Chapter 2365: Trading Station in Sanya

The last stop of Xu Yanliang's Sanya tour was the Southeast Asia Company's trading station. Few of the company's ships were based in Sanya, and during winter, business virtually ceased. Only a dozen or so staff remained, responsible for guarding the warehouse, ships, and offices. Business activities had ground to a halt, and most clerks had been temporarily reassigned to terminals elsewhere.

The Southeast Asia Company runs a tight ship with its expenses, Xu Yanliang thought.

The person in charge of the trading station was named Tang Zheng. He was neither a captain nor a shareholder, but a genuine "cadre" appointed by the Senate. Xu Yanliang knew that naturalized cadres serving in such companies weren't merely "one of us"—they were very likely also covert operatives of the Political Security Bureau. He could trust this man completely.

After briefly inquiring about the company's operations, he asked with studied casualness: "Where is your hometown?"

"I'm from Gaozhou Prefecture in Guangdong," Tang Zheng replied. "Years ago, I was sailing to Nanyang on business when we encountered pirates in the Qiongzhou Strait. Fortunately, the Senate rescued us. But I lost my capital and couldn't continue as a merchant, so I simply stayed."

"No wonder you ended up here—so you were a Nanyang trader yourself."

"You flatter me, Chief. For a merchant like me, my entire cargo amounted to a few bundles—about as small as business gets. Going to Nanyang was small capital, big profits. If nothing went wrong, one trip could feed the family for a year. But if disaster struck—natural or otherwise—ruin came instantly. That's how I ended up staying in Lingao." Tang Zheng grew emotional. He had traveled with the Hai family's ship to Nanyang that year and was robbed by pirates before even leaving the Qiongzhou Strait. Though rescued and alive, his goods had been soaked and severely damaged.

"I see." Xu Yanliang nodded. "How many times did you travel to Nanyang? What goods did you trade? Silk?"

"Five or six times altogether. Silk requires too much capital. I dealt in food and daily necessities. Everything is scarce over there—something worth one wen here sells for twenty or thirty there."

As a small merchant, Tang Zheng hadn't visited the major Southeast Asian ports Xu Yanliang often heard mentioned—Manila, Batavia, and the like—but rather unfamiliar smaller harbors. Compared to the major ports where merchants congregated, business in relatively remote small and medium-sized ports was easier and more profitable. The downside was greater danger.

A merchant by background, Tang Zheng proved an engaging conversationalist. Xu Yanliang's knowledge of maritime trade had been largely theoretical, derived from books and documents. Now, listening to firsthand accounts and practical examples, the subject came alive. Before he knew it, they had talked for hours, eventually turning to the Southeast Asia Company's current operations.

Xu Yanliang learned that the company operated similarly to taxi companies in the old spacetime. It didn't manage specific operations but handled management, taxation, personnel, and logistics. Actual trading was the responsibility of individual captains, who were either hired by shareholders or were shareholders themselves.

He inquired about shipping operations and cost calculations. Tang Zheng explained that the Southeast Asia Company now employed a route license system. Ships affiliated with the company that engaged in trade—rather than serving as carriers—needed to apply for a license.

"That's the Command Flag from the old days, isn't it?"

"Yes, some call it that—and it literally is a flag." Tang Zheng explained that these licenses came in two pricing structures: annual packages and per-voyage fees. Annual packages were expensive but allowed unlimited voyages, suitable for year-round routes. Per-voyage purchases were cheaper, ideal for routes traveled infrequently.

"I recall that merchant ships going to Nanyang could usually only make one round trip per year. Can they make several now?"

"That's old thinking." Tang Zheng said. "Now there are specialized navigation charts. As long as captains follow them and adjust routes according to seasonal wind patterns and ocean currents, they don't need to idle at the docks for half a year waiting for the monsoon. Besides, sail rigging has been improved—they can sail against the wind now, just more slowly. The current bottleneck is a shortage of competent navigators. Most captains can't master the new navigation technology..."

I see, Xu Yanliang thought. The new technology the Senate had introduced had dramatically advanced traditional maritime trade. Confined to his office for so long, he had been completely unaware of these developments—and he had fancied himself part of the Age of Discovery Club...

At this realization, his face flushed slightly with embarrassment. He asked:

"What's the price of this flag? For an annual license."

"Originally, it was two thousand taels of silver for large ships going to Nanyang, one thousand for medium ships, and five hundred for small ones. After switching to silver coins, it's calculated in yuan."

"That's considerable money!" Xu Yanliang was somewhat surprised. According to data Wang You had provided, there were currently forty-three trading merchant ships plying the Nanyang route. Even using the median price, "license fees" alone would bring in 43,000 yuan annually. In reality, few small ships engaged in Nanyang trade—most were large vessels. From this single revenue stream, the Southeast Asia Company could collect roughly sixty to seventy thousand yuan without lifting a finger.

