African Entrepreneurship Record

Chapter 344: Chapter 24: Triangular Alliance

In the Great Lakes Region, planting japonica rice is not only to account for the temperature differences compared to the East African coastal plains but also to enhance competitiveness in the international market.

Markets in the Far East, Japan, Korea, and parts of Southeast Asia have distinctly different rice demands compared to the Middle East and India.

The current state of the international grain market is increasingly competitive, with East African grain production joining the ranks of expanding production areas like the United States, Australia, Canada, and Tsarist Russia.

It’s now certain that global grain production capacity has exceeded demand, even earlier than this period in the past life. The rapid industrialization across various nations maintains the oversupply, and the world is currently amidst extreme prosperity preceding an economic crisis. Everyone is blindly investing in production, as anything seems profitable, but once the economic bubble bursts, a crisis is bound to erupt within a year or two.

To mitigate risks, Ernst’s next goal is to optimize East African industries, develop the internal market in East Africa, dispose of non-performing European assets, and further strengthen East Africa’s economic barriers, segregating it from the global market.

In fact, East Africa has always been economically disconnected from the global market. As a country owned by a consortium, all of East Africa’s external trade must go through the ”connector” of the Heixinggen Consortium, thus not aligning with the global market.

Therefore, the global economic crisis has a limited impact on a purely agricultural country like East Africa and may even lead to beneficial effects. This can be seen in the Far East, which became the hottest period for industrial investment during the world economic crisis.

Although it’s beneficial for East Africa, the economic crisis will affect the profits of the Heixinggen Consortium, whose assets are predominantly in Germany and the Austro-Hungarian Empire.

With East Africa stirring things up, Ernst is unsure when the economic crisis will suddenly erupt in this timeline.

Historically, it was early 1873, but signs were already showing by late 1872, primarily when American railway production couldn’t cope anymore, yet the first place to erupt in crisis was the Austro-Hungarian Empire, with the center of the crisis in the United States.

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July 1871.

Due to the construction of Nairobi in East Africa, some industrial workers were diverted from the Far East, and with the reduction in orders following two European wars, part of Jiaozhou’s textile machinery fell into idleness, necessitating capacity reduction in Jiaozhou’s textile industry.

The capacity reduction targeted at the textile industry investments by the Heixinggen Consortium in the Far East was already in effect due to worker emigration, reducing Jiaozhou’s cotton textile production capacity. The Heixinggen Consortium aims to dispose of surplus machinery following the capacity reduction.

Jiaozhou Textile Factory.

Sale representative of Jiaozhou Textile Factory, Levins: ”Mr. Qiao! Look at these machines; they’ve been operating for less than two years and can be considered new equipment for continued use, remaining competitive in the market for decades. Before you, Japanese companies have shown purchasing intent, but we still decided to leave most of these machines in the Far East.”

Selling the machines to Japan is impossible as these machines were world-leading when ordered and are still in the leading tier today.

Due to reform, Japan’s textile industry has undergone significant growth, and Ernst doesn’t want to help Japan improve their mechanization level; letting Japan remain a sweatshop is the best option.

The West is currently imposing technical blockades against the East, focusing mainly on blocking advanced machinery. Even if machinery is exported, it’s mostly outdated and nearing obsolescence. The machines from Jiaozhou Textile Factory were imported under the name of Heixinggen Consortium from Britain when there were no obstacles, as British manufacturers didn’t expect Heixinggen to assemble a factory in the Far East.

Qiao Zhiyong: ”Mr. Levins! Although your factory’s machines look quite new, they are second-hand, and the price is too high!”

Levins shook his head and said: ”Mr. Qiao, let me explain some concepts for you. These machines are of first-class standard even in Europe, with very high production efficiency. If you have the chance to visit Britain, you would find many British textile companies still using outdated machines, so these machines we plan to sell in the Far East are well-valued with no market. Missing this opportunity would be a loss for you and your nation.”

Qiao Zhiyong: ”Alas, although that’s said, I’m a small businessman with little experience in this domain, so there’s a significant risk to bear!”

You’d be a fool to believe it!

Jiaozhou Textile Factory has its considerations in looking for a buyer. Merchants without economic strength don’t even qualify to view the goods here.

The South does have some commercial giants capable of taking over, but their close ties with British capital mean Heixinggen Consortium doesn’t even give them the opportunity to enter. To put it bluntly, it’s aiding the enemy.

Representing German capital in the international market, Heixinggen is one of the competitors of British capital, especially after Germany’s unification.

As a northern commercial giant, Qiao Zhiyong represents the Jin Merchants, the most powerful in the north currently.

The Jin Merchants’ iconic operation is in banking, akin to running banks in Western terms, making them somewhat peers with Heixinggen Bank, possessing strong capabilities.

Importantly, they are untouched by foreign influence, representing a native commercial group in the Far East and a potential partner for Heixinggen Bank.

Moreover, the Jin Merchants’ stronghold is primarily in the Shanxi region and Inner and Outer Mongolia, with commercial operations not overlapping with Heixinggen Consortium, whose current expansion focuses on North China, reaching as far as Northern Anhui, Eastern Henan, and Southern Zhili. With Northern regions lacking the South’s dense water networks, and neighboring Yantai hosting British and French competition, their reach is already at its limits.

If Heixinggen Consortium and the Jin Merchants establish a partnership, both Heixinggen Consortium and East Africa could leverage Jin Merchants’ channels to reach the northwestern hinterlands of the Far East.

Levins: ”Mr. Qiao, you’re a visionary; don’t focus on trifling little gains. Imagine, with these machines, leveraging the population market and resources in your northeastern hinterland, you could establish cotton textile enterprises comparable to the South. We’ve learned that your nation’s North and Northwest are suitable for cotton planting.”

While the two negotiate, the next workshop over, Jiaozhou Textile Factory is also negotiating with Hu Xueyan, the representative of the Huishi.

Indeed, this time the Heixinggen Consortium is looking to profit from both ends since Jiaozhou Textile Factory plans to halve its capacity. As the largest textile factory in the Far East, even half its capacity is significant.

East Africa is not a strong nation, relying on German influence to have a modest impact in the Far East, barely holding a spot in the North.

If it wishes to further develop in the Far East, it must have agents and partners, and the Jin Merchants and Huishi, as two major commercial groups in the Far East, have the economic capacity to collaborate with East Africa.

Although the two business groups appear prosperous now, they both actually face very precarious situations, and as two of the Far East’s commercial representatives, they also face competition from foreign capital.

It’s advantageous for both sides, including the Heixinggen newcomer, to delineate territories to avoid internal strife, preventing other nations’ capital from exploiting the situation.

All parties are competitors of British, French, and American capital; thus, sticking together is necessary. If the three combine, they can maintain regional economic independence within their respective business ranges. Of course, if competitors use military means to breach, that’s another matter.

For instance, the Huishi, situated dangerously, with Britain’s foothold already in the Jianghuai Basin, making the entire Yangtze River unsafe.

The Huishi can still resist, like Hu Xueyan, who historically resisted foreign capital but was ultimately crushed by the combined suppression of domestic bureaucrats and foreign powers.