Chapter 337: The Shift Of Initiative
Businessmen can see it, so how could East Berlin not see it.
Before China showed its potential in consumer electronics, European countries had already established specialized Chinese companies for re-export trade. East Germany’s evaluation of China has always been very accurate: this is an unexploited gold mine.
There are differences between gold mines. If in the past China’s value was a gold mine with extraction difficulty of 10 and value of 1, after Panda Electronics appeared, its extraction difficulty remained 10 but value became 5, now the extraction difficulty is at most 5, but the value is at least 50, and the potential interests are inestimable.
Because of the speed of progress, China’s technological progress speed is too fast. You can’t say this is already the peak of Chinese people; perhaps this is just the starting point of Chinese people.
The room fell into silence. Li Mingde was looking at the document Gerhard handed him, titled “China-Germany Deepened Cooperation Agreement”. After roughly reading it, he had only one thought in his mind:
“Rather than calling it a deepened cooperation, it’s more like an entrustment agreement, fully entrusting the sales of Chinese products in Europe to the East German side.”
The general idea is that East Germany and China negotiate pricing for products to be sold each year starting from spring: how much per jin for tea, how much per piece for porcelain, how much per bolt for silk, and electronic products follow a similar pricing model. Both sides negotiate to determine price and order quantity. East Germany handles sales, and China doesn’t care about the selling price.
This is somewhat similar to the COMECON model, a COMECON model with greater flexibility.
If China is worried about sales volume, this would be a good cooperation method, equivalent to East Germany solving the sales channels for you. For China, it’s a guaranteed profit regardless of drought or flood.
At the beginning of the year, I can clearly determine my production and manufacturing volume for the year. Even the East German side is willing to pay half the deposit in advance, which in the past would already be very sincere.
It is also very suitable for these Socialism camp countries right now. Planned economy, of course, it’s best to plan everything in advance. Your most important foreign trade part, I nail it down with you at the beginning of the year.
Li Mingde thought to himself, even if it were last year, China would grit its teeth and sign this agreement, but now, it’s somewhat insufficient.
“Comrade Bell, I will transmit this cooperation agreement back to Yanjing via telegraph soon. The Yanjing side will definitely seriously discuss this cooperation agreement. Whether the Yanjing side is willing to agree, I cannot give you a specific answer.”
Li Mingde was very polite. He didn’t need to be the bad guy. His task was to be responsible for the exhibition, bringing China’s pinnacle of technology to appear at the Socialism camp’s trade fair.
China has no worries at all about orders.
Gerhard nodded: “Understood, Comrade Li. Regarding Deep Red One, we want to place an initial order for a batch. Can you provide a preliminary quotation?”
Li Mingde stood up, took out the prepared quotation from the briefcase behind him, and handed it to the other party:
“Issuing Unit:
China Panda Computer Export Company
Yanjing
Quotation Number: LTF-68-001
Dear Sir/Madam,
We are pleased to submit to you the quotation for the Deep Red One computer system. This advanced large-scale computer is designed specifically for high-performance data processing, scientific computing, and industrial applications, providing reliability and efficiency in line with modern technical standards.
Product Description:
Model: Deep Red One Main Features: High-speed processing unit, expandable memory, multi-channel input/output capability, and compatibility with standard peripheral equipment.
Delivery: To the port specified by the buyer.
Delivery Time: 6-12 months after order confirmation.
Price List:
Unit Price (US Dollar), including central processing unit, standard memory configuration, and basic peripheral equipment, 5000000 per unit.
Orders exceeding 50 units eligible for negotiated quantity discounts.
Annual Maintenance Service Contract Full on-site maintenance, including preventive services, software updates, and priority technical support, one-year term. 500000 per unit per year, available only when the buyer’s national total purchase exceeds 10 units, renewable annually.
Temporary Repair Service Single incident diagnosis and repair, excluding parts, 200000 per time, applicable only when no maintenance contract is purchased.
Replacement Parts Repair Spare components or modules required for repair quoted separately, priced according to specific parts needed, provided after fault evaluation with cost.
Terms and Conditions:
Payment: 30% deposit upon order confirmation, balance upon delivery, all payments in US Dollars via irrevocable letter of credit.
Maintenance Eligibility: Annual maintenance service available only to countries with total sales of Deep Red One systems exceeding 10 units, ensuring economic scale for service deployment.
Warranty: 12 months standard warranty for hardware defects from date of delivery, not covering misuse or unauthorized modifications.
Repair Policy: Without a maintenance contract, all repairs charged per incident.
Temporary repair fees include travel and labor costs; parts charged extra, subject to availability.
Validity: This quotation valid for 30 days from issuance or until the end of the Leipzig Trade Fair, whichever is later.
Governing Law: Governed by Chinese law and international trade agreements.
Force Majeure: We are not responsible for delays due to unforeseen events (such as natural disasters or political interruptions).
We invite you to discuss customization options or visit our stand at the Leipzig Trade Fair for a demonstration.
If you need more details or references from existing installations, please contact our representative.
