Li Ming walked home alone through Tianjin's darkening streets, his mind still replaying the evening's events. At a street corner, he paused under a gas lamp and pulled out the card Rupert Montague had pressed into his hand before they parted.
Rupert Montague
Assistant Manager, Hongkong and Shanghai Banking Corporation
Tianjin Branch
On the back, Rupert had scrawled in English: "Another game Friday next, 8pm. Bring your friends. —RM"
Li Ming tucked the card away carefully. A connection to HSBC—one of the most powerful financial institutions in China. That could prove valuable, though he wasn't yet sure how.
The next two weeks fell into a rhythm. Each morning, Li Ming arrived at the China Merchants Steam Navigation Company offices and threw himself into his assigned work with methodical precision. But he didn't limit himself to cargo manifests and freight calculations. Whenever he finished a task early, he wandered the building asking questions.
"Mr. Zhou, how do you determine optimal cargo loading sequences?"
"Mrs. Chen, what's the typical processing time for foreign shipper correspondence?"
"Captain Liu, when inspecting ships for damage, what are the most common structural problems?"
The employees didn't know quite how to judge this curious young clerk. Some found him annoying—too many questions, too much energy. Others appreciated his genuine interest. Yang understood best: "He's learning the entire system, not just his job."
Li Ming was indeed learning, but not in the way they assumed. He was comparing 1895 business practices against the logistics systems of his original timeline. How did information flow? How were decisions made? What technologies existed and which were still decades away? He made no suggestions, offered no critiques—just absorbed everything with the hungry curiosity of someone seeing a living museum.
But beneath his curiosity lay growing concern. The war's impact on CMSNC was catastrophic, and the details emerged gradually through overheard conversations, leaked documents, and Yang's increasingly worried commentary:
Ship Losses:
- The Kwang Yi, sunk by Japanese naval artillery at the Yalu River
- The Fuping, captured intact and now flying the Rising Sun flag
- The Tung Ching, damaged beyond economical repair and scrapped
- Seven other vessels requisitioned for military transport, returned in terrible condition requiring expensive overhauls
Financial Crisis:
- 200 million tael war indemnity imposed by the Treaty of Shimonoseki
- Government demanding CMSNC contribute to indemnity payments
- Insurance payouts inadequate—foreign insurers claimed war damage excluded from coverage
- Outstanding loans from HSBC and other foreign banks, with interest accumulating
- Revenue collapse as cargo traffic plummeted during and after war
Operational Chaos:
- Routes disrupted by lingering instability
- Competition from Japanese shipping lines now aggressively expanding into Chinese waters
- Crew shortages as sailors sought more stable employment
- Maintenance backlog on aging fleet
- Cargo theft and embezzlement (like Wang's scheme) draining remaining capital
Management Crisis:
- Shanghai headquarters demanding cost cuts
- Tianjin branch pressured to improve profitability or face closure
- Shareholders, having lost fortunes when stock value collapsed, demanding accountability
- Rumors of corruption investigations targeting senior management
- Sheng Xuanhuai himself under attack from reformist critics
The atmosphere in the office grew heavier each day. Clerks whispered anxiously about salary delays. Captain Morrison openly discussed seeking employment with British lines. Even Yang's usually optimistic demeanor darkened.
Then came the announcement that changed everything.
Huang gathered the entire Tianjin office staff in the main hall. His exhausted face showed the strain of weeks spent managing catastrophe.
"I've received word from Shanghai," he began without preamble. "Deputy Director Xu Run will arrive in Tianjin next week to assess our situation and determine next steps." A murmur rippled through the crowd—Xu Run was legendary, a co-founder of CMSNC and Sheng Xuanhuai's right hand.
"Director Xu will meet with branch leadership to discuss our path forward. But—" Huang paused significantly, "—he has also requested that we solicit ideas from all staff, regardless of rank. If anyone has constructive proposals for improving our performance, I will review them and present the best ones directly to Director Xu."
The crowd stirred with surprise and skepticism. Huang continued: "Submit written proposals to my office by week's end. Be realistic—we have no capital for major investments. But if you have ideas for operational improvements, cost reductions, or revenue enhancements that don't require significant funding, I want to hear them."
As the meeting dispersed, Li Ming caught Yang's eye. They both understood: this was opportunity knocking.
That evening, Li Ming invited Yang to the Red Lion. They secured their usual corner table, and Yang immediately pulled out paper and pen.
"Alright, let's think through this systematically," Yang said, his commercial instincts engaged. "What can we propose that addresses real problems without requiring capital we don't have?"
