Giving & receiving

There was a Korean firm, which was exporting fabric to an Indonesian firm at the rate of 17 cents per yard. All of a sudden, due to certain policy initiatives of the Indonesian Government, the market price of the fabric in Indonesia fell to about 10 cents per yard. However, since the Indonesian firm was under a long-term contract, it had to continue import at the higher contract price of 17 cents. It ran up a debt of $30,000 with the bank. If it did not pay up, the bank was going to take it over.

Guess what the Korean firm did?

It minimised the Indonesian firm’s losses by reducing its exports deliberately. But that was not all. It went directly to the Indonesian firm and handed the firm $30,000, the money it needed to be saved from bankruptcy! What is more, at that time the Korean firm had only $10,000 as paid-in capital and so $30,000 was a huge amount for it too.

Within a year, things changed dramatically. The Indonesian market opened up. The price of fabric shot up to 36 cents per yard. But as the Korean firm was under long-term contract, it still had to export at 17 cents per yard. The Indonesian firm could have legally paid only 17 cents. But it did not. It offered the Korean firm 35 cents per yard, just a cent lower than the market price. The Korean firm received 35 cents instead of 17 cents per yard. Eventually it made over $1 million profit on the deal.

The Indonesian firm had returned the favour.

Whenever we look upon this earth, the opportunities take shape within the problems.

– Nelson Rockefeller