Chairman Lee continued talking.
“The hard money lenders at that time suffered a bitter blow when the banks took the promissory note discount service that they had been providing to companies. That was the reason why I quit the hard money lending business and moved to the real estate investment business. I went to Apgujeong Town, Gangnam District in Seoul and started investing in condos. The condos in Gangnam were already selling at a high price, but I was certain that people would be willing to pay even more for those condos. I was sure about it because I knew that people preferred the convenient location of Gangnam, and they also had a desire to show off that they were living in a nice community—the Gangnam area.”
“You must have made a fortune from that investment.”
“I did. But then the IMF happened.”
“Gosh, you must have lost a lot then.”
“No, actually I didn’t.”
Chairman Lee wagged his head.
“I was actually so excited because it could be a huge opportunity to make big money.”
“Huh? During the IMF crisis?”
“Right before the IMF crisis, the officials in the Ministry of Economy and Finance saw the signs of an upcoming financial crisis in this country. They, however, denied their awareness by stating that our economy was fundamentally strong. I had been in the money market for too long to believe them and I had the opposite view. By that time, I had already liquidated my assets; I sold dozens of condos I owned in Apgujeong Town along with all of the promissory notes I was holding. I believed the only way I could survive was by securing cash.”
“I see.”
“Once the Korean economy began to experience the financial crisis, the building owners who couldn’t handle the interest rate hikes started putting their buildings on the market, and many companies with significant debts went bankrupt. At that time, I acquired the 25 billion won building in Cheongdam Town.
“Oh, I see.”
Manager Gweon and Jong-Suk were listening intently to Chairman Lee’s story while sitting next to him.
“Guess how much that building is worth today.”
“Um, I don’t know. Maybe 30 billion won? 40 billion won?”
“It is now worth 200 billion won.”
“200 billion won!” Gun-Ho gasped in astonishment.
“The rent income from that building was substantial. One day, a branch manager of a bank came to me and offered a loan of 100 billion won since I didn’t have any debt. He then asked me to take over a building that the bank had seized for a defaulted loan; the bank was about to put that building up for sale. I took a 60 billion won of loan out of the 100 billion won loan they initially suggested and took over a paper production company for 40 billion won. With the remaining 20 billion won, I bought the small building.”
“I see.”
“The reason why I acquired the paper production company was that… The delivery business was being developed in Korea at that time and I thought the delivery business would make substantial use of packaging boxes which are made of corrugated cardboard. Additionally, my son was about to return from studying in the U.S. and I wanted to give him a company he could run. I already paid off the loan of 60 billion won. That paper production company continuously grew and now its asset exceeds 100 billion won, and the small building is worth about 70 billion won now.”
Gun-Ho, Jong-Suk and Manager Gweon had gasped in astonishment and admiration.
“Now, I have no desire to amass any more money, and I’m just spending my time fishing like this. Promissory notes or real estate investments are no longer a good way to make money these days. As banks took over the promissory note business with their B2B payment system, the government is taking the profits from the real estate investment by collecting so many taxes by the name of a transfer tax and an excess profits tax. A person born to a poor family might find it impossible to move up the economic ladder because the economic ladder became way steeper than it used to be. It could solidify the economic inequality in our society.”
“Whew.”
The three people let a deep sigh simultaneously as they listened to Chairman Lee’s story.
“Do you know why I am telling you all these stories today? I usually don’t talk much.”
“I don’t know.”
“I am telling you these stories because Mr. Gun-Ho Goo is going to China.”
“Huh? I haven’t decided anything yet. I’m going there just to see how it is.”
“I am not an expert in running a business, but I’ve heard that a lot of Korean companies expanded their business to China and failed. Moreover, many Korean business people became victim of fraud there. There is something very clear though.”
“Huh? What is it?”
“The real estate.”
“Real estate?”
“What is China’s economic growth rate? Almost 10% right? It’s 30% for three years. The real estate market and a country’s economic growth are closely related. If a housing boom occurs in addition to the economic growth, the real estate prices will rise significantly.”
“Then the real estate price in China will keep increasing, right?”
“No.”
Chairman Lee shook his head from side to side.
“If the real estate price goes up continuously, the Chinese government will pull out their sword to intervene, just like our country. The government would want to develop the source of tax revenue and they don’t want the economic inequality to be intensified. Chinese real estate market is going through a golden age right now. You might not hit a jackpot there, but it will cover the economic growth. You want to pay attention to the market.”
Gun-Ho almost said, ‘I don’t have money to invest in a real estate market.’ Chairman Lee seemed like he knew everything. If Gun-Ho said so, Chairman Lee might reply this to him ‘You made your money when you worked in accounting by using inappropriately the company’s funds.’ Gun-Ho was scared to hear that from him.
“Haha. I will keep that in mind. Thank you for telling me your story, sir.”
“I’ve got a bite!”
Chairman Lee reeled in the fish.
The sun was about to set. Chairman Lee and Manager Gweon left for home. Gun-Ho and Jong-Suk laid out a picnic mat on the grass and started drinking. Jong-Suk said as he poured the soju in his paper cup, “Sometimes I don’t understand Chairman Lee. He knows that we both have no money. Why does he keep saying we need to pay attention to the real estate market?”
“Haha. Yeah. Weird.”
As Gun-Ho was responding to Suk-Ho, he talked to himself while he poured the soju in his paper cup.
‘Wow. Chairman Lee is something. He knows everything, I mean literally everything. He is on a whole different level.’
Gun-Ho went to Gimpo International Airport and met the shaved-head restaurant owner’s uncle.
“I already reserved a hotel for you.”
“Oh, the hotel in China? Isn’t it expensive?”
“It’s a three-star hotel. The price is about the same as a motel in Korea.”
“Okay. Thank you.”
“Oh, and I believe I didn’t give you my name. I’m Hee-Yeol Byeon. I had worked in L Group for a long time before I retired three years ago.”
“Oh, really? How did you start the restaurant in China then?”
“The location of the last branch office of L Group that I worked for is in Shanghai. After retiring, I started my own business and then I blew most of my retirement pay because of some sort of fraud. It left me with 50 million won, so I acquired that restaurant in Hangzhou City with it.”
“Oh, I see.”
“I’ve heard that you used to work in a company before too.”
“Right. Not long though. I used to work at an electronic assembly company in Asan.”
“Oh, so you were not a business person.”
“No. The restaurant in Noyrangjin was my first business experience. You can talk to me in a more informal way; you are way older than me.”
“Well… If you haven’t exchanged your money yet, you can do so here.”
“How much do you think I should exchange?”
“200,000 -300,000 won should be good. It’s up to you. Today’s exchange rate is displayed on the electronic board over there.”
Gun-Ho exchanged 300,000 won with Chinese Yuan. The current exchange rate from Korean Won to Chinese Yuan at that time was 120:1. Gun-Ho received 2,500 Yuan.
Gun-Ho boarded the plane to China. Everything seemed marvelous to him.
“Wow. I am on board. I guess I achieved a certain level of success in my life! Even though I lost 20 million won in Noryangjin!”
The plane took off and Gun-Ho couldn’t take his eyes off from outside the window even though all he could see was the clouds, and they looked like cotton candies. Gun-Ho looked at Hee-Yeol Byun in the next seat and he was dozing off; he must be very tired.
