.

”I see! It seems developing overseas isn’t easy. I was just purely curious, so I asked.” Prince Karl Anton said.

”Uncle Karl, there are indeed good places overseas, but those places have long been divided among those maritime countries.” Ernst said.

”Alright, let’s not talk about this anymore! Let’s continue discussing the railways! What are your plans? Just be straightforward with me; no need for any roundabout ways.” Prince Karl Anton said.

”Uncle Karl, in that case, I’ll be direct. I actually want to acquire a railway company. It doesn’t need to be large in scale, but it must have construction experience. However, since I’m not from that circle, I’m not aware of all its intricacies, so I’ve come to consult you for some insights.” Ernst said.

The German region’s railway development is rapid, with numerous companies, both those who do solid work and those who talk a lot but do little.

Though Ernst is also a capitalist, he operates in a different field. Entering abruptly, the others might dare to deceive him. Railways are one of Germany’s pillar industries, and those involved wield considerable influence, not much less than Ernst’s, and they are closely connected to the government.

Business naturally benefits when there are fewer competitors. A wealthy businessman like Ernst entering the railway sector will surely draw attention.

And Ernst doesn’t intend to go against these people. Truthfully, his real motive for wanting to break into this industry is to accumulate the relevant technology and experience for East Africa.

Moreover, the railway market is currently booming. The future won’t be the same. It will be ripe for large-scale entry when the entire market is in decline.” Ernst concluded.