Chapter 270 We Gentlemen Share the Same View: Fortune and Misfortune
The two big bosses immediately perked up their ears to listen to the gossip, forgetting even the opening song and dance of CCTV's Spring Festival Gala.
There is indeed some gossip, involving the family life of Shi Zetian, the factory construction expert.
On New Year's Eve, he had a big fight with his wife and decided to separate.
The reason for the argument, well, the root cause is related to Japanese women's views on marriage.
As is well known, being a housewife is a profession in Japan.
Since we are working professionals, marriage is naturally a job.
How employees treat their bosses definitely depends on their salary and career prospects.
Simply put, it refers to the husband's career prospects and income.
When both of these decline, can you still be nice to your boss?
Although Wang Xiao hadn't worked for others much, putting herself in the shoes of a working person, she firmly believed that she couldn't.
Therefore, Mr. Ishizawa was treated coldly by his wife on New Year's Eve, and she really didn't think he was that wicked.
Besides, it's their family matter, and she really has no right to meddle.
However, Wang Xiao really needs to pay attention to Shi Zetian's family troubles. The direct reason he's being neglected by his wife is because he's suffered setbacks at work.
Japan's semiconductor industry has developed very rapidly, which has led to fierce competition and extremely fast product updates.
So, it's not surprising that R&D personnel who were the company's darlings yesterday are now marginalized.
Unfortunately, Ishizawa, this unpopular mixed-race man, and his team were marginalized by the company.
The company wants him to transfer to an administrative position.
Shi Zetian felt deeply humiliated, and his wife, believing he had no future career prospects, immediately became hostile towards him.
Today is Lunar New Year's Eve, and in previous years the couple would have spent it according to Chinese tradition.
But today, his wife not only didn't prepare the New Year's Eve dinner, but instead went out shopping.
Ishizawa, who was used to his wife helping him put on his suit and tie when he went out, couldn't stand this indifference. He was heartbroken and didn't want to stay in Japan for another minute.
So he left home and used a public phone to contact the headhunting company that had been trying to poach him.
Ichiro Toda emphasized: "Miss Wang, Mr. Ishizawa is truly an outstanding semiconductor expert. This was a mistake by Sharp, and they will surely regret this decision in the future. Just like Toshiba regrets offending Kumagai Doku. Oh, I mean, Mr. Ishizawa is very important, not that he can't distinguish between what's important and what's not."
Wang Xiao laughed: "I understand what you mean."
Who is Kumagai Doku? He's the traitor in the infamous Toshiba machine tool scandal.
In April 1981, Toshiba signed an agreement with a Soviet company to supply the Soviet Union with four 9-axis CNC machine tools worth 3.5 billion yen. After a series of covert operations, the high-precision machine tools were delivered to the Soviet Union in 1982 and 1983.
It is said that after the Soviet Union acquired 9-axis CNC machine tools, submarine propulsion noise was significantly reduced, and the US anti-submarine warfare system lost its advantage. To regain this advantage, the US would have to spend at least $20-40 billion to upgrade its anti-submarine warfare system.
Are Americans furious? Of course they are!
At that very moment, in December 1985, Kumagai Doku, the chief representative of Wako Trading Co., Ltd.’s Moscow office who had participated in the Toshiba-Japan-Soviet transaction, was criticized at the Toshiba Group’s annual meeting.
Given the perverse environment in Japanese workplaces where it's common for subordinates to be physically assaulted, the implications of this criticism are likely very complex. In any case, it directly led to Kumagai's resignation.
It is well known that Japanese companies, especially large ones, practice lifetime employment. The fact that Kumagai Doku could force a middle manager to resign speaks volumes about the resentment he harbored.
No sooner had he left Toshiba than he cleanly and efficiently revealed the deal to the U.S. Department of Commerce and the Coordinating Committee for Multilateral Export Controls (COCOM).
And then what? Then the US imposed tariffs, the Japanese Prime Minister was forced to issue a public apology, and the Japanese government spent 100 million yen to publish full-page "repentance ads" in more than 50 US newspapers. Even though Toshiba created the most successful public relations campaign in history, spending nearly 10 million US dollars on PR, it still received a three-year ban on its products entering the US, and its executives were arrested and imprisoned.
In short, this matter has a very large impact.
This has led to the Coordinating Committee for Multilateral Export Controls (COCOM), or more specifically, the United States, tightening its control over the export of high technology.
Wang Xiao asked, "What time will you arrive tomorrow? I'll pick you up from the airport."
After she hung up the overseas call, Ivanov shook his head disapprovingly: "Wang, you shouldn't be running around like this, you should rest."
Wang Xiao raised her eyebrows and shook her head firmly: "No, I can't rest."
She pointed out the window, "Weren't the fireworks beautiful?"
With a "whoosh," fireworks burst across the night sky outside the window.
