Chapter 95: Ma.s.s Production Is Achieved
Translator: Nyoi-Bo Studio Editor: Nyoi-Bo Studio
Chen Jin understood the meaning behind Brother Lei’s words. Da Mi Technologies’”Love Mi Cleaning Robot” was similar to the “Rock Robot.” It also made use of the technical data rights of Xing Hai Technologies. However, learning from the mistakes made by Rock Technologies, Brother Lei was obviously a more decent human being. He had a much better sense of boundaries than Cheng Yun Feng. Not only did he personally call him to talk things over beforehand, he even expressed that he was willing to fork out the fees to buy the exclusive rights, hoping to use money to solve the problem.
He had sufficiently expressed his sincerity. The issue here was… Did Chen Jin lack for money? Was it necessary that he go along with the desires of a notable personage that he respected so as to save his face? After some thought, he said, “President Lei, allow me to ask you a question. What’s the estimated hardware cost of one ‘Love Mi Cleaning Robot?’ After its launch, what is the market price?
President Lei felt very awkward about answering this sensitive question. “Um…”
“President Lei, if you don’t even reveal the two conditions a wee bit, I’m unable to discuss the technological exclusive rights with you… You can simply give a rough estimate to the two questions.”
“Ok, the hardware costs of the ‘Love Mi Cleaning Robot’ is similar to the Wa-wah robot. It’s around $2,000. It’s selling price is also similar to the Wa-wah robot. It’ll not be lower than $3,599! We’ll maintain our high performance to price ratio, but we cannot make a loss as well.”
It was a big business taboo to reveal the fixed selling price! Lei Xiao Jun also understood the meaning behind Chen Jin’s words. He was evaluating the level of threat that the “Love Mi Cleaning Robot” presented. But, in terms of pricing, the “Love Mi Cleaning Robot” really did not present much of a threat. He was also puzzled and doubtful. Did Xing Hai Technologies plan to follow the development path of Da Mi Technologies? Was profit not their first priority and they only wanted to make a friendly relations.h.i.+p?
Since both of them only wanted to become friends and not focus on making profits, it was harmless to reveal some information in advance.
“Does your company use imports for the two core components of the brushless motor and the mechanical mobile parts?”
“Yes, they are all imported from j.a.pan, they are too expensive! The brushless motor costs $350 and the mechanical mobile parts cost $400. Put together, the two parts cost almost $800! I was wondering which two domestic companies provide you with the two core components that your company is using? I’d sent people out to get information on this, but they’ve found nothing. President Chen, would you care to reveal a little information on this? I’ll be very grateful!”
Chen Jin was very surprised. The hardware costs were only around $2,000. Moreover, this was achieved at a time when the two components were imported from j.a.pan at inflated price conditions. It was evident from this that Da Mi Technologies possessed great control over its upstream supply chain! All major profitable corporations, for example, Fruit and Hua Yao, possessed an extremely high level of control over their supply chains. There were still many things that Xing Hai Technologies had to learn.
Taking into account Da Mi’s size and the various intermediate costs that it would incur, the price of the “Love Mi Robot” would be much higher than the Wa-wah Robot! Xing Hai Technologies was a smaller company, thus it was more flexible and had a faster reaction. Its final selling price was fixed at $3,599, which would only generate the smallest of profits. In terms of its price to performance factor, it was not much higher than Wa-wah Robot 1.0.
He further considered the fact that the production of Wa-wah Robot 1.0 had been stopped and the Wa-wah Original 1.0 would soon be launched. After some thought, Chen Jin said, “President Lei, how about this? Let’s be friends. The cost for the exclusive rights to the technology behind the ‘Love Mi Robot’ would be $100 per unit sold. The rights would last for five years. After five years, it will be free. Alternatively, you could buy it outright for a lump sum of $500,000,000. You can choose either option.” Chen Jin proposed exclusive rights of five years as he had predicted that the inferior imitations would saturate the market in five years. He would not even be able to win any lawsuits.
The copyright authorization fee of $100 per unit sold was neither expensive nor cheap. It was about 3% of the price of a “Love Mi robot.” The cost of the exclusive rights to Qualcomm’s 3G/4G technology was 5%, which had been denounced by countless companies as “bloodsucking.” This had caused Fruit company and Qualcomm to part ways. 3% was more reasonable pricing. Moreover, if he had priced it above $100, it would have been pointless for Brother Lei to call him for a discussion on this matter.
