Reborn Industrial Tycoon

Chapter 429 Top Strategic Layout

In the late 1980s, there was a TV price war in China. This was also the first price war after the reform and opening up, and it was recorded in the annals of history.

At that time, as the people gradually became richer, the demand for home appliances in the domestic market also increased significantly, so many companies entered the field of home appliances.

Televisions, washing machines and refrigerators were all the most popular products at the time, which also led to a lot of blind investment and waste of resources.

Take refrigerators for example. Many production lines were launched at once. However, the country has not mastered the production technology of refrigerator compressors. As a result, many refrigerator companies have no compressors to use, or they can only spend precious foreign exchange to import compressors.

The picture tubes in the TV industry are not technically difficult, and there will be no shortage of supply. With sufficient supply of spare parts, domestic TV companies have opened up production, causing a massive squeeze on TV inventory.

Take Changhong TV, for example, which squeezed out 200,000 color TV sets, and together with various parts and components, it occupied 320 million yuan.

Even now, it is very stressful for a company to have more than 300 million inventory in its warehouse. In the late 1980s, such a huge inventory put Changhong on the verge of life and death.

In order to survive, Changhong asked the local price department for instructions, hoping to reduce the price of each TV to 350 yuan and clear out the inventory.

At that time, the prices of large household appliances such as televisions and refrigerators were not open to enterprises and the market, but were set by the price department. If Changhong wanted to reduce prices, it had to apply in advance.

Naturally, local governments did not want to see companies within their jurisdiction go bankrupt, so they approved Changhong's application, and the TV price war began.

Due to the sharp drop in prices, market demand was stimulated and consumers' willingness to purchase was very strong. Changhong also successfully cleared the inventory of 200,000 units.

Other color TV companies followed suit. Those weak color TV companies were eliminated in this price war, and foreign brands were also squeezed out of the Chinese market.

Changhong, which took the lead in cutting prices, also relied on this price war to become the leader in the domestic color TV industry.

Although there are certain accidental factors in this price war, if it were not for the backlog of products and the imminent break of the capital chain, Changhong would not necessarily launch a price war. However, the result of the price war is that the country has introduced new policies for the home appliance industry.

Give businesses more autonomy.

Since then, the domestic home appliance industry has got rid of the planned economy, enterprises have taken the initiative in operations, and the domestic home appliance industry has also entered a period of rapid development.

As the leader of the Planning Committee, Director Lin is naturally very familiar with this color TV price war and its subsequent impact.

Li Weidong explained: "Director Lin, we must first understand that price wars are an inevitable product of market economy. Although price wars are achieved at the expense of profits to gain turnover growth and market share, it sounds like

Drink poison to quench thirst, drain the lake and fish.

But the price war also has many benefits. First of all, consumers have benefited, the market has also been expanded, the purchasing power of the entire society will increase, and domestic demand will also increase. This should be very evident in the last color TV price war.

It’s obvious.”

Director Lin nodded. The price war on color TVs has indeed greatly increased the sales of color TVs in China. Nowadays, ordinary urban households have color TVs.

Expanding domestic demand is obviously good for the economy, and Director Lin is very clear about this.

Li Weidong continued: "Secondly, the price station can eliminate a group of low-tech, low-quality manufacturers, as well as speculators seeking short-term profits, effectively prevent duplication of investment, and enable a more reasonable integration and utilization of social resources."

Director Lin nodded again with deep understanding. Chinese people always like to follow the trend of investment. When they see any industry making money, they all rush into it. This will not only cause waste, but also be detrimental to the entire industry.

For example, there is a story that has been circulating on the Internet. It is said that in a small town, a Chinese came and opened a gas station, and the business was very prosperous. After the second Chinese came, he found that the business of the gas station was good, so he also opened a gas station.

The business was okay, but the third, fourth, and fifth Chinese came and opened gas stations, which resulted in vicious competition, and in the end everyone was left behind.

Similar situations are common even today, but they became even more common in the 1980s and 1990s.

However, due to China's large population and huge market, and with the development of the economy, the demand for various commodities continues to increase. This kind of swarm of investment is often eventually digested by the market.

As the leader of the Planning Committee, Director Lin certainly cannot wait for the market to slowly digest it. What he wants to do is to use macro-control means to promote the healthy development of the market. Therefore, he is very sensitive to repeated investments.

What the country needs is a long-term, stable market, not a market full of speculators. So when Li Weidong said that price wars can eliminate speculators, Director Lin was already somewhat in favor of this price war.

Li Weidong went on to say: "The third advantage of the price war is that it can drive foreign brands out of the Chinese market. Although our country wants to open up and should not engage in trade protectionism, I think that industrial products, such as manufactured goods, can

If you use domestic products, it’s better to use domestic products as much as possible.”

