A Frozen Spring
It was mid-February, and Cho Bong-am was still being hounded as a spy, when another incident was announced that froze the political season solid. A Korean National Airlines passenger plane that had lifted off from Busan on the sixteenth, bound for Seoul, failed to appear at its destination. Twenty-four hours passed, and still it had not landed at Yeouido Airport.
On the seventeenth the U.S. military informed KNA that the missing airliner had crossed the armistice line and come down in the North, and so the news broke upon the world. On the eighteenth, the day before Lunar New Year, the papers carried the facts, and the Republic of Korea reeled in confusion over why a Korean passenger plane had gone north across the line.
Syngman Rhee summoned Walter Dowling, the American ambassador, to Gyeongmudae for urgent talks. Pressed on why it had failed to stop a civilian airliner from crossing, the Ministry of National Defense answered that the plane was civilian, and that a North Korean civil aircraft coming south would not have been shot down either. The police, saying only that they were looking into how the flight had gone north, kept their counsel. The moment it emerged that a U.S. Air Force lieutenant colonel had been among the passengers, the American military demanded through Panmunjom that the aircraft, the passengers, and the crew be returned, every last one of them. The whole country grew loud with it.
On the nineteenth, Lunar New Year's Day itself, the U.S. State Department declared that the South Korean airliner had been abducted and condemned the North. On the twenty-second the police announced that a spy who had been working in secret inside the South had boarded the plane and hijacked it northward, and that the aircraft was now in Pyongyang. Demonstrations denouncing the North erupted nationwide. Rallies calling for the return of the passengers and crew, underway across the country since the twentieth, swelled from some three hundred thousand people into a great national rising in which millions took part. Hatred and hostility toward the North deepened, and the political climate froze harder still.
At last, on the sixth of March, the North sent twenty-six people home after nineteen days. The eight it did not return, it claimed, had defected of their own will. The repatriation came sooner than anyone had expected. With a summit between the United States and the Soviet Union drawing near, Washington had pressed Moscow hard for their return, and that pressure had made it possible. When the twenty-six came back through Panmunjom on the night of the sixth, relief swept the country, and people celebrated the safe homecoming of those who had been taken north.
The next day a grand welcome for the repatriates was held in the plaza before City Hall. The intersection out front packed so tight with the crowd that it became a human sea in which nothing seemed to move but bobbing heads. Latecomers hoping to join the welcome had to turn around and go home without ever getting near the hall.
There was no connection at all between the Cho Bong-am spy case and the hijacking of the KNA airliner. Falling together, though, the two incidents broke in favor of Syngman Rhee's regime. The argument over whether Cho Bong-am was truly a spy tilted, strangely, toward the possibility that he might be. If a spy inside the South could hijack at will a plane carrying an American lieutenant colonel, then might such a spy not also have passed money to a leader of the opposition? The suspicion spread.
Through all of that current, Gi-jo quietly went on with the work that was his. Barred from running prize giveaways, Cheil Jedang was thickening the money under the table—the rebates it paid to sellers of Mipung. Against that, Gi-jo resolved to strengthen the distribution of Miwon. He meant to build a network under the sign of Cheongsan Store, granting benefits to any shop that would carry Miwon and no other seasoning. In exchange for selling only Miwon, Cheongsan would supply cheaply the snacks, bread, candy, matches, quick-light charcoal, and coal briquettes it produced, and so lift the shop's profit. It was a tidy conception.
Cheongsan's people went around the small shops scattered through Seoul and made the offer: handle only Miwon, and we'll change your signboard and give you these terms. The response split down the middle. Those against it either hated to give up a shop's old name or judged that the range of goods Cheongsan could provide was too thin. Seeing that it would not do, Gi-jo threw himself into the work in person. He would go to the manufacturers himself and sign supply contracts for killer products to put into the Cheongsan Stores.
The first door he knocked on was the Dongbang Soft Drink Partnership Company, maker of Chilsung Cider. Seoul at the time was thick with rivals—Seoul Cider, Samsung Cider, Star Cider, and more besides. Gi-jo chose Chilsung because its finances were weak. The "seven stars" of the name had originally been seven surnames. Seven men of different families had founded the company together and meant to call it Seven-Surnames Cider; judging that a trademark was better off with a star on it, they had named it Seven Stars instead. There was no single powerful owner, and no backer so large that the seven had not all put in roughly equal shares. Dongbang Beverage was forever falling short of cash, merger piled upon merger, right up until the giant Lotte finally acquired it. Gi-jo thought it better to negotiate with a firm run by seven more or less equal dwarfs.
He went to Dongbang and proposed to buy, in cash, 150 percent of Chilsung Cider's current sales in the capital region, in return for exclusive distribution rights there. What came back was an unexpected counteroffer.
"Why not build a sales network for the whole country? The Seoul market alone has its limits. We'd like the product sold in Yeongnam and Honam as well, where the people are."
It was a fair proposal. In a Seoul already crowded with cider companies, there was only so far one could go against the rivals. But if he stood up a distribution company of that kind and Chilsung suddenly cut him off, the firm Gi-jo had built would be left to go under. He needed something that could bind Dongbang Beverage.
"Cheongsan has the strength to build a distribution network nationwide. We have a good many entertainers on hand, so we can handle the publicity, radio advertising included. Sales will certainly grow."
He laid his power out first, before the seven presidents.
"But if you mean to make use of that power, I think you'll have to put up a price to match it."
"A price? What sort of price do you mean? Are you proposing a partnership with us? An investment in shares, something of that kind?"
One of the seven dwarfs asked it with his eyes alight. The company was always short of money, and it showed.
Gi-jo shook his head. He had no wish to tangle himself up with seven partners and run a business in a knot.
"No. Give me exclusive rights to sell every beverage Dongbang produces."
