BXBX NOVEL Chapter 3179: Free Trade Writ
Chapter 3179: Free Trade Writ
Now that he returned to his own ship, he immediately felt at home and wanted to do nothing more than to relax for the rest of the day.
He had a lot of questions, though. A lot had happened during his surprising visit and he needed to get to the bottom of them quickly in order to make sure his clan would do well once it reached the Red Ocean.
To do that, he called Shederin Purnesse first in order to get some answers.
The foreign affairs ministers of the Larkinson Clan looked surprised. "The Mech Trade Association actually extended a free trade writ to us, sir? Is it a permanent writ?"
"It\'s not a permanent one. Master Willix seemed quite reluctant to extend it to us, so we can only enjoy it for a single decade before it expires." Ves explained. "Juliet requested one for the clan for some reason. Did she do us a favor?"
"This… is a massive favor, sir!"
"It is?" Ves raised his eyebrows.
"If you have read up on the legal intricacies of operating in the Red Ocean, then you should know that the star systems under the control of the MTA or the CFA are one of the few places that are absolutely safe." Shederin began. "They function as the military bases and launching points of the Big Two\'s invasion of the Red Ocean. As far as I\'m aware, the indigenous alien empires that occupy the dwarf galaxy have never succeeded in dislodging the Big Two out of these key star systems. They\'re now known as central star nodes."
"I\'ve heard a bit about them, but how do free trade writs fall into this picture?"
"It\'s expensive to operate in a central star node. The MTA and CFA have heavily invested in their development, allowing them to raise its safety and infrastructure to impressive levels. This has also turned them into strong attractions, so much so that many people want to settle permanently in these paradises. That is obviously not what the Big Two has in mind, so they have implemented many measures to encourage people to go elsewhere."
"What kind of measures are we talking about?"
"You can broadly separate them into two categories. The first one encompasses taxes and fees. You need to pay a hefty sum to the Big Two for every day you spend in a central star node. Ships and other large assets incur fees as well. Then there are the taxes. There are high taxes for any transaction you make when you are in a central star node. No matter if you want to purchase fuel, raw materials or finished mechs, the MTA or CFA takes a hefty cut out of every trade."
"That sounds like a ripoff." Ves remarked.
"It\'s not, in a way. The Big Two offer a trading venue with impeccable security. You won\'t have to worry about pirates swooping in to steal all of the goods or a trading partner reneging on a deal by employing violence. The Big Two will also guarantee every transaction so that you can have absolute confidence that a trade will proceed as agreed upon. You can\'t obtain such certainty if you conduct the same transaction in an empty star system or in some dingy little colony where the local owners are aligned with one of the parties."
That indeed sounded rather sketchy. Strong and established states like the Heavensword Association and other second-rate states in the regions that the expeditionary fleet were traveling through didn\'t exist yet. Too little time had passed since the opening of the Red Ocean for alternative trade hubs to establish themselves.
"What about the second category of restrictions?"
"Oh, they are mainly laws and prohibitions that forbid the use of mechs and limits where people can live and stay. Visitors are heavily constrained in what they can do. If they run afoul of one of the prohibitions, then they can expect a steep fine and a direct passage out of a central star node. In fact, not just the occupied star system, but also a buffer zone around it are subject to restrictions."
The Big Two wanted the incoming pioneers to explore the depth and breadth of the Red Ocean. This wouldn\'t happen if too many newcomers opted to shelter right under their umbrella!
"So a free trade writ gives us an exemption to all of these trade barriers?" Ves guessed.
"Not all, but some. We still have to pay hefty fees for each day we stay in the star system and we cannot ignore the rules as we will, but what we can do is make direct transactions in a central star node without directly involving the MTA. While this means that they won\'t guarantee any private trades or crack down on any scams, we don\'t want to pay heavy taxes and fees either. This can make a huge difference in our profits. In fact, it will also allow us to attract a lot more customers as it is a lot safer to conduct trades in a central star node. I can imagine that weaker clients who aren\'t confident in their ability to protect themselves will eagerly embrace the opportunity to purchase mechs from us in a safe environment without paying at least 50 percent more."
Ves understood the true value of a free trade writ now. For 10 years starting from entering the Red Ocean, the Larkinson Clan could basically flog its products directly to consumers in huge, convenient hubs that were absolutely safe.
This was a powerful advantage that could definitely allow the LMC\'s business in the Red Ocean to jump ahead of the competition!
