Rebirth 1977 Great Era

Chapter 826 Knowing the Future, Dialects Standing Outside of History (Bonus Chapter for Monthly Tickets: 3K Chapters)

"Brother Fang, this is a handwritten version of the Thirteen Ghost Needles by my master. It is the original version and is slightly different from the one I am using now. You can use it for comparison."

Chu Qiaonan handed the book "Thirteen Needles of Ghost Gate" to Fang Yan.

This is not just a book; this is Chu Qiaonan's attitude.

By accepting the offer, Fang Yan essentially agreed to Chu Qiao Nan's request to join their group.

The next second, Fang Yan reached out with both hands, took the book from Chu Qiaonan's hands, and then said with a smile:

"Then I won't be polite."

Chu Qiaonan smiled and nodded, then said to Fang Yan:

"I like Brother Fang's straightforwardness; he's not shy or pretentious at all."

Next, Fang Yan had Lao Hu hand him Chu Qiaonan's contract.

Chu Qiaonan glanced at the contents of the book, nodded, took out a pen, quickly signed her name, and pressed her fingerprint on it.

The contract was in triplicate, and Chu Qiaonan quickly signed all of them, as if afraid that Fang Yan and the others would change their minds.

After signing, Chu Qiaonan kept her copy, then had the other two copies handed to Fang Yan, and said to them:

"Now I'm one of them, right?"

Hu Daohu nodded and said:

"Of course, you are now one of our shareholders."

"As long as you complete your tasks according to the contract, you will also be entitled to the subsequent resource equity."

Chu Qiao Nan responded:
"I need a list of our products. You don't need to give me samples, just the list will do. I will contact people in Switzerland to launch a marketing campaign in Central Europe."

Hu Daohu asked curiously:

"Didn't you say you only wanted to open up the Swiss market? You have connections throughout Central Europe?"

Chu Qiaonan said:
“I have a lot of acquaintances there, so we can give it a try. As you know, the Swiss market alone isn’t that big. However, Switzerland borders Germany to the north, Austria and Liechtenstein to the east, Italy to the south, and France to the west. The boundaries between their countries aren’t as clear-cut as they are here. Once the market expands, many things can be shared.”

At this moment, Fang Yan said:

"As far as I know, there are quite a few restrictions on traditional Chinese medicine in Europe, right?"

Chu Qiaonan was slightly taken aback, not expecting Fang Yan to say such things. This clearly showed that Fang Yan had done research on the European market.

He didn't take on everything, but instead said:

"Yes, there are indeed some regulatory barriers. Various countries require that imported and exported drugs must undergo clinical trials and component analysis. Traditional Chinese medicine compound formulas have complex components, making it difficult to provide data that meets the standards of compound Western medicines."

"Sweden and the Netherlands have begun testing Chinese medicinal herbs for lead and arsenic content, which must be ≤5ppm. However, due to limitations in our medicinal herb processing technology, there may be instances where the levels exceed the standard."

He said in dialect:

"Not only that, the European medical community classifies traditional Chinese medicine as alternative medicine, believing that it lacks evidence-based medicine support. For example, the UK's 1976 Medical Care Act restricts the use of traditional Chinese medicine as a prescription drug."

He had gathered all this information before starting his first business deal with Milos and his team.

Fang Yan paused and continued:
"In addition, there is the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), which restricts the circulation of traditional Chinese medicines containing ingredients such as rhinoceros horn and tiger bone."

“Western European countries impose a technology blockade on Chinese products. I know that French customs has a 60% opening rate for packages labeled as traditional Chinese medicine, which has been statistically verified.”

"In addition, they also have a trade quota system, which is actually a non-tariff barrier imposed on China by the European Community (EEC). Our traditional Chinese medicine is classified as other miscellaneous products, and imports require additional approval."

Fang Yan's meaning was clear: he certainly believed that Chu Qiaonan could handle the Swiss route, but he was skeptical about the possibility of handling all the routes in Central Europe.

Chu Qiaonan felt a little embarrassed. He had originally wanted to make a good impression, even if he couldn't succeed, he could still gain some goodwill. After all, as long as the Swiss route was successful, Fang Yan and Lao Hu wouldn't blame him if the other routes failed, since he had tried his best. However, he didn't expect Fang Yan to know more than he did.

He scratched his head and said:

“Well… what Brother Fang said does make sense, which is why I said we should find a way to expand the market.”

However, at this moment, Hu Daohu stroked his chin and said:
“If they boycott our country’s products, I have a shell company in Japan that makes traditional Chinese medicine. I can use that company’s name to go there.”

“We repackage the product through a Japanese company, using the analysis certificate for Kampo medicine to circumvent ingredient checks. We also make minor adjustments to the ingredients. The contract stipulates that the Japanese shell company will be responsible for any quality issues, while the Chinese company will only act as a raw material supplier, thus reducing the risk of legal liability.”

"Moreover, the comprehensive tariffs for products transiting through Japan are 8%-12%, while the comprehensive tariffs for direct exports to Europe are 25%-30%. The 'Made in Japan' label can increase the price of similar products by 50%-80%. For example, Yunnan Baiyao buys from us, then changes the label to Taisho Pharmaceutical, and sells it there for double the price." "Just by being a middleman, you can make so much money."

