novelraw Chapter 607: The Crisis of Wild Suma Root Supply and the Solution
Chapter 607: The Crisis of Wild Suma Root Supply and the Solution
[Chapter 607: The Crisis of Wild Suma Root Supply and the Solution]
Ten days later, Linton, having harvested the power of Merit, left Jiangxi Province with Li Bingbing and headed to Shanghai.
Aunt Kelly, however, remained in Jiangxi Province to check on the progress of this year's 80 million charity investment project.
Linton's trip to Shanghai this time was to discuss further cooperation on medicinal materials with the Hundred Herbs Hall.
In fact, Linton's cooperation with the Hundred Herbs Hall had always been very smooth, so there was no need for him to come in person to negotiate.
But recently, a major problem had arisen: the supply of Wild Suma Root over 30 years old was experiencing significant issues.
Starting from the end of last year, the Wild Suma Root supplied by the Hundred Herbs Hall decreased month by month, even as the acquisition price rose repeatedly.
In less than two years, the acquisition price for Wild Suma Root over 30 years old had climbed from the initial 15,000 US dollars per kilogram to the latest 300,000 US dollars per kilogram.
The price had increased by a full 20 times, yet there was no effect; the supply volume continued to drop.
Last month's supply volume was only a little over 5 kilograms, which was far from meeting the needs of Vitality pill production.
To maintain the current supply volume of Vitality pills, producing 334 bottles monthly, required consuming 13.5 kilograms of Wild Suma Root over 30 years old.
Although the Health Care Company had increased its procurement reserves and held some inventory at the beginning, due to the deficit over the past six months, the Health Care Company's inventory of Wild Suma Root over 30 years old was now only 220 kilograms, enough for only 16 months of use.
A while ago, he tested the medicinal properties of the ginseng grown on his own farm. The ginseng nourished by Spiritual Energy indeed had very strong efficacy, far exceeding that of ordinary ginseng, and even surpassing the efficacy of Wild Suma Root.
But the problem was that the current growth time for the ginseng was too short; even by October, the root age would only reach 3 years, and its medicinal efficacy was still far from sufficient.
He estimated that to truly replace the efficacy of Wild Suma Root over 30 years old, even with the nourishment of Spiritual Energy, the ginseng needed to grow for 5 years.
This meant that to use the ginseng grown on his farm to replace Wild Suma Root, they would have to wait until after October of the year after next, which was still 25 months away.
If the supply volume was to be maintained without a drop, the inventory shortage of Wild Suma Root over 30 years old for the next 25 months would total 118 kilograms.
This implied that the monthly procurement volume of Wild Suma Root needed to reach over 4.7 kilograms.
However, based on the Hundred Herbs Hall's current supply trend, this would be an extremely difficult, if not impossible, task.
So, taking the opportunity of coming to China to harvest the power of Merit, he personally came to see what the problem was and whether there was a solution.
If the Wild Suma Root supply truly could not be resolved, perhaps they would have to start reducing the production and supply of Vitality pills early to avoid a complete stockout later.
After Linton and Li Bingbing flew from Nanchang to Shanghai on a private jet, as soon as they disembarked, Wan Haibo, the General Manager of the Hundred Herbs Hall, and Boss Xu, who had been liaising with Linton previously, were waiting at the airport entrance.
Wan Haibo had received notice from Linton two days prior that he was coming to Shanghai to discuss the medicinal material supply, and he was extremely excited.
Since last year, the volume of medicinal materials supplied by the Hundred Herbs Hall to Linton had accounted for over 50% of the Hundred Herbs Hall's total business volume.
The transaction amount settled this year had reached 57 million US dollars, with the projected annual transaction amount expected to exceed 80 million US dollars.
Moreover, the prices Linton offered were very generous, providing a huge profit margin; this portion of the business generated over 85% of the Hundred Herbs Hall's total profit.
More critically, Linton paid in US dollars and never delayed payment.
Of course, the medicinal materials provided by the Hundred Herbs Hall were also always delivered on time with guaranteed quality and quantity, without any mishaps.
Due to the nation's strong support for earning foreign exchange, the Hundred Herbs Hall also received substantial tax rebates from customs. Last year, it was named an Advanced Unit for Export Earnings by Shanghai City, and Wan Haibo himself was named an Outstanding Entrepreneur by the city.
Boss Xu was also promoted to Deputy General Manager of the head office for securing the deal with Linton, a major contribution to the company.
It could be said that the cooperation with Linton was crucial to the lifeblood of the Hundred Herbs Hall, and no amount of attention was too much.
After greeting Linton at the airport, they exchanged a few pleasantries, and the group headed straight for the Portman Ritz-Carlton Shanghai on Nanjing West Road.
After checking in, Wan Haibo intended to invite Linton to visit the Hundred Herbs Hall headquarters before starting the detailed negotiations.
However, Linton had no intention of visiting the Hundred Herbs Hall. He directly invited Wan Haibo and Deputy General Manager Xu into the meeting room of the presidential suite, saying, "Let's keep it simple and chat here."
