The License Agreement, Part 3
Inside Haesol Textile’s conference room, the final negotiations for the contract with the United States Defense Logistics Agency were in full swing.
The broad framework had been agreed upon at a seven percent royalty, but hammering out the details was never going to be simple.
"We will provide information on the basic composition and characteristics of the Dualtex fabric, but the exact manufacturing process and the blending ratio of the yarns will remain a corporate secret."
Deputy Director Robert Clark nodded.
"Understood. Then how do you guarantee quality control?"
"We will dispatch our own quality-control staff to conduct regular inspections. We will also specify a quality assurance process based on sample testing in the contract. Delivery will be within three months of order placement... "
After two days of intense negotiation, the contract was finally complete.
The agreement clearly specified production volume, quality assurance, delivery schedule, technology protection clauses, and price.
The clauses concerning intellectual property protection were written with particular severity.
"With this, the contract is complete. The United States Army will be able to greatly improve its soldiers' combat efficiency through battle uniforms made with Dualtex fabric."
Robert Clark, who had spent the entire time frowning and picking apart every clause, finally smiled at the end, and Seung-hyun let out a long breath as he signed the contract.
This was a defining moment in Haesol Textile’s history.
"Thank you, Deputy Director Clark. I hope we can continue a good working relationship."
The next morning, news of the contract between Haesol Textile and the U.S. Department of Defense dominated the front pages of every major outlet.
MBS News even aired a special report.
"This contract signed by Haesol Textile is significant not simply as an export deal, but because it is a licensing agreement that recognizes the company’s technological prowess. It is also meaningful as the first contract ever between a Korean textile company and the U.S. Department of Defense."
At the reporter’s explanation, the handsome anchor asked, "Then just how much revenue will Haesol Textile actually earn from this contract?"
"First, to estimate Haesol Textile’s income, we need to understand the size of the U.S. Army. Take a look here."
The reporter had apparently prepared a table in advance and brought it up on screen for easy viewing.
"The active-duty strength of the U.S. Army is estimated at about 450,000. On top of that, around 50,000 new personnel enlist every year, and it is said that each recruit receives roughly five sets of uniforms at enlistment. Since uniforms are consumables and wear out quickly through training and operations, their annual replacement rate is reportedly higher than in Korea."
"I see."
"So, generally speaking, it is said that U.S. soldiers receive at least two to three additional combat uniforms per person per year. Of course, these figures have not been officially released by the U.S. Department of Defense, so the exact numbers are unknown. But according to defense sources, this estimate is not far off."
"Ah, I see. Then you can roughly calculate the sales, right?"
"That’s right. The price of a combat uniform supplied to the U.S. military has not been publicly disclosed, so let’s assume one set costs 120 dollars. With total annual demand for combat uniforms exceeding one million sets, total sales for one year would be about 120 million dollars, or roughly 176 billion won. From there, Haesol Textile’s income would depend on the royalty rate it negotiated."
"Do we know how much royalty Haesol Textile agreed to?"
"That remains confidential, so it hasn’t been disclosed. Moreover, because the company has not gone public yet, it is difficult for outsiders to estimate the royalty based on its revenue scale."
"That’s a shame. I was curious."
"According to industry sources, the figure is said to be at least five percent. If you calculate it on that basis, the company would be bringing in around 8.8 billion won in net profit every year."
The anchor let out a low sound of amazement.
"So they’re basically making close to 10 billion won a year just by sitting still?"
"Exactly. And what’s also worth noting is that Haesol Textile’s Dualtex technology has already been extended to our Air Force and Navy combat uniforms, which means it is generating additional royalty income there as well."
"So one technology has created an enormous ripple effect."
"Yes. And if you consider that Haesol Textile is already a company producing a youth-focused apparel brand called Lesser Factory as well as luxury bedding, then it makes you wonder whether another textile conglomerate is being born right before our eyes..."
Click.
Jeong Man-sik, president of Hanil Global, shut off the news and let out a deep sigh.
"Haah... one guy develops technology, lands a combat-uniform deal with the U.S. Department of Defense, and another guy is out here busting his ass trying to sell a brand made by a small company in Japan..."
