The next day, I visited the industrial area in Shenzhen with the people CEO Wu had assigned to me.
I was amazed by the sheer scale of it.
"Are these all factories?"
"Of course. Shenzhen is one of the leading industrial cities in China."
I had visited countless industrial complexes in Korea, but I had never seen anything on this scale.
Thousands of factories, arranged in a grid pattern, stretched as far as the eye could see.
"Is there anything specific here? What's the reason for such a high concentration of factories?"
"Well, it's due to its location. Do you know that Shenzhen is right next to Hong Kong?"
"Yes, I heard it's very close."
"It's not just close, it's practically attached."
"I see. But what does that have to do with anything?"
Manager Han held up two fingers.
"First, Hong Kong is a famous shopping destination. Having access to such a large market reduces distribution costs. And another reason is…"
He smiled slyly.
"It's very convenient for smuggling."
"Smuggling?"
"Yes, China imposes high tariffs on all imported goods. At least 10%. So they import the goods through Hong Kong, which is tariff-free, and then have daigong (personal shoppers) bring them inland. That way, they can avoid paying tariffs, reducing the cost of importing raw materials."
So it was all about money, as always.
"You're saying enough raw materials are smuggled in to keep all these factories running? Is that even possible?"
"Let me emphasize again that labor costs are low in China, and there are plenty of people willing to work."
I understood immediately.
"I see. But is smuggling that easy?"
"Well, it's not exactly easy, but it's not difficult either. And with the Hong Kong handover approaching, people are expecting it to become even easier. That's why so many companies are setting up shop in Shenzhen, hoping to capitalize on the Hong Kong special. The number will probably increase."
"Ah."
As we drove to the industrial complex, I listened to Manager Han's explanation and had an interesting thought.
'If the labor cost in China is only 50,000 won per month, running a junkyard here would be a jackpot.'
Chunha Trading enjoyed incredibly high-profit margins, so labor costs weren't a major concern. But it was different for ordinary junkyards.
It was fine for small, independently run junkyards like the one owned by the man who taught me about the business, but for larger junkyards, the primary consideration when buying scrap wasn't just the quality of the goods, but the processing cost.
It was common for them to buy scrap hoping for a 100 won profit per kg and then find that the labor cost was 120 won per kg. So the most important skill for a junkyard owner was the ability to assess the processing difficulty.
"The more I think about it, the more advantageous it seems to run a business in China. The labor costs are incredibly low. And you can avoid tariffs."
"Of course. But the downside, as I mentioned yesterday, is the high crime rate, especially for foreigners."
I smiled, looking at the ten men following us, who were CEO Wu's employees.
"I don't think that applies to me."
"Of course not."
The thirteen of us – CEO Wu's ten employees, Manager Han, Maru, and me – endured the scorching Shenzhen weather and started scouring the industrial complex.
We visited every company with "electronics" in its name and inquired about their products, but we couldn't find any Tamagotchi manufacturers.
"This company manufactures electric fans."
I sighed at Manager Han's words.
"I expected it to be difficult, but this is harder than I thought."
We had already visited dozens of factories, but they were all dead ends.
Maru fanned himself with his hand and said,
"We'll never find it if we keep searching like this. We need a different approach."
Manager Han said apologetically, seeing us racking our brains,
"I'm sorry. We specialize in secondhand goods, so we're not very knowledgeable about the manufacturing industry. We know a lot about secondhand goods retailers and processing companies, but this is new to us."
"It's okay. We're grateful for your help."
We spent the entire day searching, but we returned to the hotel empty-handed.
CEO Wu also returned after work, and the four of us – Maru, Manager Han, CEO Wu, and me – started discussing the situation.
"We'll never find it if we keep searching like this."
CEO Wu asked Manager Han,
"Manager Han, is it that difficult to find?"
"I'm sorry, sir. These companies are different from regular companies, so they're hard to find."
"Really? CEO Park can't just keep wandering around here looking for counterfeit factories."
While they were talking, Maru, who had been thinking hard, said to me,
"Hyung, how about a reverse approach?"
"What do you mean?"
"Instead of searching for factories, we search for counterfeit products and trace them back. If someone is manufacturing them, they must be selling them somewhere. We find the retailers, then the wholesalers, and work our way back to the factory."
I was impressed by Maru's idea.
"That's right! That makes sense. It would be much faster."
I said to CEO Wu urgently,
"CEO Wu, are there any markets or stores that sell counterfeit goods?"
CEO Wu's eyes widened at Maru's suggestion.
"Why didn't I think of that? I must be getting old. I overlooked such a basic strategy. There aren't any stores that specialize in counterfeit goods, but they sell a lot of them at night markets in Shenzhen. They should be open by now."
I snapped my fingers.
"Alright, let's try the reverse approach."