This was a fireworks display specially prepared by the trade city, using firework cannons. The cannons launched the fireworks into the air, and after reaching a certain height, the gunpowder inside the fireworks ignited again, blooming into dazzling colors and shapes, like a dream.
"Beautiful!" Ivanov was stunned.
In his impression, the Chinese are extremely pragmatic, and their romance seems to reside entirely in ancient poetry.
Seeing such fireworks, he felt that the romance of the Chinese people had never disappeared, and their aesthetic sense was first-rate. The liveliness of fireworks and the serene solitude of aloofness could coexist in the dazzling display.
I am truly grateful to our Chinese ancestors for creating such a magical thing as fireworks. Their romance is hidden in gunpowder.
The moment the purple fireworks exploded, his pupils reflected the starlight, as if he had been pulled into an oriental fantasy.
Wang Xiao looked up at the night sky, and the fireworks shattered into stars in her pupils. But the sparks didn't fuel her dreams of a boatload of stars over the Qinghe River; instead, they ignited her burning ambition.
She suddenly scoffed: "Have you ever seen a drone formation? A thousand drones take off, arrange themselves into a dragon pattern, and then explode with a 'boom'—that's what fireworks are."
Honestly, before she transmigrated, Gatling guns were all the rage, but she had absolutely no interest in lighting them. After watching the drone fireworks show, her appetite was completely whetted.
At this moment, seeing the fireworks shooting into the night sky, her only feeling was: how monotonous.
It was so monotonous that she even found the fireworks display on New Year's Eve boring.
Ivanov was stunned.
He had seen military parades in Moscow's Red Square, but he couldn't imagine airplanes dancing with gunpowder—not in the smoke of war, but for a festive performance.
He stared at her, wide-eyed, incredulous: "Isn't this good?"
Wang Xiao shook his head firmly: "Of course, fireworks have existed since ancient times. No matter how glorious our history is, we can't rest on our laurels; we must innovate. You wait, once our drone industry is developed, I will definitely give you a grand fireworks display."
Xiao Gao and Xiao Zhao were enjoying the fireworks when they overheard the conversation between the two bosses and felt something was off.
In romantic movies, isn't it always the wealthy male lead who throws a fireworks show for Cinderella? Every time, Cinderella is so moved she covers her face, and every time, the women in front of the screen are all starry-eyed.
Now, the person with eyes sparkling and a face full of emotion is their male boss.
Ivanov asked with great anticipation, "Your Majesty, really?"
“Of course,” Wang Xiao said ambitiously. “Then, we’ll name this fireworks show after you!”
Ivanov's eyes instantly shone brighter than the fireworks exploding outside the window: "Your Majesty!"
Chen Yanqiu kept her eyes glued to the television, but her ears were already perked up, listening to her daughter's words. She had endured it all for so long that she could no longer bear it. What kind of nonsense was this?
She could only forcefully change the subject: "Why are you setting off fireworks at this hour? The Spring Festival Gala isn't even over yet. Which one do you all think is better?"
Wang Xiao picked up the phone again, dialing a long-distance number while replying to her mother: "It's good that there are fewer people now. Otherwise, if there were too many people, what if there was a stampede? That would be too dangerous."
This isn't the era of fireworks displays everywhere anymore.
Using fireworks cannons once costs at least a thousand yuan; you absolutely can't get any fireworks to go off without spending that much. So, naturally, scarcity drives up the price.
So what if the 1994 Spring Festival Gala was spectacular? Throughout the entire Spring Festival period, various TV stations would rebroadcast it. Those who value cost-effectiveness would have to watch the fireworks display, which wouldn't be rebroadcast.
The call connected, and Wang Xiao immediately reported to his superior: "Secretary Fang, I'm sorry to bother you. It's like this, the Japanese headhunting company just called me. The factory construction expert, Ishizawa, whom we've been following up with, will be flying to Jinning tomorrow. I was wondering if you could arrange for the leader to meet him tomorrow as well. Mainly, to show our attitude of importance."
Without saying a word, Secretary Fang said, "What time tomorrow? I'm going back to Jinning."
That suits me perfectly.
But Wang Xiao still had to say something politely: "That's not appropriate. You work so hard, and it's the New Year, so it's rare for you to come home."
Secretary Fang had already instructed people to pack her luggage: "I was supposed to go back to Jiangdong on the first day of the Lunar New Year."
In fact, if it weren't for the fact that her elderly family members were getting on in years and in poor health, unable to withstand the travel, she, as the top official in Jiangdong, would never have gone home for the Spring Festival.
She will attend various occasions to celebrate the Spring Festival with working people from all walks of life who cannot go home for the holiday.
On the first day of the Lunar New Year, she still has to lead a team to pay New Year's visits to retired cadres, and then work non-stop.
Wang Xiao then reluctantly agreed, saying, "Then I'll have to trouble you, Secretary, to take some time out of your busy schedule."
