1905: Beer Hall Speaker

Page 126

"Bronze can be smelted at temperatures above 1,000 degrees Celsius, and ceramics can be fired and iron and steel can be smelted at temperatures above 1,200 degrees Celsius."

"How to increase the temperature is the core of steel smelting, but increasing the temperature comes at a price."

"Many officials and generals now believe that we simply set up a few furnaces, lit fires every day, and easily turned ore into steel, then picked up money all over the place."

"They don't know how much cost is involved in the entire process from ore selection, inspection, transportation, cleaning, to smelting, rolling, and forming."

"Just one imported Thomas converter costs us tens or hundreds of thousands of yuan, not to mention the subsequent installation and commissioning, all of which require money."

"The biggest problem now is that you're not paying enough, so we can only provide inferior steel. You get what you pay for, that's an eternal truth."

Liu Ting pressed further, "Then what exactly are the raw materials you supply to the arsenal, and where did the problem lie?"

The engineer said helplessly, "We can provide some phosphorus-containing steel from our inventory, all of which were produced using older steel mill processes."

"Huh?" Liu Ting was shocked and grabbed the other man's collar: "You dare to use that brittle steel to make guns for our army? Aren't you afraid of being taken to court?"

A sales representative from the factory on the other side chimed in: "We already informed your Joint Logistics Department in advance that the price of raw materials has increased, and your original purchase price is no longer sufficient. We asked you to pay more, but you refused and insisted on sticking to this price."

"The arsenal is pressuring us like it's our lifeline. We had no choice but to propose supplying us with our stockpile of substandard steel. You didn't say anything, so we had no choice but to bite the bullet and go for it."

The engineer added, "We also reminded the arsenal that they did not use this inferior steel to process core components. The barrels and bolts are reliable; the unreliable parts are the magazines and bayonet lugs."

"Because these things all require special steel processing, we can't cut corners in other areas, but we have to make sacrifices in these areas."

Liu Ting's face turned red: "This is blatant disregard for human life! I'm going to sue you! I want to terminate our contract!"

The sales manager nodded and said, "No problem, but if the military unilaterally cancels the order contract, we will not pay any penalty!"

Military orders are a double-edged sword for manufacturers; they don't make much money, have many demands, and even carry the risk of losses. The military is the kind of client who pays little but has a lot of problems, and terminating the contract would be the best outcome.

The domestic steel market is currently rife with money. The demand for steel in the infrastructure sector is enormous. Building bridges, paving roads, constructing houses, and building factories—where can you not need steel materials?

Clients in the infrastructure sector are quick to pay and have few problems, while they also have more orders than they can handle, selling as much steel as they produce.

Whether a ton of steel is used to manufacture farm tools, machinery, or rolled into steel bars for road and bridge construction, the profits generated are far greater than those from manufacturing rifles.

The state-owned factory was the top performer, and no one dared to gamble with their future. The more they earned, the faster they were promoted. The former factory director was transferred to the Wuhan Municipal Government as vice mayor after only two years in office.

However, if the factory loses money or its performance declines, the current factory manager will be lucky to avoid being demoted, let alone promoted.

If the military can't come up with enough money, steel mills can only use cheap, low-quality steel to make up the difference. They can't even meet the high-profit demands of the civilian market, so who would bother with these unprofitable military orders?

So in the end, poverty is the original sin!

The military needs to grow stronger, and officers need to be promoted, but steel mills also need to expand production capacity and improve technology, and factory directors and other officials also need to improve their performance.

With money, everything is negotiable; even earning less can be overlooked. But without money, there's nothing to talk about. If you're blocking my path to promotion and wealth, what's there to discuss?

Although the Joint Logistics Command is not to be trifled with, the State-owned Assets Supervision and Administration Commission, which oversees state-owned enterprises, is not to be underestimated either. If the lawsuit goes up the chain of command, you have the Ministry of National Defense backing you up, and I have the Prime Minister's Office to stand up for me!