With such income, the reported net profit was only 27,000, and shareholder dividends exceeded 10,000. The Planning Committee certainly had some explaining to do.

"This money doesn't belong to the company," Tang Zheng explained, noticing his surprise. The proceeds from shipping licenses had to be turned over to the fiscal and tax department. "...Our company can extract twenty percent."

"I see." Xu Yanliang thought that made more sense! Otherwise, the markup would be outrageous. He asked: "Are there other income sources?"

"Many, but they're all bits and pieces." Tang Zheng enumerated them like counting family treasures. Besides various miscellaneous fees, another important income source was the fee for shipping operation certificates paid by captains working as carriers. These were much cheaper, calculated annually. The company also collected a "vehicle and vessel tax" on behalf of the government. This amounted to tens of thousands of yuan annually, with the company retaining a fifty percent commission.

Xu Yanliang mentally added and subtracted, concluding that the net profit shown on the Southeast Asia Company's statements was legitimate—nothing significant was hidden. He felt a twinge of disappointment. He had originally planned to challenge the fiscal and tax department to see if more funds could be retained. Now that seemed impossible.

"Is that everything? Are there any channels for generating additional revenue?" he asked.

Tang Zheng laughed. "If we're talking about tapping potential, there's always room. Those shipowners earn thousands or tens of thousands on every Nanyang voyage. If you really want more money, just invent some unconventional fees. But Minister Si said in the past that the company was originally meant to 'win over distant peoples.' As long as it doesn't operate at a loss, that's sufficient. Don't be stingy and charge for everything—if they earn well, let the Tax Bureau go after them for income tax."

"Minister Si makes a fair point." Xu Yanliang didn't know whether to laugh or cry. Easy for you to say! Indeed, the Tax Bureau had a hundred methods to "adjust income," and he had no doubt the Senate extracted enormous tax revenue from these traders every year. The problem was that this money wouldn't flow into the Southeast Asia Company's coffers.

But the conversation had given him something to consider. There was limited potential to be tapped on the Senate's existing Nanyang routes. The newly established Nanyang Company would struggle to prosper by relying solely on traditional China-Nanyang trade. It needed to find new paths—not just new routes, but new commodities.

He thought of bone china. Since its development, someone had proposed exporting it. However, export kilns in Fujian and elsewhere had ample supplies. Neither the foreign trade companies nor the later-established China Merchants Bureau had shown much interest in this new product. After all, bone china's production costs were much higher and output remained low. Except for small quantities exported as high-end porcelain, it hadn't captured a significant export share.

However, Engineer Qi had recently developed a new bone china production process that should significantly increase output while reducing costs. The Nanyang Company could promote this product as a future flagship commodity.

Another commodity came to mind: ice. This wasn't novel—it had been a thriving business in the old spacetime. In the nineteenth century, European and American merchant ships trading in East Asia, lacking cargo for return voyages, often stuffed their holds with sawdust-insulated ice from Europe and America to sell in India, East Asia, and Southeast Asia for handsome profits.

In May 1833, American merchant Frederic Tudor dispatched the Tuscany carrying 180 tons of ice from Boston directly to Calcutta, crossing the equator twice en route. The loaded ice had to remain frozen for four months. The Tuscany arrived on schedule. The locals regarded natural ice as a rare delicacy, and this first shipment made huge profits, catapulting Tudor to fame. The ice trade between Boston and the Far East expanded rapidly. Drawing on experience gained in the Caribbean, Tudor built an icehouse in Calcutta and encouraged local Anglo-Indians to purchase household refrigerators and cold drink makers. He shared refrigerated apples, butter, and cheese from his ships with everyone, seeking to transform their eating habits.

Soon, Boston's ice was reaching everywhere—and succeeding everywhere. In 1846, Boston exported 65,000 tons of ice; ten years later, the total had more than doubled, with 400 ship voyages selling to over fifty destinations including the United States, the Caribbean, South America, and in the East—India, China, the Philippines, and Australia. Ice had become a major commodity and a significant export of New England in world markets.

Guangzhou, China's foreign port at the time, had also been an important market for European and American ice. Now, the Guangdong business was outside the Nanyang Company's purview, but in India and Southeast Asia, the ice trade remained completely untapped.

Struck by this realization, he suddenly felt he had discovered a new continent. "Is there a cold storage facility here?"

"Yes. Several of them." Tang Zheng was puzzled—why was the Chief asking about cold storage? These were only used by fishery cooperatives and food processing factories. They just purchased some ice in summer for cooling. "If you want ice blocks, Chief, I'll send people to buy some right away..."

"No need. Just send someone to inquire at each ice house about their maximum output and the local demand."

(End of Chapter)