Chapter 56
Translator: Dreamscribe
Bonds.
Not only financial firms but also ordinary people often engage in bond trading.
However, the world of bonds was more complicated than expected.
The most common mistake people make is misunderstanding the relationship between interest rates and bonds.
Most people think that if interest rates go up, bonds will rise as well.
But in reality, it is the opposite.
When interest rates rise, bond prices fall.
Bonds pay out at a fixed rate, so when interest rates go up, their attractiveness inevitably decreases.
For this reason, government bonds and corporate bonds are affected by interest rates and either fall or rise in price.
Recently, as the United States ended its era of zero interest rates, it was gradually raising rates.
Accordingly, other countries were also raising their rates, and after Brexit, the volatility became even greater.
Furthermore, as interest rates rose in Korea as well, bond prices were gradually declining.
“I heard about it. You’re collecting bonds related to Geumwoo Shipbuilding, right?”
It was CEO Kim Doo-young, who had been saying for some time now that he wanted to have a meal together.
Today, we finally met one-on-one.
“Ah, yes. Thanks to Kwangwoon Shipping doing such a great job, all the offshore plant bond prices have hit rock bottom.”
While bond prices were falling due to rising interest rates.
The shipping sector was really in bad shape.
Kwangwoon Shipping was sweeping up all the work, and with the surge in oil prices, the Asian region was practically devastated.
In such a situation, who would want to buy bonds from a shipping company?
Of course, I also thought it was a crazy move.
But my intuition was drawn precisely to those bonds.
“How much did you buy them for?”
“At 10% of the price.”
“…10% off?”
“No. I bought them at one-tenth the price.”
“!?”
CEO Kim Doo-young froze with his glass in hand, completely startled.
“W-What? Even with such a slashed price, the banks still sold them?”
“You know how it is. The Singaporean banks are facing a bank run crisis right now. They didn’t have a choice. If the companies go into corporate restructuring and default, who knows when they’ll see their money again.”
That’s why they threw them.
At first, even the banks tried to hold on.
But as rumors about a crisis in the shipping industry spread and no one was buying bonds, they eventually gave up and dumped everything.
Because they needed cash immediately.
“You’re really something. Department Head Jung’s blueprint is shaping up perfectly.”
“…Blueprint?”
“Hehe. I know all about it. You’re buying up bonds to reduce the debt of the company you’re trying to acquire, aren’t you?”
Honestly, even as I was purchasing the bonds on instinct, I was half in doubt.
Why was my gut reacting to those bonds?
Especially to bonds from a company that was practically collapsing?
Then suddenly, I had this thought.
Maybe this was about acquiring the company.
And sure enough.
CEO Kim Doo-young was thinking the same thing.
“To be honest, it’s a waste. There’s no other shipping company holding as much oil as we do, but we can’t handle the flood of contracts, so we have to outsource to other companies. If we could take it all on ourselves, we could turn a huge profit, couldn’t we?”
That part was true.
We had outsourced, but
If we could handle everything without sharing it with others, we could make far greater profits.
“So now you’re trying to acquire the companies that are about to shut down one by one, right? Starting with Geumwoo Shipbuilding. That’s how Kwangwoon becomes a group. Haha. How’s that? Pretty sharp insight, right? I may look dull, but my sense for these things is lightning fast. Haha.”
There’s a saying that interpretation is better than the dream.
Perhaps this was one of those moments.
But a group…
It was a good direction.
If we really ended up forming a group, then my hyung would have no choice but to quit as CEO and ascend to the Chairman’s position.
Ah, hyung.
Even though you submitted your resignation, it seems it will not be accepted.
“If you need anything, just say the word. If it’s Department Head Jung giving the order, I’m ready to jump into the flames without hesitation!”
However, forming a group is no easy task.
It required an extremely cautious approach.
If you recklessly create a group and even one part fails, the damage spreads to everything.
“What do you think, CEO-nim?”
“Well, buying up Geumwoo Shipbuilding’s bonds means you plan to start the acquisition from there, but Geumwoo Shipbuilding builds ships, they don’t operate them, right? So we’ll need a company to operate the vessels coming out of Geumwoo Shipbuilding. That means what we need now is Geumwoo Shipbuilding & Offshore, a shipping operator, and a holding company to organize all of this under one group. These three are the bare minimum.”