Telex: CNCOMP 1968”
In this timeline, China fully appreciated the benefits of the US Dollar from trade with America during the Vietnam War, making a huge profit in US Dollars by selling portable calculators.
The Chinese side found that whether purchasing goods from Hong Kong or free world companies, or from Socialism camp, US Dollar settlement is far more convenient. Everyone recognizes it.
Greatly reducing transaction friction costs.
Gerhard was stunned after reading it, “Five million US Dollars? You are robbing us!”
He thought Chinese goods would be at most three million US Dollars, they could easily resell for five million no problem, but now you tell me it’s five million, where does my profit go?
Li Mingde said calmly: “Comrade Bell, did you forget what I said during the product introduction this morning?”
“What did you say?” Gerhard asked.
Li Mingde said: “We already said that our product far surpasses IBM’s similar products in performance, better stability, and more user-friendly features, so our price is the same as IBM’s. What’s the problem?”
Leipzig’s autumn is so cool, but he was already sweating: “Li, we are the best trade partners, we cooperate in many fields, right? Even if your product is better than IBM’s in parameters, IBM’s products have been market-tested and are very mature.
While China’s Deep Red One is the first large-scale computer facing the market, both the five million US Dollar selling price and the 500,000 annual maintenance service are too expensive. For your first sale, you need to open the market first.”
Gerhard persuaded earnestly, thinking how Chinese people don’t play by the rules, they weren’t like this before.
“Yes, so our price is the same as IBM’s and not higher, precisely considering the issue you mentioned.” Li Mingde smiled: “Moreover, you have to consider that among computers of the same model as Model 85, only China has them for sale. If East Germany doesn’t buy, other countries will.
Even Western European countries, I believe companies that can’t get Model 85 will be interested in our Deep Red One.”
Gerhard’s face changed: “They are free world countries, while we are brothers in the same camp!”
Something’s wrong. Gerhard suddenly realized that China is completely different from the past. Previously, it was always East Germany holding China in its grip.
In the past, China imported a large number of products from East Germany, mainly industrial facilities. Zhengzhou Machine Tool Factory, Yanjing Radio Equipment Factory, fertilizer plants, optical equipment factories—these were all bought from East Germany.
East Germany’s most famous optical industry, Zeiss, once wanted to do industrial division of labor, hoping East Germany specializes in precision machinery and machine tools, Soviet Union handles mechanical parts, and China acts as raw materials supplier and low-end product assembler. In the original spacetime, China refused; in this spacetime, China agreed.
East German experts in Chinese projects worried that China would catch up through imitation and replication, so they deliberately withheld key technical details.
In chemical and machinery plant construction, East Germany avoided transferring knowledge that could endanger its market position, forcing China to invest extra resources in testing and development.
Although Chinese engineers visited East German factories to learn, in the coal liquefaction project, East Germany only provided partial test data, not fully sharing.
Similar behaviors were not uncommon. The worst was Zhengzhou Machine Tool Factory, where East Germany deliberately delayed, taking a full ten years to finally complete.
It can be said that the history of cooperation between China and East Germany is a history of being gripped in various ways. After all, you have needs from them, and East Germany’s industrial strength is the strongest in the entire Socialism camp.
Now the offense and defense have reversed.
Li Mingde was very clear about this. Looking at Gerhard’s shit-eating expression, he thought, you have this day too? Finally, it’s our turn to grip you.
Moreover, this doesn’t even count as gripping; just seeing the East Germans deflated made Li Mingde feel inwardly refreshed.
Ever since he learned that in 1957, for a project East Germany exported to China, the parts imported from Austria cost 3114 US Dollars, but were marked at 50,000 US Dollars on the price list sold to China.
That was 1957; China’s industrialization money was scrimped bit by bit. Even if sold at double, Li Mingde wouldn’t mind, but East Germany marked it up ten times.
With this, you now talk to me about being brothers in the same camp—isn’t that a bit too ridiculous?
Li Mingde explained: “Of course, so I met you first. We are of course brother countries.
Additionally, this price is negotiable. If your side is willing to transfer some Zeiss-related technology, this price can be fully negotiated.”
Gerhard asked cautiously: “What technology do you want?”
“We hope to import all technology related to photolithography from Carl Zeiss company.” Li Mingde pointed to Deep Red One in the distant exhibition hall: “Deep Red One can bring us enough US Dollars to buy Zeiss’s technology.”
Carl Zeiss’s technology reserves are very deep. Even now, East German Zeiss is technically more advanced than West Germany’s Zeiss.
East German Zeiss’s lens system was the first optical company to achieve sub-micron pattern transfer, more advanced than early Western photolithography.
As support, East German Zeiss also developed measurement instruments with integrated data processing functions, like coordinate measuring machines, for semiconductor wafer inspection and quality control.
And projection lithography machines supporting micron-level resolution.
In short, without cooperation with East German Zeiss, China couldn’t have produced Deep Red One so quickly on its own.
But at this time, China is clearly not satisfied with photolithography equipment still in East Germany’s hands. They have greater ambitions; they hope to introduce photolithography technology all at once and freely experiment with future concepts on photolithography equipment.
