Reborn Tycoon Rise

Xu Zhi said: "The current domestic market is indeed dominated by black and white TVs and small color TVs, but we will not and cannot participate. The higher authorities will not give us such an opportunity. Our purpose is to seize the high-end market from foreign giants. , instead of grabbing the market that has been occupied by so many state-owned enterprises. If you do this, you won’t make much profit, but you will offend a lot of people.”

In fact, in order to protect foreign exchange, the country is unwilling to open even a little bit of its domestic market to foreign countries. After all, importing Western products requires the country to actually spend its own US dollars in foreign exchange. The electrical appliance industry is not a means of production, nor is it an industry needed for national strategic development.

However, international trade has always come and gone. The mainland's economy has developed rapidly in recent years because Western countries, led by the United States and Japan, have greatly opened up their markets, allowing the mainland's textiles, clothing, food, furniture, ceramics, etc. Exports earn foreign exchange. Although at the same time, the country also stepped forward to purchase a large number of necessary development materials such as aircraft, steel and chemical production lines, etc., the purchases in these industries could only benefit a few companies, not the entire Western market. Therefore, under diplomatic pressure , it has also become necessary to appropriately open the mainland market.

However, the opening of the market does not mean that we must buy Western products. This is a game of fair competition. Just like the Japanese automobile industry, it desperately exports to the United States, but at the same time it also opens its own market to the American automobile industry, but you, the United States, Cars just can't be sold in Japan. The U.S. auto industry can only keep complaining about this outcome, but there is no reason to persuade the U.S. government to restrict Japanese cars. At most, it can force Japanese car companies on the grounds of increasing employment. Just invest in the United States.

In the same way, the same is true in the mainland. If domestic companies can defeat Western products openly, then Western countries will have nothing to say.

As for the electrical appliance industry, senior central officials are not worried about low-end products because most domestic state-owned enterprises can produce them themselves. Although the quality may not be as good as imported products, the prices are much cheaper. The only thing I worry about is mid-to-high-end products, because many families who can buy mid-to-high-end appliances don’t care about money. Coupled with the current trend in the domestic market, imported products are too popular.

Among all electrical appliances, TV is the product with the largest sales. Countless people in the country currently regard owning a TV as a goal in life. Once the import market is liberalized, no one knows how many people will buy imported color TVs.

"I am also optimistic about the current domestic market, but at present it should not be enough for us to significantly increase production!" Huo Jianning asked.

"Of course it's impossible to rely solely on the domestic market, but don't underestimate the current domestic market." Xu Zhi smiled and said: "In the past, you were only responsible for production, and the orders were all handled by the Xiangjiang headquarters, but now you will soon enter the market. In the mainland market, you have to pay more attention to some official data published in the country. Not only the electrical appliance industry, but data from other industries can also give feedback on the development of the domestic economy."

How many rich people are there in the country now? It is difficult to know this data, but some industry data are enough to make a rough guess. If importing tens of thousands of cars every year can be said to be an official need, then the air conditioning installation data is enough to judge the number of private wealthy families in the country.

According to statistics in 1985, the number of households with air conditioners installed in the country was 80,000. At that time, the price of air conditioners was very high, far more than that of color TVs. The reason why officials can know the detailed data is because in the 1980s, domestic There was a shortage of electricity, and air conditioners were extremely power-consuming at the time (houses were not well insulated at that time). In order to limit the use of air conditioners, the country introduced an air conditioner tax. Except for foreign hotels, state-owned enterprises and government departments, all other private households were required to install air conditioners. You need to pay a fee, which is about 2000-3000 yuan.

In an era when the per capita salary in big cities is less than 100 yuan, the cost of installing an air conditioner is at least more than 5,000 yuan. But even so, the number of households with air conditioners according to official statistics is as high as 80,000, not counting some secret installations and policies. There is no place to pass to.

In the same way, the sales volume of personal computers worth tens of thousands of yuan in mainland China is as high as 10,000 units, and the number of other smuggled products is even more difficult to estimate.

This is also a concern for domestic high-level officials. Although domestic wealthy families have money, it is only in RMB. Once they purchase large quantities of imported electrical appliances, they will also consume the central government’s stretched foreign exchange reserves. This money could have purchased the production of a large number of strategic materials. materials and high-end technology products.

In the original history, in 1985, the mainland imported a total of 5.09 million TV sets worth US$993.9 million. In 1984, this figure was only US$254.92 million.

