"Yessss!"
We were lucky. Amidst the barrage of faxes we sent out, someone at Sasung Semiconductor read ours, and they contacted our company.
We erupted in cheers that shook the office, but Sasung had a condition.
They wanted to see our business registration, our company's capital amount, and documents verifying our purchase and sales figures.
"What junkyard has those things?!"
We had been gleefully evading taxes through undocumented transactions, and now, just as we were about to step into the major leagues, it came back to bite us.
I remembered the previous owner saying that wholesalers actually preferred documented transactions with large corporations because they needed to maintain a certain sales volume.
"Damn it! Damn it! We're so close! Just one step away! Team Leader Park, what's our sales figure for this year?"
"…About 1.4 billion won."
"Would that impress Sasung Semiconductor?"
"Not a chance."
It was already August, and our total sales were only 1.4 billion won. Less than 200 million won per month, and even that was mostly due to the sales generated from delivering goods from Chunha Resources to wholesalers, with the invoices issued under Chunha Trading's corporate name.
"Let's send them what we have. You never know."
As expected, we failed.
Sasung's response was that due to their company's security regulations, electronic scrap, which posed a risk of technology leaks, could only be handled by companies with a certain scale and proven trustworthiness. Our company was too small to be trusted.
"Sigh, there's no solution. Would they agree to issuing tax invoices when we buy and sell secondhand goods?"
"Of course not. We might be able to generate sales figures by issuing invoices through CEO Wu's company, but the problem is the purchases. Junkyards would never agree. They would lose out on the VAT amount. If we do that, our company will have sales without purchases, which is risky."
For any company, purchases and sales needed to be balanced. A company with sales but no purchases would immediately be flagged for tax evasion and audited by the National Tax Service.
It might be okay for 100-200 million won, but if we started generating significant sales, it would be at least 5 billion won per month, which was too risky.
"What if we offer to pay the junkyards an additional 10% for VAT(Value-Added Tax)?"
"They would still be reluctant, but if our prices are the best, they might agree. But our margin is only 5%."
Ah, right.
"Hmm, Team Leader Park, what's the current situation in the secondhand goods market?"
"Most of them are struggling, but there are a few still hanging on."
"Even though we're securing most of the supply?"
"Secondhand goods come from other sources besides junkyards. Households discard them, and individuals try to sell them to traders."
"Hmm, it's still too early."
We needed at least one or two months to build up our sales and purchase records. It was impossible to target large corporations before that.
"For now, Team Leader Park, focus on mid-sized companies. Tell the office staff to send faxes to all companies with 'electronics,' 'tech,' 'precision,' anything related to electronics in their names. I'm going to meet with CEO Wu and discuss this."
***
"Annyeonghaseyo(Hello)."
"Whoa, CEO Wu, you're speaking Korean?"
"Learning."
"Hahaha, that's amazing. Your pronunciation is excellent."
"Kamsahamnida(Thanks)."
We all burst into laughter at CEO Wu's awkward Korean. My head had been aching from all the worries lately, and it felt good to laugh for a change.
"He wants to learn, so I've been teaching him a few words here and there."
"Teach him more diligently. It would be great if we could communicate directly in the future."
"Alright."
"Anyway, the reason I'm here today is because of the prices."
"Prices?"
"Yes. What's the situation with Chinese secondhand traders? Most of the Korean traders are out of business, but there are a few left."
CEO Wu smiled and said,
"He says the only ones left in Korea are traders who cater to the domestic market. He says the high-quality clothes that are sold secondhand in Korea never reach us anyway, so we can ignore them. And since China offers the highest prices for secondhand goods, it's difficult for traders from other countries to enter the Korean market."
"Oh, is that so?"
"And the Chinese secondhand traders who were operating in Korea all withdrew about two weeks ago. But we can't let our guard down. They can come back anytime if the prices of Korean secondhand goods drop."
"Hmm, then it'll be difficult to adjust the prices for now."
CEO Wu looked at me curiously.
"He's asking if something happened. He says you weren't losing money even with the 5% margin, were you?"
I didn't go into details and just explained that I needed to build up our sales and purchase records, but there was no easy way to do it.
CEO Wu laughed and said,
"He's asking why you didn't tell him sooner. He says he might not be able to offer a big increase, but adjusting the prices is definitely possible."
"Now? You said Chinese secondhand traders might come back if we lower the prices."
"So, here's the plan…"
***
Go Je-heon, who ran a junkyard near Cheonan, was living the good life. The volume-based waste disposal system had made collecting easier, and the used clothing donation boxes he rented from Chunha Trading were a gold mine.