Secretary Fang chuckled: "No matter how busy I am, I'll still find time for the LCD screen. But this Shi Zetian, isn't he mixed race? Doesn't he celebrate the Spring Festival?"
Even if he doesn't celebrate the Spring Festival, he should know how much importance the Chinese people attach to it.
Could it be that he deliberately chose to visit on the first day of the Lunar New Year just to test the sincerity of the Jiangdong Provincial Government?
These intellectuals love to get bogged down in trivial matters.
Secretary Fang decided to be tolerant of the other party.
If you want to use someone, as long as it's not a matter of principle, you must accept their offer completely.
After Wang Xiao finished explaining the situation with a smile, Secretary Fang was both amused and exasperated: "Alright, alright, I understand. We'll be more careful with our words from now on."
Otherwise, during the Lunar New Year, she would definitely inquire about the situation of his parents, spouse, and children to express her concern for him on behalf of the Jiangdong Provincial Government.
After hanging up the phone, Secretary Fang started packing his own luggage.
Wu Haoyu had been trying to help his mother for a long time, but finally couldn't help but say, "Mom, I'll go to Jinning with you tomorrow."
Secretary Fang refused outright: "No, you should stay home and spend time with your grandparents. As an embassy staff member, you shouldn't have left Japan during the Spring Festival. The year before last, you went to Moscow on official business, no problem. Last year, you returned to China, which already took up a spot. This year, your superiors approved your leave because your grandparents are old and in poor health. You should use your talents wisely."
She couldn't help but want to scold her son a couple of times.
But then I thought, it's not good to curse people during the Chinese New Year.
Moreover, the mother and son rarely see each other, perhaps only once a year.
Even though Wu Haoyu wasn't scolded, his face was still full of desolation.
He thought of the Spring Festival of 1992, the Spring Festival when he had to fly to Moscow for some business.
The spa resort on the outskirts of Moscow is like a line from Casablanca: Of all the towns in the world, and of all the pubs in them, she walked into mine.
No, it was he who walked into her sanatorium.
But she is not Rick, and he is not Ilsa.
She was his nemesis.
Secretary Fang had no interest in his son's destined misfortune.
Those who wield great power are always able to quickly lose their obsession with love, because their lives are full of excitement and opportunities for them to showcase their charm.
On the morning of the first day of the Lunar New Year, Secretary Fang flew to Jinning. She first attended the Spring Festival gathering, extended New Year greetings to the people of the province, and delivered a speech. Then, without even having a sip of water, she got into her car and rushed to the next location to personally receive Shi Zetian, who had flown from Japan to Jinning via Shanghai.
Shi Zetian, looking weathered and exhausted, was stunned and truly flattered.
In fact, he regretted it as soon as he lost his temper, realizing just how outrageous it was that he went to his boss on the first day of the Lunar New Year.
But when he called the headhunter again, the headhunter told him that the boss had already adjusted his schedule, and even another boss had already left Moscow and was about to fly to Jinning.
What else could Shi Zetian say? If he backed down now, he would be making a fool of himself.
The engineer, filled with fear and trepidation, was already devastated to see his boss, who had broken his leg in a plane crash and insisted on personally picking him up from the airport in a wheelchair.
But what happened next was that even the top official of Jiangdong Province personally appeared to meet with him.
Later, Secretary Fang even led a convoy to the factory site and pointed directly to a large open space, telling him, "Jiangdong needs LCD screens, but it also needs time. Tell me how you want this factory built, and the government will fully cooperate."
Wang Xiao smiled and replied, "Yes, you are an expert in technology. As the boss, our understanding of LCD screen technology is far inferior to yours, but we absolutely respect technology."
Do wealthy dogs understand space technology? No. But their respect is worth its weight in gold.
Now, even the nouveau riche Mr. Wang wants to be a big dog for once.
Shi Zetian adjusted his glasses, the sweat from his palms leaving white streaks on the frames. He had lived in Taiwan for almost 20 years and then spent nearly 20 years in the Japanese semiconductor industry, and had never seen government officials clear a path for a technical expert.
As Secretary Fang's car rolled over the snow, in the rearview mirror, perhaps because of the expensive cashmere blanket she was wearing, Wang Xiao's wheelchair and the Hongqi motorcade did not appear to be in a grotesque contrast, but rather complemented each other somewhat.
On this Lunar New Year's Day, power and capital were intertwined, making Shi Zetian's throat tight and dry.
He gritted his teeth and took out two documents: "These are my requirements for the environment of the LCD screen factory. There may be a lot of requirements, but they must be implemented."
Secretary Fang naturally reached out and took one, indicating his understanding: "I have visited LCD screen factories in Japan, and it is indeed necessary to have high standards."
Wang Xiao took the remaining copy and translated it to Ivanov as he read it.
Firstly, there's the cleanroom standard, which requires the construction of a Class 10,000 cleanroom according to STN-LCD production standards. This is also the current mainstream standard in Japan. It must be equipped with an air filtration system and constant temperature and humidity control to prevent dust contamination of the LCD panels.
