Technology invades the modern world

Chapter 337 The Change of Initiative
What businessmen could see, how could East Berlin not see?

East Germany, a European country that had already established dedicated Chinese companies for entrepot trade before China demonstrated its potential in consumer electronics, had always accurately assessed China: it was an untapped gold mine.

There are differences between gold mines. If in the past, the value of a gold mine in China was a mine with a mining difficulty of 10 and a value of 1, then after the emergence of Panda Electronics, its mining difficulty remained at 10, but its value became 5. Now, the mining difficulty is at most 5, but the value is at least 50, and the potential benefits are immeasurable.

Because of the rapid pace of progress, China's technological advancements are so fast that you can't say this is already the pinnacle for the Chinese people; perhaps this is just the starting point.

Silence fell over the room. Li Mingde was looking at the document Gerhard had handed him, titled "Agreement on Deepening Cooperation between China and Germany." After a cursory reading, only one thought remained in his mind:
"This is less about deepening cooperation and more about a delegation agreement, which entrusts the sale of Chinese products in Europe entirely to East Germany."

The general idea is that every spring, East Germany and China would set prices for the products they wanted to sell that year: how much per kilogram of tea, how much per piece of porcelain, how much per bolt of silk, and electronic products would follow a similar pricing model. The two sides would negotiate and determine the price and order quantity, and East Germany would be responsible for sales. China would not be responsible for how much they sold.

This is somewhat similar to the CMEC model, but a more flexible CMEC model.

If China is worried about sales, this would be a good way to cooperate. It would be equivalent to East Germany helping you solve the sales problem, which would be a guaranteed income for China regardless of the circumstances.

At the beginning of the year, I was able to clearly define my production volume for the year, and the East German side was even willing to pay half of the deposit in advance, which was already a very sincere offer in the past.

It's also very suitable for countries in the Socialism camp right now. With a planned economy, it's best to have everything planned out. As for the most important part of your foreign trade, I finalized it with you at the beginning of the year.

Li Mingde thought to himself that even if it were last year, China would have gritted its teeth and signed the agreement, but now, it's not enough.

"Comrade Bell, I will send this cooperation agreement back to Yanjing by telegram in a moment. Yanjing will definitely study this cooperation agreement carefully. As for whether Yanjing is willing to agree, I cannot give you a specific answer."

Li Mingde was very polite. He didn't need to play the bad guy; his job was to be in charge of the exhibition and showcase China's technological masterpieces at the Socialism-sponsored trade fair.

China has no shortage of orders.

Gerhard nodded and said, "Understood, Comrade Li. Regarding Crimson One, we would like to order a batch first. Could you provide a preliminary quote?"

Li Mingde stood up, took out a pre-prepared price list from his briefcase, and handed it to the other party:

Issuing unit:
China Panda Computer Export Company

Yanjing
Quotation No.: LTF-68-001
Dear Sir/Madam,

We are pleased to submit a quotation for the Crimson One computer system, an advanced mainframe computer designed for high-performance data processing, scientific computing, and industrial applications, offering reliability and efficiency in accordance with modern technology standards.

Product Description:

Model: Crimson One Key Features: High-speed processing unit, expandable memory, multi-channel input/output capability, and compatibility with standard peripherals.

Delivery: Port specified by the buyer.

Delivery time: 6-12 months after order confirmation.

Price List:
Unit price (USD), including central processing unit, standard memory configuration and basic peripherals, is $5000000 per unit.

Orders exceeding 50 units are eligible for quantity discounts that can be negotiated.

Annual maintenance service contract for comprehensive on-site maintenance, including preventative services, software updates, and priority technical support, for one year. 500000 per unit per year, offered only if the total purchase volume in the buyer's country exceeds 10 units, renewable annually.

Temporary repair service includes one fault diagnosis and repair, excluding parts, at a rate of 200000 per instance, applicable only if a maintenance contract has not been purchased.