“That’s the default setup, right?”
“Yes. Literally the basic structure. But to handle the full volume ourselves, we’ll need more companies than just that. We could group them under affiliates within the group, or just absorb them entirely.”
Right now, all the maritime companies must be frowning.
You can tell just by looking at their stock prices.
But for us, it couldn’t be a better opportunity.
Buy them all up dirt cheap and fill the resource gaps we need.
“Speed is the key. Sure, oil prices are soaring right now, but things could return to normal, and it’s not like our oil reserves are infinite.”
In other words, we had to collect what we could before the discount period ended.
“I think CEO-nim might be even more knowledgeable in this field than our Research Team. If you know of companies that seem like good acquisition targets, could you share a list?”
At that, CEO Kim Doo-young smiled as if he had been waiting for those exact words and handed me a file.
“I actually prepared this in advance. Didn’t I tell you? I’ve got a good sense for these things. I made it this far just by surviving on my instincts. Haha.”
Exactly as he said.
Now I understood how that CEO had risen all the way from entry-level employee to an executive.
“……!”
The moment I opened the file CEO Kim Doo-young handed me, a current surged through my whole body like a jolt.
As expected, my intuition was pointing toward acquiring Geumwoo Shipbuilding first, and then devouring all the related companies one after another to create a massive maritime group.
‘This one hits my intuition right away… but this one doesn’t give me any feeling at all.’
I quickly skimmed through the data and checked only the companies that triggered my intuition.
“Here they are.”
“Hm? A-Already?”
“Yes. Please prioritize acquiring the companies I’ve checked here. Since you’re more familiar with this sector, I’m sure it’s safe to leave it in your hands.”
“Oh, of course. That’s exactly why I’m sitting here, after all.”
“I’ll keep researching, and if I find any more companies worth acquiring, I’ll let you know separately. For now, let’s start with these.”
“Understood, Department Head-nim.”
He was clearly a CEO, and I was much younger, yet he called me Department Head with such respect, it felt a bit awkward.
“And feel free to speak casually. We’re family now.”
“Ahem. W-Would that be okay? That’s really touching. To call me family like that.”
“Yes. It’s more comfortable for me too.”
“Haha. Thank you. But really, if you ever need anything, just say the word. That whole thing about jumping into fire if it’s your order, I meant every word of it.”
“Yep. Thank you, CEO-nim.”
“Aigoo. I’m the one who should be grateful. Haha.”
Now I understood why my instincts picked CEO Kim Doo-young among all the other executives.
He was the kind of talent our company truly needed.
***
Was there ever a dinner as meaningful as the one last night?
CEO Kim Doo-young walked out feeling extremely satisfied.
“The man’s character is just on another level.”
The more he saw, the more he realized just how sincere a person he was.
He must have already mapped out the entire blueprint in his head, and yet he still took the time to respect and consider CEO Kim Doo-young’s opinion.
Proof of that was how Jung Jin-ho received the company list, scanned it quickly, checked the necessary parts, and handed it back.
Even before CEO Kim Doo-young could print out his own list, it meant Jung Jin-ho had already long calculated which companies would be ideal for acquisition.
“With that level of talent, he could afford to be arrogant.”
He was making massive amounts of money through his remarkable performance at Kwangwoon Securities.
There was a reason why CEO Hwang Dae-woon valued him so dearly.
At such a young age, one might expect him to be arrogant, but Jung Jin-ho didn’t show a single trace of it.
Despite having such a genius-level brain, how should he put it.
He came across as truly pure.
Of course, at times, that in itself felt frightening.
Precisely because people like him were the hardest to read on the inside.
“But… this is a bit unexpected.”
The next morning, back in his office, CEO Kim Doo-young tilted his head as he reviewed the list that Jung Jin-ho had checked.
“Most of the acquisitions are targeting Chinese companies?”
Of course, it was Kim Doo-young who initially compiled the list.
But it was just meant to be a reference, not a strong recommendation for actual acquisition.
And yet, Jung Jin-ho had selected mostly Chinese maritime companies.
“China is a bit troublesome.”