He then emphasized that cleanrooms should be managed in separate zones, such as array, cassette, and module workshops, to minimize cross-contamination.
In addition, ensuring the supply of electricity and energy is of paramount importance.
LCD panel manufacturers require a stable dual-circuit power supply to meet the high energy consumption demands of their production lines. Equipment such as sputtering and evaporation processes must have a guaranteed power supply, as voltage fluctuations can drastically reduce yield.
Perhaps genuinely afraid that he was facing a complete novice, Ishizawa specifically emphasized the importance of yield rate.
In 1988, after establishing itself as an industry leader with the world's first 14-inch TFT-LCD, Sharp began to attempt mass production of large-size TFT-LCDs.
However, as an industry giant, Sharp suffered losses for five years before it could increase its yield rate from 8% to 80% and finally achieve profitability last year.
In order to ensure the yield of panels, factories must plan industrial water systems in advance. Deionized water preparation is essential so that the purity of water used in the production process can meet the standards.
The factory layout and equipment must also follow the STN first-generation line technical drawings, and vacuum evaporation machines and lithography machines are indispensable.
The factory must be large enough to allow for future modifications and to accommodate future technological upgrades.
When Wang Xiao saw this, he smiled and said, "I am very pleased that you have made these plans in advance. I believe that you, like us, firmly believe that China's LCD screens can catch up and surpass Japan's dominant position in the future."
Ishizawa's eyes widened instantly.
He admitted that when he boarded the plane in a huff, he was indeed determined to make his former employer look bad.
But even if he's furious, he can't go crazy and fantasize that mainland China's LCD screens can trample Japanese products underfoot.
Are you kidding me? Japan's semiconductor industry has completely crushed the United States.
The reason why Toshiba's smuggling of high-precision machine tools to the Soviet Union caused such a huge uproar was that the United States was no longer able to surpass Japan's semiconductor industry through normal commercial, industrial, and scientific research means, so it had to take extraordinary measures.
If the United States can't do it, how could China possibly do it?
When he moved from Shanghai to Jinning, he felt that China was at least half a century behind the United States and Japan.
But this is already a well-known metropolis on the mainland.
Wang Xiao, however, seemed oblivious to the other person's suspicion that she was delusional. Instead, she smiled and continued to forcefully establish herself as a confidante: "We're kindred spirits. You don't need to be so shocked. Great minds think alike. The rise of Japan's semiconductor industry, besides objective conditions, should be attributed to the Japanese spirit of craftsmanship. It can be said that it contributed to Japan's post-war economic boom."
"But it is precisely this spirit of craftsmanship that has limited the development of Japan's semiconductor industry."
"Because of the spirit of craftsmanship, there is too much worship or even obsession with unique skills, and heroes are judged purely by their technical abilities."
"But this model is no longer suitable for the development of the modern electronics industry. The greatest innovation in the modern electronics industry is essentially efficiency, which is brought about by the separation of software and hardware. Design and research and development are design and research and development, and production and manufacturing are production and manufacturing."
"Just like many international brands, they don't build their own factories at all, but directly find contract manufacturers. This way, after I finish my design, I don't need to build a production line and then produce it. I can directly hand it over to the contract manufacturer. This greatly shortens the cycle from design to receiving the product."
"And what the semiconductor industry needs most is this kind of shortened cycle."
"As a typical product of standardized and modular production, LCD screens were produced by companies like Sharp, Toshiba, and Seiko (which has since exited the market). At their peak, the technology and quality of their products were already quite similar. The real competition was in R&D speed, supply chain management, cost control, and marketing. In these areas, Chinese companies have a natural advantage."
"The Pearl River Delta and Yangtze River Delta regions already have a large number of small and medium-sized enterprises, and as the reforms on the mainland deepen further, there will be even more such enterprises. The specialization of each enterprise can reach a very refined level."
"In product appearance mold companies, there are three main categories: design, machining, and precision machining, each of which can be further divided into subcategories."
"In this way, once there is a new demand for supply, these supply chain networks can be quickly reorganized to coordinate with production with extremely high efficiency. This kind of network with production scale, efficiency and flexibility is something that no country or region in the world, except China, can achieve, let alone Japan."
"It's like the Japanese invented disposable lighters, but China was able to drive down the price of lighters to 1 yuan in just a few years and still make a profit, thus dominating the market."
Shi Zetian was stunned.
What puzzled him even more was that he actually felt that what the young mainland Chinese female boss in the wheelchair was saying made a lot of sense.
However, as a technical worker, he still emphasized quite rigorously: "There are also many small and medium-sized enterprises in Japan, some of which specialize in one thing and can also accomplish the kind of supply network restructuring you mentioned."