The executives gathered in the conference room kept their mouths shut again, unable to say a word.
Hanil Global had a history stretching back more than thirty years, and it had never once managed what Haesol Textile had just done... no, not even thought to try. That a small company had pulled it off left them feeling hollow, self-reproachful, and baffled all at once, a mess of emotions roiling inside them.
"We pour hundreds of billions into distribution and marketing, and if we make 100 billion in profit, we celebrate like it’s a feast. But that little company is now making more than 10 billion a year with one technology."
At the president’s voice, tangled with envy and bitterness, Executive Director Han Se-gyeol stepped in.
"It’s absolutely true that we fall short in many ways, but it’s also true that Jung Seung-hyun at Haesol Textile is something special. Just look at Taesung Apparel."
"Why are you bringing up Taesung?"
"They were hit just as hard. In fact, isn’t the damage even greater there? Haesol Textile used to be Taesung’s subcontractor, but at this rate it looks like Haesol will overtake Taesung before long."
At that, President Jeong Man-sik’s expression eased a little.
"Right? They’d be the ones angrier about it, wouldn’t they?"
"Of course. You can say that again... The president over there is probably not sleeping right now. He’s likely getting chewed out hard by Chairman Lee Hee-jung at this very moment."
Only then did the faintest curve appear at the corner of Man-sik’s mouth.
"Fine. The talented can live as they please, and the untalented have to live as they can. Give me the Lesser Factory report."
As if he had been waiting for the cue, Executive Director Han Se-gyeol took out a tablet and showed the data.
"The numbers are much better than expected. Sales at the Shibuya store have been rising steadily since opening, and the response from Japanese consumers has been very positive. In particular, the fabric quality and value for money are being rated highly."
"Really? Then we should start expanding physical stores, shouldn’t we?"
"Yes. Based on the success of the Shibuya location, I think we can open two more stores in Tokyo. We’re also considering expansion into other major cities such as Osaka and Nagoya."
President Jeong nodded with satisfaction.
He might envy Haesol Textile’s success, but Hanil Global had achievements of its own.
"How’s the new WindRover line using Urbantex coming along?"
Brand Strategy Division Executive Kang Ho-yun stepped forward.
"Prototype production has been completed, and internal reviews have been very favorable. In particular, Urbantex has been praised for its waterproof and windproof performance, as well as its light weight, which makes it ideal for outdoor activities."
With a self-assured expression, Executive Kang added, "This year’s outdoor market will be dominated by WindRover, armed with Urbantex. As Executive Director Han Se-gyeol mentioned, even Taesung seems to be on edge over news of our new product."
"Are you sure? That’s not just your impression, is it?"
"No, sir. After hearing that our new product uses a fabric developed by Haesol Textile, Taesung has apparently begun moving to sign a fabric supply contract with Komatsu Seiren in Japan."
"Komatsu? Hm... So they’re not just going to sit there and take it."
"Even so, it’s too late. Even if they sign now, they’ll have a hard time releasing it for S/S. It may only be possible for next year’s F/W season..."
"Well, let’s see. It’ll depend on how WindRover performs."
After saying that, Jeong Man-sik raised his voice.
"Let’s be realistic. Even if the scale is small, the fact is that they’re ahead in technology. Urbantex will definitely become the driving force behind WindRover’s growth, so let’s do this properly. And the important thing is R&D. Haesol Textile is showing us why we have to throw ourselves into materials research. I want everyone to wake up, think hard about what we need to do for the company to grow, and get to work. Understood?"
"Yes, sir. We’ll keep it in mind."
Jeong Man-sik felt sour, but he still hoped the company would find a direction that allowed it to grow before it was too late.
A week passed after the news of the contract between Haesol Textile and the U.S. Department of Defense spread across the country.
Seung-hyun’s office phone rang nonstop, and the employees were kept busy sorting through the endless calls and the list of visitors.
"Boss, maybe you should lie low for a while?" Park Han-soo asked with a sympathetic expression.
"Until when? They’ll keep coming."
"Then don’t take the calls at all..."
"What about the people who just show up at the company?"
Seung-hyun glanced toward the window of the president’s office.