The Hanyang Iron and Steel Plant is now in a critical period of transformation. The plant is phasing out outdated technologies and introducing more advanced converter smelting technologies. It is even working with the Germans to develop open-hearth furnace and even electric furnace smelting technologies.

Every technological advancement requires massive financial investment, and many key equipment and technologies need to be imported from overseas at real cost.

Fortunately, the booming domestic market and the demand for steel exceeded supply, which gave Hanyang Steel Plant a sufficient profit base to support technological advancement.

The higher-ups have already given instructions that the state's support for Hanyang Steel Plant and Hubei's industry has come to an end, and their future development depends on themselves.

Currently, private and foreign-invested steel companies are emerging in the Jiangnan region (Nanjing and Shanghai) and continuously joining the competition in the domestic market. The Anshan Coal and Iron Consortium in Liaoning in Northeast China is also rising, and steel plants in Tangshan, Hebei Province are seeking breakthroughs and development.

The steel industry is booming across the country, and Hanyang Steel Plant's leading position is in jeopardy. It currently holds a first-mover advantage, but as time goes by, its competitors in the steel industry are catching up at a rapid pace.

To be honest, Wuhan's only advantage is its convenient shipping. Compared to other places, it doesn't have much of an advantage, especially compared to places like Tangshan in Hebei, Anshan in Northeast China, Nanjing and Wuhu, and Shanghai.

The emerging steel giants in the north have readily available iron ore and coal mines right on their doorsteps, while the southeastern region, being close to the coast, enjoys even greater transportation convenience.

With infrastructure development and technological breakthroughs, the time left for Hanyang Iron and Steel Plant to continue being the leader is running out.

They must seize every minute and second to develop themselves in order to avoid being eliminated in the future wave of reforms.

The central government is not a charity. It has given all the support it could. If you can survive the rest of the journey, you will succeed; if you can't, you will be swept into the dustbin of history.

Zhao Yan believes that Chinese state-owned enterprises have never been like his own children, but rather like shopkeepers who help him out. He also believes that there will never be any so-called "indispensable" enterprises in China in the future.

Local state-owned enterprises would never dare to dream of using their own existence to influence the central government's will or living off government funding. Everyone strives to survive through relentless progress and constant competition.

Compared to the huge market of 400 million people and the vast demand for infrastructure and urbanization, the military's dissatisfaction seems insignificant. Do you think you can bombard me with cannons?

Chapter 210 Industrial Development (2)

Lieutenant Colonel Liu Ting left the Hanyang Iron and Steel Plant with mixed feelings, taking with him a detailed investigation report that explained all the problems and their causes.

He couldn't solve this problem anymore. It wasn't a technical issue, nor was it a procurement corruption issue; it was a purely cost-related problem. Even the Joint Logistics Command couldn't handle it, so the Ministry of National Defense had to step in to resolve it.

There's no way around it; the army is a large and complex organization with far too many people to support, and the most basic things are the most expensive.

The Republic's current economic situation is already quite remarkable, as it can support a national defense force of 500,000 and a garrison force of 200,000, and a standing army of 700,000.

Even now, amidst the European arms race, France, which boasts the largest army in Europe, has a standing army of only 770,000. It is nominally the world's second-largest military power, yet it also has a standing army of only 770,000.

Germany has just over 800,000 troops. These two countries represent the pinnacle of modern armies, and both are major European powers, yet they barely manage to maintain this size.

The postwar republics' massive disarmament was met with skepticism from European countries, because the data was so outrageous. After the disarmament, there was still a standing army of 700,000. What kind of massive disarmament is this? Which country can still rank among the top four in the world after a massive disarmament?

The largest army in the world is that of Tsarist Russia, with a standing army of 1.4 million. God doesn't know how the Tsar managed to support them.

Germany ranks second with 810,000, France third with 770,000, and China fourth with 700,000.

Despite the Republic's repeated assertions that its standing army consists of only 500,000 men and the other 200,000 are "armed police forces," other countries simply do not believe it. They train every day and equip their troops with military weapons, though their heavy firepower is somewhat lacking. What else could this be but a standing army?