I convinced CEO Wu to stay behind and headed to the night market in Shenzhen with Manager Han and four of his employees.
It was late at night, but the streets were filled with stalls selling all kinds of food and goods.
"Wow, this is my kind of place."
I had always preferred shabby restaurants to fancy ones and traditional markets to clean supermarkets.
The chaotic and messy atmosphere of the night market and the tantalizing aroma of food excited me.
"This smells amazing."
Maru, on the other hand, who preferred clean and organized places despite his large build, wrinkled his nose and said,
"You like this smell? I think it's disgusting."
I ignored Maru's disgust and went from stall to stall, sampling the food. I was captivated by the exotic flavors and aromas I had never experienced in Korea.
"Hmm, so this is yang kkochi (Chinese lamb skewers). This is delicious."
Maru tried a bite hesitantly, but he didn't touch it again.
"Hyung, aren't we here to find Tamagotchis? Can you afford to be so leisurely?"
"I'm looking, aren't I? It's good to fill my stomach while I'm at it."
I led the group through the stalls, enjoying the sights and sounds.
We found a stall selling electronic products near the end of the market.
"I think we might find it here."
The stall was filled with all sorts of items, from telescopes and mini fans to children's toys.
I took out the Tamagotchi and said to Manager Han,
"Can you ask if they sell these?"
Manager Han asked the stall owner, who shook his head, saying he didn't know. I clicked my tongue in disappointment.
Manager Han tried to console me.
"This is just the first electronics stall we've visited. We'll find it if we keep looking."
We spent three hours exploring the night market, but we couldn't find anyone selling Tamagotchis, and the group started to get tired.
My initial excitement also subsided, and a sense of unease crept in.
"What if there are no counterfeit Tamagotchis yet? Maybe it's because it's a relatively new product."
"We haven't seen everything yet. Let's keep looking."
And finally, at the last stall, we found it.
I smiled.
"We found it."
We persuaded the reluctant stall owner with money and found the wholesaler he was buying from. After much pleading, assuring them that we had no malicious intentions, we finally managed to contact the owner of the counterfeit factory.
"He's asking why we're looking for him."
"Ask him what kind of IC chips they use for manufacturing Tamagotchis. And if they need cheaper IC chips."
Manager Han spoke to the factory owner on the phone, and Maru and I watched nervously.
Manager Han nodded as he listened and then said,
"He's asking how cheap they are. He's currently using Fujitsu IC chips, which are known for being the cheapest. He wants to know if we have anything cheaper."
I cheered internally and said,
"Yes, tell him we have them. Sasung, Fujitsu, Toshiba… we have them all."
The IC chips I had processed came from various manufacturers.
Manager Han smiled after a long conversation.
"He's going to give us his address. He says it's too late today and wants us to visit his factory tomorrow."
"Finally! Good, good, very good."
We celebrated with a toast after the call ended.
"CEO Park, congratulations. You finally found it."
I waved my hands at CEO Wu's congratulations.
"It's not a done deal yet. They haven't agreed to buy them. We'll see tomorrow."
"I guarantee it'll work out. No one runs a counterfeit factory if they're willing to use expensive, genuine components when they can get cheaper alternatives."
I nodded in agreement.
"I think so too, but you never know. Anyway, let's celebrate. It's a good day."
We all raised our glasses and chatted. Maru said,
"I'm glad we found it, but how are you going to handle the processing?"
"The IC chip detaching process?"
"Yes, the lead residue is a problem, and it's time-consuming. We need to solve that."
I smiled at Maru's question and said to CEO Wu,
"CEO Wu, please don't misunderstand me."
"Misunderstand what?"
"I've been thinking about it, and I think Chunha Trading needs to expand into China."
My sudden declaration of expansion into China was met with silence.
CEO Wu's face hardened at the news that I, his biggest client and supplier, was planning to enter the Chinese market directly.
"You mean you're going to set up a factory in China? That's not exactly welcome news."
I waved my hands.
"That's why I said don't misunderstand. We'll continue the secondhand goods business as usual."
CEO Wu looked puzzled, so I continued explaining.
"Once the IC chip business starts, we'll need to process them in large quantities. Considering the environmental regulations and the labor costs, China is more advantageous than Korea. We'll just handle the IC chip part of the business in China. It would be difficult for me to handle the secondhand goods business directly in China due to the language barrier and other issues. And I've realized once again how valuable a trustworthy partner is. I wouldn't do that to you."
My explanation seemed to reassure CEO Wu, and his expression softened.
"I might not be a saint, but I wouldn't betray you like that. Our business will only grow, not shrink, so don't worry."
"I'm relieved. I trust you, but I just wanted to make sure."
"Hahaha, don't worry. I'll need your help with our expansion into China. I look forward to continuing our partnership."
I extended my hand, and CEO Wu shook it, saying,
"Likewise."