They spent two hours brainstorming:
Yang Jirong's Ideas:
- Consolidate overlapping routes to reduce fuel costs
- Negotiate bulk fuel purchases with coal suppliers for better rates
- Implement stricter cargo manifest auditing to prevent theft
- Cross-train staff to reduce redundant positions
- Establish direct contracts with major shippers, bypassing intermediaries
Zhao Yunsheng's Additions:
- Standardize loading procedures to reduce dock time
- Create performance metrics to identify inefficient operations
- Develop preventive maintenance schedules to avoid expensive emergency repairs
- Coordinate passenger and cargo scheduling more tightly to maximize capacity utilization
Each idea had merit. But as they worked through implementation details, a pattern emerged: most required upfront investment.
"Route consolidation sounds good," Yang said, "but we'd need to compensate shippers for longer delivery times. That means lower rates, which means less revenue in the short term."
"Bulk fuel purchases need capital reserves to pay suppliers in advance," Li Ming noted.
"Preventive maintenance requires hiring inspectors and buying parts before they're needed."
They kept hitting the same wall. Good ideas existed, but executing them required money the company didn't have. Yang pulled out a folder containing his previous reform proposals—all rejected for the same reason.
"This is hopeless," Yang said, pushing his papers aside in frustration. "Every solution requires investment, and we have no capital. We're trapped."
Li Ming stared at his beer, feeling the same discouragement. They'd been naive to think young clerks could solve problems that had stymied senior management.
"Gentlemen, you look troubled. Business problems?"
They both looked up to find Rupert Montague approaching their table, a friendly smile on his aristocratic face. "May I join you? Or would I be intruding?"
"Please," Li Ming gestured to an empty chair. "We're just... struggling with impossible questions."
Rupert sat, signaling the waiter for a drink. "The shipping company troubles? I've heard rumors. HSBC is naturally concerned—we hold substantial loans against CMSNC assets."
Yang glanced at Li Ming, then decided honesty was worth the risk. "Our company is in crisis. We're trying to develop proposals for improvement, but everything requires capital investment we don't have. The war destroyed our financial position."
Rupert nodded sympathetically. "I've reviewed CMSNC's accounts—bank confidentiality prevents me from sharing details, but I can speak generally. Your company faces severe credibility problems with lenders. The war losses, yes, but also the corruption scandals, the management disputes, the shareholder lawsuits charging Sheng Xuanhuai with embezzlement. Foreign banks view CMSNC as high-risk now."
"So we can't borrow to fund improvements," Li Ming said.
"Precisely. And without improvements, the company can't restore profitability. And without profitability, you can't repay existing loans. It's a vicious cycle." Rupert sipped his drink. "Honestly, gentlemen, I'd advise against wasting effort on this. The company may not survive. Perhaps look for positions elsewhere?"
"That's defeatist thinking," Yang protested.
"It's realistic thinking. Sometimes enterprises simply fail, regardless of good intentions." Rupert's tone was gentle but firm. "The maritime shipping industry is brutally competitive. CMSNC faces Japanese lines with government backing, British firms with superior capital, and its own internal dysfunction. The odds are poor."
They sat in uncomfortable silence. Finally, Li Ming glanced at Rupert's business card still sitting on the table. "HSBC assistant manager—that must be fascinating work. Is banking very different in China compared to England?"
Rupert seemed happy to discuss lighter topics. "Quite different, actually. London banking is rather staid—established clients, predictable transactions, very proper. Here in the treaty ports, it's rather more adventurous. We're financing everything from opium suppression efforts to railway schemes to shipping ventures that may or may not succeed."
"Did you always want to work in banking?" Yang asked.
"Not particularly. I'm the second son, you see—won't inherit the title or estate. Had to find my own path." Rupert sipped his drink. "My family's relatively new nobility anyway. My father earned his title through service with the East India Company in India. We were merchants originally."
"Merchants who became nobles?" Li Ming's interest sharpened. "That's unusual, isn't it?"
"Unusual but not unheard of, especially in families with East India Company connections. My grandfather made his fortune sailing merchant vessels under the Company's banner, trading throughout Asia. The wealth and connections eventually led to my father's knighthood."
"Under the Company's banner?" Li Ming leaned forward, suddenly interested. "What does that mean exactly?"
"Ah, the old partnership system. Fascinating bit of commercial history actually." Rupert warmed to his subject. "The East India Company held monopoly rights to British trade with Asia, including exclusive access to Company-controlled ports and warehouses. But they couldn't possibly operate all trade themselves."
"So they used private merchants?" Yang asked.