Europe still feels the threat from China, and that the Republic also harbors ill intentions; otherwise, why would it need such a large army? Russia is constantly on edge because its land neighbor, the Republic, is truly frightening.

Having just risen to power, you've already built the world's fourth-largest standing army. With no rivals around, who exactly are you planning to fight with such a massive army?

The central government of the Republic also had its own difficulties. To be honest, they really wanted to reduce the army to 100,000 people, which would be the best and most cost-effective option. However, the country was too big, and even 700,000 people were not enough.

The surrounding neighbors all thought that 700,000 troops were too intimidating and that they couldn't possibly defeat them, but the Republic thought that it had too many neighbors around it that needed to be beaten, and that 700,000 troops were simply not enough.

But the budget is what it is. The monthly expenses for the 700,000 army personnel, including salaries, benefits, insurance, and food, amount to as much as 18 million.

This is the minimum expenditure. Even if nothing else is done, just maintaining such an army is far beyond the budget. The government and the military have to scramble and find ways to raise money to support it. Not to mention the need to upgrade equipment and develop combat capabilities.

Lieutenant Colonel Liu Ting was a shrewd man. He was well aware of the predicament the army was facing, but he was powerless to change it. Unless war broke out and the national treasury was fully allocated to the military, the army's impoverished days seemed endless.

Returning to the Hanyang Iron and Steel Plant, after dealing with the troublesome military personnel, the plant once again gave a grand reception to representatives from the Ministry of Transportation.

Compared to the impoverished military, the transportation department, which now oversees the nation's infrastructure, is the real money-maker; the resources and financial power they control are astonishing.

This Spring Festival, the central government was very dissatisfied with the nationwide traffic paralysis and also very unhappy with the situation where the inconvenience of people traveling between different regions hindered economic development.

Around the Spring Festival, the central government further promoted new reform policies and increased investment in infrastructure.

Rather than building more rifles and cannons, the central government now prefers to build more bridges and hundreds of kilometers of railway, because building military equipment is a waste, while building infrastructure is an investment.

Rifles and cannons are just sitting there, not producing anything. There's no war crisis right now, so there's no rush for those things. But building infrastructure is a business where you can get ten dollars' worth of output for every dollar invested.

This year's Spring Festival saw a surge in national tax revenue, with the national treasury receiving over 80 million yuan in revenue during the holiday alone. Local commercial and industrial taxes were also plentiful.

This is the benefit of infrastructure development: improved transportation leads to smoother markets, and a thriving market leads to a surge in national fiscal revenue.

The Ministry of Transport representatives came to Hanyang Iron and Steel Plant to discuss plans to further expand the procurement of infrastructure building materials. Steel bars, rails, pipes, plates, and even rivets are all in huge demand now.

The transportation department representatives are financially well-off, after all, the initial fiscal investment in the five-year plan alone is 700 million yuan, with more to be added later.

Hanyang Iron and Steel Plant almost fawned over its technical strength and production capacity, exaggerating its current leading position in the industry.

But Hanyang Iron and Steel Plant does indeed have the capability right now. After all, a train isn't made by pushing it, and boasting isn't just empty talk!

Thanks to the unparalleled financial support from the central government, Hanyang Iron and Steel Plant enjoyed a three-year tax exemption for the entire industrial development of Hubei Province and was exempt from paying taxes. This benefit is something that other sister companies still envy and resent.

Hanyang Iron and Steel Plant is now a large steel group enterprise. Not only is its output the largest in the country, but its processing capacity is also the largest in the country.

Steel mills not only need to smelt steel, but also need to be responsible for steel forming and manufacturing. After all, you can't just sell a lump of iron to a customer and let them take it back and process it themselves, right?

Hanyang Iron and Steel Plant possesses many top-notch equipment and technologies, including the only two 10,000-ton forging presses, universal rolling mills, large-scale heavy plate presses, and trough roll mills in the country.

They can provide all the profiles and raw materials needed for infrastructure construction, and they supply them in large quantities.

In modern infrastructure, steel is an indispensable core material. Starting with the 19th-century British World's Fair and the Crystal Palace in France, mankind has applied steel to the field of infrastructure, which has driven revolutionary breakthroughs in urbanization and transportation development.

