Episode 87: Business Trip to Mexico
“Hmm, if I’m not mistaken, isn’t that country known for its high country risk?”
South America, especially Mexico, is famously known as the land of the mafia. Moreover, the 1970s in Mexico were a chaotic period. It was a time when the people’s demands for democratization were intensifying due to their discontent with the one-party dictatorship of the ruling Institutional Revolutionary Party (PRI).
In addition to political instability, the economic growth slowed after the 1973 oil shock, leading to a significant increase in crime rates due to the income disparity within Mexico.
For Lee Chang-jin, who remembered these historical facts, the mention of Mexico was naturally off-putting.
Brandon, guessing Lee Chang-jin’s thoughts, smiled gently.
“I thought you might say that. However, isn’t it a different story when it comes to Pemex?”
“Pemex, you mean the Mexican state-owned enterprise?”
“Yes. Actually, we are producing rutile-type titanium dioxide in a titanium factory near Veracruz, Mexico, using the OEM method. We are planning to replace the outdated equipment and increase production capacity. If you are interested, I can introduce you.”
It was a suggestion to explore an indirect route through a reinvestment company as it was currently difficult to directly deal with DuPont headquarters due to the intertwined interests with various companies.
Jung Ho-seong, sitting next to him, whispered.
“Pemex is a public enterprise. It’s quite a reliable company. Since it has its own oil wells, you don’t have to worry about your partner going bankrupt or defaulting on payments.”
Pemex (Petróleos Mexicanos) is a representative state-owned enterprise in Mexico, responsible for a variety of businesses including oil, tankers, pipelines, marine terminals, and petrochemical plants.
After organizing his thoughts for a moment, Lee Chang-jin spoke.
“This is quite a good proposal for us. However, is this introduction from your headquarters, or is it a personal suggestion? If you don’t mind, I’m curious about the reason behind this proposal.”
Robert responded nonchalantly to his question.
“Haha, there’s no special intention. Though this deal didn’t work out, I hope you understand it as a gesture to maintain a good relationship with Daese Industries in the future. Whether in business or personally.”
In fact, Brandon, who was quite successful at headquarters, had come all the way to Korea, a relatively peripheral region, because he had ambitions to become independent from DuPont in the future.
To him, Daese Industries was a refreshing shock while searching for capable partners in Asia. Being an OEM company for Clark while possessing various patents and inventions, he could roughly gauge the potential of this company just by looking at the business plan through the briefing.
“A company with more capability than I thought. It’s worth knowing.”
Who knows, it might become a major client in the future,
Who knows, a small favor might return as a great gift.
Brandon thought that creating a debt in such a situation was the real investment.
Of course, Lee Chang-jin had no reason to refuse.
“Thank you, Mr. Brandon. Then, how about you serve as our agent rather than just an introducer? We will provide a separate agent fee, so we ask for your active cooperation. Would a commission of about 1.5% according to international convention be reasonable? We will transfer it to your account immediately upon signing the contract.”
“Haha, I would be honored. I will do my best to ensure the contract is concluded.”
Brandon’s eyes sparkled with enthusiasm as they shook hands.
An agent contract was like an unexpected windfall for him.
Having completed the agent contract with Brandon, Lee Chang-jin immediately applied for a visa. Fortunately, the visa was issued very easily. The improved credit rating from dealing with large corporations had subtly influenced the process.
Thanks to Brandon’s efforts behind the scenes, the schedule with Pemex was arranged shortly.
Having set the meeting schedule with Pemex, Lee Chang-jin headed to the Mexican airport with Jung Ho-seong. They departed from Gimpo Airport a day before the scheduled meeting and arrived at Mexico City Airport (Benito Juarez International Airport).
A man holding a placard was waiting there.
“Hello. Are you President Lee Chang-jin?”
“Yes, I am Lee Chang-jin. Are you Jonathan?”
“Ah, thank you for coming all the way here. I am Jonathan, tasked with guiding you. I received prior notice from Mr. Brandon and was waiting for you.”
