David Sullivan


takes us on a journey to a smelter in rural China, where the lengthy negotiation process pays off in the end.

We drove five hours from Zhengzhou Airport to reach the smelter. I never sleep during long car journeys. I am not frightened of crashing, although I should be as my driver speeds up the wrong side of the road and breaks quickly like an aeroplane landing, to avoid geese crossing the road.

He obviously doesn’t mind nearly killing us but doesn”t want to hurt the geese; he doesn’t want to take away the farmer’s livelihood in a one minute splat.

I don’t sleep because I like watching China, acre after acre of new trees planted swaying in the wind, a brick house with no power lines in the middle of a ploughed field, the people in the villages with their dull clothing and suddenly an old man wearing a T-shirt with ‘Bon Jovi’s on it! Huge gorges, huge holes to fall into, as the car wheels get close to the edge and then back on the highway with the road sweeper working slowly in the fast lane as the cars barely manage to avoid her.

We pull off the road. The smelter is at the top of a hill. We can see the chimneys; silver white fumes curling around the black, slightly greenish emissions. I know what will happen: we will arrive at the smelter on top of the hill and the people will tell us that we are immediately going to lunch back in the town we passed through half an hour before.

Awful restaurants, with worn carpets and dirty table cloths, pretty waitresses, with old cheongsams and poor make up. However we will have eight courses of fantastic food and we will only manage to eat a little.

Surviving lunch

Socialising for three hours in the restaurant to ensure you get the mandate. Surviving the cigarette smoke, thicker than the plant chimney and hopefully your liver surviving at least a pint of Chinese white wine. Then back to the smelter, past workers cleaning their black feet in metal bowls outside their sandstone lodging where 20 share one toilet and shower.

They will show us round the smelter enthusiastically, up and down the fragile metal ladders, across metal bridges above the furnaces and down to the electrolysis tank where your eyes sting but the workers are wide eyed as they adjust the metal plates dangling in the sort of solution a villain would throw James Bond into.

They will tell you they are number one for this technology, that no one else has it, and they will point with proud expressions to a weathered old man, the ‘chief engineer’s who invented the process. The equipment looks 20 years old but they tell you it is only two years old.

Back to the legal person’s office. He has been sleeping in a little room behind his desk. You can briefly see the bed as he comes out, with a metal bowl of water on a wooden table. How many days a week does he sleep off the Chinese wine in this bleak place

  • The bargaining begins

    We pitch our expertise, they know us, they heard we arranged a loan for somebody in a nearby city. We tell them our way of working, the big boss picks up a huge pile of faxes, at least 100 from his desk.

    He tells us the faxes are all from ‘financial companies’s in Beijing, Shanghai, and Hong Kong, offering to arrange loans, equity, listings on Wall Street – everything. He says he knows we are the best and the reason he doesn’t deal with all those other intermediaries is that they must all be crooks because they are asking for upfront fees.

    I know we will all look at each other and in two seconds we shall all remember the five-hour journey it has taken to get here as our hopes of a retainer go up with the silver white fumes – where all hopes of a retainer from a Chinese smelter usually go.

    The legal person says he cannot borrow any renminbi (Rmb) because the banks don’t have any liquidity. All the customers have taken the money to build real estate, invest in the stock market or somehow get the money into Hong Kong for speculation. His friend the bank manager told him that the inter-bank borrowing rates are so high that even if his bank gets some money they can only lend it at some unworkable high interest rate.

    The authorities are blaming the banks, including the foreign ones, for fuelling the speculators and what is more worrying to the legal person, the banks are being accused of lending to support polluting industries.

    He complains he is more than 3,000km from the nearest Olympic event. Why should he suffer this stupid policy

  • This is “our industrial revolution, it’s our turn,” he proclaims, looking his sharpest since he made it out of the sleeping room. Despite everything he knows we will get him a Rmb loan, because we are the best and he knows we are the best because we will not charge a retainer; we are brimming with confidence.
    No trade

    I know the smelter will not want to export. Taxes and more taxes to come means they will not make any money, although our strategy is to persuade them it is only a reduction in profit and they should see that as just an additional borrowing cost.

    We will tell them that to export is the easiest way to get money by obtaining some pre-export finance. He says he knows that because the foreign banks who manage to find his smelter only talk about pre-export US dollar financing and nothing else. We will go around in circles for at least an hour before the legal person will admit he could export maybe 10,000 tonnes if we can get him US$10mn. But he needs the loan quickly although ‘just a few weeks will be OK’.

    I know we will all look at each other again and remember in a split second how long it took the bank to handle the last smelter loan we arranged. I will turn to him with my most sincere look and say that I reckon we could arrange everything in six-to-eight weeks, as my staff stare down at their shoes.

    “I cannot convert the pre-payment if you remit it to the smelter’s bank account however because I still have outstanding exports under my last pre-payment deal and my local bank tells me that the Foreign Exchange Administration recommends on conversion of pre-payments up to 180 days.”

    Then we will tell him how legal people in other smelters have managed to work something out with their local bank and that he should have the confidence to persuade his bank that one more pre-payment will not do any harm.

    We all know what will come next: he will suggest remitting the money to some associate company in another province who somehow finds it easier to convert the proceeds into Rmb. Or he will suggest just giving the US dollars to the Hong Kong borrowing vehicle because they have their own ways of getting money into China.

    We try to explain that banks will want to handle the loan in a proper way whilst at the same time the thought processes are already working to remember the last bank who was more flexible about this conversion issue.

    I can’t wait to get back to the hotel five hours away with its dinner buffet and Filipina singer. The end of a successful day of getting a mandate from a big smelter, a mandate with no retainer, a mandate with no obvious solution. In the car on the way back I don’t sleep again, this time two hours thinking about how to get money to the smelter to get my 2%, two hours thinking about what else I should do for a living and an hour thinking of how to get the Filipina singer to at least notice me.