The biggest challenges facing modern infrastructure construction are issues related to materials, structure, mechanical calculations, and connections. Among these, materials are the most important. Modern roads and high-rise buildings can no longer be made of wood and stone; they must be made of steel and concrete.

The structure has also undergone tremendous changes. In the past, even official roads were dirt roads. When the emperor went out, he had to pave the road with yellow earth and sprinkle water on his face. But now the roads have at least multiple layers of roadbed and then a cement and steel pavement.

The structures of bridges and houses have also undergone tremendous changes. The old stone arch bridges, courtyard houses, and black tiles and white walls are no longer suitable for modern development.

Mechanical calculations are also crucial. Modern infrastructure can no longer rely on the experience and historical legacy of previous designers. It must be based on solid calculations and use solid data to guide the construction process. Otherwise, if problems arise after construction is based on experience, you won't know whose fault it is.

The final connection, which is mainly used in the construction of roads, railways and bridges, used to be done with mud and glutinous rice soup, but now it involves rivets, welding and cement bonding.

In short, apart from the calculation process, all other fields and processes rely on the participation of steel.

The Hanyang Iron and Steel Plant acquired a large amount of technical equipment from the Germans, which met the needs of the infrastructure sector. The Hanyang Plant dared not say that it could monopolize the huge infrastructure market, but as long as it occupied the vast market in the south, it would be enough to make the Hanyang Plant invincible.

Currently, China's steel market is experiencing a situation where demand far exceeds supply. The private market has huge demand, and the government's infrastructure procurement is also massive. It can be said that as long as you build a steel plant and successfully produce steel, you will be rolling in money.

But smart people will focus on the most high-end and elite part of the market at this time, giving up some secondary markets, concentrating on their own field, and building a market barrier.

Hanyang Steel Plant has its own technological strength. They disdain competing with private steel mills for the ordinary civilian market. Instead, they set their sights on the demand in the high-end infrastructure sector.

High-strength steel profiles are not something that just anyone can produce, but they are essential. High-rise buildings, bridges, and railways all rely on them, and Hanyang Steel Plant is seeking exclusive supply rights for this part of the market.

Putting aside other things, at the very least, it must secure supplier status for the two major strategic projects: the Beijing-Shanghai Railway and the Beijing-Hankou Yangtze River Bridge. The resources required for these two projects are sufficient to support Hanyang Steel Plant in completing its transformation and taking a new step forward.

The factory manager knew very well that it was impossible to monopolize the business, and the supply exceeded the factory's capacity. However, the factory manager still wanted to seek a dominant position, take the lion's share and give up the smaller share, and take as many high-profit, high-value orders as possible.

Accompanying the transportation representatives during the day did not mean they had inspected the steel plant. In the evening, the plant manager personally went to the table and poured drinks for them, getting the transportation representatives completely drunk.

The very next day, Hanyang Iron and Steel Plant signed an order worth 15 million Hanyuan with the Ministry of Transport, securing the order for the main truss structure profiles for the Wuhan Yangtze River Bridge.

For orders placed right on our doorstep, the Hanyang factory is a prime example of a factory that can only take on such a task. The Ministry of Transport wouldn't turn to a distant location for such an order; they have to give them face.

Hanyang Iron and Steel Plant still wanted to keep all the subsequent orders for rails, rivets, and so on, but the Ministry of Transport gave them a warning: being too greedy is not good; they had to leave some for others.

Official orders must be distributed fairly, taking care of local state-owned enterprises, private enterprises, and foreign-invested enterprises.

The share may vary, but everyone should receive what they are entitled to, no matter how much or how little. State-owned enterprises cannot monopolize the profits, let alone allow one state-owned enterprise to take the lion's share.

The allocation and destination of hundreds of millions of yuan involves complex interests, local disputes, and internal and external competition, which even Zhao Yan cannot easily resolve with a single stroke.