If it were domestic or even other foreign companies, it wouldn’t be that complicated. The strategy would be to buy up all the bonds currently on the market at a dirt-cheap price and then acquire the company, on the verge of bankruptcy, by paying only the minimum necessary.
But China was different.
Many of the companies had deep ties to the Chinese government, and if the authorities decided to interfere, things could get messy.
“Fortunately, the shipping sector isn’t something they care about too much.”
Citing national security, departments like the Ministry of Commerce in China control state-owned enterprises and designate certain sectors as national strategic industries, strictly blocking out foreign capital.
Perhaps Jung Jin-ho had considered all this when selecting the companies.
The companies listed weren’t that large in scale, so even if foreign capital bought them, it was unlikely to trigger restrictions.
Even the Chinese government had too much on its plate to get involved with each and every small company like this.
Still, even so, it was strange that the selections were almost entirely focused on Chinese firms.
“Rather than these, acquiring companies elsewhere might be more profitable.”
There were plenty of acquisition targets available in Korea.
Acquiring such domestic firms would certainly be much easier to manage.
And if not Korea, even Europe would be fine.
So why China, of all places?
Moreover, they were small to mid-sized private companies.
“…….”
Should I call?
Ask why he chose only these?
“No, wait.”
He had received a very important piece of feedback from CEO Hwang Dae-woon the other day.
It was almost like a company motto shouted out every morning by the team working with Department Head Jung.
“He said to abandon your ego.”
In other words, don’t question the tasks Department Head Jung assigns.
Besides, hadn’t Kim Doo-young himself said it yesterday?
That if Jung gave the order, he’d jump into fire without hesitation.
That meant, no matter what the task, he wouldn’t question it.
“Yeah. That’s right. It’s me.”
Finishing his thoughts, Kim Doo-young picked up the receiver.
“Call all the executives together. We’re starting acquisition operations immediately, so we need to move fast.”
***
The acquisition operations were in full swing.
Hwang Dae-woon deliberately kept out of it.
Once the engine got going, Kim Doo-young began going from place to place, aggressively buying up companies, and stepping in would only get in the way.
Just like he said before, this was a discount sale event for Kwangwoon.
Companies were putting up shares at prices less than one-third of their market cap from a year ago.
But even then, no one was buying, so prices kept dropping further, and just at that moment, Kwangwoon Shipping swooped in like a savior and bought up all the shares.
Just look at the fact that Industrial Bank, the largest shareholder of Geumwoo Shipbuilding & Offshore, stepped aside and handed over its shares without any negotiation, practically begging.
That alone showed how dead the maritime market had become.
Except for one company, Kwangwoon Shipping.
‘So this really was the plan our Jin-ho had all along.’
What a sly little guy.
To have such a plan and yet not say a single word about it back then.
Was it to give us a surprise present?
On top of that, with Kwangwoon Securities and Kwangwoon Shipping working together on corporate acquisitions, in order to avoid violating the Financial Industry Structure Improvement Act, Hwang Dae-woon was urgently establishing a holding company to coordinate the structure.
Thanks to that, while he had been slowly stepping back from securities work and handing things over, he suddenly found himself buried under a mountain of tasks.
‘Damn it. Looks like I won’t even be able to retire on my own terms.’
Why was he suddenly reminded of Prime Minister Hwang Hee, who had submitted his resignation to King Sejong multiple times only to be rejected?
Still, work was enjoyable.
It meant the company was growing.
But that feeling didn’t last long.
“What the hell is this? The Korean Wave Ban?”
The Korean Wave Ban.
Restricting Korea.
In other words, China was essentially trying to shut down all Korean businesses making money within China.
K-pop, tourism, cosmetics, consumer goods, Korean supermarkets operating in China, everything.
China had taken an extreme measure to completely halt Korean business operations and even triggered a nationwide boycott movement, aiming to economically strangle Korea.
“This is retaliation for the THAAD deployment. We had no choice but to bring it in for defense against North Korea’s nukes, but from China’s point of view, it’s enough to make them furious. It’s not just about North Korea, the U.S. is basically using our country to defend against China too.”
“Seriously. Why do China and the U.S. keep dumping their bullshit on us?”
“What can we do? Our country just happens to be in the perfect spot as a strategic hub. Anyway, because of this latest move, all Korean companies operating in China are shutting down.”