In his eyes, the cooperation between the two parties had always gone smoothly, and a strong degree of trust had been established. Most importantly, the annual procurement cost of 80 million US dollars was trivial compared to his Health Care Company's tens of billions in revenue.
For him, the most crucial factor was the stable supply of medicinal materials; supplying them on time, with guaranteed quality and quantity, was more important than anything else.
With the previous foundation of cooperation, Linton's negotiations with Wan Haibo and others proceeded very smoothly.
The two sides quickly confirmed the procurement quantities and prices for next year, with the exception of Wild Suma Root aged 30 years or older.
Wan Haibo apologized shamefully, "Mr. Linton, thank you very much for your support of Hundred Herbs Hall, but we truly cannot guarantee the supply volume for Wild Suma Root aged over 30 years."
Linton did not entirely believe him and used Soul Induction to ask, "Explain the specific difficulties regarding the Wild Suma Root in detail."
"Wild Suma Root aged over 30 years has very harsh growing conditions. They are mainly distributed in the Changbai Mountain Range, and all are located deep within uninhabited old-growth forests. Their yield simply cannot be guaranteed.
In the last two years, because of your purchasing, we mobilized a large number of people to search the mountains. After two years, the Wild Suma Root in the Changbai Mountains has almost been dug up; it is truly hard to find now.
Two years ago, ginseng diggers entering the mountains could generally find one or two stalks of qualifying Wild Suma Root per month, with an average harvest of over 0.2 kilograms per person.
At that time, even if the price wasn't particularly high, you offered us 15,000 US dollars per kilogram. We only gave the grassroots diggers 5,000 US dollars per kilogram.
But if each person could dig 0.2 kilograms of Wild Suma Root per month, their income would be 1,000 US dollars, which is over 8,000 Yuan in Renminbi. For them, that was a huge sum of money.
So they were all very motivated, and at that time, quite a few people were willing to go into the mountains to become ginseng diggers.
But now it is different. Less and less ginseng is being dug up in the mountains. Now, 100 people go into the mountains, endure wind and rain for a month, and often the entire group fails, with no one finding anything.
Even if you now raise the price we offer to 300,000 US dollars per kilogram, and we raise the price for the grassroots diggers even further to 280,000 US dollars per kilogram.
The number of diggers is still decreasing sharply because they simply cannot find any qualifying Wild Suma Root in the mountains!"
Hearing that Hundred Herbs Hall gave 280,000 of the 300,000 US dollars to the grassroots diggers, meaning Hundred Herbs Hall barely made any profit from it, yet the supply volume was still so low, it seemed that Wild Suma Root meeting the requirements was indeed almost impossible to find.
Thinking of this, he felt a bit depressed. Would he really have to reduce the production of Vitality pill for the next two years? Unwilling to give up, he asked with great emphasis, "Is there any other way to help me solve the supply problem for Wild Suma Root aged over 30 years?"
Unexpectedly, Wan Haibo actually offered a suggestion, "Mr. Linton, we have actually investigated extensively before. There are two places in the world where Wild Suma Root grows: the Changbai Mountain Range and the Sikhote-Alin Range.
The Changbai Mountain Range is mainly located in China's Heilongjiang, Jilin, and Liaoning provinces. Besides that, there is also a branch range within North Korea, and there should be some yield there as well.
And the Sikhote-Alin Range in Russia's Far East has geographical conditions extremely similar to Changbai. Someone has dug up Wild Suma Root there before, and its medicinal efficacy is exactly the same as that from Changbai Mountain. It should also meet your requirements.
Moreover, that area is sparsely populated and basically undeveloped, so there should be a considerable reserve of Wild Suma Root aged over 30 years in the mountains.
Why don't you try finding partners in those two locations? They should be able to provide you with a sufficient quantity of Wild Suma Root."
"Both places are relatively close to the Three Northeastern Provinces. Can't your people go over to purchase them?"
"We have tried to purchase from those places before, but it is difficult. North Korea is closed off, making normal purchasing impossible. Under the temptation of our high prices, occasionally someone will secretly smuggle ginseng over, but we cannot guarantee the supply.
Russia suffers from political turmoil and rampant gangs. Doing this kind of business there carries too great a risk."
Hearing this, Linton understood the situation. He withdrew his Soul Induction from him, "Good, thank you for your suggestions. I will not make any demands on the quantity of Wild Suma Root in next year's cooperation. The purchase price remains unchanged. I will continue to buy whatever you can supply. The rest of the supply contract should proceed as just negotiated."
Hearing Linton agree so readily, Wan Haibo was overjoyed. This was a contract worth over 70 million US dollars! The profit was as high as over 30 million US dollars. Coupled with government tax rebates, Hundred Herbs Hall had truly struck it rich. There would be no worries about next year's profit.
"Thank you, Mr. Linton. Shall I have someone prepare the contract now?"
"Yes."
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