If compared with other materials, in 1985, the import of cars was US$470 million, the import of trucks was US$980 million, the import of medical equipment was US$210 million, the import of industrial machine tools was US$137 million, the import of ships was US$550 million, and the import of pharmaceuticals was US$96 million.

Throughout the year, only soda ash, chemical fertilizers, steel, and complete sets of enterprise equipment (purchased for key national projects) had more imports than TV sets. While the first four items are necessities for national strategic development, TV sets are just luxury items. This is A big waste.

More importantly, the official data are only figures from formal channels, and some TV sets entered through other channels. Because in 1985, Japanese official data showed that a total of 6.48 million TV sets were exported to the mainland, with 820,000 TV sets exported to the mainland. Singapore has 210,000 units, Spain has 210,000 units, and the data for other countries is ominous. In other words, the number of smuggling activities captured by the exporting country may not be less than 3 million. In addition, there are also some importing and exporting countries that are not aware of it. No one knows how many there are.

One TV set caused the country to lose at least US$1.5-2 billion in foreign exchange. To take a step back, how many lives could be saved if the foreign exchange was used to purchase imported medicine and medical equipment?

This is also the reason why Xu Zhihui was notified of this policy in advance. The country also intends to support Midea Company, not because its boss is Chinese, but because Midea's factories are in China, and it is cheaper for Midea. Partial foreign exchange.

"I will pay attention to this information in the future." Huo Jianning said: "However, we also have a joint venture factory in Shanghai. They have direct authority to enter domestic sales. I think the central government may require us to expand the scale of that factory. "

The Midea factory in Shanghai is a joint venture factory. Half of the products are imported into the mainland and half are exported, forming a foreign exchange balance. However, the scale is not large. The annual output of color TVs is about 500,000 units, which is less than a fraction of Shenhai City.

"It's also possible that this is actually the process of future negotiations. Of course the Shanghai Stock Exchange wants us to expand their scale, and the Shenzhen Stock Exchange may not be willing to let go. Besides, we also have a certain say in this aspect. How about the specifics? Let’s talk about it in Beijing.” Xu Zhi paused and then said: “The fundamental reason why I asked you to continue to expand production capacity is that I am preparing to start a price war!”

"Price war!" Huo Jianning was a little surprised.

Xu Zhi said: "Yes, you have been in the mainland for the past few years and do not know the company's overseas development. The rise of our Midea company has actually touched the cake of many Japanese colleagues.

These people are using their influence on the government in Japan to restrict Midea's development. That's all. Now they have extended their hands to the United States, intending to get the U.S. government to target us. Fortunately, I also have certain partners in the United States. , In addition, the U.S. government does not want Japanese products to invade the United States too much, so it ignores them. "

Huo Jianning understood: "So we have to fight back in their main market?"

"Yes, these people will never stop until they are hurt. Be prepared. This price war may last for ten years, and it is not just in the United States. I am prepared to spread it all over the world and fight at the same time." Xu Zhi said calmly.

Does the electronic base in Shenhai City make money?

The answer is very profitable.

Ten million color TVs are exported, with a net profit of about US$20-30 per unit, and a net profit of US$200-300 million a year. Within the entire Midea Group, the proportion is not small.

But this is only now. In the future, the field of personal computers will grow explosively. Even if the achievements in hardware are difficult to control, in terms of software, Word, Excel, PPT and other software have almost monopolized the entire market, and have registered extremely strict regulations. Patent barriers make it almost impossible for latecomers to keep up. At the same time, Midea's software department is still researching some future products, such as industrial 3D software, ERP management systems, image processing software, etc...

Not to mention that he holds 20% of Microsoft's shares. Even if Microsoft goes public in the future and the shares are diluted, by the 1990s, the market value will be at least tens of billions of dollars.

In the field of games, the 1990s were also the hottest time. Even if it cannot compare with computer software, it will be much stronger than household appliances.

From the beginning to the end, the main purpose of entering the field of household appliances is not to make money. From the huge purchase of raw materials - jobs in production control - logistics and transportation - the number of employees in the terminal market, these are all just to increase their impact. force.

In order to increase your influence, of course you have to expand your market. In this mature market, unless there is a historic technological breakthrough such as smartphones replacing feature phones, the only option is price war. At the same time, you can crack down hard. own competitors.