Wang Xiao smiled and shook his head: "It's a pity that Japan is too small, and its consumer market is too small. Moreover, Japan has to be mindful of the United States' attitude. I remember reading a Japanese editorial after the Toshiba machine tool incident, in the Sankei Shimbun. It said: 'Even seppuku wouldn't be enough to atone for the Toshiba incident! As a country under the protection of the United States, Japan has torn a huge hole in that protection. It's not an exaggeration to say that Toshiba Machinery has committed a 'catastrophic disaster.'"
"The United States may not be able to defeat Japan technologically, but it can still make Japan's semiconductor industry extremely difficult through political and economic means."
“China is different. Our population of 1 billion is our greatest source of confidence. With a market share of nearly one-fifth of the world’s consumer market, we can definitely become the trendsetter for the entire industry.”
To make it easier for Ivanov to understand immediately, Wang Xiao spoke these words in English.
Of course, there was another advantage to her saying this: in 1994, fluent English allowed her to easily portray herself as a well-educated, internationally-minded nouveau riche, not a frog in a well, but a new-age intellectual who had become wealthy through knowledge.
Shi Zetian understood easily. He looked at Wang Xiao extending his hand and smiled broadly: "So, congratulations on making the right choice at the most opportune time. Let's work together to create a new hegemon in the semiconductor industry and witness the glory of an era!"
The mixed-race child, who had been in mainland China for less than half a day, unwittingly grasped Wang Xiao's hand.
Ivanov was quick; he immediately reached out. Without saying a word, he simply smiled and easily used his large hands to envelop both of them.
Secretary Fang's English listening comprehension is completely inadequate.
Even so, after the secretary's brief, almost verbose translation, she couldn't help but sigh inwardly.
This is Jiangdong's good fortune, because those who invest in LCD screens not only have the financial strength but also the willpower to clearly see their own advantages and have a well-founded belief in them.
In this way, even if the development of LCD screens encounters difficulties in the future, she will be able to continue investing based on her confidence in "future profitability".
But Jiangdong's good fortune is Xiaoyu's misfortune.
As a mother, Secretary Fang couldn't help but sympathize with her son. Wang Xiao's world was too big, so big that Xiao Yu simply couldn't find his place.
However, Secretary Fang considered this misfortune insignificant. For her, the identity of Provincial Party Secretary was far more important than that of her mother.
She hopes that the rise of Jiangdong's LCD screen business will be a significant highlight on her resume.
Without hesitation, she reached out and firmly cradled the three hands in her palm: "The Provincial Party Committee is backing you up. From today onwards, Jiangdong Province will be your cleanroom—the factory manages talent, the market manages profits, and we only need to sweep away the dust of the system!"
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Yes, the change in Wang Xiao and Wu Haoyu's relationship will not lead Secretary Fang to begin suppressing Wang Xiao's career. Those who wield power value power above all else, regardless of gender.
Yes, I could design it so that Secretary Fang falls out with Wang Xiao because of her son, and then Wang Xiao uses her interests to bind Secretary Fang—that way, you get all the emotional drama, melodrama, and business intrigue. [Covering face and peeking] But, such a design would be an insult to female politicians. [Splitting face] So, there won't be such a plot.
Additionally, the Toshiba machine tool incident mentioned in the article is based on information from the internet, as follows:
Many people say that the Cold War began with the Iron Curtain speech, but in fact, Churchill's Iron Curtain speech opened the prelude to the Cold War, while the Truman Doctrine was an important symbol of the beginning of the Cold War.
In 1970, Soviet import and export officials attempted to negotiate with the Italian company Danieli to purchase modern CNC machine tools. Predictably, the Americans intervened, obstructing the project in every way, and it ultimately failed. However, if the Soviets had given up so easily, Toshiba wouldn't have had a chance later on.
The turning point came in 1979.
At the time, the Soviet Union was facing difficulties in agricultural and consumer production. The government had to allocate a significant portion of its meager foreign exchange reserves annually to grain imports. To ensure sufficient funds for these imports, imports of industrial machinery almost completely ceased. Meanwhile, Japan was a major supplier of industrial equipment to the Soviet Union. Several Japanese machinery companies had dozens of sales representatives in Moscow, who were constantly busy closing deals. Among them were representatives from Toshiba.
That year, Kumagai, the head of the Japanese company's Moscow office, met a Soviet friend: Osipov, the deputy general manager of the All-Union Technical Machinery Import and Export Company.
Through the matchmaking of two businessmen, a group of people gathered around them, including representatives from the Norwegian company Kongsberg, which specializes in providing CNC systems, and others.
At a cocktail party, Osipov, a representative from Toshiba, a company that supplies machining equipment, quietly told the Toshiba employee hosting the event: "The Soviet Union urgently needs a machine tool for large ship propulsion systems. Toshiba is an expert in manufacturing industrial machinery, and I believe such a machine tool can already be produced in Japan."