Fang Yan understood. Lao Hu had consulted relevant personnel. To put it bluntly, he was using the legality of Japanese Kampo medicine technology and its distribution channels to break through European barriers, and then controlling risks through legal framework design, so as to maximize profits in the short term.

Chu Qiaonan was also thinking about what Lao Hu said. After a while, he said:

"Brother Hu, I think that over-reliance on Japanese channels may marginalize our own brands. My personal opinion is that we should go through parallel exports, such as establishing a subsidiary in Switzerland to directly purchase our raw materials and then process the semi-finished products there. We should gradually build independent channels. In the long run, we should focus on independent technology research and development and brand building to avoid being controlled by others. Although Japan is good, there are still many potential risks. For example, once we grow big, Japan will inevitably find out in the long run. In the short term, it may be profitable, but in the long run, I think the risks are too high. We should find a way to deal with it."

After hearing this, Lao Hu glanced at Chu Qiaonan and then said:
“Setting up a subsidiary in Switzerland… that’s not urgent. Let’s focus on the short-term ones first. You need to let our other shareholders see the money first. As long as we have money, we shareholders have more options than us.”

"Where you stand determines where you stand." Lao Hu is currently dealing with the Overseas Chinese Affairs Office of the State Council and the Ministry of Health. They have already invested a lot of resources and are now in dire need of returns. As for long-term investments, Lao Hu hasn't thought that far ahead. The most important thing is to make money and keep the shareholders happy.

Fang Yan then stepped forward as a mediator and said:
"Yes, Lao Hu is right, but Qiao Nan's overall direction is correct."

"Let's stick to the original plan for now. Don't take too big a step. Let's take it one step at a time and deal with the most important thing right now."

“Our products are good, and we hold the intellectual property rights. That’s our confidence. Even if we don’t go out to them to open up the market, they will come to us on their own, just like the orders from Yugoslavia.”

After all, Fang Yan and Lao Hu are the major shareholders of A-shares, while Chu Qiaonan is just a leader of B-shares. He needs to sort out the route in Switzerland first and prove his value before Fang Yan and the others can trust him.

We're all shrewd people; let's stop making empty promises and focus on getting things done properly first.

Fang Yan agrees more with Lao Hu's decision, as this plan was more reasonable under the historical conditions of 1978.

The transition can be completed by starting the construction of independent channels within two years and setting up a strict technical protection mechanism.

This path of "borrowing a boat to go to sea" and then "building a boat to go to sea" was actually the optimal solution for the internationalization of traditional Chinese medicine in the early stages of reform and opening up. The key is to seize the opportunity for transformation and avoid falling into path dependence.

A successful historical example is Tongrentang's entry into Southeast Asia through Hong Kong's entrepot trade in 1980. Initially, it used the "Made in Hong Kong" label, but after 5 years, it switched to its own brand and increased its market share to 30%.

Of course, there are also failure cases. For example, Tianjin Darentang relied too much on Japanese channels in 1982, which led to the loss of 70% of European orders after the Japanese side unilaterally terminated the cooperation in 1985. It took eight years to recover the market.

The timing of these decisions is crucial.

And those who speak the dialect happen to be the ones who know the important time points of these decisions.

In the year or two from 1978 to 1979, they made quick profits by utilizing Japanese channels, while secretly setting up a Swiss subsidiary to test the European market response by importing "Kampo medicine" from Japan and then re-exporting it to Switzerland.

In the third to fifth years, from 1980 to 1983, an extract processing plant was established in Switzerland to circumvent CITES restrictions, gradually replacing the Japanese packaging and transitioning to a Sino-Swiss joint production label.

When it's profitable, make as much money as possible. As long as traditional Chinese medicine can generate profits, the government's policies will favor it, allowing them to invest more resources in it.

The dialect needs to be considered not only from their own perspective but also from the decisions made by higher authorities.

Therefore, he must be the one to choose the optimal solution.

After all, he was someone who stood outside of history.

Knowing the future course of history and important time nodes.

Money is the most important thing right now. Only with money can everything else follow. It's not just about the support from superiors, but also about having a united group of people around us. Only then will we have the ability to acquire the secret formula and the capital to fight against those evil external forces.

So you can't make a mistake, or it'll be all over.

Lao Hu said:

“Then let’s decide on this for now. In the initial stage of the China-Europe project, we will demonstrate our profitability to shareholders such as the Ministry of Health and the Overseas Chinese Affairs Office of the State Council, and use the Japanese shell company to quickly generate cash flow to meet the return expectations of all parties.”

Fang Yan nodded:
"Well, then I'll leave this to the two of you."

Old Hu smiled and looked at Chu Qiaonan.

Chu Qiaonan was also straightforward; without saying much, she immediately nodded.

"clear."

"Everything is proceeding according to plan."

P.S.: I still owe you 78000 words after finishing this chapter.

That's all for today, please come early tomorrow.

Lao Feng is working hard to write tomorrow's code.

(End of this chapter)