Story of a Big Player from Gangnam

Gun-Ho’s group followed President Miura to his office.

Besides a desk made of Paulownia wood, there was a large meeting table where several people could sit together. Once everyone sat at the meeting table, Japanese traditional tea—Matcha—were served.

President Miura spoke first, “As you have noticed, the factory is small and narrow. I hope you are not disappointed by its size.”

“Not at all. The factory is extremely clean and neat, and the technology that you have here seems to be advanced. Especially, I was impressed by the quietness of the factory.”

“We used to make loud noises like any other factories about ten years ago. At that time, we received a lot of complaints from the residents in the area. It took us ten years to make this place quiet. Once we succeeded in finally making a quiet factory, I found myself aged. Haha.”

President Miura smiled faintly.

Gun-Ho had a question.

“Could I ask you how much sales revenue you are making annually if you don’t mind me asking?”

“We currently have 12 workers here, and this business generates about 7 million U.S. dollars per year.”

“What is your major client company then?”

“It’s Toyota Motor Company.”

“Do you directly provide them with your products?”

“No, we actually send our products to Isehara Machines which directly ship our products to Toyota Motor Company.”

“Where is that Isehara Machines company located?”

“It’s around here.”

“Generating 7 million dollars per year with only 12 workers doesn’t sound bad at all. I wonder why you want to sell your business.”

“I’m actually suffering from a chronic disease. Because of the condition with my kidney, I need dialysis regularly. I had good days and bad days with this factory. I think I spent enough time running it. I’m now hoping someone can take over this business, and I want to take a rest.”

Mr. Ikuzo, who was sitting next to President Miura, chipped in, “You started working with this business when you were 19 years old, didn’t you?”

“Right. I was only 19 years old. Ever since I graduated from a technical high school, I’ve been devoting my entire life to this company. It has already been 50 years.”

“You have worked with this particular company for 50 years, sir?”

“Yes, I did.”

Solemn silence filled the air. Gun-Ho and Jong-Suk Park admired President Miura who devoted 50 years of his life to one business. They respected his persistence and devotion.

President Miura continued, “During my senior year in high school, I came to this company for the first time as a trainee. That was how I started my work with this particular company. When I turned 48 years old, the previous president transferred the business to me. And, I’ve been working here as its president for more than 20 years ever since.”

While looking at President Miura’s face as he was talking about his days with the company, Gun-Ho thought that he saw President Miura’s eyes being welled with tears.

“I was told that your son is not interested at all in taking over the business. Is it true?”

“That’s true. My son and daughter, they are artists, and they have no interest in running the company.”

“You have 12 employees here. Is there anyone among them who wants to acquire the business?”

“As you have noticed, all of my employees here are 60 or above. Well, the youngest one is almost 60 years old; he is in his late 50s. They all feel more comfortable working as an employee with a salary rather than running the business. Even if some of them are interested in taking over the business, they are not willing to pay for it.”

“They could take out a loan to pay for the business, no?”

“Even though they can take out a loan, it would be inevitable to spend their own money in the process and also in running the company afterward. To make the situation even worse, this particular area is designated as an area that will soon be redeveloped, so the factory has to move to somewhere else. That’s why I’ve been looking for someone who could take this business, and I was very open to sell it to one of my employees. But, no one wants to take out a loan just to buy the business at their age—60 something years old.”

“If you sell your business to someone in Korea, can you arrange that they could keep your current clients such as Isehara Machines?”

“The president of Isehara Machines is a friend of mine. That company is large in size, and his son is now working there as a director; he will eventually take over the business. That guy is lucky. So, I asked my friend a few days ago if he would still keep the business with us even though I sell the factory to someone in Korea or Taiwan. He confirmed that as long as whoever takes over the business could keep the same good quality and price, he will keep the business as it is now.”

“Do you have a specific price that you have in mind in selling this business, sir?”

“Haha, well…”

Gun-Ho took a sip of his tea and said, “You are not selling real property like the land and the factory building, but you are selling machines here with a little of inventory. Even though you would include services such as sending your personnel to us for training, the price shouldn’t be high.”

“How much do you think would be adequate then, Mr. President Goo?”

“Haha. Well, I would like to hear your offer price, Mr. President Miura.”

As President Miura scratched his head while thinking of his offer price, Jong-Suk Park, who was sitting next to Gun-Ho, quickly showed Gun-Ho his smartphone screen. There was a note that Jong-Suk Park just wrote down. It said 300 million won.

President Miura finally gave his offer price, “Well, I would like to receive 500,000 dollars.”

Gun-Ho shook his head, and asked, “Do you have, by any chance, a list that shows all of the items that would be included for the sale?”

The plant manager person, who was sitting next to President Miura, replied, “We do have the list.”

He then brought the list and handed it to Gun-Ho. Gun-Ho and Jong-Suk Park looked at the items in the list. Gun-Ho then said, “The machines here are too old. Even though you would include the technology that you’ve developed in-house and training, I don’t think it can be more than 300,000 dollars.”

President Miura responded, “300,000 dollars is too low. The price difference between yours and mine seems to be too big.”

Gun-Ho said, “As you know well, there is no free trade agreement signed between two countries—Japan and Korea. Therefore, the import tariff is very high. Once I go back to Korea, I will have to check the HS codes (Harmonized System Codes) with Korea Customs Service.”

“In the meanwhile, I will talk with a company from Taiwan about the acquisition. Someone from that company is coming to see us tomorrow.”

“Well, please do so. There has to be a meeting of the minds between a seller and a buyer after all anyway. If we are meant to reach the agreement for the deal, we will see each other again.”

Gun-Ho’s party then walked out of the company after exchanging a bow with President Miura and the plant manager to say goodbye. When they arrived downtown Yokohama City, Gun-Ho suggested, “Let’s have lunch somewhere around Motomachi where Mr. Ikuzo lives.”

Mr. Ikuzo said, “Sounds good. There is a nice fish cake restaurant in the Kannai area, called Noge. That restaurant is more than 100 years old.”

“100 years?”

Gun-Ho and Jong-Suk Park looked at each other in surprise.

“Is that restaurant popular?”

“It is, sir. That’s why it has been in business for more than 100 years.”

“Things like that can’t happen in Korea.”

“Why not? If a restaurant serves good and tasty food persistently, it can stay in business for a long time, can’t it?”

“Problems that restaurant businesses can face are not limited to their customers. They also have to deal with landlords of the space that they are renting. In Korea, if a restaurant becomes so popular, and a lot of customers start coming to the restaurant, its landlords will raise the rent. That happens commonly. We say in Korea that building owners are sitting above the Creator. That’s why it is almost impossible to see an old restaurant like the one that we are heading to, in Korea.”

“Oh my. Are they not interested in using a win-win approach?”

“That’s why building owners are getting richer while tenants are getting poorer. To make the problem worse, the price of real property in Korea is increasing constantly.”

“Korea is experiencing a decrease in population as well, right? If there are fewer and fewer people, why would the price of real property increase? The value of real property in Japan keeps decreasing for this reason.”