Chapter 391: Dress in Style
In early July 1997, the Thai baht financial system collapsed, and a large amount of capital fled the country.
The storm quickly swept across Southeast Asia, and several South Korean and Indian countries suffered severe financial shocks.
There is no need to elaborate on the causes and consequences. In short, the currencies of Asian countries have depreciated significantly and export trade has dropped sharply.
Miraculously, apart from the University of Tokyo, India was almost "intact" in this financial crisis.
The reasons can be roughly divided into two aspects: first, foreign exchange control; second, limited foreign trade.
Although the rupee is unpopular in the international currency market, the Indian government always controls exchange rate fluctuations.
As long as the signs are not right, we will intervene and take a strong approach.
Of course, the most important thing is that the government has not opened up the financial market. Foreign capital coming here not only causes trouble, but it is even a question whether it can go out.
India earns money and India spends it. This is a world-famous saying and it treats everyone equally.
It is impossible for a situation like Thailand where shares are controlled by foreign capital to happen. It has always been India that rips off foreign capital, so there is no reason for India to be ripped off by others.
At this time, India's economy was mainly focused on meeting domestic demand, with a low dependence on foreign trade, and exports accounting for less than 10% of its total GDP.
This is fundamentally different from countries such as Thailand and Malaysia that rely heavily on foreign investment and exports.
To put it bluntly, it is not open enough, and foreign capital cannot deeply participate in India's domestic economy.
However, there is still some impact. In order to cushion external shocks and avoid the depletion of foreign exchange reserves, the rupee depreciated by about 15% under the intervention of the Indian government.
Now 1 US dollar can be exchanged for 45 rupees, and the pressure to import raw materials has increased.
Some export-oriented companies encountered business difficulties, and some even went bankrupt.
Sur Electric has also clearly felt this cold wave, and its share of overseas trade has continued to grow in the past two years.
However, since the outbreak of the financial crisis a month ago, overseas orders have been cut one after another.
Although Sur Electric's main trading partners are the Persian Gulf countries and Africa, this crisis inevitably began to affect the world.
In the past, we could export 700,000 to 800,000 home appliances of various types every month. Now it has returned to the level of early last year, about 500,000 units.
The impact on profits has been significant.
But Ron was not anxious, there was no point in being anxious.
This financial crisis that has swept across many countries is an act of force majeure and is not subject to personal will.
Instead of flying to Gujarat or Mumbai in a hurry, he came to New Delhi first.
A call came from the Industrial Bank of Mumbai, saying that it would be difficult for him to transfer his money abroad quietly in the future.
The financial crisis taught the State Bank of India a lesson, and they began to strengthen supervision and tighten the channels for capital transfer.
A few years ago, with the help of the president of Bombay Industrial Bank, Ron slowly moved all his small treasury overseas.
He has multiple international bank accounts with accumulated deposits of up to US$2.5 billion.
The income of Sur Electric Appliances and Cement Plant in recent years has all come from here. He had foresight and knew that the depreciation of the rupee was a major trend.
So in order to preserve its value, all the excess cash was converted into US dollars.
There are still 20 billion rupees in India's domestic accounts for working capital.
Investment, engineering construction, etc. all require a certain amount of cash flow.
Now that Yanghang has tightened its supervision, it will be difficult for him to get his money out.
However, Ron's various businesses were slowly beginning to reap the rewards: the port in Chennai was about to open, the coal mine in Dhanbad was under construction, and the factory in Kolkata was complete.
Together with the booming Sur Electric and the cement plant that is expanding year by year, if there had been no financial crisis, the profit alone might have been around 15 billion rupees per month by the end of the year.
If this money is not converted into US dollars, is it going to depreciate?
Of course, he considered increasing investment to rationally allocate his assets, but after thinking about it, he found that there were no good opportunities in India for the time being.
So is there a legal way to convert rupees in the company account into US dollars?
Yes, letter of guarantee!
This is a financial instrument unique to India. Essentially, it is a document given to you by a state-owned bank.
With this document, you can obtain credit from foreign banks.
To put it simply, it is the state's endorsement that allows companies to legally raise foreign exchange.
The advantage is that there are no huge exchange fees, and the official exchange rate also avoids the high fees of the black market.
Because this method of exchanging foreign currency is relatively cost-effective, whether it is US dollars or British pounds, many companies adopt the practice of "letter of guarantee".
But if you want to get a letter of guarantee, you have to leave collateral.
It can be a portion of the foreign exchange you borrowed or it can be cash like rupees.
However, the Indian government’s own foreign exchange reserves are limited, and the amount of US dollars that can be exchanged for the letter of guarantee is also limited.
Giants like Sur Electric only have an annual quota of $100 million.
It’s too little. Sur Electric’s monthly profit is more than this.
Ron came to New Delhi to meet with a senior official from a banking department. He didn't want a letter of guarantee, he just wanted his money to go out smoothly.
The minister had a hobby, which was cigars. He liked collecting all kinds of cigars.
It's not difficult to find cigars in a place like New Delhi, but there are not many shops that can offer a complete range of cigars.
Ron also asked around before he found a young man named Manish, who was one of the two largest cigarette importers in India.