The man with a darkly tanned face was Brandon’s local partner in Mexico.
“Did you get vaccinated? In summer, the mosquitoes here are rampant, so there is a risk of malaria or yellow fever.”
“Of course. I also brought long-sleeved shirts.”
“Then that’s fine. First, let’s head to the factory. I will drive.”
Although the weather was sticky, it wasn’t too hot, possibly because it wasn’t yet the peak of summer. Before long, a wide-open coastal area appeared before Lee Chang-jin’s eyes as they drove.
Near the beach, voluptuous beauties and men with chiseled abs were visible here and there. Women in tiny bikinis were seen swimming on one side. Jung Ho-seong, unable to take his eyes off, murmured enviously.
“Wow, the water is clear and the scenery is great here.”
“Yes, it’s known for its cleanliness. It’s a well-known tourist spot in the summer.”
Watching the group of beauties playing on the beach, Lee Chang-jin thought of Jin Seon-ah.
It was somewhat regrettable that they hadn’t been able to visit such a beach while dating for over two years.
However, the pristine beauty of the coast was nothing short of artistic.
Leaving behind the group enjoying beach volleyball, the vehicle picked up speed again.
The vehicle soon entered a gray area covered with rugged rocky mountains.
The iron fences set up like borders indicated strict security.
The titanium dioxide factory was located about 5 kilometers away from the coastal village, in a hilly area.
This was to prepare for any major accidents.
As they drove inside, tall chimneys, round silos resembling drums, and water and fuel tanks lined up along the road came into view. Next to them, old temporary buildings were clustered together.
Across from the main control building stood a five-story administrative building made of reinforced concrete. The distance from the factory’s main gate to the administrative building was approximately 2 kilometers, and the two-lane concrete road had patches here and there. Upon getting out of the car, buildings with peeling paint were occasionally seen. The signs of wear from the weather hinted at the passage of time.
“It certainly looks like it needs remodeling urgently. How long has it been since the factory was built?”
In response to Jung Ho-seong’s question, Jonathan answered.
“At least 40 years.”
“40 years? Are you serious?”
“Yes. The factory has been operational since before World War II.”
Leaving the astonished Jung Ho-seong behind, Lee Chang-jin continued to inspect the factory. Although it felt old and shabby, the fact that it was still operating without major accidents suggested that it was reasonably well-maintained.
At that moment, a voice came from behind.
“Ah, you’ve arrived, Jonathan.”
Turning around, he saw a chubby white man looking at them with a kind smile. Jonathan approached and extended his hand.
“Yes. Long time no see. You haven’t changed.”
“Haha, haven’t changed? Haven’t I spread out sideways like this? Are these the guests from Korea?”
“Yes, they are. This is Mr. Lee Chang-jin, the president of Daese Industries. And this is Manager Jung Ho-seong.”
Upon Jonathan’s introduction, the chubby man greeted them.
“Hello. I am Saulo Luis Jiménez. You can call me Jiménez. I’m the plant manager here.”
Jiménez, an intellectual who had spent ten years in a government department, seemed more suited to floral Hawaiian shirts than suits.
He was a typical portly South American man accustomed to cola and couches.
His appearance with a tie on a hot day was as unnatural as a beetle in clothes, but it was evident that he had paid attention to his attire for the guests.
Lee Chang-jin, wearing a hospitable smile, warmly shook hands.
“Muchas gracias… It’s an honor to meet you. I am Lee Chang-jin.”
“Oh, Mr. Lee, you speak Spanish.”
The unexpected fluent Spanish made the other person’s expression turn favorable.
“I studied it as a second foreign language in college. I only know simple conversations.”
“For something you’ve learned briefly, your Spanish is fluent.”
After having a friendly conversation, Lee Chang-jin nodded.
“So, may we tour the factory as planned?”
“Of course. From here, I will guide you personally.”
Lee Chang-jin, wearing a white protective suit to avoid contamination, entered the factory. He saw mills constantly moving and cylindrical grinders in operation.
