The next morning. The third-floor conference room of the Shenhai Foreign Investment Promotion Bureau.
Outside the window, the sky remained that dull gray-white tone, like an old bedsheet that had been washed too many times.
The 1:5000 scale planning map from yesterday had been rolled up and placed in the corner.
In its place, a white tablecloth now covered the entire long table. Eight white porcelain teacups and two thermos flasks were arranged on the tabletop.
The tea was Biluochun, freshly unsealed that morning. It had not been steeped yet, and the dried, curled leaves sat at the bottom of each cup, heaped like tiny pinches of dark green iron filings.
Two more chairs had been added since yesterday. Division Chief Sun from the Municipal Tax Bureau sat in the third seat to Chen Zhiyuan's right.
A black faux-leather briefcase rested in front of him. The zipper was not fully closed, revealing the corners of several documents stamped with red seals.
Section Chief Ma from the Municipal Labor Bureau sat at the far end. His chair was half an inch lower than the others.
There had not been enough chairs in the conference room, so this one had been temporarily brought in from the office next door.
Chen Zhiyuan stood by the window with his back to the conference table, his hands clasped behind him.
"Old Chen, let me say this upfront," Deputy Director Liu lowered his voice. "I touched base with the city again last night.
The bottom line is fifty thousand USD per mu. This is the filing price reported to the Ministry of Foreign Trade and Economic Cooperation. We can't drop it by a single cent. Otherwise, we won't be able to answer for it when other foreign investors come later."
Chen Zhiyuan gave a grunt of acknowledgment without turning around.
Fifty thousand USD. The Japanese side's psychological target was probably less than half of that.
"Let's hear what they have to say first," Chen Zhiyuan turned around, pulled out the chair at the head of the table, and sat down.
"The Japanese have a habit when doing business. The harder they slash the price at the start, the greater their actual sincerity. Don't be intimidated by the numbers."
"The cards on the table have to be played one by one."
Just as he finished speaking, someone knocked on the conference room door.
Everyone instinctively straightened their backs.
The door opened, and Endo walked in first. Behind him followed two Japanese staff members in suits, one from legal and one from finance.
Both had hard-shell briefcases tucked under their arms, looking like two bricks of the same color.
"Welcome, welcome..."
Chen Zhiyuan and Deputy Director Liu immediately stood up, wearing perfectly measured smiles, and went to greet them.
Both sides shook hands, exchanged pleasantries, and took their seats.
The last person to walk in was Satsuki.
Today, she had changed into a beige cashmere dress, with a light camel-colored short trench coat over it.
She carried a small white porcelain plate holding an exquisite piece of French Opera cake, topped with a piece of gold leaf.
She seemed oblivious to the confrontational atmosphere at the conference table. After glancing around casually, she walked straight to the guest armchairs by the window, far from the long table.
She placed the cake on the coffee table, sat down in an armchair, pulled a hardcover Shenhai travel album from her handbag, and began reading to herself.
The moment Chen Zhiyuan sat down, his peripheral vision swept over her feet. The little leather shoes that had stepped into the mud yesterday were gone. Today, she wore a pair of soft brown flat ballet shoes.
That detail made the smile at the corner of Chen Zhiyuan's mouth deepen slightly.
"Mr. Endo, how was your inspection yesterday? Did you rest well?" Chen Zhiyuan personally picked up the thermos to refill the hot water in the teacup in front of Endo.
"Thank you for Director Chen's thoughtful arrangements," Endo bowed slightly.
"The open view and independent shoreline of the B-07 plot left a deep impression on us. We held an internal evaluation meeting overnight and have drafted a preliminary letter of investment intent."
He took a bound document from his briefcase and pushed it with both hands to the center of the table.
Printed on the cover in both Japanese and English was the title: S.A. Industrial (Shanghai) Co., Ltd. Letter of Investment Intent.
"Based on the current topography of the plot and the preliminary plan provided by your side, we propose to lease the entire 520 mu of land in the B-07 plot at a price of 18,000 USD per mu, with a lease term of 50 years."
The translator's voice echoed in the conference room. Deputy Director Liu's hand froze in mid-air while holding his teacup, the rim pressed against his lower lip, unable to take a sip.
"In exchange, the Saionji Group promises that all infrastructure within the park, including but not limited to roads, electricity, water supply, and sewage systems, will be funded and constructed entirely by our side."
