Chapter 106: The Center of Contention

Tao Zhiming pondered quietly to himself. Kinoshita Hidekaze probably believed that Tao simply lacked the strength to handle this matter on his own. After all, a major corporation had already offered 7 billion yen to acquire Takeda Manufacturing.

If Tao couldn’t manage it independently, naturally he would have to seek financial backing from Kinoshita. In that case, he would become little more than Kinoshita’s pawn.

Yet Tao possessed a greater ability to attract capital than Kinoshita had estimated. Fortune favors the bold, and frankly… this was a matter worth careful consideration.

On that piece of land, the assets of Takeda Manufacturing, aside from the land itself, were insufficient to cover its debts—equipment, materials, inventory, all paled in comparison. They produced cassette tapes, and although recent growth showed promise, in 1984 they had taken out a 3 billion yen loan to prepare for investing in a new factory. Before the new plant could officially start production, rising exchange rates slashed export profits, leaving the company in the red for two consecutive years.

Compared to those large factories producing tens or even hundreds of millions of units annually, Takeda Manufacturing had no cost advantage. Industrial production always benefits from scale—the larger the operation, the lower the marginal cost.

In domestic sales within Japan, Takeda had no edge. And in exports, the soaring exchange rate further eroded profits, increasing the burden of repaying the initial loan.

At a time when financing should have been easier, the banks, suspicious of the sensitive location of the land, found every excuse to deny further loans.

Tao wondered aloud, “If the bank that took the land as collateral belongs to a certain financial group, why wouldn’t they secretly suppress Takeda’s product sales to force default, so they could seize the land themselves?”

Kinoshita nodded. “That’s exactly Mitsubishi’s strategy. And the pressure on Takeda Manufacturing isn’t limited to just one point—financing channels, suppliers, market access—all are being squeezed. But Mitsubishi can’t be too blatant about it; after all, other parties like Mitsui, Sumitomo, Fuji, and the Industrial Bank of Japan are watching closely. If evidence of unfair competition surfaces, those groups could use it as a pretext to attack Mitsubishi, potentially causing losses far greater than the value of that land.”

Tao was puzzled. “So, with Mitsubishi in such a dominant position, what are the other parties planning to do?”

Kinoshita smiled. “The repayment deadline for Mitsubishi’s loan is still some time away, around mid-June. For now, everyone intends to maintain tacit understanding with Mitsubishi, aiming to keep Takeda Shinya’s expectations for the land or Takeda Manufacturing’s sale value as low as possible.”

Tao was impressed. “That’s ruthless. Looks like President Takeda hasn’t been sleeping well lately, yet he has no idea he’s caught in such a huge storm…”

“How’s it looking?” Kinoshita asked. “If you succeed, regardless of what plans Tomokazu has for me, we’ll have an extra bargaining chip. That 3,000-plus square meter plot, once in our hands, would see its value soar from 7 billion to nearly 20 billion yen. Time is running out. Judging from the current tussle over Shiodome land, it’s very likely to be handed over to the liquidation committee. Once the reform plan is announced, Takeda Shinya will realize just how precious that land truly is!”

Tao contemplated and then asked, “Why is Takeda Shinya so unwilling to sell?”

“It’s an inheritance from his father, carrying the Takeda name. Honestly, I admire his resolve. He’s ambitious. The decision to build a new factory was a bold gamble on the future, even taking on a 3 billion yen loan for it. He doesn’t want to be acquired because he believes he can earn far more down the line. Once the new plant is operational, Takeda Manufacturing’s annual production could reach the tens of millions of units. Plus, the new factory will produce video cassettes, which command higher prices and profits.”

“If the new factory holds such promise, why not just sell the old land and focus on the new facility for a stronger foundation? After all, the old site is only about 3,000 square meters, and its capacity limit is obvious.”

Kinoshita shook his head. “It’s closer to Tokyo Port, making contact with traders easier. To prevent Takeda Shinya from seeing the truth, no one has proposed buying just that land outright. Some companies specializing in real estate have offered pure land bids—up to 3.5 billion yen—but those folks don’t know the full picture or when the ‘beast’ behind the scenes might sweep them away.”

“Most importantly, Takeda Shinya only needs a relatively small sum—just another 1 billion yen. It’s not worth selling the entire company or that land, especially now with rising real estate prices in the port area.”

The situation was now clearer.

As Tao sifted through the documents, he suspected the investigation hadn’t been arranged by Kinoshita’s top estate people. The files were detailed, even including Takeda Shinya’s family background and travel habits.

It all seemed to suggest preparations for some underhanded tactics against him.

Probably intelligence gathered by the Inagawa-kai?

He slowly set the papers down and said, “Hidekaze, this matter exceeds what I can handle right now.”

Kinoshita studied him intently, then after a long pause said, “Taro, you truly are cautious and rational. So even if I lent you 1.5 billion yen, you still wouldn’t trust me enough?”

His meaning was clear: He didn’t believe that even with his support, Tao would feel the situation was within his control.

Tao’s words revealed only one thing: he was considering the worst-case scenario, which even included the possibility of Hidekaze becoming his enemy.

“Of course, Hidekaze, I trust you,” Tao sighed. “But school has started, academic demands are strict, and Professor Yamamoto’s research project is time-consuming. Trying to take on this at the same time feels overwhelming. Don’t forget, I’m only 21 years old.”

Kinoshita was momentarily stunned. “Right… I always forget how young you are. It’s frustrating…”

“That’s exactly it. I just wanted your advice on where to buy real estate for a dance hall, and you suddenly threw this huge target at me. But I’ll keep it confidential.”

Kinoshita waved his hand. “So, do you have any ideas on how to handle Takeda Manufacturing?”

“He just needs a small amount of money to seize a development opportunity, yet everyone wants to give him that money only if he sells that land. Mitsubishi is probably waiting to see what happens. If someone uses unconventional means, Mitsubishi might propose easing repayment terms to block everyone else. That way, Takeda Manufacturing still faces pressure to repay Mitsubishi and might be forced to compromise eventually.”

“That’s the difficulty!” Kinoshita acknowledged. He wanted to see if this unusually sharp-minded Taro had a surprise move.

Taro smiled. “Did you lend me 1.5 billion yen from the start expecting I’d consider the broader context of Japan National Railways’ privatization and be waiting here for me?”

Kinoshita laughed heartily. “With your abilities, you could very well be our secret weapon. Taro, you can state your conditions.”

Tao did not answer immediately.

This time, Kinoshita said nothing, only watching him intently.