Outside, there were five or six people clearly here with business for Haesol Textile, pacing nervously back and forth.
He had never imagined the news would have such an effect in this direction.
Like people crowding around someone who had won the lottery and asking to borrow money, all sorts of people started calling after the news aired, each one moaning about their own troubles.
Seung-hyun took the visitor list and scanned the names one by one.
Some were unfamiliar, but several were names he definitely knew.
"These people..."
In particular, the three names written near the top made him frown, because his father had mentioned them several times when he was alive.
His father had supposedly gone everywhere looking for help when the company was at its worst, but since the company still hadn’t recovered, it was obvious he had not received real help from them in the end.
"Kim Dong-su, Park Jae-hyun, Lee Myeong-ho... Aren’t these all people who were close to my father?"
"That’s right. These are exactly the people who cut off contact coldly when the previous president asked them to help."
Park Han-soo, more than Seung-hyun himself, was practically grinding his teeth.
Back then Seung-hyun hadn’t been at the factory and didn’t know the details, but Han-soo had gone through those hard days alongside his father, and the memory of that pain seemed to rise up in him now.
"If we don’t meet them, they’ll just keep coming until we do. Let’s see all three at once."
"Are you sure? Should I just tell them no outright?"
"Wouldn’t they just ask to hear the answer from me anyway? Tell them to come to the conference room."
Without wasting time, Seung-hyun called in the three men who had supposedly been very close to his father, and soon he was facing them as they entered with uneasy expressions.
They were all around his father’s age, and hardship was carved plainly into their faces.
Of the three, President Kim Dong-su, dressed in a neat suit, was the first to smile and speak.
"President Jung! Congratulations, congratulations! A contract with the United States, of all things. If your father were alive to see this, he’d be bragging about you until the day he died, that’s for sure!"
Seung-hyun gave a calm nod.
"Thank you. But what brings you to the company?"
Kim Dong-su looked briefly flustered, then broke into a hearty laugh.
"Well, you see... I don’t know whether you heard, but your father and I were extremely close. Same for these other men here. Once work was done, we’d all go grab pork intestines and soju, then head home. He talked about his son so proudly, too."
"I see."
At Seung-hyun’s expressionless face, Kim Dong-su looked around at the other presidents he had brought with him, momentarily at a loss.
Then Lee Myeong-ho, with no cheeks to speak of and a dark, weathered face, who had been listening quietly, stepped forward.
"I’m not good at beating around the bush, so I’ll get straight to it... The thing is, our companies are in a very difficult spot. You probably know that this industry has never exactly been kind, but this year after year has become hell. Since you’re President Jung’s son, I’m going to ask you for one favor. Could you invest even a small amount? A large amount would be even better."
It was absurd.
So Seung-hyun’s reply came out rather cold.
"My father asked for your help when the company was in trouble, didn’t he? You didn’t help him then, and now you’re asking me for help?"
He thought it was a difficult question, but Lee Myeong-ho only raised his voice.
"We didn’t help because we didn’t have the money! If I’d had money, wouldn’t I have helped? What kind of way is that to talk?"
At his outburst, President Kim Dong-su and President Park Jae-hyun, who had come with him, hurried to stop him.
Only then did Lee Myeong-ho seem to realize he had gotten a little worked up, and he said with a reddened face, "I did get a little heated, but why would we have refused to help if we’d disliked President Jung? Everyone has their own circumstances, and we simply didn’t have the capacity to help. But our President Jung’s son has talent to spare, doesn’t he? Help us just this once, and we’ll repay you generously."
Seung-hyun looked up at the ceiling for a moment, gathering his thoughts, before speaking.
"I’m not a filial son, but I was deeply shaken when my father died. And I heard how hard he begged the three of you back then. There will be no occasion before I die for me to help the three of you."
"W-wait a minute!"
Kim Dong-su grabbed at Seung-hyun as he turned to leave, but the employees who had come in from outside quickly pulled him off.
The three men stared blankly as the young president walked out of the conference room without a shred of softness in his face, and then they cursed under their breath.
For the first time, Seung-hyun realized there were moments when being sworn at in filthy language could actually make him feel better.