"In addition, the Japanese side will build a deep-water berth on the north shoreline. The design standard will be no lower than the berthing requirements for 5,000-ton ships. The construction costs of the wharf will also be borne by the Japanese side."
Endo turned to the second page of the document.
"Our conditions are as follows. First, the approval process to change the land classification from agricultural to industrial must be completed within 60 working days after both parties sign the formal contract.
Second, the park shall be granted an independent customs supervision code, with import and export goods cleared within the park without transiting through other ports. Third—"
Endo's finger moved to the clause marked in bold at the bottom of the page.
"Corporate income tax: fully exempt for the first five years, and halved from the sixth to the fifteenth year."
After the translator finished the last word, the conference room was silent for three seconds.
Chen Zhiyuan placed his teacup back on the table. The movement was light and made no sound.
Eighteen thousand.
Two thousand lower than his estimated lowest opening bid.
These Japanese sharpened their knives quickly.
The smile on Chen Zhiyuan's face did not change. He did not even blink.
He did not respond to the offer immediately. Instead, he took out a document from his own briefcase and gently pushed it in front of Endo.
Provisional Measures for the Administration of Foreign-Invested Enterprises in Pudong New Area, Shenhai City.
"Mr. Endo, before we discuss price and taxation, I would like to reach a consensus with your side on several basic principles of the cooperation framework." Chen Zhiyuan's finger pointed to Article 12 of the document.
"'For wholly foreign-owned manufacturing enterprises, the product export ratio must not be lower than 70%.' This is a mandatory regulation to balance national foreign exchange."
His finger moved to Article 18.
"'Starting from the third year after the enterprise officially begins production, the proportion of local employees must not be lower than 80%.'
Mr. Endo, the development of Pudong is not only about introducing capital and technology. It is even more about creating jobs for the local population."
Chen Zhiyuan withdrew his hand and leaned back into his chair.
"These two points form the framework. I personally cannot change them. As for your request for a tax exemption period, our Division Chief Sun from the Tax Bureau is present today.
Provided it does not violate national tax laws, we can discuss it together and strive to secure it."
In the conference room, the expressions of the Chinese personnel relaxed slightly. Director Chen had not been angered by the other side's low price. Instead, he had steadily kicked the ball back.
Endo picked up the draft for comments and began reading it word for word. The legal counsel beside him also leaned over, and the two exchanged a few words in Japanese in very low voices.
"Director Chen," Endo set down the document.
"Regarding these two principles, our side expresses understanding and respect in principle. However, there are a few details at the execution level that require clarification."
"Please go ahead."
"We can accept the 70% export ratio," Endo looked up.
"But the statistical scope of 'export foreign exchange earnings' needs to include the portion of entrepôt trade via Hong Kong.
Our products are shipped from Shenhai Port to Hong Kong warehouses and then transshipped from Hong Kong to third-country customers. This path should be counted as export volume in customs statistics."
Chen Zhiyuan looked at the Customs Specialist. The specialist flipped through the folder in his hand and whispered something. Chen Zhiyuan nodded.
"The issue of statistical scope can be discussed. There are precedents on the customs side."
"Article 18," Endo flipped to the next page. "We can also accept the 80% local employee ratio.
However, the definition of 'local employee' in the clause needs to be clarified as 'Chinese nationals who have officially taken up their posts after passing technical training by the Japanese side.'
Management and core technical positions, including but not limited to factory manager, quality control supervisor, and equipment maintenance director, should not be included in the calculation base for this ratio."
Section Chief Ma from the Labor Bureau opened the document he had brought and tapped his finger on a certain line.
"Mr. Endo, according to our current labor regulations, the definition of 'local employee' is based on the place of household registration and the place where the labor contract is signed—"
"Section Chief Ma," Chen Zhiyuan raised a hand, interrupting him.
Section Chief Ma glanced at Chen Zhiyuan and closed his mouth.
"We will coordinate the specific wording of the employment clause internally," Chen Zhiyuan looked at Endo.
"I understand Mr. Endo's core demand is management autonomy. This direction can be discussed."
Endo nodded. "Thank you for Director Chen's pragmatic attitude."
Endo pointed the tip of his fountain pen at the seventh line of the summary of terms.