Spare components or modules required for replacement parts repair will be quoted separately, with pricing based on the specific parts needed, and costs will be provided after fault assessment.

terms and conditions：
Payment: A 30% deposit is payable upon order confirmation, with the balance due upon delivery. All payments are made in US dollars via an irrevocable letter of credit.

Maintenance eligibility: Annual maintenance services are only available to countries where the total sales of Crimson One systems exceed 10 units, ensuring economies of scale for service deployment.

Warranty: 12-month standard warranty against hardware defects from the date of delivery, excluding misuse or unauthorized modifications.

Repair Policy: In the absence of a maintenance contract, all repairs are charged per incident.

Temporary repair costs include travel and labor costs; spare parts are charged separately and subject to availability limitations.

Validity period: This quotation is valid for 30 days from the date of issuance, or until the end of the Leipzig Trade Fair, whichever is later.

Applicable Law: Subject to the laws of China and international trade agreements.

Force Majeure: We are not liable for delays caused by unforeseen events such as natural disasters or political disruptions.

We invite you to discuss customization options or visit our booth at the Leipzig Trade Fair for a demonstration.

If you need more details or a reference for existing installations, please contact our representative.

Telex: CNCOMP 1968

In this timeline, China fully appreciated the benefits of the US dollar through trade with the US during the Vietnam War, and made a fortune in US dollars by selling portable calculators.

China has found that whether purchasing goods from Hong Kong and companies in the liberal camp or from companies in the Socialism camp, settling in US dollars is much more convenient, so everyone accepts this method.

Significantly reduce transaction friction costs.

Gerhard was stunned after reading it. "Five million dollars? You're robbing me!"

He thought Chinese goods were worth at most three million US dollars, and they could easily resell them for five million. But now you're telling me it costs five million? Where did my profit go?

Li Mingde said calmly, "Comrade Bell, have you forgotten what I said during the product presentation this morning?"

“What did you say?” Gerhard asked.

Li Mingde said, "We have already stated that our products are far superior to IBM's similar products, with better performance, better stability, and easier-to-use features. So our prices are the same as IBM's. Is there any problem with that?"

The autumn in Leipzig was so cool, but he was already sweating: "Li, we are the best trading partners, we cooperate in many areas, don't we? Even if your products are better than IBM's in terms of specifications, IBM's products have been tested by the market for a long time and are very mature."

"China's Crimson One is the first large-scale computer to be marketed. Both the five million dollar price tag and the five hundred thousand dollar annual maintenance fee are too expensive. Your first sale requires you to establish a foothold in the market."

Gerhard tried to persuade them earnestly, thinking to himself why the Chinese weren't playing by the rules; they weren't like this before.

“Yes, that’s why we’re asking for the same price as IBM, and not higher, because we’ve taken into account the issue you raised,” Li Mingde said with a smile. “And you have to consider that only China sells computers of the same model as the Model 85. East Germany might not buy them, but many other countries will.”

Even in Western European countries, I believe companies that can't get their hands on the Model 85 will be interested in our Crimson One.

Gerhard's expression changed: "They are a country of the Freedom faction, while we are brothers in the same faction!"

Something was wrong. Gerhard was shocked to discover that China was completely different from what it used to be. Previously, East Germany had always been the one controlling China.

In the past, China imported a large number of products from East Germany, mainly industrial facilities, such as the Zhengzhou Machine Tool Plant, the Yanjing Radio Equipment Plant, the Fertilizer Plant, and the Optical Equipment Plant.

Carl Zeiss, East Germany's most famous optical manufacturer, once sought a division of labor, hoping that East Germany would specialize in precision machinery and machine tools, the Soviet Union would handle mechanical parts, and China would act as a raw material supplier and low-end product assembler. The China of the original timeline refused, but the China of this timeline agreed.

East German experts, fearing that China would catch up through imitation and replication in projects in China, deliberately withheld key technical details. In the construction of chemical and machinery plants, East Germany avoided transferring knowledge that might jeopardize its market position, forcing China to invest additional resources in testing and development.

