Chapter 2545: Guangzhou Textile Market (Part 3)

"Speaking of cotton stock, there might actually be a fair amount still inside Guangzhou City." Wu Yijun considered for a moment. "The problem is, with the market the way it is now, the other parties will almost certainly want to hold out. They may not be willing to sell even at market price."

"As long as there are goods, they'll have to sell eventually. Besides, in another few months the local new cotton will arrive—not selling before then would mean taking a loss. Now is the perfect time."

"You're not wrong, but the market is scalding hot right now, rising every day..." Wu Yijun laughed. "I've never seen cotton this sought-after! You probably haven't heard about the new trick yet."

"Several patterned cloth firms in the city have privately set up a cotton market, selling something called 'Paper Cotton.'"

"'Paper Cotton'? How do you make cotton from paper?" Chen Lin was baffled.

"Hehe, that's why it's called a fresh novelty!" Wu Yijun said. "Though when you think about it, the concept isn't entirely new. Your family has been making silk for generations—do you know about 'Pre-renting Mulberry Trees'?"

"That I know well." Chen Lin nodded. "Silkworm-raising households find families who plant mulberry trees and sign contracts beforehand, paying money to rent a set number of trees. When the time comes, they enter the garden to pick leaves regardless of market price." He paused as understanding dawned. "So you mean they're selling autumn's new cotton?"

"Exactly. You go there, pay the money, and they give you a warehouse receipt stating how many piculs of cotton can be collected upon expiration. But it's not just a slip of paper!"

"An interesting trick indeed. But we need cotton now—what use is a piece of paper?"

"Virtuous Nephew! You're an honest businessman, so you don't understand the schemes at play here." Wu Yijun chuckled. "This Paper Cotton is merely a paper contract. One slip of paper can be exchanged for wealth—it's practically making money from nothing! They can issue as much Paper Cotton as they want. Is there any more profitable business under heaven?"

"But delivery still has to be made upon expiration! If they issue too much and there aren't enough goods to deliver when the time comes, what then? Could it be they intend to abscond when the deadline arrives? Haven't the buyers considered this?"

"Of course they've considered it, but their thinking differs from yours." Wu Yijun explained. "After this Paper Cotton is sold, it can be traded. A buys and sells to B, B buys and sells to C... like beating drums to pass flowers. With cotton prices climbing higher every day, buying in the morning and selling in the afternoon can turn a profit. You shouldn't underestimate this game of passing the flower. With each pass, the price floats up considerably. This morning's market price per picul is already higher than the spot goods..."

"This..." Chen Lin could scarcely believe it. Though the concept of "Futures" already existed in those times, theoretically speaking, futures prices and spot prices had no strict relationship. Futures prices were primarily estimates of future market supply and demand. If a major disaster struck this summer and caused cotton production to plummet, or if the Senate opened ten new cotton textile factories at once, it wasn't impossible for the market price three months hence to exceed current levels. But the risk involved was staggering—pure gambling.

"This... I fear something will go wrong," Chen Lin said.

"I see it the same way." Wu Yijun sighed. "However, those patterned cloth firms and speculators have certainly made a fortune. The unlucky ones will be the suckers left holding the bag at the end. I've heard that many small households, peddlers, and porters in the city have pooled their money and formed associations to buy this Paper Cotton for resale."

"They'll likely lose their family fortunes in the end, leading to unbearable consequences!" Chen Lin sighed.

After the uncle and nephew had finished lamenting, Wu Yijun said: "You needn't worry too much about buying cotton, though. There's one family that has ready-made stock."

"Which family might that be? I'll go pay them a visit. If I can persuade them to sell, that would be ideal."

"Oh, they'll be willing. And speaking of which, he's an old acquaintance of yours—Dong Jizhong's family."

"Him?" Chen Lin was stunned. "His family were hereditary military officers, not merchants. Though they have some landed property locally, most of it was encroached Garrison Fields that have now been turned over to the Australians. Where would cotton come from?"

The Dong family had long maintained dealings with his cousin-uncle; Chen Lin was aware of this. Moreover, he knew the Dong family was actually one of the shareholders in this Nansha Textile Factory, though the specific investment amount remained unknown. Chen Lin naturally hadn't asked.

"Hehe, you only know half the story." Wu Yijun laughed. "Dong Jizhong's old man and brother are both officials in the Ming State—and not minor officials either. Some days ago when we were setting up the factory, I told Little Dong: once the factory is established, the demand for cotton will be substantial, and everyone must find ways to secure supply. Little Dong then wrote letters to his father and brother, asking them to try purchasing cotton and shipping it south. He managed to get several hundred piculs."

"Since there's cotton to be had, I'll go request a meeting right now!"

"No need to rush. I've already made an appointment to meet him at the Textile Market tomorrow. We can discuss it then."

Early the next morning, after the uncle and nephew had finished breakfast, they boarded two rickshaws. Four servants rode in two other carts separately, and the group headed toward the Light Textile Market.

Wu Yijun lived in the north of the city. After leaving the residence, the rickshaws went south all the way before turning west. The pullers were vigorous young men, swift on their feet and intimately familiar with the roads. In no time at all, they had exited Xiguan.