What caught his attention the most was a sedimentation tank that looked like it belonged in a sewer. Dangerous-looking bubbles were bubbling up from there.
“What process is this?”
“It’s a process of processing ilmenite pigment with sulfuric acid. After crushing the titanium ore, ilmenite, it is dissolved in sulfuric acid to extract liquid titanium dioxide (TiO2) from the partially undissolved solid state.”
“Hmm… It seems to have multiple stages. Could you explain it simply?”
“The titanium dioxide process involves applying heat and pressure to titanium metal to produce titanium dioxide. The work at this titanium dioxide factory is mainly divided into two stages: forming rutile-type titanium dioxide (TiO2) by heat-treating and pressurizing titanium in the first stage, and crushing the titanium dioxide raw material in the second stage.”
It was quite fascinating, likely because it was his first time seeing such a process.
For Lee Chang-jin, who had a keen interest in technology, it was quite an enjoyable tour.
That evening, after the tour, Lee Chang-jin was invited to a banquet.
The dinner included Spanish-style rice dish paella, mackerel grilled whole with coarse salt, guacamole seasoned with salt as the base of avocado, and a roast piglet as the main dish.
“I hope the food suits your taste. Many people dislike cilantro, so we left it out. How do you find the taste?”
“It’s delicious. This guacamole is refreshing. It’s to my taste. The pork is tender, and there’s no off-flavor.”
The well-grilled pork skin was crispy like a cracker, and the inside was moist, stimulating the palate. Even for Lee Chang-jin, a self-proclaimed gourmet, it was rare to experience such delicious meat.
At Lee Chang-jin’s genuine admiration, Jiménez replied with a tone full of modest pride.
“Thank you. My grandmother was from Segovia. I’m confident in roast piglet, if nothing else.”
“Indeed… It has a deep flavor. I’d like to learn the recipe.”
As the atmosphere became quite warm, Jiménez subtly changed the subject.
“What was your impression of the factory tour?”
After a moment of contemplation, Lee Chang-jin spoke honestly.
“The factory is clean, and the safety measures are well implemented. However, there are quite a few outdated facilities, which is somewhat disappointing.”
Although it might have been slightly offensive, Jiménez quickly acknowledged it.
“The facilities are over thirty years old. That’s why we are planning to modernize the equipment recently.”
“I heard you are planning a major overhaul of the existing facilities. Could you tell me specifically how you plan to do it?”
“We plan to gradually convert the sulfuric acid process to the chlorination process. The current sulfuric acid process is quite challenging to maintain quality. As the factory ages, the likelihood of impurities entering during the process increases. While we will utilize the existing facilities to the maximum extent possible, we believe it would be better to replace the first stage process with the chlorination process to produce high-quality products, so we are in serious discussions about it.”
The ‘chlorination process’ is a method of producing anatase titanium dioxide (TiO2) by reacting ilmenite with chlorine gas to generate titanium tetrachloride (TiCl4), which is then reacted with oxygen gas.
This method is simpler in process and superior in quality compared to titanium dioxide produced by the sulfuric acid process.
Moreover, it has the advantage of lower production costs due to relatively less manpower and energy consumption.
Carefully listening to the conversation, Lee Chang-jin spoke.
“Converting the process step-by-step seems like it would require a significant amount of money.”
“Yes, indeed. To be honest, we are in urgent need of financial support for the equipment replacement.”
“Financial support, you say. How much would you roughly need?”
“We estimate about 20 million dollars would be needed to expand the annual production capacity by an additional 50,000 tons. We have requested investment attraction through JP Morgan in the United States. JP Morgan has agreed to be the lead bank, and we are planning to attract investments through a syndicate loan by recruiting small investors. So, I would like to inquire if it’s possible for you, Mr. Lee, to invest.”
Lee Chang-jin nodded calmly. He had roughly guessed from the beginning that such a deal would be proposed. The excessive hospitality for a small buyer had made him suspicious from the start.
- To be continued in Episode 88 -