Before the party was even over, an urgent telegram was sent back to Toshiba headquarters in Tokyo: "Quickly find a machine tool for processing propellers!" A few days later, a senior employee from Toshiba's product department flew to Moscow with various data on the latest "nine-degree propeller computer machine tool".
The trading environment back then wasn't much better than it is now. Getting a 20% discount was a miracle, and half-price transactions were common.
The daily routine of a Japanese company's sales representative in Moscow is all about haggling, haggling, and haggling some more.
Toshiba headquarters assessed the deal as too risky and specifically telegraphed instructions that if the Soviets aggressively lowered the price, they would not sell.
Toshiba's offer was 1 billion yen per machine (approximately US$5 million at the time).
The Soviet response baffled the Japanese representatives. They were buying four mother machines at once, and also needed a lot of spare parts, yet they only offered a 20% discount. The Japanese representatives unanimously thought they had lost their minds. "Dude, at least offer a bigger discount! I wasn't prepared for this. Are you kidding me?" So what should they do?
A Toshiba employee said, "No capitalist country, except Toshiba, would dare to do this! Your price is unacceptable, too low!" Reportedly, this representative was uncomfortable with such weak price cuts and made the remark casually.
"We're really sorry, we also feel we were being unfair, we cut the price too much. How about we add some more?"
Wang Defa? ?? When did the Soviets become so easy to talk to?
In the end, the deal was closed at 87% of the original price, which even Toshiba couldn't believe—that four machine tools could be sold for 3.5 billion yen.
Toshiba, driven by greed, quickly disregarded the Coordinating Committee for Multilateral Export Controls (COCOM) ban.
What is "Batumin"?
The Coordinating Committee for Export Controls (COCOM), officially known as the Coordinating Committee for Export Controls, was secretly established in 1949 at the suggestion of the United States. Its member states were developed countries within the Western bloc. The organization's purpose was to restrict member states' exports of strategic materials and high technology to socialist countries. Because its headquarters were located in Paris, it was commonly referred to as the "Paris Coordinating Committee," later shortened to COCOM.
We'll discuss the Coordinating Committee for Multilateral Export Controls (COCOM) later when we talk about the international situation. From its inception until its dissolution in 1994, this committee imposed import and export controls on socialist countries, forcing many technologies to be developed independently. China, having been bullied by COCOM for so long, felt it had to do everything itself. In reality, the idea of 100% self-sufficiency was a huge waste of production costs and efficiency. To borrow a netizen's words: "But there's no way around it. Who told us that there are only two countries in the world, China and foreign countries?"
After both sides reached an agreement, the next step was to figure out how to bypass COCOM.
On April 21, 1981, Soviet company representatives Osipov and Trotsky quickly signed a supply contract with the Japanese at the Moscow office of Itochu Corporation. In order to circumvent the control of COCOM, the Japanese began to plot this conspiracy with the Soviets (can this be called a conspiracy?).
You might think that this Soviet man, Osipov, was a patriotic businessman. A businessman buying machine tools—was he donating them to the country? Haha, actually, Osipov's identity wasn't that of a businessman at all; he was a KGB agent.
The supply contract clearly states that Japan will provide the Soviet Union with four TDP-70 two-axis CNC boring and milling machines. You might find it hard to understand or remember, but basically, the contract specifies the kind of machine tools that COCOM does not restrict, which is not the same as what was actually sold. Do you think ZTE is as stupid as having it written in black and white?
In fact, Soviet businessmen (spies) and Toshiba secretly signed a secret supply contract, which contained the MBP-110S CNC propeller milling machine that the Soviet Union really wanted.
Then, Toshiba submitted an export application to its government agency for the two-axis CNC boring and milling machine that had been previously approved in writing. Because this type of machine was not subject to export controls, and because Toshiba, as a large multinational corporation, considered this export normal, the Ministry of International Trade and Industry approved it, and Toshiba obtained the export license.
With the hardware in place, the next issue was the equipment. Norway received an order from the Soviet Union for the NC-2000 CNC system. The NC-2000 is typically used in two-axis CNC machine tools, which are not subject to export controls. These orders were sent to Japan, where technicians modified and compiled the system to adapt it for nine-axis, five-linkage machine tools.
Don't worry if you don't understand. Let's take an example: the US bans Samsung from selling the Samsung Note 100 phone to us.
However, for the sake of profit, Samsung signed a contract with us to sell us the Note 99 phone (actually the Note 100). Then we would buy the Symbian installation package and send it to Samsung. Samsung would then install it as their native system on the Note 100 and send it back to us. In the end, what we received was a complete Note 100 phone with the system already installed. You might ask, why buy the Symbian system? It's to give the US the wrong impression. Because Symbian is best suited for the Note 99, it would definitely be installed on the Note 99. Who would have thought that I was getting a Note 100 with Samsung's system installed? You ask me why I didn't just buy the installation package directly from Samsung, but instead had to specifically buy the Symbian version?
The following text will mention
The machine tool was assembled, and the export license was obtained. The next issue was shipping it to the Soviet Union.