That was right. He had to go along with the desires of the bigwig and not offend him! With Brother Lei’s prestige, position, ma.s.s appeal, and network of relations.h.i.+ps in the tech community, having a good relations.h.i.+p with him would only bring about great benefits! It was no big deal even if he offended a notable personage in the industry. If he offended him, then so be it. Chen Jin was not afraid of his retaliation. But, more friends equate to more options and solutions available to him in the future. More enemies would only mean more future obstacles. He was fine with earning fewer profits. A good reputation would be a huge support for him.
“Ok! That would work. I choose the first option of paying $100 per unit for the exclusive rights to the technology. President Chen, I am very grateful for your understanding. Really, I am very grateful!” President Lei thanked him profusely. Logically speaking, he should have chosen to outright buy the rights for one lump sum. But, Da Mi was used to days of being tight on money. He rarely paid for transactions in a lump sum. Often, he had to organize a publicity blitz or product campaigns to attract attention and then profit from those. Moreover, if the “Love Mi Robot” could not sell more than 5 million units, he would make a loss.
The matter of copyright authorization was resolved.
Regarding the core components, Chen Jin finally added, “President Lei, you can consider reducing your imports of brushless motors from j.a.pan. Recently, the supplier that is working with Xing Hai Technologies is in the process of expanding its manufacturing capacity. Very soon, it will be ma.s.s producing high-quality brushless motors. I can help you to contact this company. Their pricing will definitely be favorable… But, the upgrade in the manufacturing capacity for the mechanical mobile parts will not be complete so quickly. You’ll have to wait a few more months.”
The profits should not be allowed to go to others. Rather than letting the j.a.panese profit from the sale of the core components, why not scoop this business up for himself? For example, a brushless motor weighing 60 grams would only cost about $50 to produce. If he sold each unit for $280 to $300, he would profit at least $200 from one unit! The profits generated from the mechanical mobile parts were similar. If he sold these two types of components to Da Mi, not only would Youying Motors and Bi Long Technologies receive more orders, Chen Jin would also profit greatly from it. In addition, he would be receiving the fees for the exclusive rights. Without doing a single thing, Chen Jin would profit $300 or more for each “Love Mi Robot” sold by Da Mi. He even hoped that more “Love Mi Robots” would be sold.
This clearly showed that mastery and control of the technology behind the core components was akin to the possession of a cash cow. He did not have to worry about not making any money.
“That’s great! President Chen, you’ve done me a huge favor, I’ll be sure to treat you to a meal in the future!” Lei Xiao Jun was very pleasantly surprised. President Chen of Xing Hai Technologies was an agreeable person with an amiable temperament. He also had a very nice personality. He was someone who was worth cultivating a deep friends.h.i.+p with!
“Hahaha, Brother Lei, when that time comes, I’ll be treating you!”
…
Not long after ending the call with President Lei, at Youying Motors Company in Youxi City, the first lot of high-quality brushless motors had successfully been manufactured on the new a.s.sembly line after nearly two months of hard work all day and night.
Everyone inside the factory broke out in loud cheering.
“We’ve succeeded! We’ve succeeded!”
“We’ve made the best quality brushless motor in the world! We’ve broken the overseas monopoly of this product!”
“We’ve become the best brushless motor manufacturing factory in the country!”
After many days of continuous struggle, the factory manager, Zhang Dawei had severely bloodshot eyes. Suddenly, he held his head in his hands and cried loudly, “I’ve succeeded, the thing I’ve dreamed of has been realized! The path that I’ve persisted on walking was not wrong. I’m not an idiot with a hole in my brain. Boo hoo hoo!” The man who was almost 40 years old, was crying like a child.
“Bro, way to go! You did very well. You’ve always been our pride!” His younger brother, Zhang Xiao Long, repeatedly patted his shoulders in comfort. His eyes were also sparkling with unshed tears. This was a moment where a small sector in Z country finally caught up to the most advanced standards of the overseas sectors. This was a moment where dreams coalesced into reality. This moment was also the highlight of their lives.