The only issue was that the Larkinsons had to convince potential customers that nothing funny was going on. As long as the LMC built up a measure of trust in this new mech market, then it could easily build up quite a following through selling powerful mechs at a cheaper price in a market environment that was a lot safer than anywhere else in the Red Ocean!
This change had a lot of implications for the revenue generating strategies of the Larkinson Clan going forward. Although the writ only lasted for 10 years, the clan could do a lot with this advantage. It could rapidly build up its reputation as well as spread its products to a much wider audience. By the time the writ ran out and Ves decided not to extend it by yet another time, the living mechs sold by the LMC should have become popular enough that he no longer needed to undercut his competitors in order to gain traction in the Red Ocean\'s mech market.
Shederin Purnesse was thinking along the same lines. "We can take great advantage of our free trade writ to develop a fixed clientele and forge new friendships in the local scene. This will be crucial later on as it is very difficult to establish crucial trading relationships with organizations that either mine or distribute the raw materials we need to produce our mechs."
That was an important point as the demand for resources was immense. Plenty of pioneers had a lot of money to throw around, but the scarcity in resources due to lack of exploitation and lack of transportation meant that pioneers would have to go through a huge amount of effort to obtain goods that people in the Milky Way could easily order by going on the galactic net!
Shederin\'s interest reminded Ves that the markets were a lot cruder and less developed in the Red Ocean. This presented a lot of opportunities to aspiring traders to build up crucial relations and establish a powerful presence in the local markets that would definitely pay off in the future!
"We can also use the free trade writ to engage in other direct transactions in a central trade node." Shederin pointed out. "Think about hiring personnel, stocking up on supplies and other activities that can quickly drain our cash reserves. There are so many goods a large fleet needs that it is difficult to source them in a location other than a central star node. We just need to convince the sellers or vendors to transact with us directly."
"This should not be a problem for you, I hope."
The foreign affairs minister looked confident. "I look forward to the challenge. It is exciting to meet entirely different people who come from places much further away from us. Though it will be difficult at the start, it will become easier once we have built up an initial reputation. In newly-established market environments where there are a lot of unknowns, reputation is more important than ever. I believe Chief Minister Raymond will be able to tell you more about how we plan to earn our keep in the Red Ocean."
After they talked some more, Ves soon ended the meeting. "Please write up a report on all of the potential ways we can use the free trade writ to our advantage. Discuss the matter further with the chief ministers. They\'ll handle this matter further."
"Understood, patriarch."
Ves was a mech designer. It was his job to design mechs that people in the Red Ocean wanted to buy. He could leave the other matters to the other professionals.
Once Shederin left his office, Ves sank deeper in his chair as he continued to think about what the clan should do once it reached the Red Ocean.
The more he heard about it, the more he learned how difficult it was to start off with the right footing.
Proper colony fleets did not have to worry that much at the start as they would likely be carrying all of the goods and supplies they needed to build an independent settlement from scratch.
However, a fleet without colonial ambitions such as his own couldn\'t just find a random dirtball and stay there for a while. It also couldn\'t remain in a central star node forever despite possessing a free trade writ.
"The fees are too hefty and we won\'t be able to obtain all of the resources we need to keep producing mechs." Ves surmised. "This is especially the case if I go to the high-end mech market."
The production capabilities of the Larkinson Clan was substantial, but not enormous by the standards of the mech industry. The best way to make use of the Spirit of Bentheim\'s production capabilities was to make expensive, high-quality mechs and sell them at higher markups.
In order to make sure that such mechs performed well enough, they needed to incorporate quality components made with rare and not always accessible materials.
Due to the high charges levied on every transaction, there were plenty of traders who refused to take the risk to ship their goods to central star nodes only to sell them at reduced costs or wait a long time before someone was stupid enough to pay inflated prices.
All of this meant that the Larkinsons would definitely have to travel around. This was also his original intention as every pioneer wanted to explore the breadth and depth of the new galaxy. Who knew what kind of treasures or relics they could pick up on an unexplored planet.
The more he thought about it, the more impatient he became. He didn\'t want to stay in the Milky Way any longer than he needed to be. Though there were plenty of interesting sights to see in the Bardo Star Cluster and surroundings, nothing could make his heart race more than to enter a whole new frontier that humanity had barely explored.
"New people. New locations. New mechs. New possibilities. Less constraints."
Ves knew that he would likely become a different person and a different mech designer if he traveled to the Red Ocean. Whether he would be better off was still in question, but he was more than willing to brave the unknown in order to expand his horizons!