1997 arrived, but there was no sign of improvement in the Korean economy.
Businesses were struggling, and the ruling party, blaming the problem on excessive labor costs, rammed through a new labor law that allowed companies to restructure their workforce based on performance.
Workers responded with a general strike, and amidst the fierce battle between the government and labor unions, businesses became even more vulnerable.
Then, the Hanbo Group started to falter.
Hanbo Steel, the group's core subsidiary, had accumulated massive debts while building the Dangjin Steel Mill. They might have been able to weather the storm if the economy had been good, but the continued losses only added to their debt burden.
They replaced their entire executive team and tried to sell their real estate assets to save the group, but with everyone hoarding cash, no suitable buyers emerged.
Hanbo Group, struggling to meet its debt obligations, finally defaulted on a mere 5 billion won bill on January 23rd.
A behemoth, ranked 14th in the business world, had crumbled over a mere 5 billion won.
"Crazy," Maru muttered as we watched the news on TV.
"Too big to fail, too big to fail, they kept saying, but it finally collapsed."
Just a few days ago, Hanbo Group had been boasting that everything would be fine once the Dangjin Steel Mill was completed and operational. Their downfall was swift.
Park Jong-bum clicked his tongue.
"The subsidiaries and subcontractors will be devastated."
"It's a domino effect. When a giant falls, the impact is enormous."
Hanbo Group employees even offered to freeze their wages, but it was too late.
"It's unfortunate, but we have to focus on our business. Do we have any dealings with Hanbo Group companies?"
Park Jong-bum replied,
"It's not a major client, but there's Hanbo Information & Communications, a subsidiary that handles IT services for the group. They generate a decent amount of electronic waste."
Hanbo Group's main businesses were steel and construction, which weren't directly related to Chunha Trading's core products.
"If that's all, there's not much we can do. Let's just observe the situation."
Following Hanbo Group's collapse, many other companies started going bankrupt.
The impact of Hanbo's downfall wasn't limited to the construction and steel industries; it shook the entire Korean economy.
The bonds and bills issued by Hanbo became worthless, and the shockwaves hit all the companies under its influence.
And as banks, which had lent nearly 5 trillion won to Hanbo Group, became reluctant to lend to businesses, countless companies that relied on bank loans started to falter.
***
"I'm here to sell my inventory."
"Inventory?"
Those were the first words uttered by the CEO of a kitchen knife factory in Ansan Industrial Complex, who had suddenly requested a meeting.
"Yes, I need to dispose of my company's inventory."
"Why are you telling me this? We specialize in secondhand goods."
The factory CEO swallowed nervously and said,
"I'll sell them to you as secondhand goods at a very low price. Can you deposit the money into a separate account, apart from the official invoice amount?"
"A separate account? Are you trying to create a slush fund?"
The CEO flinched at my blunt question, and I asked again,
"Is your company in trouble?"
"Why are you asking? Just buy them if you want, or don't!"
Despite his sharp reaction, I maintained a smile and said,
"I have a good offer for you, but I need to understand your situation and the company's circumstances. How about this? If you explain everything to me in detail, I'll pay you in cash as soon as the goods arrive, no need for a separate account. Wouldn't that be cleaner and safer?"
"…Cash?"
"Yes, in cash."
After a moment of hesitation, the CEO finally confessed,
"To be honest, I'm running out of cash and on the verge of bankruptcy. The company will be seized soon, so I'm trying to liquidate my assets and get the money out before that happens. I need to survive, don't I? So what's your offer?"
It was the answer I had expected.
I smiled with satisfaction.
"First, tell me the price you had in mind."
The CEO looked at me suspiciously and said,
"The secondhand purchase price is 2,000 won per unit, and I want another 1,000 won separately. We have about 10,000 knives, so 20 million won for the company and 10 million won for me. How about it?"
I would be paying 3,000 won per unit, which seemed like a reasonable price based on the quality of the sample knife he had brought.
But it was too reasonable.
"How about we do this instead?"
"What?"
I smiled gently and said,
"Do you really need to sell them as secondhand goods? We can also handle waste disposal."
"Waste disposal?"
"Yes, we also run a junkyard. We can dispose of them as waste if you prefer. That way, the company's share will be lower, and the amount we can give you separately will be higher."
The CEO was intrigued.
"And? Tell me more."
"For example, instead of 2,000 won for the company and 1,000 won for you, we can buy them as waste for 100 won each and give you 2,000 won per unit."
The CEO frowned after doing the calculations.
"Wait, that doesn't add up. Why isn't my share 2,900 won?"
"Sir, sir, there's something called risk premium. You know slush funds are illegal, right? We're taking a risk by helping you, so we need to be compensated. And we're offering to pay you in cash. No other company in Korea would do this for you."
"Hmm."
"Think about it this way. You've already given up on the company, haven't you? It'll be seized by creditors soon. What difference does it make whether it's secondhand or waste? The more money you have, the better your chances of recovering."