Although Chinese engineers visited East German factories to learn, East Germany only provided partial test data for the coal liquefaction project and did not share it in its entirety.

Similar incidents were not uncommon, with the worst being the Zhengzhou Machine Tool Plant, where East Germany deliberately delayed construction, taking a full ten years to finally complete.

It can be said that the history of cooperation between China and East Germany was a history of being manipulated in various ways, after all, you need someone's help, and East Germany's industrial strength was the strongest in the entire Socialist camp.

Now the offensive and defensive momentum is different.

Li Mingde understood this perfectly well. Looking at Gerhard's disgusted expression, he thought, "So this is what happens to you? It's finally our turn to control you."

Moreover, this wasn't really about manipulating them; Li Mingde just felt a sense of satisfaction watching the East Germans get their comeuppance.

Since he learned about the project in 1957 in which East Germany exported parts to China, the price of the parts imported from Austria was $3114, but they were resold to China for $5 in the price list.

Keep in mind that this was in 1957. The money for China's industrialization was saved bit by bit. Even if you sold it for double the price, Li Mingde wouldn't have thought much of it. But East Germany actually multiplied the price by ten and then increased it again.

And now you're telling me we're brothers on the same side? Isn't that a bit too ridiculous?

Li Mingde explained, "Of course, that's why I met you first. We are, of course, brother countries."

Furthermore, this price is negotiable. If you are willing to transfer some Zeiss-related technology, the price is entirely negotiable.

Gerhard asked cautiously, "What kind of technology do you want?"

“We hope to import all the technologies related to lithography from Carl Zeiss.” Li Mingde pointed to the Crimson One in the distance of the exhibition hall: “Crimson One can bring us enough US dollars to purchase Zeiss’s technology.”

Carl Zeiss has a very deep technological reserve, and even now, Carl Zeiss is more technologically advanced than West Germany's Zeiss.

East German Zeiss's lens system was the first optical company to achieve submicron-level pattern transfer, which was more advanced than early Western lithography.

As an auxiliary tool, East German Zeiss also developed measuring instruments with integrated data processing functions, such as coordinate measuring machines, for semiconductor wafer inspection and quality control.

And projection lithography machines that support micron-level resolution.

In short, without the cooperation with East German Zeiss, China would not have been able to build the Deep Red I so quickly on its own.

However, China was clearly not satisfied with the fact that the lithography equipment was still in the hands of East Germany. They had greater ambitions. They hoped to introduce the lithography technology all at once and experiment with the concepts of the future on the lithography equipment.

Instead of what it is now, where China neither dares nor wants to engage in further cooperation with East German Zeiss, and to let them know the technological roadmap for the next generation, the generation after that, and future lithography.

The collaboration between Area 51 and Carl Zeiss over the past few years has allowed them to understand Carl Zeiss's profound heritage, and they want to take this opportunity to swallow Carl Zeiss whole.

Gerhard calmed down. "Lee, money can't buy skills."

Li Mingde nodded: "Of course, so we can also consider trading the technology of Crimson One, as long as East Germany can offer enough incentives to interest us."

Gerhard was now intrigued. "Crimson One?"

Li Mingde nodded: "That's right. Everything from semiconductor circuits to design concepts to specific manufacturing can be sold, but the essential option for the transaction is the technology related to Carl Zeiss lithography equipment, but that's not enough."

Of course, this is something we can't agree on between the two of us; it needs to be discussed at a higher level. However, you can first convey our intentions to the East Berlin side.

Gerhard came with expectations, and he left with expectations as well.

China seized an unprecedented moment: OGAS was about to be rolled out, and East Germany wanted to take the initiative. At any other time, East Germany would not have been willing to sell its core lithography technology.

As for the reunification of East and West Germany, when that time comes, West Germany and the Jews will happily come to receive the spoils of war, and there will be no chance for the Chinese.