Instead of like now, where China dares not and does not want to further cooperate with East German Zeiss, letting them know the technical routes for the next generation, the one after, and future photolithography.
These years of cooperation between Area 51 and Carl Zeiss also let them understand Carl Zeiss’s deep heritage, and they want to take this opportunity to swallow Carl Zeiss in one go.
Gerhard calmed down, “Li, money can’t buy technology.”
Li Mingde nodded: “Of course, so Deep Red One’s technology can also be considered for trading, as long as East Germany can offer enough chips that interest us.”
This time Gerhard was moved, “Deep Red One?”
Li Mingde nodded: “Correct. From semiconductor circuitry to design concept to specific production and manufacturing, all can be sold, but the mandatory item in the trade is technology related to Carl Zeiss photolithography equipment, but that’s not enough.
Of course, we two can’t settle this; it needs higher levels to negotiate. But you can first convey our intention to the East Berlin side.”
Gerhard came with expectations and left with expectations.
China accurately seized the unprecedented timing. With OGAS promotion imminent, East Germany wants to seize the initiative. Outside this time node, at any other time, East Germany would not be willing to sell their core technology in photolithography.
As for after German unification, by then West Germany and Jewish people would happily come to receive the spoils, where would it be Chinese people’s turn.
East Germany’s Neues Deutschland front-page report: “China’s Deep Red Shocks Leipzig
In the bustling halls of the autumn Leipzig Trade Fair, a miracle from the East quietly debuted, instantly igniting enthusiasm across the entire Socialism camp.
The Deep Red chess AI program brought by the Chinese exhibitors is not only a technology showcase but also a victory declaration, directly responding to the Deep Blue program previously launched by America’s IBM company, marking the rise of Eastern technological power.
Just one day after the fair opened, the Deep Red area became the focus.
Deep Red One is based on China’s self-developed transistor computer, and Deep Red is the program it carries.
In front of the booth, crowds were packed tightly. East German Foreign Trade Minister Gerhard Weiss personally inspected. He excitedly told reporters: Deep Red proves the superiority of Socialism’s collective wisdom; it is our camp’s weapon to counter capitalism’s technology monopoly.
The chess demonstration became the climax of the entire event. A guest who participated in the match later sighed: This machine is too calm, like it read every one of my moves. It is much stronger than I imagined.
Chinese engineers were very modest about it: ‘Deep Red is the product of our self-reliance and hard work.’ But Chinese official representatives were not modest at all; they repeatedly emphasized that Deep Red One far surpasses IBM System/360 computer. This newspaper currently cannot verify this.
Soviet representative Ivan also came to observe. He told reporters: ‘This is not only China’s achievement but the pride of the entire camp. We will strengthen cooperation to promote AI technology in industry and national defense.’
This is seen as a gesture of goodwill towards China.
A West German reporter infiltrating the fair secretly reported: ‘China’s Deep Red may break IBM’s monopoly, but under Cold War export controls, can this technology spread? Is the professor related to the dissemination of this technology?’ It is reported that America’s intelligence department is closely monitoring this, worried that Eastern computers will sweep the globe.
Fair data shows that this year’s visitors exceeded 600,000, and orders for the Chinese exhibition area excluding Deep Red One surged 50%.
Deep Red’s debut not only attracted Eastern European buyers but also sparked heated discussions on the technology competition.
A Czechoslovak visitor told reporters: ‘Two years ago, America’s Technology Ark shocked us; today, Leipzig’s Deep Red makes us proud.’”
Right after China indicated that Deep Red’s technology can be traded, Foreign Trade Minister Harvey personally came to the site to talk with Li Mingde.
“Li, we very much want to promote cooperation, but exporting optical equipment, especially the most advanced technology related to photolithography equipment, is not something East Germany can decide alone; it needs Moscow’s approval.”
As soon as Harvey spoke, Li Mingde knew the East Berlin side was moved, so they came to discuss such specific matters this time, on how to implement it operationally.
“Li, because of the existence of COMECON, if we want to export this kind of technology, we need approval from the COMECON Executive Committee. The Soviet side has actual veto power.” Harvey continued.
After 1953, the Soviet Union pushed member states for industrial specialization. East Germany was positioned as precision engineering and optics expert. When East Germany exports equipment to other Eastern European countries, it needs Soviet approval to ensure it doesn’t interfere with the Soviet Union’s own export market.
Especially something like photolithography, the most advanced technology, absolutely needs Soviet approval.
“So I hope the East Berlin side first purchases 10 Deep Reds, takes them to Moscow for exhibition, lets the Kremlin fully see China’s advantages in the large-scale computer field.
Then we lobby Kremlin officials, especially Comrade Kosygin, to achieve the goal.
Hope you convey our requests back to China. Also, purchasing 10 units at once at 5 million US Dollars unit price is a bit too expensive; hope for some discount.
And arrange corresponding engineers to go to Moscow together. After the exhibition, bring the equipment back to East Germany for installation, training, and delivery.” Harvey very much wanted to push this forward.
In the eyes of East Berlin’s high-level officials, this is a huge market, whether OGAS or the entire European computer market; East Germany needs Deep Red.