Although neighborhood blocks existed outside Xiguan, it remained a relatively desolate area in the 17th century. The rickshaws ran for some distance further before stopping by the roadside.

"We've arrived. The International Textile Market is just over there," Wu Yijun said.

Chen Lin stepped off the cart and looked around, instantly confused. The surroundings consisted entirely of paddy fields and wasteland. The only structure that could be called a building was a newly built wharf by the roadside. Quite a few people had gathered on the wharf, with people coming and carts going—a lively scene.

"This is... the market?!"

"Haha, this is just the ferry crossing. The market is across the river—on Henan Land. We have to take a ferry from this Xiguan Wharf." Wu Yijun pointed to the opposite bank, where another wharf stood. Streets and houses built along the river could be glimpsed in the distance, apparently quite large in scale.

Why did the Australians think of setting up a market on Henan Land? Wouldn't travel be terribly inconvenient? Chen Lin wondered privately. Though Henan Land lay just south of Guangzhou City, before a bridge was built over the Pearl River, travel relied solely on boat ferries. Transportation was extremely inconvenient, residents were few, and the area was mainly agricultural.

He voiced his doubts to his cousin-uncle. Wu Yijun nodded in agreement: "I'm curious about this too. Well then, let's go over and see for ourselves."

A ferry ticket office stood on the wharf. The ferry here departed once every half hour—a single ticket cost one fen, with another fen for freight. Many commoners were already waiting beneath the straw shed for the boat.

Wu Yijun was unwilling to wait that long. Fortunately, there were also many private ferry skiffs at the wharf, all displaying operation permits and boat license numbers issued by the Guangzhou Police Bureau, queuing up in orderly fashion to await customers. The price was five fen per trip, but they departed immediately upon boarding—very convenient. This had traditionally been the livelihood of Tanka boat-dwellers on the Pearl River; they remained the practitioners now, but the Guangzhou Police Bureau had brought them under its management scope. All ferry boats required licenses and operation permits for easier oversight.

Wu Yijun found a small skiff and ferried across to Henan Land immediately.

Stepping onto the wharf, the two could see many laborers clearing construction waste from the building site. Others were paving road surfaces and planting trees. The market construction had obviously entered its final stages. Besides the ten large iron characters spelling "Guangzhou City International Textile Market" hanging high at the entrance, there was also a conspicuous road sign: "No. 144 Xingang West Road."

Chen Lin looked around in puzzlement. The market surroundings were all fields—where did the preceding 143 addresses come from? Though a market town had been newly built here, with neat and attractive streets and houses, it obviously couldn't compare to the prosperity of Guangzhou on the opposite bank. Pedestrians were few, lending the place a somewhat deserted air.

Opening a shop had always been about location. Yet the Australians had done the opposite, establishing a market in a place where birds don't shit and transportation is inconvenient... What kind of business philosophy was this?

While pondering these doubts, he suddenly heard someone calling out:

"Ah Lin? You came so quickly?" The voice was very familiar. Chen Lin turned and discovered it was none other than An Jiu.

The internship group had come to Guangzhou on the same ship as him two days ago. However, they had parted ways after arriving—the internship group heading to the Great World while Chen Lin went directly to Wu Yijun's home.

"Why, Miss An!" Wu Yijun laughed. "What brings you here? Come to stroll through the market?"

"We're not here to stroll," An Jiu replied with a laugh. "We're here to help. The Rental and Sales Conference opens in a few days. I came to do some preparatory work." She looked them over. "You've come to look at market shops, I take it?"

"Exactly." Wu Yijun nodded.

"Then let me give you a preview tour." An Jiu tapped her chin with a pen. Since the wharf had opened these past few days, quite a few curious Guangzhou merchants and locals had come to visit, eager to see what this "International" spectacle was all about.

"But Miss An, surely you have official duties to attend to?" Chen Lin said. "Won't this delay your work?"

"Not at all. Taking customers on tours is part of my job." An Jiu smiled.

"If I may ask, Miss An Jiu—since this is meant for doing business, why set the market on Henan Land? Isn't the crossing inconvenient? Besides, the foot traffic here is far too thin." Chen Lin asked the question that had been nagging both him and his cousin-uncle since they had set foot within the Light Textile Market's boundaries.

"Ah, that! This market primarily caters to bulk trade. Commodities entering and exiting mostly rely on ships for transshipment, so location and foot traffic aren't key concerns. What matters is having enough space and river access for mooring ships." An Jiu explained.

In truth, Li Shan had chosen Henan Land mainly because land prices here were cheap, allowing him to purchase a large amount at once. If expansion became necessary in the future, there was ample room to grow—more convenient than the Guangzhou urban area or other suburbs. At the same time, the development could help spur the growth of Henan Land itself.

Though the market's positioning covered a broad range, its core customers were wholesalers. The volume of goods moving in and out at any one time was substantial, requiring large warehouses for turnover. For foreign merchants, there were also matters of long-term and short-term lodging for crew members and traders to consider. Meeting all these needs demanded a great deal of land.

(End of Chapter)