Director Lin chuckled, I really have to admit this benefit.

Li Weidong continued: "My first step in launching this price war is to achieve these three goals."

"The first step? Director Li, so you have a plan for the second step?" Director Lin asked.

Li Weidong nodded and continued: "The price war has expanded the market demand and can make the microwave oven bigger; eliminating low-level manufacturers and short-term interests can optimize the entire microwave industry. This optimization

It will be reflected in three aspects.

The first is the optimization of the management level of microwave oven companies. Companies that can survive the price war will inevitably have corporate management capabilities that are more adaptable to the market. The second is the optimization of the quality of human resources. Without enough outstanding talents, there will be no

The method promises to fight.

The third and most important point is the optimization of R&D levels. Insufficient R&D levels have always been a problem for our country's enterprises. Eliminating those companies that do not have R&D capabilities through price wars is definitely a good thing.

The core content of these three optimization points is to improve the competitiveness of national brands! Improving the competitiveness of the entire industry is the second step of my plan to launch a price war.

Price war is actually the simplest form of competition. Its core is price reduction. Price reduction will reduce corporate profits. When the price approaches the cost and the company is unprofitable, other forms of competition will inevitably appear, such as brand competition and product quality.

Competition, product service competition, product category competition, product technology competition, etc.

In order to cope with this all-round competition, enterprises need to improve in terms of brand, service, quality, technology, etc., and this will promote the improvement and progress of the entire industry, thereby improving the competitiveness of the industry.

When our national brands become competitive, we can start the third step of the plan, which is to go abroad! Go abroad, go to foreign markets, and compete with foreign brands. As long as we are competitive enough,

We can win the competition, gain access to foreign markets, and earn foreigners’ money!”

After listening to Li Weidong's words, Director Lin showed an expression of surprise on his face. He did not expect that Li Weidong had such a complete and huge idea.

But then, Director Lin said: "Director Li, your plan sounds very good, but it doesn't need to monopolize the market, right? Although our country does not have anti-monopoly regulations, at the level of regulating the economy, the country also

We don’t want to see an industry monopolized by one company.”

"You don't want to see being monopolized by private enterprises, right?" Li Weidong chuckled, and then said: "Director Lin, there is still a certain gap between our country's home appliance companies compared to big foreign brands. For example, Haier's

Refrigerators are well-known in our country, but when it comes to the international market, can they compare with Japan's Panasonic? Can they compare with Germany's Siemens?

Our top home appliance brands can indeed dominate in our own country, but when it comes to the international market and compete with foreign brands, they still lag behind in all aspects.

The same is true for the microwave oven industry. It is no exaggeration to say that in the international market, even the microwave oven companies across the country may not be able to compete with Panasonic!

In the international market, we face not only Panasonic, but also several well-known home appliance brands in Japan. In addition, there are American brands and European brands. Some brands have even developed.

After nearly a hundred years, what can we do to compete with others?

There is a saying that concentrates efforts to achieve big things. If our Chinese microwave ovens want to rush into the international market in a short time, they must concentrate all the resources across the country as much as possible. Only in this way can they compete with big foreign brands.

Therefore, I need to monopolize the market to a certain extent, concentrate domestic resources as much as possible, and then integrate them. Only when I am strong can I go to the international market to compete with foreign brands. Only then will I have a chance of winning!"

"Director Li, according to you, other domestic microwave oven companies are not qualified to go abroad and compete with foreign brands internationally?" Director Lin asked with a somewhat dissatisfied tone.

Li Weidong laughed and said: "Other domestic microwave oven companies will have such a complete strategic layout as mine!"

"Director Li, your strategic layout is indeed very good, but since you can think of it, others may not be able to think of it!" Director Lin said.

Li Weidong shook his head indifferently: "Director Lin, other companies, even for a price war, have to go to the Planning Commission to file a lawsuit against me, saying that I disrupt the market. Do you think they will formulate this kind of strategy?

?

To put it another way, even if they have formulated a long-term strategy, they can’t even win the initial price war, so how can they be expected to implement this strategy?”

In one sentence, Director Lin was immediately speechless when asked.

A group of companies that can't win the domestic price war are still expecting them to compete with top foreign brands. Isn't that just a fool's errand?

Li Weidong went on to say, "There is nothing I can do about it. In the microwave oven industry, my peers are not doing well. If I want to overtake in a corner, I have to do it myself! Director Lin, I guess the State Planning Commission has not encountered this problem either."

Can you live in my situation?"

Director Lin nodded: "You are indeed the first one who dares to block my face and say that you want to establish a monopoly!"

