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From January 19th to February 1st, 1992, the ongoing sale of stock subscription certificates, ended very tepidly on the eve of the Spring Festival.

As the first subscription-style new stock issuance in mainland China, the 92nd edition of the Shanghai stock subscription certificate was actually unpopular when it was officially launched. The final sales volume earned about 2.1 million yuan with less than 100,000 copies sold. And perhaps, because this subscription sales method was too special, far from the expectations of securities firms, panic buying and selling did not occur.

The stock subscription certificates were valid for use throughout the year and there was to be four lotteries from which holders could buy newly listed shares. This meant that there was great potential danger. Who could guarantee that each subscription certificate could successfully result in winning the right to purchase shares? At the same time, the price of 30 yuan per certificate exceeded the bottom line that most people could afford. This coupled with the restriction that permitted only Shanghai residents to buy also further limited the sales threshold. At the beginning of 1992, only a dozen new stocks were announced for listing and few people dared to devote their life savings to these few stocks …

However, Chen Yuanming knew that all this would soon look vastly different.

Shortly after the end of the Spring Festival holiday, at the gates of the Huangpu Business Department of Wanguo Securities on Guangdong Road, some second-hand dealers looking for subscription certificates began to appear. The prices they offered were all a few points higher than the original 30-yuan price. The purchases made by these dealers were based on serial numbers. For every 100 consecutive certificates, the price offered ranged from 3,500 to 4,000 yuan.

If the certificates were unregistered “white boards”, the price offered could still be higher by several points. After all, when buying stocks, one needed to show an ID card and for example, while securities companies such as Shenyin Securities permitted the registration name to be changed a second time, hard-liners like Wanguo Securities absolutely refused to allow a second name change. Thus even if one were to obtain a pre-registered stock subscription certificate, the purchase will not proceed smoothly.

However, Chen Yuanming was unmoved. He just walked around the doors of several major securities companies in silence every day and inquired about the black-market prices for the certificates from the second-hand dealers. He was neither buying nor selling, but like an ordinary onlooker, he quietly observed. After half a month, even some of the scalpers had become familiar with him and some turned away when they saw him.

This went on for more than half a month, until the end of February. As the news and gossip heightened so did the black market. The price of 100 consecutive stock subscription certificates soared from its original price of 3,000 yuan to about 20,000 yuan in a blink of an eye. This was ten times the profit.

At this point, the entire subscription certificate market had become very hot. In addition to those second-hand scalpers, more and more real buyers also begun to enter the battlefield. Well-dressed elites appeared at the doors of the securities market, hoping to acquire one or two books of” white boards” to personally make a killing on the stock market.

However, these developments still could not move Chen Yuanming. What good was 10 the times profit? While this was the 1992 stock subscription certificate sale, it was but the first wave of the “million-yuan waves” that all future generations are familiar with. At this time, no matter how much you sold the subscription certificate for you were selling at a loss. Only by properly grasping the four lottery opportunities, continuously circulating funds, selling stocks and buying new shares, could you maximize your profit. In 1992, the winning rate for the subscription certificate of the four lotteries was not only 30% or 50% as the world had guessed, but more than 80% in total. Especially in the second lottery, the winning rate was as high as 50%. How could he possibly give up such an amazing profit opportunity.

But at present Chen Yuanming also had his own concerns. For him, the biggest difficulty did not lie in predicting the development of the stock market, but in his own conditions.

At this time, when entering the Shanghai stock market, you can only use a Shanghai Resident Identity Card. Further to open a stock account, you needed to be at least 18 years old. Chen Yuanming was far from satisfying either of these two conditions. As a young boy who is still under 16 years old and is in Shanghai alone where could he find a suitable financial agent to protect his legitimate interests?

At the same time, the actual subscription for the listing of new shares still required a lot of funds, but, except for the part sent home, all his income over the past six months-including the profit from reselling watches and the 100,000 red envelope that Scarface handed to him before his departure totaled 390,000 yuan. Out of this amount, 360,000 had been used to purchase stock subscription certificates, and rest was used to support daily living. So, in fact currently there were not many actual new shares he could buy.

He was facing a double hurdle, and he had to come up with a truly sound solution.

With this in mind, he went in and out of these small salons on Guangdong Road more and more frequently. By now, some people had also vaguely guessed that this teenager might have the goods in hand but was waiting for a timely point to sell. Thus, more and more attention was paid to him. While others were paying close attention to him he was also paying close attention to the real buyers who were holding a lot of funds in their hands.

This mutual speculation lasted until March 1. That night, when Chen Yuanming walked out of the Palace Hotel and headed towards his own hotel, a voice called out to him.

“The little brother ahead, wait a minute.”

The voice was not bad, although it seemed to be a little hoarse and low it was not excessively so. Chen Yuanming turned his head and saw a middle-aged man in his 30s hurriedly following. The man was more than ten centimeters taller than Chen Yuanming and was wearing a suit that was quite decent-looking at this point in time. He had a pair of sword shaped eyebrows and his sharp eyes, which added a little seriousness to his expression, gave the sense that he was from a military and political family.