In the past, clothes were thrown out with all sorts of garbage, but now, because of the "Help the Less Fortunate" slogan, people were even washing their clothes before putting them in the donation boxes. Some even left money inside.
"They're a blessing."
He had initially rented one donation box on a whim and installed it in a residential area. When he saw the profits, he quickly rented 20 more.
Other junkyard owners, realizing the potential of the donation boxes, were also clamoring to rent them, but Chunha Trading was limiting the number of boxes per area to protect the existing renters' territories. Go Je-heon, who had already secured all the prime locations, had nothing to worry about.
Those who tried to install boxes without permission were quickly shut down by protests from the disability association and forced to withdraw, facing public backlash.
The contract period was one year, and the rent might increase when it was time to renew, but for now, he was happy.
"Chunha Trading, such a likable company."
And their price list was a lifesaver.
In the past, secondhand traders would come to his junkyard and haggle, using all sorts of excuses to lower the prices. But Chunha Trading's price list was clear and precise.
"Sir, I'm here."
"Assistant Manager Kim, welcome. Is today the day for the new price list?"
"The company policy has changed. I'm going around explaining the new price list to everyone. Here's a copy for you."
Go Je-heon took the price list and started reading.
"Huh? What's with these prices?"
The prices were very specific. 121 won for accessories, 1,650 won for drying racks.
"They're switching to documented transactions. So these prices include the 10% VAT."
Go Je-heon wasn't happy about it, but he thought it was acceptable as long as they guaranteed the 10% VAT, just like when he issued invoices for delivering waste paper to wholesalers.
"And they're going to issue a new price list every two days."
"Every two days? Can they even handle that?"
Assistant Manager Kim sighed.
"That's what I'm saying. They're hiring more employees, but every two days is too much."
Go Je-heon looked at Assistant Manager Kim sympathetically and then gasped as he looked at the price list again.
"What? Why did the price of used clothes drop so much?"
He noticed that the price of used clothes had plummeted from 260 won last week to 200 won.
"They said the price dropped because there's an oversupply in China."
"Damn it, I should have sold them sooner."
He checked the other items and was shocked.
"Special price? What's this? 30,000 won for rice cookers? 10,000 won for dining tables? The prices have almost tripled!"
"Yes, there are a few items marked as 'special price.' They're offering higher prices for those items because they're in high demand."
"Really? That's great. I have some rice cookers, take them while you're here."
"They're working, right?"
"Do you think I'm new to this business? I checked them all, so take them."
***
"Hyung, I don't understand this 'special price' thing."
"You were there when CEO Wu explained it to us. What don't you understand?"
"Well, if they offer special prices for specific items like this sporadically, the junkyards will just hoard those items and wait for the price to go up, won't they?"
"Come on, we've been monopolizing the secondhand goods market for months. Do you think they'll fall for such an obvious trick? If you look at the overall volume we've been buying, it's pretty consistent. The amount of each item generated by junkyards nationwide is roughly the same every day. It's the magic of statistics."
"You know about statistics?"
"Anyway, if we notice that a particular item is being supplied less than usual, what does that mean? They're hoarding it, waiting for the price to go up so they can sell it for a profit. Then it's simple. We just lower the price by 10 won every time, making them anxious. And we raise the price for items that are being supplied in large quantities. Then what will they think? 'Damn it, I should have sold those and hoarded these instead.' Then the supply of those items will decrease because they'll start hoarding them, expecting the price to go up. And we repeat the process. If we need cash, we crash the prices across the board. And if we want to give the junkyards some breathing room, we raise the prices."
Park Jong-bum, who was sitting next to us, said,
"It's like the stock market. One person controls the fluctuations of all the stocks. The retail investors are bound to lose money."
"That's right. And this is the most important part: there haven't been any complaints about the drop in used clothes prices. Used clothes account for almost 50% of the secondhand goods market, but their attention is diverted to the items with inflated prices."
"We raised the prices of most items except for used clothes to distract them."
As a result, we had raised the prices of most items but crashed the price of used clothes.
We hadn't gained any financial benefit, but we had successfully minimized the negative impact of the price drop.
"Then we start crashing the prices one by one. The overall prices will gradually decrease, but people will be too focused on the inflated special prices to notice. And then, at some point, all the prices will be lower on average. They won't realize it unless they analyze the market like some crazy stock investor."
I was getting excited as I spoke.
"If the Chinese or Korean traders see our prices and think they can make a profit because used clothes are cheap, we'll just raise the prices again. The secondhand goods market is ours now."