My words swayed the hesitant CEO. After a long silence, he said,
"…Increase my share a little more, and I'll sell them as waste."
"When push comes to shove, people will do anything to survive. Amazing."
I sent the CEO away, marveling at the power of human selfishness.
"This is the opposite of the telephone deal, isn't it? The only difference is whether it's the employees or the CEO who's benefiting."
"Do you think the creditors who seize the company would be any different? People will do anything for their own benefit. Ultimately, it's all about self-preservation."
Maru said with a troubled expression,
"Surely not everyone is like that? There must be some good people out there."
"I wonder if such people truly exist."
Working in the junkyard, the lowest rung of the economic ladder, I had witnessed the ugliness of human nature firsthand. My experience had filled me with cynicism.
"This could be considered a survival instinct. To be honest, if I were in his shoes, I would have done the same, maybe even worse."
"You're definitely capable of that, hyung."
I chuckled at Maru's words.
"Alright, enough chit-chat. From now on, we'll steer these companies towards waste disposal and buy their goods at bargain prices. They're desperate and don't care about other people's losses, so they'll be willing to sell as long as they get a little extra."
"Are you going to sell them to CEO Wu? Those knives are good enough for the domestic market, aren't they?"
"I was thinking the same thing. Let's collect them and keep them in stock while selling them gradually in the domestic market. We can always sell them to CEO Wu if we need cash. And look for a warehouse. A big one. We'll need the space to store the inventory."
"Okay, I'll do that."
I stopped Maru as he was about to leave and said with a sly smile,
"And contact flyer and banner companies. 'Buying inventory. Waste disposal available. Full payment in cash.' Let's not wait for companies to go bankrupt, let's go find them."
Even though Chunha Trading was a nationwide junkyard and secondhand goods company, it was impossible for us to handle all the bankrupt companies.
But it didn't matter. No matter whose hands the goods passed through, they would eventually end up at Chunha Trading.
And so, a new occupation emerged in the junkyard industry: the "broker."
They called themselves "intermediaries," but they were essentially business referral agents.
***
[There's a rice cooker factory in Yongin that's selling its seized inventory. Are you interested?]
"…Assistant Manager Lee, is that you?"
[Yes, it's Assistant Manager Lee from Joongang Tech.]
Assistant Manager Lee from Joongang Tech, who had sold us the telephones, suddenly called me, talking about rice cookers.
"A rice cooker factory? Since when did you start working in this field?"
[Not long ago. After selling Joongang Tech's inventory, I thought there must be other companies like ours, so I started doing this to make a living.]
He was quick to adapt.
That's what it took to survive in these turbulent times.
I grabbed a pen and paper, left my office, and snapped my fingers to summon an employee.
"Excuse me, how many rice cookers are there? What are the specs? The price will be lower if they're old models."
[There are about 5,000 units. They're brand new, in good condition, and recently manufactured. Can you give me a price estimate?]
I wrote the following on the paper and handed it to the employee:
'Yongin, rice cookers, 5,000 units, good condition.'
The employee took the paper, went to his desk, and started searching through documents.
I stalled for time, making small talk, and then the employee returned, crossing his arms in an X shape. I nodded.
"Alright, I understand. But I can't give you a firm price without seeing the actual goods. Can we send an employee to inspect them?"
[Ah, about that… I'll bring a sample myself.]
I clicked my tongue.
Junkyard owners with their own sites and established businesses had built trust with us through years of transactions, so they were content with referring deals and receiving commissions. But brokers were different.
They had no land, no money, only their cunning.
They were desperate to squeeze as much profit as possible from the deals, so they avoided direct contact between the factory and us, refusing to disclose the factory's location.
I had the employee check if the company Assistant Manager Lee mentioned was one that had contacted us after seeing our flyers or banners, but it wasn't in our records.
We had no choice but to deal with him as a middleman.
Our profits would be lower with a middleman involved, but it was better than not getting the deal at all. I considered these brokers a necessary evil.
"Alright, I'll give you a price after seeing the sample. But if the actual goods are different from the sample, the deal is off."
[Yes, I understand. Thank you. I look forward to doing business with you, CEO Park.]
"Yes, Assistant Manager Lee. Or should I call you CEO Lee now? Hahaha."
[Hahaha.]
After the insincere laughter, I was about to end the call when Assistant Manager Lee said,
[Oh, right, CEO Park. This is just a random question…]
"Yes, go ahead."
[Do you handle scrap metal?]
"As long as the quantity is large, we can handle anything."
Although our focus was on electronic scrap, Chunha Trading also had a contract with Pohang Iron and Steel Company (POSCO) to supply them with scrap metal.
We hadn't been actively pursuing scrap metal deals to avoid conflict with other wholesalers, but we didn't refuse the goods if they came our way.
A junkyard should be able to handle anything, right?
[I can guarantee the quantity, but it's a bit sensitive and requires confidentiality… Can we handle this discreetly?]
"Hmm?"
My intuition tingled.