"Exclusive sales rights?"
"Yes. Cheongsan will take distribution and sales upon itself. Let Dongbang Beverage do nothing but make the drinks."
When he answered their counterproposal with one of his own, the presidents fell to comparing notes in a hurry.
"Now, see here—wouldn't that turn Dongbang Beverage, in effect, into a mere supplier?"
The president who looked the oldest gave voice to the worry.
"Hardly. If Dongbang cuts off the supply, Cheongsan goes under as well. Why would I ever do such a thing?"
"Well, that's true enough. Still, there's a corner of it that sits uneasy with me..."
"Think of Cheongsan and Dongbang as running a three-legged race."
That was the theory he offered them.
"Then may Dongbang set the supply price?"
The president with the sharp eyes asked it.
"By all means."
Gi-jo accepted with an open hand, and then he proposed something more.
"We'll renew the exclusive contract year by year. Every year, look over the partnership with Cheongsan, and if it doesn't suit you, don't sign again."
"You mean you'll pay for a full year of nationwide sales all at once? Volume at 150 percent of where we stand now?"
"Of course."
He believed in what Chilsung Cider could become. Give it the right promotion, and lifting sales by half would not be hard. When he came on so generously, the seven presidents nodded over their counsel together. They seemed to have agreed that the safeguards were ample. The negotiation moved forward on a good footing. They would meet again in a week, so the seven could talk it through as fully as they needed, and with that Gi-jo brought the visit to a close.
Coming out of Dongbang Beverage, Dae-ik, who had followed him in and watched the bargaining, asked a question.
"Sir, why did you offer them a short contract of only a year?"
"There are plenty of cider companies. Once word gets around that Cheongsan Store sells the stuff well, do you think the others are going to sit still?"
"Ah. If rumors start that a sales contract is running out, they might come to us looking to sign one of their own."
"That's right."
Dae-ik smiled and nodded.
"And I never proposed that we would exclusively distribute Chilsung Cider and nothing else. If Chilsung wants to sell its cider, it can leave that only to us. We, on the other hand, can sign sales contracts with several companies at once."
"But then the trust would break."
"Of course, if the other side keeps faith, so do we. What I'm saying is that if they turn out to be people we can't trust, we'll have means of our own to answer them."
"Say they suddenly jack up the wholesale price of Chilsung Cider, without so much as a word?"
"Exactly."
At that, Dae-ik nodded.
Gi-jo was not content with the sales rights to Chilsung Cider. On the condition that competing goods would not be sold beside them in a Cheongsan Store, he set about signing supply contracts with other firms just as diligently. Buying in bulk, he could take delivery cheaply of Dongwha Pharmaceutical's digestive, Hwalmyeongsu; Yuhan's Hexavitamin; Orion milk caramel; Lakhee Chemical's Lucky Toothpaste; Pacific Chemical's ABC Cream; the hair dye Seruhagen; the rat poison Furatol; and more. For a company supplying Cheongsan Store, there was nothing in it to lose. They lowered the price and sold in quantity, and in return they shed the danger of inventory piling up. Whether Cheongsan Store sold all it had bought or failed to sell it was Cheongsan's affair to manage. Gi-jo had decided that every purchase would be paid in cash, in full, and that there would be no returns, ever.
Once those contracts were in place and he offered small merchants more goods, more cheaply, than the other suppliers would, the number willing to join Cheongsan Store began to grow. He went so far as to set up a signboard factory just to turn out Cheongsan Store signs. It was also a stone laid in advance of the rule, coming in August, that would make Hangul signboards mandatory. Starting from Jongno, Cheongsan Stores began to appear one by one all through Seoul. He let a shopkeeper bring in whatever else he pleased, so long as the shop sold Miwon and the goods Cheongsan supplied, and so long as those other goods were not rivals to them. Toothpaste, for instance, could only be Lucky—but a toothbrush might come from any company at all.
When Cheongsan Store spread successfully through Seoul, Gi-jo turned his eyes to Gyeonggi Province and the great cities of the provinces. He sent Cheongsan people out to open stores in Cheongju, Daejeon, Daegu, Busan, Jeonju, and Gwangju. They went from city to city recruiting franchise shops, carrying the list of what Cheongsan handled, the table of unit prices, and photographs of Cheongsan Stores already doing business in Seoul. To back them, Gi-jo called up newspaper and radio advertising and raised billboards in the big cities so that the name Cheongsan Store would be known.
By the middle of March, the employees who had brought back preliminary contracts from the provinces were coming up to Seoul. Gyeonggi yielded the most, and Yeongnam, where loyalty to Cheongsan ran deep, came next. In Chungcheong and Honam, too, merchants responded well once they saw how cheap the principal goods were, but recognition was still thin, and the volume of contracts was not yet large.
Gi-jo turned the preliminary contracts over to Dae-ik and Hyeon-gyeong and told them to work out how far the orders to the manufacturers would rise. The larger the order, the lower the supply price could be driven, and the more cheaply goods could be passed on to the Cheongsan Store franchisees. That was the heart of a distribution company. A firm that could move goods in quantity acquired the power to bargain over price. In the 1950s no company yet possessed a distribution network covering the whole country, and so few firms could manufacture a decent product that the manufacturers still held the upper hand. The moment Cheongsan finished a national network on the foundation of Cheongsan Transport and Cheongsan Store, that balance of power could be turned around.
He kept drawing the larger picture. Cheongsan Store had begun as a device for fighting Cheil Jedang over seasonings. Widen the view, though, and grow the stores into Cheongsan Distribution, and the movement of goods itself could be made to yield a great profit. That was the design he held in mind.
He decided to recruit university graduates. It was a world in which more than sixty percent of those who finished university were driven into the ranks of the unemployed. Filling out his people would not be difficult in the least.