The biggest initial hit came to the tourism and food sectors.
Millions of tourists who used to come to Korea had stopped, and Korean-run supermarkets in China were being forcibly shut down.
In addition, electronics retailers like Kangseong were attacked by enraged Chinese mobs who destroyed entire stores in violent outbursts.
“But the biggest problem is shipping. China has declared that they won’t work with Korean shipping companies anymore. For domestic shipping companies, which were barely surviving through trade with China, this is practically a death sentence.”
Korea and China have a tightly intertwined trade relationship.
Many of the raw materials Korea imports come cheaply from China, and Korean shipping companies had been scraping by on that trade.
But now that route had been cut off.
And that was a serious blow, even to Kwangwoon Shipping.
“But here’s the thing. For us, it looks like this isn’t going to be a hit, it’s going to be a money-making opportunity.”
“Huh?”
“Haven’t you looked over the list of acquired companies? Department Head Jung had CEO Kim Doo-young carry out acquisitions of Chinese companies, right?”
That was something Hwang Dae-woon himself had wondered about.
Out of all the companies available, why China?
“With so many things to take care of, it seems CEO Kim Doo-young pushed through the acquisitions quickly. The holding company hasn’t even been properly structured or the group framework finalized yet.”
“So?”
“So, while the companies have been acquired, their original names haven’t been erased yet. Plus, there’s still a certain level of Chinese capital mixed in.”
“In other words… those companies are excluded from the Korean Wave Ban?”
“Yes. Even if they wanted to sanction them, they can’t right now. You know how all the Chinese shipping companies collapsed because of the recent oil price surge. Their ports are overflowing with containers, there’s no one left to transport the goods.”
In short, unless Kwangwoon handles all that freight, nothing will move.
“That’s why the Chinese government is in a bind. They know full well that these companies were absorbed by us, but if they sanction them too, they’ll hurt us, sure, but the damage to China would be catastrophic.”
“So they’re turning a blind eye?”
“Yes. In fact, the Public Security Bureau is freaking out, begging us to move the cargo quickly.”
“Ha-”
Hwang Dae-woon let out a hollow laugh.
With the Korean Wave Ban, even the few remaining Korean companies responsible for transport to China were completely cut off, and as a result, even more freight work was pushed onto Kwangwoon.
The Chinese government knows this.
They’re not fools, they surely know that Kwangwoon acquired Chinese shipping companies.
But even though they know, they’re not stopping it.
Had the acquisitions taken place after the Korean Wave Ban, they might have intervened, but the purchases were made beforehand.
Above all, the fact that the companies haven’t yet been reorganized into a group and still retain their original Chinese names likely played a role as well.
“They’re turning a blind eye, pretending not to know, just to save face?”
“Yes. Even if we erase the original names, there’s not much they can do. If they try to block us, they’ll have to hand off the work elsewhere, and the current reality is that they’d have to pay nearly double the price, so it would amount to nothing more than a ‘let’s all go down together’ move.”
This was truly a case of killing two birds with one stone.
Though the Korean Wave Ban was dealing massive damage to the Korean economy, Kwangwoon was in a position to sit back and make even more money.
“How far ahead did this Jin-ho kid predict all of this?”
“Maybe he foresaw this exactly from the moment he heard that THAAD would be deployed in Korea?”
It was nothing short of an extraordinarily sharp insight.
Thanks to that, Kwangwoon Group was now on the verge of explosive growth.
“Congratulations, CEO-nim. Or wait, not anymore. You’re the Chairman now, aren’t you? You said you were giving the CEO position to Department Head Jung and stepping down, looks like you ended up becoming Chairman instead?”
“I haven’t even had the inauguration ceremony yet.”
“Ha-ha. Well, that’s coming soon, too. And with China practically helping us out this time, the growth is going to be massive. At this rate, it looks like we’ll become an enormous group.”
To be honest, it still didn’t feel real.
In the past, if they had imagined building a group, it would’ve naturally seemed like a financial group, but a maritime group?
At this pace, they were going to create the largest maritime group in the entire industry.
‘I just casually said I’d quit being CEO…’
And yet Jin-ho had gone and locked Hwang Dae-woon into the position of chairman of a massive group, leaving him with no way to escape.
*****
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