Manish is optimistic, handsome, energetic and smooth in his dealings, which makes his cigarette business very popular.
His products are sold in hotels, bars and clubs, and are selling well not only in big cities like Delhi, but also in many second-tier cities.
Many people describe him as the "ideal candidate", a title Manish is quite proud of.
However, he does use various methods to meet the needs of customers. For example, for customers in Delhi, he holds several gatherings every month.
The parties are usually sponsored by alcohol companies, where men sit around on leather sofas, smoking cigarettes and chatting with each other about smoking techniques.
There are also some people who just want to smoke, and Manish provides them with a comfortable and private place.
He also provides door-to-door delivery services for business celebrations and wedding parties, and provides customers with reference advice on what kind of cigarettes are suitable for different guests.
When Ron got married, many high-end cigarettes and cigars were provided by Manish.
His shop in Delhi is called "Castro Cigarettes", which is very Cuban.
Manish was surprised when Ron walked in. Fortunately, his clients were either wealthy or noble, so they were not too panicked.
"Mr. Soul, if you need anything, just call our staff and we'll deliver it within the hour."
"It's not me who smokes, it's someone else." Ron waved his hand to indicate that he didn't need to rush to entertain him, "But I'm a little curious about this place."
"Please feel free to look around. If you have any questions, just ask." Manish followed him closely.
The two of them chatted at the front desk. Besides the waiter, there was only one other employee in the shop. She was a Mizo woman from northeastern India, dressed smartly in a suit.
She bought two cappuccinos from a nearby Parsi restaurant and retreated to the back hall.
Manish introduced Ron to the various strange cigarettes in his store, and the store began to welcome customers one after another.
There were women covered in jewels supporting short and fat men, and maids pushing baby carriages following the ladies.
Behind them is a large floor-to-ceiling window, and next to the door is a temperature-controlled room where some cigarettes and cigars require special storage.
Cigarettes are displayed in a display case on the outside wall, with information about cigarette enthusiasts on one side and customer lockers on the other, each containing a customer's collection.
This is a bit like a casual izakaya where customers can store their own alcohol in the store.
Manish said the most expensive cigarettes were Cohiba, which came in boxes of five and cost Rs 30,000 each, locked in customers' lockers.
But this customer never smoked these cigarettes; they were gifts to bureaucrats and politicians who benefited his business.
Just from this detail, Ron realized that Manish's cigarette shop was very unique, which was very attractive to customers.
Put your own collection in the window for others to admire without revealing your name.
This way of pretending is very stylish.
"Whose locker is that?" Ron raised his chin towards the Cohiba.
"Mr. Sur, this..." Manish was embarrassed.
Ron noticed that Manish seemed a little nervous when he mentioned the mystery customer.
Needless to say, this was also some big shot, at least a big shot that Manish couldn't afford to offend.
"Don't worry, I won't make it difficult for you." Ron comforted him.
"Soul, if you need it, we have the same Cohiba in the store. It's from my personal collection."
"No, it's that thing of others that makes your heart beat the most, isn't it?"
Tsk, why does this sound a bit like Cao Zei.
After weighing the pros and cons, Manish gently uttered a name.
Compared to Mr. Soul, the anonymous customer seemed to be able to queue one row further back.
Ron nodded. As expected, it was some powerful person in New Delhi.
"Tell me about the others, too, the most expensive cigars."
"Ah?" Manish was stunned looking at the window.
"Dude, like I said, I promise they won't make things difficult for you." Ron comforted him with a smile.
Selling it once is selling it, selling it twice is selling it, it doesn’t seem to make any difference.
Manish simply told Ron all the customers behind the window and shared many stories.
His main job is to gain the trust of customers, and he is very good at it.
Manish said that it is the nature of all wealthy people to bargain hard for a 10% discount.
Yes, they are obviously very rich, but they still reveal their cunning and greedy side when negotiating business, even if it is just to buy a pack of cigarettes.
When some people were short of cash, they asked to use credit cards, and some Sikhs, unafraid of religious taboos, secretly smuggled cigarettes from him.
Some came to give cigarettes to their friends, dismissing them as liars, hypocrites, and sinners, while others came to chat with Manish, seeking his approval of their chosen mistresses and prostitutes.
It's like a private clinic's treatment room, and Manish listens to everyone's conversation. He himself never smokes in public, so the guests don't feel pressured.
"They speak loudly and arrogantly because they have no idea how much money they've made and who they are. These people generally have very little self-control," Manish said. "They're usually very unfriendly and panic when they realize they have to go through a second door to get to the temperature-controlled area. They don't know how to store cigars, so they show their fear, which makes them look embarrassed. When they finally get in, they slam the door."
This guy might be addicted to nagging rich people behind their backs and can't stop talking.
Only after Ron tilted his head towards Anil did he slowly calm down.
Anil took out his cell phone and called each customer behind the window one by one.
Manish was horrified and looked at Ron in horror.
After about ten minutes, Anil nodded towards this place.
"Okay, everyone behind this window has agreed to let me enjoy their cigarettes, any one of them."
“This this.” Manish was dumbfounded.
There was the sound of a car engine outside. Ron looked at it and laughed.
"The person I'm waiting for is here. Are you ready for the story?"
(End of this chapter)
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