December 1982 was the contractually agreed-upon delivery date. Kumagai, the Japanese resident in Moscow, flew from Moscow to Tokyo to oversee the shipment at the Shibaura port. Kumagai worked so hard; I wouldn't believe he didn't get paid.
Toshiba had already packed the various systems of the first CNC machine tool into dozens of boxes (too heavy and too big, more than 200 tons). In order to prevent Japanese customs from causing trouble and opening the boxes for inspection, Kumagai gave them another round of money (I can guarantee that he definitely received money, and quite a lot of it), and showed the customs officers the so-called export license and related documents for the TDP-70 two-axis boring and milling machine. In the end, the boxes were not opened.
Cranes lifted large wooden crates onto the cargo ship. The project was finished in Japan; how would they be transported to the Soviet Union?
Moscow used Norway as a transit point; Toshiba first exported its machine tools to Norway.
Norway is also a NATO member, so this action does not violate COCOM regulations.
In reality, Norway was already quite adept at this, a repeat offender. They had long ago supplied the Soviet Union with automatic artillery aiming computers, the very computers that COCOM strictly prohibited from being exported to the Soviet Union. The Soviet Union and Norway had long established a secret channel for delivering special goods.
Thus, from 1982 to 1983, four MBP-110S CNC machine tools were successively delivered to Leningrad, a naval port in northern Soviet Union.
There's a small detail here: the Soviet Union withheld 10% of the payment until Toshiba installed, debugged, and put the four machine tools into operation, while simultaneously training their technicians until they could operate them fully. Later, they changed their minds and only required Toshiba to install two machines, insisting that their own technicians install the remaining two.
During the installation of the first machine, the Japanese technicians quickly noticed that the Soviet technicians involved in the installation always had dark circles under their eyes, yawned constantly, and looked like they were overindulging in excessive sexual activity. It wasn't until later that they learned these Soviet technicians were installing machines for the Japanese during the day and then using the methods they had learned during the day to assemble another machine at night. No wonder they were exhausted! The Soviet technicians weren't yet fully familiar with the operating procedures and didn't dare to completely trust the Japanese.
Installation complete, remaining payment received, Toshiba's employees left, and the Soviet Union began working overtime with its lights on.
Logically, that should have been enough, so how did it get discovered later? Who noticed it first? You probably won't believe it, but the first to sense something was wrong was actually the US Navy. That was a huge problem.
First, we need to understand why the Soviet Union spent so much money to buy machine tools.
At the time, the Soviet Union had 256 attack submarines, while the United States had only 96. However, American submarines were relatively quiet, while Soviet submarines were much noisier. Although there were many of them, their sheer volume was overwhelming; they could be easily detected from 200 nautical miles away. Previously, tracking Soviet submarines was incredibly easy for the US Navy. These inferior submarines, navigating the seabed, produced noise that was practically a cacophony, as if they wanted everyone to know they were there. They could be easily detected from 200 nautical miles away. You might not have a concept of 200 nautical miles, so let me put it this way: you could detect them from 370 kilometers away. If you start your submarine in Taiyuan or Hohhot, I can detect it from Beijing (using sonar, not my ears!!!). Why? Because the sound is too loud...
In 1986, Soviet and American nuclear submarines collided in the Strait of Gibraltar. The reason given was that the Soviet submarine was too quiet, and the American sonar failed to detect it, causing it to ram into the submarine.
How melodramatic is this...?
After acquiring the mothership from Toshiba, the improved submarines achieved increasingly higher speeds and superior navigation capabilities. It truly was a case of spending money wisely.
Although the US had its suspicions, there was nothing it could do. Who says the Red side's technology can't be modified? Toshiba's deal with the Soviet Union was indeed quite clever. No Western country, including Japan, discovered that the machinery shipped from Japan had a significant impact on Soviet naval shipbuilding technology. I suspect Toshiba itself might not have known, or perhaps they knew but dared not admit it.
However, in December 1985, Kumagai Doku of Wako Trading Co. escalated his conflict with his employer (the one who took money to go to Japan from Moscow to urge delivery), and was eventually forced to resign. In order to get revenge on his old employer, he wrote a letter to Taurig, the chairman of COCOM, along with a report that revealed the contents of the secret Japan-Soviet deal.
This guy's name is Kumagai Doku, originally Kumagai Kazuo (which sounds Japanese). After the incident, he fled and settled in Germany, writing his experiences into a novel. He's now a mystery writer...
The Coordinating Committee for Multilateral Export Controls (COCOM) immediately handed the report over to the Japanese representative, and the Japanese government promptly launched an investigation. It seems they anticipated the consequences before acting, so Toshiba used the export documents for those "two-axis boring and milling machines" as a shield, flawless and impeccable.
Toshiba representatives also declared to the world that they had absolutely not violated any international agreements by exporting prohibited items to the Soviet Union.