The East German newspaper Neues Deutsche Zeitung reported on its front page that "China's deep red has shocked Leipzig."
In the bustling hall of the Leipzig Trade Fair in the fall, a miracle from the East made a quiet appearance, instantly igniting the enthusiasm of the entire Socialism camp.

The Deep Red chess AI program brought by the Chinese exhibitors was not only a technological demonstration but also a declaration of victory, directly responding to the Deep Blue program previously launched by IBM America, marking the rise of Eastern technological power.

On the first day of the expo, the deep red exhibition area has already become the focus.

Crimson One was a transistor computer independently developed by China, and Crimson was the program it carried.

The booth was packed with people. East German Foreign Minister Gerhard Weiss personally inspected the booth and excitedly told reporters: "Crimson proves the superiority of Socialism's collective wisdom. It is a powerful weapon for our camp to fight against capitalist technological monopolies."

The game demonstration became the highlight of the event. One guest who participated in the game remarked afterwards: "This machine is so calm; it's like it reads my every move. It's much more powerful than I imagined."

Chinese engineers were very modest about this: "Crimson One is the product of our self-reliance and hard work." However, the official Chinese representatives were far less modest, repeatedly emphasizing that Crimson One was far superior to the IBM System/360 computer, a claim that this newspaper has not yet been able to verify.

Soviet representative Ivan was also present to observe. He told reporters, "This is not only an achievement for China, but also a source of pride for the entire camp. We will strengthen cooperation and promote the application of AI technology in industry and defense."

This is seen as a gesture of goodwill towards China.

A West German journalist who infiltrated the expo secretly reported: 'China's Crimson may break IBM's monopoly, but under Cold War export controls, can this technology spread? Is the professor related to the diffusion of this technology?' It is said that America's intelligence agencies are closely monitoring this matter, fearing that Eastern computers will sweep the globe.

Expo data shows that this year's visitors exceeded 600,000, and orders for the Chinese exhibition area, excluding Crimson No. 1, surged by 50%.

The crimson debut not only attracted buyers from Eastern Europe but also sparked heated discussions about the technology race.

A Czechoslovakian visitor told reporters: "Two years ago, America's Ark of Technology amazed us; today, Leipzig's crimson hues fill us with pride."

Huaguo had just stated that Crimson's technology was available for trade when Foreign Trade Minister Hader personally came to the site to discuss the matter with Li Mingde.

“Li, we very much want to facilitate cooperation, but exporting optical equipment, especially the most advanced technologies related to lithography equipment, is not something East Germany can decide; it requires Moscow’s approval.”

As soon as Hader spoke, Li Mingde knew that East Berlin was interested, which was why they came to discuss such specific matters and how to achieve them in practice.

“Li, because of the existence of COMECON, if we want to export this kind of technology, we need the approval of the COMECON Executive Committee. The Soviet Union has a de facto veto power,” Harvey continued.

After 1953, the Soviet Union promoted industrial specialization among its member states. East Germany was positioned as an expert in precision engineering and optics. When East Germany exported equipment to other Eastern European countries, it needed the consent of the Soviet Union to ensure that it would not interfere with the Soviet Union's own export market.

Especially for technologies like photolithography, which are among the most advanced, the consent of the Soviet Union was absolutely required.

"Therefore, I hope that East Berlin will first purchase 10 Deep Red computers to be exhibited in Moscow, so that the Kremlin can fully appreciate China's advantages in the field of mainframe computers."

We will then lobby Kremlin officials, especially Comrade Kosygin, to achieve our goal.

We hope you can convey our demands back to China. At the same time, purchasing 10 units at once at a unit price of $500 million is a bit too expensive. We hope you can offer a discount.

And they arranged for corresponding engineers to go to Moscow, exhibit the equipment, and then bring it back to East Germany to complete the installation, training, and delivery. "Harder was very keen to push this forward."

From the perspective of the top brass in East Berlin, this was a huge market; East Germany needed Crimson, whether it was OGAS or the computer market in Europe as a whole.

(End of this chapter)