I bought a prison in the United States.
Chapter 79 Trust
Frank looked at Craig, a hint of approval flashing in his deep-set eyes:
"You're the one Boss Chen mentioned, the one from Lockheed?"
Craig paused, then asked, "How did you know?"
"The way you described the problem is that you first said it could be solved, and then you talked about the specific parameters to adjust."
"This is the way of thinking of aerospace engineers: start with the conclusion and then expand on the parameters."
"But people in the manufacturing industry usually do it the other way around: they state the parameters first, and then they state the conclusions."
He put the parts back on the stack and turned to Ringo.
"Mr. Chen, you mentioned at the last business meeting that your factory can produce stamped parts with a tolerance of 0.1 millimeters. I have brought a formal contract with me today."
Frank took a brown paper envelope from his inside suit pocket. The envelope was sealed with red wax, and the character "Cao" was pressed onto the wax in cursive script.
This method of sealing is quite rare in commercial contracts; most people have long since switched to using glue or simply not sealing at all.
But Frank still uses sealing wax, which has always been his habit.
His grandfather taught him to seal letters with sealing wax. His grandfather used to own a hardware store in San Francisco, and every letter sent to suppliers had to be sealed with sealing wax.
The purpose of sealing wax is not to prevent others from opening letters; if someone really wants to open a letter, sealing wax cannot stop them at all.
The reason for this extra step is to tell the recipient that the writer has taken every word of the letter seriously.
Lin Ge took the envelope and removed the sealing wax.
The contract was six pages long, and every clause was neatly typed.
It's all written in engineers' language, clear and direct, with every number accurate to two decimal places.
The contract is very simple:
"Frank Cao's valve company commissioned the McLean County Correctional Center to manufacture twelve different sizes of butterfly valve plates and stem connectors."
"The materials are provided by Frank, and the processing fee is calculated per piece, ranging from $3.2 to $8.5, depending on the complexity of the part."
"The total value of the first batch of orders is US$24,500."
Frank prepaid 60% of the order amount, which was $14,700.
After deducting Oklahoma's 4% sales tax, federal income tax withholding, and various miscellaneous fees, the net prepayment is approximately $11,200.
Lin Ge stared thoughtfully at the 60% prepayment.
In the manufacturing industry, the standard advance payment ratio is 30%.
50% is already a very high level of trust.
60%, that's Frank's way of saying this deal, "I trust you."
This trust is especially valuable for two parties who have never cooperated or communicated before.
"Mr. Cao, isn't a 60% prepayment a bit too high?"
Lin Ge looked up, somewhat puzzled. This wasn't the first time the other party had done business.
He felt there must be other reasons besides simple trust.
"Does Boss Chen think I was too hasty?"
"I'm just a little curious."
Frank stood under the fluorescent lights in the factory, looking at the machines that were running, as if he were lost in some kind of memory.
"Around 1971, my first factory was in San Francisco."
"It was a small workshop with only five machines and twelve workers."
"I have a client, a shipyard in Auckland, who gave me a big order, an order that would allow me to survive."
"But they didn't pay any advance payment, not even a single cent."
"They told me at the time that big companies don't pay advances; that's the rule."
He put his hands in his suit trouser pockets.
There are several old white scars on the back of his hands, left from being splashed with hot iron filings in the workshop over the decades.
"I had just entered the industry at the time, and although I had some doubts, I didn't ask any questions."
"I borrowed money to buy materials for that order and hired more workers. We worked eleven hours a day to deliver the goods on time."
"As a result, that shipyard delayed my payment for six months."
"I call every day, I write every day, and every day I'm told that I'll be paid next week."
"Six months later, two-thirds of my workers left because I could no longer pay their wages."
"When the shipyard finally made the payment, they deducted 15% as a penalty for breach of contract. As the party that breached the contract, they actually wanted to deduct money from my account."
"The reason for the penalty is that they said several of the goods I delivered had minor scratches on the surface, which is a quality issue."
"I later found out that the shipyard used this method with all new suppliers."
"They don't give advance payments first, they lure small suppliers into taking out loans to expand production with large orders, then they delay payment and finally deduct penalties for non-existent quality problems."
"That year, seven small suppliers in San Francisco went bankrupt because of the same client's same tactics."
"I was the only one who didn't fall because my father sold his house in San Francisco to help me pay off my debts."
Lingo listened quietly, and even from the description alone, he could sense Mr. Frank's difficulties, anger, and helplessness at the time.
Frank said:
"So later I set two rules: first, for all new suppliers, the first order must be at least 50% prepaid."
"Secondly, never include unfair clauses in contracts such as 'The buyer reserves the right to the final definition of quality issues.'"
He looked at Lingo.
"My lawyer raised the same concerns with you, arguing that such a large prepayment would increase my cash flow risk."
"Revoking the final definition right would make me lose my negotiating advantage in the event of a quality dispute."
"I know all of this, but I don't want to do business that drives people to the brink of despair anymore."
He pulled his hand out of his pocket and patted Lingo on the shoulder.
"Keep the contract and look at it at your leisure."
"Call me anytime if you have any questions. If there are no problems, just sign it and send it back to me next Monday."
He walked out of the factory and toward the black Lincoln Town Car.
The driver opened the car door for him, he got in, and the door closed with a solid sound—the sound of German steel and precision welding.
The Lincoln Town Car was one of the last full-size luxury sedans produced in the United States in 1984.
In a few years, these vehicles will lose market share to small luxury cars from Japan and Germany, becoming another footnote to Detroit's decline.
In the Tulsa sunset, its taillights resemble the tail end of a bygone era.
It was 7 p.m., and it was completely dark.
Lin Ge sat in his office chair, with today's financial records spread out in front of him.
Peterson's equipment rental fee is $5100, payable in full upfront.
Paul received a $2000 advance payment for cleaning and packaging.
Frank's contract prepayment was $11200.
After deducting equipment rental fees, the net income was $8100.
He wrote the numbers on a new sheet of paper, his handwriting neat and each line perfectly aligned.
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