The booming domestic market has attracted massive amounts of capital to compete in the market, and a wave of industrialization has swept the country, with private capital continuously investing in and building factories.

With the profits at stake, no one could sit idly by while state-owned enterprises made a fortune. Zhao Yan used the ruthless "eleventh tax" to force capital from agricultural land to the industrial sector.

Many gentry and landlords who sold their land had large amounts of Han Yuan banknotes in their hands, but they couldn't just watch them depreciate, so they had no choice but to invest them.

Originally, these people were just setting up light industries such as textile factories, food factories, match factories, and flour mills, but when they saw that making money in the heavy industry sector was like robbery, they couldn't wait to join in.

These wealthy Chinese business owners are also greedy. If they don't have access to certain channels, they'll hide their money in cellars or exchange it for land. But if there's a channel with higher profits, they'll throw themselves into it without hesitation, regardless of the risks. The bigger the storm, the more valuable the fish.

The Chinese are arguably the world's most gambler; they dare to gamble at the card table, and they dare to gamble even more in the market.

During the rubber crisis in the original timeline, Chinese business owners dared to spend lavishly on the uncertain futures market. Now that they are actually building factories and engaging in real businesses, they are even more daring to pour money into it.

In addition to domestic capital and industrial power, foreign investment within the Republic has also become a force that cannot be ignored.

After the Central Government opened its markets to equal free trade after the war, capital from various countries began to pour into the country. At first, these foreign investors were still the same as before, setting up trading companies, cultivating compradors, and trying to engage in dumping.

However, they discovered that the market environment in China had undergone tremendous changes. Although foreign firms were still making money as before, they were not as profitable as investing.

Zhao Yan implemented the "three reductions and two exemptions" policy thoroughly. It applied not only to foreign-invested enterprises but also to domestic enterprises. Foreign firms were no longer very competitive. Moreover, after the market was fully opened, Chinese businessmen became smarter. They stopped using foreign firms as intermediaries and went directly to the manufacturers to purchase imported goods at the CIF price, which was much more cost-effective than buying from foreign firms.

As a result, foreign investors seeking profits also set their sights on China's booming industrial goods consumer market. They discovered that Zhao Yan's "three reductions and two exemptions" policy was truly beneficial, and thus began to build factories and start production.

Foreigners who built factories in China found that their status had changed drastically. Previously, the Chinese only regarded them as outsiders, and they could not even get into the local core circle. The government also ignored them.

But after they built factories and acquired fixed assets locally, they were gradually regarded as half of their own people. They began to gain access to the local core circle, and the government began to take the initiative to deal with them and even befriend them.

Foreigners brought capital, technology, and equipment, helping China expand its industrial scale, but they also made huge profits. The top leadership didn't care about the profits they made, as long as they weren't stolen.

Zhao Yan only cares about the scale and production capacity of domestic industry. As long as it is still within Chinese territory, Zhao Yan considers it to be domestically produced, and he treats foreign-invested products the same way.

Chapter 211 Industrial Development (3)

July 22, 1910, Shanghai.

China-Fritz Chemical Group, Experimental Production Workshop No. 4.

Inside the workshop, Zhang Jian, the Vice Minister of Industry from the capital, was leading a team to inspect the construction progress of the China-Fritz Chemical Group. Accompanying him was the renowned chemist Fritz Harper.

The China-Fritz Chemical Group, or simply the China-Fritz Group, is one of the core obligations that Germany has fulfilled following the secret agreement between China and Germany: to help China build a modern chemical industry.

Zhao Yan personally requested Fritz Harper to bring his research team to China and offered him extremely generous compensation.

The newly established Sino-French Group was officially established in Shanghai in July 1909. Fritz Harper and his technical team, leveraging their expertise, held 17% of the shares in the Sino-French Group. The German government supplied the necessary equipment, machinery, and supporting production technology, holding 38% of the shares. The Chinese government's Ministry of State-owned Assets Supervision and Administration Commission contributed land and a fiscal grant of 4 million yuan, holding 45% of the group's shares.

Fritz Harper originally didn't want to come to China, but China offered him so much that he had no choice but to agree.