Chen Yuanming narrowed his eyes slightly, he knew this person. Over the past ten days, he had seen this man often at the Palace Hotel, flanked by two attendants who appeared to be purchasing stock subscription certificates on a large scale. Chen Yuanming stood still as he suppressed the smile threatening to appear at the corner of his mouth.

In a few steps, the man strode to Chen Yuanming’s side and looked him up and down for a moment. He politely extended his right hand. “Little brother, you’ve made it difficult for me to find you.”

Chen Yuanming didn’t accept the handshake and merely raised his eyebrows. “This gentleman, I don’t seem familiar with you.”

Though the man faced this kind of awkward scene, there was no embarrassment. He simply retracted his hand, and smiled brightly, “Over the past half month you’ve spent a lot of time on Huaihai Road and Guangdong Road. There aren’t many children dressed like you. It’s the eve of the lottery. Haven’t you decided on a buyer for the goods in your hands yet? “

Chen Yuanming glanced at the other party noncommittally and instead asked, “It’s the eve of the lottery, haven’t you given up on scouring for goods?”

These simple words startled the other party and he immediately smiled even more broadly. “Since we are both willing, why not sit down and talk about it? Have you booked a hotel?”

“The International Hotel.”

As soon as the name of the hotel was stated, the expression on the man’s face changed slightly. Located in the tallest building in the Far East, the International hotel was ranked higher than the famous Peace Hotel. This hotel was not comparable to ordinary grade hotels and those who could stay there were either rich or powerful. This young man looked well-dressed and did not talk like other ordinary children but it was still completely unexpected that he was staying at The International Hotel.

Though his thoughts whirled the man smiled, “International Hotel? That’s perfect. It is better for your brother to be the host and for us to go to the International Gallery for a light meal.

The International Gallery was one of several famous restaurants located in the International Hotel. It specialized in Western-style food. To confirm his identity, this place was indeed a good choice. Chen Yuanming nodded and accepted the other party’s invitation. The man suggested, “Shall we rent a Santana[1]?”

This time, Chen Yuanming did not agree but just responded lightly, “I’m not used to Santana’s. Let’s walk.”

At this time, Santana rentals in Shanghai were still very few. The man looked at the teenager’s bland expression and smiled, “Yeah, it’s just a few steps to go anyway. By the way, my name is Xiao Yun. I have only recently come to Shanghai.”

“Chen Yuanming, I also haven’t been here long.”

They talked about the weather and walked along the road for more than 20 minutes before they arrived at the International Hotel. Looking at Chen Yuanming’s familiarity with the place, Xiao Yun’s eyes only swept away, and he made a gesture of invitation. Together, the two stepped into the International Hotel. After settling down in the western restaurant, they ordered two steaks and their conversation slowly turned to the main topic.

“Since we are both walking around Guangdong Road, let’s not speak secretively.” Xiao Yun looked at the teenager with a little bit of meaning in his gaze. “Now you know what price the whiteboard is selling at. Brother, you should also know that if you have the goods you might as well get them off your hands now so that we can both do brisk business.”

Chen Yuanming smiled, “Brother Xiao, since you are seated here, let’s not speak in circles anymore. Since you are here in Shanghai now, you must know what the actual value of this subscription certificate is. Why should I sell it now?”

Though this was true, how could Xiao Yun let himself get cornered in three or two sentences? He smiled slightly. “If it were someone else, I might have believed it, but your performance is not like that, brother. If it is true that you have no intention to buy or sell. At this time, you would stay in the salon and wait for people to come pay you money, instead of swinging by the salon every day.”

Having said this, he sighed softly, “It’s not a secret. Nowadays, some of the true resellers have already reacted. All the certificates have been collected but they aren’t being sold at all. I have been in Shanghai for so long, but I have only been able to purchase a few odd certificates. Now there are less than 2,000 certificates available, putting aside the winning rate, the quantity alone is not enough. Since everyone has a need, why not sit down and discuss it? The price is not a problem. “

Chen Yuanming shook his head. “On the contrary, I think the price is the biggest problem.” Looking at the other person’s doubtful eyes, Chen Yuanming’s mouth curled up slightly, “So let’s say, I do have a whiteboards here, but each book would cost 160,000 yuan would you accept or not? “

Xiao Yun’s eyebrows jumped and there was an instant surge of anger, 160,000? At present, the highest price on the market was only 20,000 yuan per book. At most it could rise to 30,000 yuan. 160,000 yuan? That is not a price, that’s a joke!  

