Eleven hours away, on Park Avenue in New York, another meeting was under way. Butterfly was the name of a burgeoning chain of clothing stores which marketed to prosperous American women. It had combined new microfiber textiles with a brilliant young designer from Florence, Italy, into fully a six percent share of its market, and in America that was big money indeed.
Except for one thing. Its textiles were all made in the People's Republic, at a factory just outside the great port city of Shanghai, and then cut and sewn into clothing at yet another plant in the nearby city of Yancheng.
The chairman of Butterfly was just thirty-two, and after ten years of hustling, he figured he was about to cash in on a dream he'd had from all the way back in Erasmus Hall High School in Brooklyn. He'd spent nearly every day since graduating Pratt Institute conceiving and building up his business, and now it was his time. It was time to buy that G so that he could fly off to Paris on a whim, get that house in the hills of Tuscany, and another in Aspen, and really live in the manner he'd earned.
Except for that one little thing. His flagship store at Park and 50th today had experienced something as unthinkable as the arrival of men from Mars. People had demonstrated there. People wearing Versace clothing had shown up with cardboard placards stapled to wooden sticks proclaiming their opposition to trade with BARBARIANS! and condemning Butterfly for doing business with such a country. Someone had even shown up with an image of the Chinese flag with a swastika on it, and if there was anything you didn't want associated with your business in New York, it was Hitler's odious logo.
"We've got to move fast on this," the corporate counsel said. He was Jewish and smart, and had steered Butterfly through more than one minefield to bring it to the brink of ultimate success. "This could kill us."
He wasn't kidding, and the rest of the board knew it. Exactly four customers had gone past the protesters into the store today, and one of them had been returning something which, she said, she no longer wanted in her closet.
"What's our exposure?" the founder and CEO asked.
"In real terms?" the head of accounting asked. "Oh, potentially four hundred." By which he meant four hundred million dollars. "It could wipe us out in, oh, twelve weeks."
Wipe us out was not what the CEO wanted to hear. To bring a line of clothing this far was about as easy as swimming the Atlantic Ocean during the annual shark convention. This was his moment, but he found himself standing in yet another minefield, one for which he'd had no warning at all.
"Okay," he responded as coolly as the acid in his stomach allowed. "What can we do about it?"
"We can walk on our contracts," the attorney advised.
"Is that legal?"
"Legal enough." By which he meant that the downside exposure of shorting the Chinese manufacturers was less onerous than having a shop full of products that no person would buy.
"Alternatives?"
"The Thais," Production said. "There's a place outside Bangkok that would love to take up the slack. They called us today, in fact."
"Cost?"
"Less than four percent difference. Three-point-six-three, to be exact, and they will be off schedule by, oh, maybe four weeks max. We have enough stock to keep the stores open through that, no problem," Production told the rest of the board with confidence.
"How much of that stock is Chinese in origin?"
"A lot comes from Taiwan, remember? We can have our people start putting the Good Guys stickers on them… and we can fudge that some, too." Not all that many consumers knew the difference between one Chinese place name and another. A flag was much easier to differentiate.
"Also," Marketing put in, "we can start an ad campaign tomorrow. 'Butterfly doesn't do business with dragons.' " He held up an illustration that showed the corporate logo escaping a dragon's fiery breath. That it looked terminally tacky didn't matter for the moment. They had to take action, and they had to do it fast.
"Oh, got a call an hour ago from Frank Meng at Meng, Harrington, and Cicero," Production announced. "He says he can get some ROC textile houses on the team in a matter of days, and he says they have the flexibility to retool in less than a month-and if we green-light it, the ROC ambassador will officially put us on their good-guy list. In return, we just have to guarantee five years' worth of business, with the usual escape clauses."
"I like it," Legal said. The ROC ambassador would play fair, and so would his country. They knew when they had the tiger by the balls.
"We have a motion on the table," the chairman and CEO announced. "All in favor?"
With this vote, Butterfly was the first major American company to walk out on its contracts with the People's Republic. Like the first goose to leave Northern Canada in the fall, it announced that a new and chilly season was coming. The only potential problem was legal action from the PRC businesses, but a federal judge would probably understand that a signed contract wasn't quite the same thing as a suicide note, and perhaps even regard the overarching political question sufficient to make the contract itself void. After all, counsel would argue in chambers-and in front of a New York jury if necessary-when you find out you're doing business with Adolf Hitler, you have to take a step back. Opposing counsel would argue back, but he'd know his position was a losing one, and he'd tell his clients so before going in.
"I'll tell our bankers tomorrow. They're not scheduled to cut the money loose for another thirty-six hours." This meant that one hundred forty million dollars would not be transferred to a Beijing account as scheduled. And now the CEO could contemplate going ahead with his order for the G. The corporate logo of a monarch butterfly leaving its cocoon, he thought, would look just great on the rudder.
We don't know for sure yet," Qian told his colleagues, "but I am seriously concerned."
"What's the particular problem today?" Xu Kun Piao asked.
"We have a number of commercial and other contracts coming due in the next three weeks. Ordinarily I would expect them to proceed normally, but our representatives in America have called to warn my office that there might be a problem."
"Who are these representatives?" Shen Tang asked.
"Mainly lawyers whom we employ to manage our business dealings for us. Almost all are American citizens. They are not fools, and their advice is something a wise man attends carefully," Qian said soberly.
"Lawyers are the curse of America," Zhang Han San observed. "And all civilized nations." At least here we decide the law, he didn't have to explain.
"Perhaps so, Zhang, but if you do business with America you need such people, and they are very useful in explaining conditions there. Shooting the messenger may get you more pleasant news, but it won't necessarily be accurate."
Fang nodded and smiled at that. He liked Qian. The man spoke the truth more faithfully than those who were supposed to listen for it. But Fang kept his peace on this. He, too, was concerned with the political developments caused by those two overzealous policemen, but it was too late to discipline them now. Even if Xu suggested it, Zhang and the others would talk him out of it.
Secretary Winston was at home watching a movie on his DVD player. It was easier than going to the movies, and he could do it without four Secret Service agents in attendance. His wife was knitting a ski sweater-she did her important Christmas presents herself, and it was something she could do while watching TV or talking, and it brought the same sort of relaxation to her that sailing his big offshore yacht did for her husband.