Li Weidong smiled and said: "Actually, microwave ovens are not an industry related to people's livelihood and economy. If you ask me to create a monopoly, at most a large private enterprise will emerge, which will not affect the overall situation!"

What's more, if my strategy can really succeed, it will definitely not be a bad thing for the country. At least it will explore a new path for the export of home appliances.

If I fail, then the country will not suffer any losses. On the contrary, it will be able to eliminate some backward companies and upgrade the microwave oven industry. Even if the industrial upgrade is unsuccessful, at least the microwave ovens will become cheaper and the people will benefit!"

Director Lin thought about it carefully, and it seemed that this was indeed the case.

The TV price war a few years ago has proved that the market will not collapse because of a price war. On the contrary, the entire industry will develop because of the price war. Even if there is vicious competition, the companies will be harmed and the profits will be cheap.

It is definitely the majority of consumers who can purchase goods at cheaper prices.

From this perspective, there is no problem in allowing microwave oven companies to engage in price wars.

The Planning Commission considers the planning and regulation of the overall national economy. Compared with this, the life and death of a certain enterprise or enterprises is not that important.

What's more, at that time, China was not the world's factory, and Chinese manufacturing did not go abroad on a large scale. If a new path for industrial exports could be explored, it would indeed be a good thing for the overall economic planning.

…

At Jufeng Microwave Oven Factory, Zhang Zhijie was holding a letter in his hand, his expression looking very ugly.

This letter is a copy of a reply from the State Planning Commission to the local price bureau. It states that after investigation, the Planning Commission found that the price reduction of microwave ovens is entirely a business behavior of the company, and that the microwave oven market is operating well as a whole, and no disruption to the market has been found.

Looking at this reply letter, Zhang Zhijie knew that his complaint strategy had completely failed.

Since filing a complaint is useless, the price war will continue. As for Jufeng Microwave Oven Factory, if the price war continues, the factory will definitely go bankrupt.

"It's time to switch to other products! At the last party, Lao Zhao seemed to say that making radio cassette players seems to be quite profitable. Middle school students should be able to use it to learn English. They can go and investigate the market..."

Zhang Zhijie let out a long sigh. He had decided to give up the microwave oven business completely and switch to other businesses as soon as possible while the factory still had some funds.

With the price war now underway, most domestic microwave oven brands cannot survive, and the sales of imported brands have also been greatly affected. The sales of many brands in China have almost disappeared.

Before this, domestic microwave ovens sold for more than 2,000 yuan, and imported microwave ovens sold for more than 3,000 yuan. The difference between the two is only 1,000 yuan. Many wealthy consumers who value brands will still choose imported brands.

Since the microwave oven price war began, the price of domestic microwave ovens has dropped significantly. Even those consumers who value foreign brands more will give priority to domestic microwave ovens.

After all, the price difference is really huge. The price of one imported microwave oven can buy two and a half domestic microwave ovens. Rich people’s money does not come from strong winds. If they are taken advantage of by asking them to spend more than twice the price, they will also

Not willing.

…

In 1994, the Chinese name of South Korea's capital was still called Seoul.

At night, when the lights were on, Director Goo was chatting and laughing with several men next to him in a private room of an entertainment venue in Seoul. In front of him, several beauties in ragged clothes were posing to the music.

If anyone who is familiar with the Korean entertainment industry walks in, they will definitely be surprised, because the beauties dancing in the private room are all popular Korean movie stars.

Director Goo is the senior managing director of LG Group, and his father is Chairman Goo, the head of LG Group.

Chairman Koo is relatively old and is expected to retire next year. At that time, the entire LG Group will be handed over to Director Koo, so Director Koo is now considered the manager of LG Group.

Director Goo was squinting at the dancing female star. At this moment, his phone suddenly rang.

"Who is so disappointed!" Director Goo snorted coldly, and then answered the phone.

Immediately afterwards, there was a burst of harsh yelling and cursing on the phone.

Director Goo's expression suddenly turned livid. He immediately stood up and shouted at the dancing female star in front of him: "Get out of here!"

The music stopped immediately, and the female star also walked out of the private room with a pale face.

Director Goo was seen holding the phone in his hand and kept saying "patiently, patiently" in agreement.

After a while, Director Goo hung up the phone, with a sad look on his face.

"What happened?" a man next to him asked.

"The call is from the old man." Director Goo continued: "I'm afraid the investment in building a microwave oven factory in China will come to a halt."

"Why? I heard that the company's board of directors is very interested in this project." The man continued to ask.

Chairman Goo sighed: "Chinese microwave oven companies have launched a price war. Selling microwave ovens in China is no longer profitable!"

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