I didn't do it, you can't frame me, but the US military is furious and wants to investigate thoroughly.
In 1987, at the Coordinating Committee for Multilateral Export Controls (COCOM) annual meeting, just as the Japanese vehemently denied ever exporting large-scale processing equipment to the Soviet Union, the Americans, seemingly to embarrass the Japanese, played a slideshow. The content was none other than the MBP-100S nine-axis five-linkage CNC machine tool that Toshiba exported to the Soviet Union!
The Japanese and Norwegian representatives (a repeat offender) walked out of the meeting, their faces filled with shame. This massive scandal had finally shaken the Western world. It turned out there was a traitor within their own ranks. Further investigation revealed something that even shocked Japan: the Norwegian company Kongsberg was not only involved in this CNC machine tool export incident, but over the past few decades, they had exported more than 20 sets of CNC systems to the Soviet Union in violation of the embargo, even exporting computer hardware for artillery fire control systems used by the Soviet army! For such a classic example of prioritizing money over lives, the Japanese representative gave a thumbs up.
Why did Toshiba risk offending its big brother, the United States, to sell to the Soviet Union?
From 1982 to 1985, Toshiba Machine exported a total of eight CNC machine tools to the Soviet Union, including four nine-axis CNC machine tools and four five-axis CNC machine tools. The Soviet Union spent 3.5 billion yen (equivalent to US$17 million at the time) to purchase the four nine-axis CNC machine tools, nearly three times the price Toshiba Machine's expected price. However, while the Japanese made a small profit, the Soviets got a much better deal. The Americans would need to invest at least US$20 to 30 billion to close the gap in nuclear submarine technology.
Marx (whether he actually said this, I'm not sure) said: "With a 20% profit, capital will become restless; with a 50% profit, capital will take risks; with a 100% profit, capital will risk being hanged; with a 300% profit, capital will trample on all human laws." Toshiba is a company, just a company. As for whether it's a victim of US-China trade tensions, who can say for sure?
At that time, not only Toshiba Machine, but its parent company Toshiba (which held 51% of Toshiba Machine's shares) was facing near annihilation, and the entire Japanese industrial sector was also affected and impacted, leading to the biggest crisis in the Japan-US alliance since World War II.
At the time, members of both houses of Congress proposed a series of sanctions against Toshiba, including: a fine of 3 trillion yen (equivalent to about US$15 billion at the time), imposing a 100% tariff on all goods imported from the Toshiba Group, suspending the import of any goods from the Toshiba Group for 5 years, and other measures such as closing all Toshiba factories in the United States, permanently expelling Toshiba from the United States, and providing free after-sales service for all previously sold goods.
At the time, the Japanese newspaper Sankei Shimbun published an editorial with the headline: "Even seppuku is not enough to atone for the Toshiba incident! As a country under the protection of the United States, Japan has torn a huge hole in that protection. It is no exaggeration to say that Toshiba Machinery has committed a 'catastrophic disaster'."
Putting everything else aside, Japan's crisis management at the time was truly outstanding.
From 1987 to 1989, Toshiba mobilized all available resources in the United States for a major self-redemption operation.
On one hand, they lobbied Congress through former congressional budget officials and the U.S. Trade Representative. Simultaneously, they mobilized hundreds of large and small companies with close business ties to Toshiba, using their channels to plead for leniency from various sectors. Their reasoning was: if Toshiba were sanctioned, the U.S. would lose $340 million in tax revenue (in US dollars) in 1988, 4,000 Americans working at Toshiba's U.S. branch would lose their jobs, and tens of thousands more would lose their jobs in U.S. companies related to Toshiba. They appealed to both emotion and reason.
On the other hand, all Toshiba's American employees were mobilized, dividing into districts and going door-to-door to persuade each of the more than 500 federal congressmen in their respective districts. He called their actions "grassroots lobbying." (Why grassroots?)
A few months ago, lawmakers angrily greeted the Japanese and smashed Japanese electronics in front of the parliament building as a publicity stunt. A few months later, they all changed their tune and began to speak well of the Japanese.
The US sledgehammer of sanctions against Toshiba was raised high but brought down gently. The target of the sanctions was narrowed from the Toshiba Group to Toshiba Machine, and the duration was shortened from five years to three years. It is estimated that Toshiba spent at least $9 million on this lobbying effort. (You think the senators helped for free?)
In his 1991 book, "Lobbyists: The Power That Shakes American Politics," Professor Toshio Oo of Waseda University stated that Toshiba's lobbying campaign was the largest battle in history.
In order to compensate the United States, the Japanese government proposed to the United States that Japan would fund joint technological research with the United States in order to "master better submarine detection technology and manufacture submarines that are quieter than Soviet submarines." At the same time, Japan agreed to the United States' request to cooperate in the development of the FXS fighter jet, which was equivalent to giving the United States its automatic phased array radar and wing design technology free of charge.
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