Chapter 333: Triangular Alliance
The decision to grow japonica rice in the Great Lakes region of East Africa was not just about adapting to the local climate; it was also aimed at enhancing competitiveness in the international market. Regions like the Far East, Japan, North Korea, and parts of Southeast Asia had distinct requirements for rice compared to the Middle East and India.
The international grain market had become increasingly complex, with East African grain production, along with expanded production in the United States, Australia, Canada, and Tsarist Russia, leading to overcapacity in food production worldwide. The rapid industrialization of various countries had contributed to this overcapacity, and the world was experiencing a period of extreme prosperity before an impending economic crisis.
Ernst's goal was to optimize East Africa's industry, develop its internal market, dispose of non-performing assets in Europe, and further strengthen economic barriers to separate East Africa from the world market. East Africa had always maintained limited economic integration with the world market due to its status as a consortium-owned country, where all foreign trade had to pass through the Hexingen Consortium.
The impending world economic crisis had the potential to disrupt the income of the Heixingen Consortium, as most of its assets were in Germany and the Austro-Hungarian Empire. Ernst was unsure of when this economic crisis might erupt, but history suggested that it began in 1873, with signs appearing in late 1872. The crisis initially centered in the United States and the Austro-Hungarian Empire.
In July 1871, due to the construction of Nairobi in East Africa and the shift of some industrial workers from the Far East, coupled with reduced orders caused by the end of two wars in Europe, the Jiaozhou textile industry had to reduce its production capacity. The Heixingen Consortium decided to sell the excess machines from the Jiaozhou Textile Factory.
Levins, a Sales Representative from the Jiaozhou Textile Factory, explained that these machines were almost new and among the most advanced in the world. They had the potential to remain competitive for the next decade. The Heixingen Consortium had considered selling them to Japanese companies but decided to retain most of the machines in the Far East.
Qiao Zhiyong, a representative of Shanxi merchants, expressed hesitance about the high price of these machines, despite their quality. He was concerned about taking such a significant risk.
Simultaneously, the Jiaozhou Textile Factory was negotiating with Hu Xueyan, a representative of Huizhou merchants, as both groups were interested in purchasing the machines. The Heixingen Consortium intended to involve both groups, as they were economically capable of partnering with East Africa.
Shanxi merchants and Huizhou merchants, as major business groups in the Far East, faced competition from foreign capital and aimed to cooperate with East Africa to establish spheres of influence and reduce internal friction among themselves. This alliance would help stabilize the independence of regional economies within their commercial scopes and guard against capital from other countries.
The triangular alliance between East Africa and the two major business groups aimed to keep regional economies strong and independent, despite the competition from foreign capital. However, they understood that external threats, like war, could potentially change the dynamics of their competition.
For instance, Huizhou merchants faced a precarious situation due to their geographical location, with British capital already having a foothold in the Jianghuai River Basin. Cooperation among these groups was essential for their collective resilience in a competitive global environment.
(End of this chapter)