"Precisely. Private merchants could sail under the Company banner—essentially a franchise arrangement. You paid the Company a percentage of your cargo value, and in return you got: access to Company ports and warehouses, protection from pirates and foreign interference, use of Company trade intelligence networks, and most importantly, the backing of British military power. The costs were significant—typically 10-15% of cargo value plus various fees—but the benefits made it worthwhile."
Li Ming's mind began racing. "So private ship owners operated independently but under the Company's brand and infrastructure?"
"Exactly. My grandfather owned two ships. He paid the Company handsomely for privileges, but the profits were substantial. He could dock in Bombay, Singapore, Hong Kong—anywhere the Company had facilities—without negotiating separate arrangements. The Company maintained the infrastructure, handled customs relationships, provided warehousing, even offered ship repair services. My grandfather focused purely on finding cargo and sailing routes."
"And the Company made money without owning every ship?"
"Indeed. They monetized infrastructure and political connections rather than just operating ships. Brilliant business model really—extract value from assets without bearing operational risks of every vessel."
Yang was listening intently now too. Rupert continued, caught up in family history: "After the Company was dissolved in 1858, my father saw banking as the next frontier. He invested in HSBC during its founding, serves on several boards. I'm the second son, so not inheriting the title—came East to make my own fortune in finance." He grinned. "Following the family tradition of mercantile adventure, just with ledgers instead of cargo manifests."
They talked for another hour about European affairs, new technologies, the changing world. But Li Ming was only half-present. His mind churned with possibilities, connections, solutions clicking into place like puzzle pieces.
When they finally parted, Rupert reminded them about Friday's dart game. Li Ming agreed absently, his thoughts elsewhere entirely.
He walked home slowly, replaying every detail of Rupert's explanation. The East India Company franchise model. Infrastructure monetization. Extracting value without operational risk. Private operators paying for access to centralized services.
Then he layered in his 21st-century knowledge: franchise business models, supply chain management, economies of scale, network effects. How McDonald's made money not from hamburgers but from real estate and franchise fees. How logistics companies created value through coordination rather than asset ownership.
And suddenly, he saw it. The complete solution, elegant in its simplicity.
He didn't go home. Instead, he turned and nearly ran to Yang's boarding house, arriving breathless and pounding on the door.
Yang opened it in his nightclothes, alarmed. "Zhao? What's wrong?"
"Nothing's wrong. Everything's right. I know how to save the company."
"What? It's nearly midnight—"
"I need to explain now, while it's clear in my mind. Let me in."
Yang's small room was barely large enough for his bed and desk, but they crowded around the desk's surface as Li Ming grabbed paper and began drawing diagrams.
"Listen. CMSNC's fundamental problem is capital scarcity. We have infrastructure—docks, warehouses, trade routes, established relationships—but not enough ships to fully utilize it. Meanwhile, private Chinese ship owners have vessels but lack infrastructure. They can't compete with British and Japanese lines because they don't have access to proper docking facilities, warehousing, or established trade networks."
Yang leaned closer, following the diagram. "Go on."
"So we create a franchise system, modeled on what the East India Company did. CMSNC becomes not just a shipping operator but a maritime services provider. We offer private ship owners a complete package: the right to operate under CMSNC's banner, access to our docks and warehouses, placement on our established routes, use of our cargo booking networks, even our company reputation with customers."
"In exchange for what?"
"A percentage of their cargo revenue—say 15-20%, depending on services used. Plus fees for specific services: docking charges, warehouse storage, cargo handling, ship repairs. We're monetizing infrastructure we already own instead of letting it sit underutilized."
Yang's eyes widened. "So we get revenue from ships we don't have to buy or maintain?"
"Exactly. The capital risk stays with the private owners. They pay for ships, crews, fuel, maintenance. We provide infrastructure and coordination. If their ship sinks or becomes unprofitable, it's their loss, not ours. But when they succeed, we profit from the fees."
Yang grabbed his own pen, starting to sketch calculations. "How many private owners are there?"
"I don't know exactly, but based on what I've seen at the docks—dozens at least, maybe hundreds across all Chinese ports. Most own one or two vessels. They're struggling because they can't access proper facilities or compete with foreign lines' organization."
"So we offer them legitimacy, infrastructure, and market access."
"Right. And we can layer additional services on top: ship repair facilities, crew training schools, cargo insurance, even shipbuilding eventually—all fee-based services that generate revenue without massive capital outlays."
Yang was writing furiously now, his commercial mind seizing the implications. "The franchisees would need to meet quality standards—can't have unreliable ships damaging our reputation."
"We establish requirements: ship safety inspections, crew certifications, operational standards. Ships that meet our criteria get franchise approval. This actually improves overall Chinese shipping quality while generating inspection fees."
"And we'd coordinate routes to avoid franchisees competing destructively against each other..."