"Regarding the statistical scope of the export ratio, our side needs further clarification," Endo's speaking pace was measured.
"Our products are loaded at Shenhai Port and shipped to Hong Kong warehouses, then transshipped to North American and European customers after sorting in Hong Kong.
The total value of this path should be counted toward the 70% export foreign exchange earnings ratio."
As soon as the translator's voice fell, the Customs Specialist opened the folder in his hand and pressed his finger on a red annotation on a certain page.
"Mr. Endo, according to the current customs statistical system, export foreign exchange earnings are based on the 'departure customs declaration.'
When goods are shipped from Shenhai Port, if the destination port on the declaration is listed as Hong Kong, then statistically it can only be counted as trade with Hong Kong and cannot be directly counted as exports to third countries."
Endo tapped his finger lightly on the table.
"Then, what if the final destination on the declaration is listed as New York or Hamburg, but the physical path transits through Hong Kong?"
The Customs Specialist exchanged a look with Chen Zhiyuan. The specialist lowered his head to flip through two pages of documents, then looked up.
"If you can provide the transshipment bill of lading from the Hong Kong warehouse and the commercial invoice of the final receiver as evidence, it can be recognized as entrepôt trade and counted toward export volume. However, every single shipment would need to be verified separately."
Endo wrote this sentence in his notebook, drawing a line under the phrase 'verified separately.'
"The administrative cost of verifying shipment by shipment is too high," Endo looked up. "Our side suggests submitting a summarized transshipment list on a quarterly basis, to be verified in batches by Customs."
The specialist shook his head. "There is currently no such precedent."
"Then create one," Endo's tone did not change.
"Our quarterly export value is expected to exceed 20 million USD. This volume is worth a new process."
Chen Zhiyuan picked up his teacup and took a sip, without expressing an opinion. He turned his gaze to Section Chief Ma from the Labor Bureau.
"Let's also refine the employment matter," Chen Zhiyuan put down his teacup. "Section Chief Ma, read out our definition again."
Section Chief Ma cleared his throat and opened the document.
'Local employee' refers to a Chinese national who has signed a labor contract with the enterprise, whose wages are paid by the enterprise through a domestic account, and whose social insurance is paid in Shenhai City—"
"The problem lies in the calculation base," Endo interrupted him. "The staffing plan for our park is estimated at 420 people.
Among them, there are about 35 technical management personnel dispatched by the Japanese side. If these 35 people are included in the denominator, an 80% employment ratio means there must be no fewer than 336 Chinese employees."
Endo opened his notebook to the pre-calculated numbers.
"But if management and core technical positions are excluded from the denominator, the actual denominator is 385 people, and Chinese employees would only need to number 308 to meet the standard.
The difference is 28 people. Those 28 positions are the key to whether our quality control system can function normally."
Section Chief Ma looked at Chen Zhiyuan. Chen Zhiyuan shook his head slightly.
"Mr. Endo, the boundaries of 'core technical positions' are too vague," Chen Zhiyuan leaned forward.
"If there are no limitations, your side could define any screw-tightening position in the workshop as 'core technical'—"
"Our side can provide a detailed list of positions, to be confirmed one by one by both sides," Endo's response was almost instantaneous.
The translator's voice bounced back and forth between Chinese and Japanese, the speed getting faster and faster.
Chen Zhiyuan would say one sentence, and Endo would follow with one. Section Chief Ma tried to interject but was blocked by Endo with a piece of data.
The Customs Specialist proposed an alternative plan, and Endo pointed out the loopholes in it within three seconds.
After three rounds, neither side had taken a step back.
Chen Zhiyuan leaned back into his chair and placed the ballpoint pen in his hand onto the tabletop. The pen rolled half a turn and stopped.
Truly difficult to deal with...
"Let's do this," he reached out and picked up the letter of intent in front of him.
With his ballpoint pen, he drew a pair of parentheses next to the two clauses concerning "export statistical scope" and "employee definition," and wrote six characters outside the parentheses: Pending further negotiation.
Endo looked at the two pairs of parentheses and was silent for a second. Then he nodded.
On his own copy of the letter of intent, he also drew parentheses next to the corresponding two clauses with his fountain pen and wrote the same six characters beside them.
Both documents now had an extra pair of silent parentheses, like a temporary ceasefire line drawn in the middle of the battlefield when two armies face off.