Once a price war starts, it will be difficult for any competitor to use official power to stop it, because it will benefit the people and increase capital flows and tax revenue at the same time. No official will forcefully intervene in such a thing.

As long as it can occupy enough markets and at the same time attack its opponents and force some of its opponents to withdraw from the industry, the profits will be returned several times after the LCD era.

As for the LCD era, will the huge industrial bases in Shenhai City or other cities suffer losses?

Under normal circumstances?

meeting!

But in mainland cities like Shanghai or Deepsea, with such a large area of ​​land, it is estimated that even the losses caused by the price war for more than ten years can be recouped...

"I see, but I heard that prices in the chip industry have plummeted recently, and they are having a hard time." Huo Jianning said with a smile. There are many chips in household appliances used in Shenhai City, and he is very aware of the price fluctuations in the international market.

"That's just right. I like to do things that add insult to injury." Xu Zhi laughed, because too many electronic companies had entered the chip manufacturing field before, and even the booming personal computer market could not absorb so much chip production capacity, so, After entering 1984, global chip prices plummeted.

It was at this time that, in order to occupy the market, Samsung Group started a counter-cyclical price war. With the help of the Korean government, it made its Japanese electronics counterparts cry and withdraw from the field of memory chip manufacturing.

With Samsung making waves in the memory chip market, Midea can also start in the electrical field. With Shenhai City's current tax-free + low-labor cost advantages, even if it maintains zero profit, it can make other electrical companies want to die.

TVs are mature technology products. Whether they are from Japan, the United States or the Mainland, as long as they are well controlled, the scrap rate will not be very high. This is completely different from LCDs and chips. The reason why Japanese electronic technology is so developed is because of the scrap rate. Very low control.

But in the field of home appliances, the most important thing is cost. This is also the reason why Samsung can rise in the low-end TV market. South Korea's labor force is far lower than that of Japan.

Even if Japanese counterparts find that costs are lower in the mainland in the future, it will be very difficult to transfer all their factories there.

Xu Zhi continued: "With Midea's current market share, under normal circumstances, your factory in Shenhai City has enough production capacity, but once the price war starts, you must provide sufficient supply, otherwise it will become a joke. Food and grass go first, and only when you are ready can the price war officially begin."

"I understand. I will place an order with the equipment supplier immediately. As long as the new factory site is decided, there is no need to worry about the efficiency of the mainland government in terms of infrastructure. In this case, the new assembly factory can be built next summer, but the color The picture tube factory may take longer, but in the early stage we can supplement picture tubes through international procurement." Huo Jianning assured that the home appliance industry is only a light industry after all, and as long as there are enough funds, a production base can be set up soon, at least Assembling the workshop is simple.

Xu Zhi asked: "Are the suppliers of production equipment all foreign companies?"

"Yes, although there are companies in China that can produce color TV production lines, they cannot meet our requirements in terms of technology or scale." Huo Jianning replied.

"That's true." Xu Zhi frowned. At present, China even needs to purchase the production lines of its own state-owned enterprises, let alone take over Midea's production lines.

"Is the chairman worried that Japanese companies will find problems in our procurement data?" Huo Jianning saw the problem.

"Yes, if they know this kind of thing in advance and are prepared, even if the price war will hit them, their losses will be reduced a lot." Xu Zhi also has a headache. Even the current production capacity of Shenhai City is basically insufficient. It's impossible to hide it, and it's better to build infrastructure. After all, in the mainland, Japanese electrical appliance companies may not be able to know if they don't pay attention, but basically all peers know about the large-scale purchase of production lines from overseas markets.

Huo Jianning thought for a while and said: "I think we can find a factory in Europe to build a production line. The Japanese business in Europe is not developed. As long as we control the good news, Japan will probably have to wait until the production line arrives in China. They may know it, but even if they know it by then, it will be too late, but in this case the cost will increase.”

"It doesn't matter, it doesn't matter if the cost is higher, it doesn't matter if it's more than 10%, just do it." Xu Zhi nodded in agreement. Under normal circumstances, a production line worth hundreds of millions of dollars would definitely be subject to bidding. This is the best way to reduce costs. Now it is done secretly and requires the manufacturer to keep it secret, which naturally costs a little more money.

Huo Jianning said: "Okay, then I will send a few teams to Europe tomorrow."

"Okay, let's do that. It's going to rain. I'll go back to the hotel first." Xu Zhi stood up.

Huo Jianning also stood up and said, "Then Chairman, I'll see you off!"