"While filling in gaps in our current coverage. We don't operate profitably to Xiamen? Find a franchisee who can."
They worked through the night, refining the concept. By dawn, they had a complete proposal:
**The China Merchants Maritime Franchise System**
**Phase 1: Basic Franchise (Immediate Implementation)**
- Recruit private ship owners meeting safety/quality standards
- Charge 15% of cargo revenue plus docking/warehousing fees
- Provide access to CMSNC infrastructure and trade networks
- Establish route coordination to optimize coverage
- Minimal upfront investment: mainly administrative and marketing
**Phase 2: Expanded Services (6-12 months)**
- Ship repair facilities at major ports (fee-for-service)
- Crew training school (tuition-based)
- Cargo insurance program (premium-based)
- Centralized cargo booking system (transaction fees)
**Phase 3: Long-term Development (2-5 years)**
- Shipbuilding facilities (contract-based)
- Navigation school for officers (government-sponsored)
- International route expansion through franchisee network
- Transformation into comprehensive maritime services company
**Revenue Projections:**
If they recruited just 20 franchisee ships in the first year, each generating average annual revenue of 3,000 taels, CMSNC would receive 9,000 taels (20 ships × 3,000 taels × 15%) plus docking and service fees—potentially doubling current revenue without buying a single ship.
As morning light filtered through the window, Yang set down his pen and looked at the pages of calculations and diagrams covering his desk.
"This is brilliant," he said quietly. "It solves every major problem: capital scarcity, underutilized infrastructure, competitive disadvantage against foreign lines, revenue generation without massive investment. It's not a patch—it's a complete restructuring of the business model."
"But?" Li Ming heard the hesitation in Yang's voice.
Yang slumped back, his initial enthusiasm dimming. "But convincing the old-style officials will be nearly impossible. Do you understand how radical this proposal is? It fundamentally changes what CMSNC is—from a ship operator to a services provider. That threatens everyone's existing position and power."
"Huang asked for ideas."
"He asked for incremental improvements. Cost-cutting measures. Efficiency gains. This—" Yang gestured at their proposal, "—this requires senior management to admit that the old model is obsolete. It requires trusting private merchants instead of maintaining centralized control. It requires thinking like a modern commercial enterprise instead of a quasi-government monopoly."
Li Ming felt his enthusiasm cooling as Yang's words sank in. "You think they'll reject it."
"I think the bureaucratic faction will see it as threatening their authority. The conservative managers will see it as abandoning state control. The Shanghai shareholders will worry about diluting company prestige by associating with small private operators." Yang's frustration was palpable. "And worst of all, even if it's logically sound, it's coming from us—two clerks in their twenties with no seniority or connections. They'll dismiss it without serious consideration."
They sat in defeated silence. The proposal remained brilliant. The obstacles remained insurmountable.
Finally, Li Ming spoke: "What if we got validation from someone they couldn't dismiss?"
"Who? Sheng Xuanhuai himself? Good luck getting an audience."
"Not Sheng. Captain Morrison."
Yang looked up sharply. "The British captain?"
"He's got thirty years of maritime experience. He's worked for British lines, knows Western business practices, understands Chinese operations. And he's foreign—they won't be able to accuse him of simply protecting Chinese face or pushing personal agenda. If Morrison reviewed our proposal and endorsed it, would that give it credibility?"
Yang considered. "Morrison has Huang's ear. And he's respected even in Shanghai. If he said this model could work..." He sat up straighter. "It might actually give us a chance."
"Then we take this to Morrison first. Get his opinion, get his endorsement if possible. Then we submit it through Huang to Xu Run with Morrison's backing."
"Morrison's not easy to convince. He's pragmatic, skeptical, and he doesn't suffer fools."
"Then we'd better make sure our proposal is foolproof."
They spent another hour reviewing every detail, stress-testing assumptions, identifying weaknesses to address. By the time they finished, the morning work bell was ringing across the city.
"We need to get to the office," Yang said, gathering the papers carefully. "But tonight, we approach Morrison. If he laughs us out of the room, at least we tried."
"He won't laugh," Li Ming said with more confidence than he felt. "This proposal solves real problems. Morrison's smart enough to see that."
They walked to the office together as the city awakened around them. The morning sun painted Tianjin's buildings in shades of gold and red, and the Hai River reflected the light like molten metal.
In Li Ming's pocket, their proposal represented something he hadn't felt since arriving in this era: genuine hope. Not just for his own advancement, but for the possibility that his knowledge—his strange gift of seeing the future in the past—might actually change things for the better.
The question was whether anyone would listen to two young clerks who claimed to have found a solution that had eluded their elders.
By evening, they would know.