The Mech Touch novel Chapter 1177

Calabast wanted to set up a joint venture owned by their own companies. The purpose of this joint venture was to manage the LMC’s business in the Ylvaine Protectorate.

Unlike other states with more open economies like the Reinald Republic, the Ylvaine Protectorate made it really difficult for foreign companies to do business.

Selling ten to fifty mechs a year did not arouse too much scrutiny, but beyond that more severe trade barriers kicked in. Higher tariffs, extra fees, longer inspections, stricter quality requirements, quotas and more all served to stop foreign companies from taking over the Ylvainan mech market.

And those were just the legal trade barriers. Ves learned from his earlier tour throughout Krent that the Ylvainan attitude towards mechs constituted an unofficial trade barrier. The local culture favored a specific visual style that most foreign mechs lacked.

If Ves wanted to design a mech that appealed to the Ylvainan mech market, then he needed to adapt his mech designs to local customs.

Perhaps a time would come when the Ylvainans would be okay with piloting mechs with standard, non-religious visual themes. Ves estimated that it would take decades to get to that point.

Right now, the market was just about to open up. Most Ylvainan mech pilots never touched a foreign mech design before. Those who piloted imported machines consisted of only a small proportion of mech pilots in the state.

Therefore, not only did it make a lot of sense to adapt to local customs, but also operate through a local subsidiary. As the joint venture would be set up in the Protectorate, it was for all intents and purposes a local company.

Through this legal construction, it was a lot easier for the Office of Strategic Mech Management to grant the company some important exemptions. The idea was that the joint venture imported the LMC’s mechs from the Bright Republic and sold it to Ylvainan consumers under their brand name.

Ves began to look beyond this instance. There were many states like the Ylvaine Protectorate that restricted their economies. While it was a hassle to do business in those places, the reduced competition meant that as long as the LMC got in, it could make a handsome profit.

The need to establish subsidiaries and joint ventures owned by local partners would only increase in the future. While those daughter companies funneled a substantial share of earnings back to their local partners, the share of earnings received by the LMC would still be worth it as long as sales surpassed a certain volume.

The LMC might see a need to set up more joint ventures like the one that Calabast proposed. If that was the case, then Ves wanted to adopt a standardized approach to doing business in this fashion.

The most important burden for Ves was the need for local adaptation. The Ylvainans loved to make their mechs look like giant holy warriors of the Ylvainan Faith, and none of his existing mechs matched these aesthetic requirements.

If the LMC wanted to sell the Blackbeak, Crystal Lord and the new Aurora Titan models in the Protectorate mech market, then the company needed to change their outward appearances!

Having studied the Ylvainan visual style, Ves possessed the confidence to emulate their works at the very least. It wouldn’t take more than a week to restyle his existing mech designs. It wouldn’t take much effort from him to do so for just three mech models.

Yet what about the future?

What if the LMC conducted business in a dozen states like the Ylvaine Protectorate? What if the LMC’s mech catalog ballooned to twenty mech models? The amount of time Ves needed to spend on adapting all of his mech designs to the local customs of each difficult state would be immense!

One of the most important lessons that several Seniors imparted to Ves was that a mech designer’s time was valuable. They should spend the bulk of their time designing new core mech designs.

While there may be a need to design variants or adapt an existing mech design to local customs, it didn’t require the attention of someone as overqualified as Ves!

It was massively overkill for Ves to spend days or weeks of his precious time to adapt a mech design. Rather than do the work himself, why not delegate the responsibility to a locally-born mech designer?

They didn’t need to be too skilled. They just needed to be immersed in the local culture and skilled in the changes that needed to be made

The proposal that Calabast put forward led Ves to consider all of these matters. If he wanted to use this approach to enter difficult foreign markets, then he needed to do it right the first time. As long as the joint venture was a success, the LMC could adopt the same model in other restricted markets.

The main issue was the matter of control. Owning a joint venture with a local partner meant that the LMC needed to share power with someone else. It would be fine if they both agreed on a single direction, but what if their opinions differed?

The second complication was that the joint venture needed to retain a local mech designer who could be trusted. It would not be good if the subsidiary hired a local mech designer and trained him or her at great expense only for them to resign a few years later.

All of these matters concerned Ves greatly, but he knew he didn’t have to manage all of these issues alone. Ves had already prepared the LMC for these kinds of occasions.

Therefore, as soon as Calabast handed over a data pad containing all of the necessary contracts and other paperwork, Ves simply handed it over to Gavin once he returned to the guest compound.

"What’s this?" Gavin asked.

"It’s a set of documents for setting up a joint venture between the LMC and the Curin Development Holding Company. The CDHC is wholly owned by Madame Cecily, so the joint venture we plan to erect in the Protectorate is owned by me and her. The purpose of the joint venture is to serve as a channel for the LMC to export mechs to the Protectorate."

Ves took the time to explain all of the reasoning behind the move.

The only snag was that Gavin became a bit puzzled by how easily Ves agreed to Madame Cecily’s proposal. How could Ves explain to him that Calabast wasn’t a woman who accepted ’no’ for an answer?