Liu Chuanzhi will not let Feng Yu wait for too long. In fact, he was the one that does not want to wait. The earlier Feng Yu invest into Lenovo, the easier they could get the approval for their listing. Also, their share prices will increase higher.
For a listed company’s shares to rise, a good company development plan is required. If the company does not have the necessary funds, what’s the use for the development plan?
Although Lenovo was only getting listed in Hong Kong, their main business in Hong Kong were servers and PC. If Lenovo were to announce they had advanced CD-ROM technology and their PC business will improve and achieve high profits, the share prices will rise.
After Liu Chuanzhi reported to his leader, the leaders held a meeting to discuss this. Their conclusion was they agree to let Feng Yu invest in Lenovo using cash and technology. But they want Liu Chuanzhi to evaluate the value of the technology carefully.
Since the higher-ups had agreed, Liu Chuanzhi and the rest of the founders had a discussion to evaluate the CD-ROM technology before calling Feng Yu.
“Manager Feng, our main shareholder had agreed for you to invest with technology and cash. Let’s discuss how much your CD-ROM technology is worth.” Liu Chuanzhi did not beat around the bush.
“How much do Chairman Liu think the most advanced CD-ROM technology is worth?” Feng Yu asked/
To Feng Yu, this technology was not very valuable as Aiwa had not spent too long to develop it. Aiwa had been developing CD and VCD technologies. Not much effort was put in developing this technology, and Feng Yu had not spent much to buy this technology from Aiwa.
“1 million?” Liu Chuanzhi asked.
“1 million USD? At least 5 million USD!” Feng Yu purposely said.
“Manager Feng, I am talking about RMB!” Liu Chuanzhi said.
We had been using RMB in our negotiations, and you should know about this. Even if we were to buy the rights to use this technology, it would not cost so much. 5 million USD? Why don’t you go rob a bank?!
“RMB? 1 million RMB? I think you are not sincere. Do you still need me to state how important this technology is to Lenovo? Increased storage space is the direction of all PC companies are heading. You want to deny this? Not many companies in the world have this second-generation CD-ROM technology. Do you think those western companies will sell the rights to you? Even if they are willing to sell, how much do you think it will cost?” Feng Yu laughed and said.
Although Feng Yu had not spent much on this technology, it still cost 200,000 USD. Covert to RMB, it was also more than 1.1 million RMB. Even if Feng Yu was not looking for profits, he also does not want to lose money. If Lenovo were to develop this technology themselves, they would need at least 5 million RMB!
“Manager Feng, technology changes very fast. That’s why we need to discount on our prices. But even if we had offered a lower price, this technology is also not worth 1 million USD. Let alone 5 million USD!” Liu Chuanzhi was not happy with Feng Yu’s counteroffer.
“If you look at the technology alone, it might not be worth 5 million USD. But for Lenovo, this technology is worth this price! With this technology, Lenovo will be able to produce a better PC. A PC with CD-ROM drive can sell much higher than those PC with only Floppy Disk drive. The profits from this deal are very high.”
Feng Yu was not talking nonsense. CD-ROM was a new thing, and people will feel this was very hi-tech. The storage capability was a few hundred times more than a floppy disk. It was suitable to store lots of documents. Most of the organizations that buy computers now were the banks and government agencies. They had lots of data, and floppy disks will not be enough to store their data.
With CD-ROM, Lenovo will be able to develop newer and bigger markets. This was very important to Lenovo. Furthermore, with the CD-ROM drive, the profit margin of their PC will be higher.
“Manager Feng, this is only what you said. Are you able to show me the figures to prove you are right?” Liu Chuanzhi could not agree with Feng Yu’s price.
“You want figures? Then I will show you the figures. This is the production cost of the C-ROM drives. This is the price difference between a PC with and without CD-ROM drive. This will show you how much profits you can get from CD-ROM drive. This is the sales figure of PC with CD-ROM drives in Hong Kong. From the trend, you should be able to tell that the market demand is increasing. As our data continue to grow and increase, who will still want to use Floppy disk to store? Moreover, CD-ROM can be used to store videos. Can floppy disk do that? It would be hard for a floppy disk to store even one song.”
Feng Yu had conducted market research. He had spent some money to tabulate this data about Hong Kong’s PC market. This was the reason why he dares to ask for high prices.
“This is only Hong Kong’s data. It does not represent other places. Our biggest market is China. China and Hong Kong had vast differences.” Liu Chuanzhi said.
“Chairman Liu should know clearly how much this technology is worth. But I do not want to talk about this anymore. If Lenovo is able to let me increase my investments, I can give this technology to Lenovo for free!” Feng Yu smiled.
Feng Yu wants to use this technology to induce Liu Chuanzhi. Feng Yu’s objective was to own more of Lenovo’s shares. Even if he can’t be the major shareholder, he still wants to be the second shareholder.
Liu Chuanzhi looked at Feng Yu. What does Feng Yu mean by this? How much did Feng Yu want to invest, for him to give this technology to Lenovo for free? Feng Yu wants to be the controlling shareholder?
“Manager Feng, you kept saying that you want to increase your investments. How much do you intend to invest and how much shares do you want?” Liu Chuanzhi asked.
“Chairman Liu, don’t you think that you own too little Lenovo’s shares? Lenovo could get to where it is today is all due to you and the rest of the founders, right? Do you know how many shares my engineers and researchers own in my companies? I gave Old Jiang, Jiang Wanmeng, 4% of the company’s shares. I gave 10% shares to those engineers at Aiwa pagers. They do not even have to pay a single cent. Do you know how much are their monthly salaries? 10,000 RMB a month!”
Errrr…. Only the head gets 10,000 RMB. The rest does not reach such high salaries. Those normal engineers only get 200 RMB a month. Feng Yu did not say this too clearly. He wants Liu Chuanzhi to misunderstand his words and disrupt his thoughts.
Liu Chuanzhi was dumbfounded as he looked at Feng Yu’s raised index finger. What? Feng Yu gave his engineers so many shares?! Old Jiang and the rest own the company’s shares, and their salaries were 10,000 RMB a month?!
Although Liu Chuanzhi was from CAS and set up Lenovo, as the head of the company, his salary was only about 1,000 RMB a month. This was still using Hong Kong’s standards. If his salary were to follow the pay scale of China, it would be less than 300 RMB!
The salary differences were 10 times, and shares were several times more. Liu Chuanzhi could not calm himself down. He remembered the grumbles of his colleagues who had worked hard with him to set up Lenovo. All of them felt that CAS had given them too little shares. Now, Liu Chuanzhi really want to speak to the leaders at CAS about their shares!
Wait, why was Feng Yu telling me these? Could it be that he will give us some shares after he invested in Lenovo? He wants the controlling stake?!