Looking at the other side’s displeased expression, Chen Yuanming did not take it to heart. He just raised his hand lightly, “You see, once I offer you a price, we can’t agree on it immediately. But am I really asking for an unreasonable amount? In other words, why are you here in Shanghai now? Why do I think that whiteboards are worth so much? In the final analysis, it because of the same thing … “

With that, Chen Yunaming pointed his finger upwards, and then pointed to the south, his eyes calmly looking back at the man in front of him.

Xiao Yun was shocked to death, this kid …

“The old man is about to return soon[2]. That is the best time for me to get rid of the subscription certificates. It is not smart to say anything now.”

As expected … Xiao Yun lowered his gaze and concealed the astonishment in his eyes. He had come to Shanghai precisely because he had listened to the opinions of the elders in the family and decided to dig for gold in Shanghai before the Old man’s announcement was made, If the old man’s speech is released while he’s on the tour of the south, the stock market will become turbulent immediately. At that time, it will not be a question of tens of thousands for a subscription certificate, by then it will cost hundreds of thousands. But the boy in front of him had directly stabbed at his weakness. No matter where he received this news from he had placed himself in a position that cannot be underestimated.[3]

However, after just a moment, the expression on Xiao Yun’s face returned to normal, and a gentle smile reappeared. Talking about business was like playing bridge. Each side would have a few cards in their hands. This kid had raised his own card, but did he have no weaknesses?

“Sure enough, heroes are young.” Picking up the red wine that complemented their dinner, Xiao Yun smiled with admiration. “There aren’t many people who could buy the subscription certificate as early as you did. I know of a few people in the Shanghai banking system who secured 10,000 subscription cards in one go. But such skilled people are relatively few in number … “

Hehe … Chen Yuanming couldn’t help sneering at him. What couldn’t Xiao Yun understand? In fact, Chen Yuanming’s biggest shortcoming could be seen at a glance when you observed his method of buying subscription certificates. In order to avoid becoming a target he chose four bank branches and invited four Shanghai residents to buy on his behalf. This way he avoided being caught at first glance and avoided the eyes of the professional purchasing agents by hiding himself safely in the rear.

However, this method had its disadvantages. Four different companions and four different ID cards precisely represented his weak foundation in Shanghai. Not only did he not have a suitable purchasing agent, he did not even have a proper alternate identity. And this was almost fatal. Basically, he was just a child from the grass-roots. Although he could eat, live and confuse others with his mode of speech and experiences, his foundation was too thin and he was powerless. In this financial wrestling arena, any oversight could result in him being beaten to death by predators. But what of it?

Forcing a wry smile from the corner of his mouth, Chen Yuanming shook his head. “Those were just little tricks. I have made Brother Xiao laugh. It’s really tough at home, so I have had to take this road.”

These words were indeed true, but when put in the ears of different people, it had a different meaning.

“Well, since you are young it is good to come out and seek a break through.” Xiao Yun smiled, and seemed to understand Chen Yuanming’s situation. “When I was coming out to sea, my old man almost broke my leg. Since neither of us wants to fail to live up to the mark in such a situation, it is better for us to think of a solution together to overcome our difficulties … “

Both sides had made clear their conditions so indeed it was time to really talk business. Chen Yuanming put down his wine glass. “To be honest, I really want to sell some of my subscription certificates, but there are two things that I need. First, I need a secure local ID card. It goes without saying that you understand that I need it to open an account. Second, what I want to do is not a whiteboard resale business, but to sell the winning lots.”

As these two sentences were uttered, Xiao Yun suddenly hesitated, the first one was easy to understand and achieve, but the second? Not selling whiteboards with an unknown probability but selling winning lots? Was this shrewd or stupid?!!

Looking at the startled expression of the man in front of him, Chen Yuanming smiled calmly, “Are you surprised? I feel that at present, this is the most favorable solution for both of us.”

Translator’s Notes:

Today’s text was a little heavy but in simple terms they both guessed what the other person needed and are now ready to do business/ become partners.

[1] Santana here referred to the Volkswagen Santana. Based on the second-generation Volkswagen Passat (B2). It was introduced in 1981 while production started in 1985 for China.

The santana 2000 looked like this:

[2] Old man refers to the then leader of china’s communist party Deng Xiaoping

[3] The 5 preceding paragraphs bear further explanation: Recall that chen yuanming had purchased a certificate for 30 yuan per piece. At present the price of a book of certificates had increased to about 20,000-30,000 yuan per piece. However, Chen Yuanming was demanding 160,000 yuan per certificate. Why? With his foresight he knew that the leader of china’s communist party who was on a tour of the south would be issuing a speech praising stock markets that would cause the value of the certificates to rise. To hint at this speech without actually saying the words CYM did this (Chen Yunaming pointed his finger upwards, and then pointed to the south, his eyes calmly looking back at the man in front of him). This is why Xiao Yun was shocked. Because he is connected to a political family he was aware very quickly that the president’s speech will happen soon. This was why he was in shanghai. But how could Chen Yuanming who was not connected to a powerful family know this even earlier than him? see https://www.jstor.org/stable/2645086

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