Chapter 872 – Impenetrable new market
“Brother Fu, how is the progress?” It’s been a week since Feng Yu returned to Seattle, US. During this week, he drops by Microsoft once and watched 2 NBA matches. Shawn Kemp is really a great player!
It’s not that Feng Yu had nothing to do. He was waiting for Fu Guangzheng’s news of launching Wind and Rain mobile phones in the US, as he had engaged the services of Fu Guangzheng’s trading company to introduce his mobile phones in the US market.
A mobile phone is an electronic device, but it’s different from VCD players. The target customers of mobile phones are individuals and not families.
The Fu family’s sales distribution channels in the US are the local distributors, and some of them are dealing with telecommunication devices.
Also, the US is Motorola’s home ground, and during the peak of the mobile phone era, 9 out of 10 mobile phones sold are Motorola phones. Even with the emergence of European and Japanese mobile phone brands, Motorola still holds the position of the number one mobile phone brand in the US.
The local distributors had worked with the Fu Family for years, but they still imposed harsh conditions if they were to bring in Wind and Rain Mobile phones.
The distributors felt that there were too many mobile phone brands in the market, and there’s still Motorola at the top. On the other hand, Wind and Rain Mobile phones are still an unknown brand and there’s still no aggressive marketing campaign to bring up brand awareness. Thus, it will not sell well.
Although the distributors felt the exterior designs of Wind and Rain phones are attractive, the functions are not outstanding. Furthermore, Wind and Rain phones are imported products and coupled with the tax, the phones will have no advantages in the prices.
In the telecommunication sector, there is still a significant gap between Wind and Rain and Motorola. The functions of the phones from both companies were about the same, but Wind and Rain phones will lose out when it comes to the pricing.
This product will not sell well in the US, and the distributors had to put in the same effort as the rest of the brands to promote it. Therefore, they had to set harsher conditions.
Fu Guangzheng, who was sitting opposite Feng Yu, shook his head and sighed. “It’s not going well. We are unable to fulfill the conditions set by any of the distributors unless we sell them at a loss. But it’s useless too. If Motorola got mad, they might start a price war, and our phones will be left on the shelves!”
Motorola is the world’s leading telecommunication company, and it’s easy for them to attack any new mobile phone brand. Even Europe’s top mobile phone company, Nokia, cannot be compared to Motorola in the US.
This is different from Feng Yu attacking Motorola in China. In China’s telecommunication market, Motorola is also the leader, and Feng Yu had to use his connections and economic advantages to sell his phones at lower prices for the market share. In the US, Wind and Rain do not have these advantages!
“What did the distributors say about our phones?” Feng Yu asked curiously.
“Lack of varieties, brand awareness, supply, advertising, prices, etc.” Fu Guangzheng was feeling helpless. He had used Wind and Rain phones and knew it is a good phone. Also, the size is small, and the exterior is attractive. But the disadvantages pointed out by the distributors are facts.
It’s not easy to market a new brand, let alone a new product in a new market. Wind and Rain’s brand awareness is useless in this new market.
If Wind and Rain introduce home appliances, it’s the brand will play an important role. But consumers will not pick Wind and Rain mobile phones and without advertising and marketing, it will not sell well.
Wind and Rain mobile phone’s production is low because they must supply to the Chinese market, and only a small number of phones are exported to the US. Advertisements might increase sales, but in the end, Feng Yu will still suffer losses.
Feng Yu kept quiet and thought hard on what he should do. He had to think of a solution.
Fu Guangzheng said softly. “If we have a factory in the US, all these problems will be solved. We can make slight changes to the exterior designs and come up with different models of phones, and our production cost can be lowered. After that, we can increase our marketing, and those distributors will not ask for such harsh conditions. They might even take the initiative to contact us.”
Feng Yu thought to himself. Set up a factory in the US?
Feng Yu had thought of this before but had hesitations, as the wages in the US is much higher than Russia and China.
Feng Yu had just spoken to Kirilenko and had spent a lot on setting up 4 factories in East Europe. The mobile phone market is still not developed yet. This market will bloom at around the year 2000 and mobile phone sales will rise rapidly for the next 10 years, before going into the smartphone era.
Is it too early to set up a factory now?
Fu Guangzheng saw Feng Yu hesitating and was curious. Setting up a factory in the US or Canada is the best solution. Although the wages are higher, the tax, transportation cost, etc. are lower. Also, this is a significant market, and China’s production cannot meet the supply.
The Chinese factories can only cover the Asia market, and it’s more worthwhile to set up factories in the West.
Fu Guangzheng does not believe Feng Yu is short of funds. Feng Yu can easily get an astronomical amount of loan from the bank with just his Microsoft shares.
Fu Guangzheng is thinking of getting a share if Feng Yu were to set up a new factory in the West.
“Brother Fu, do you have any connections in Brazil?” Feng Yu asked.
It’s more worthwhile to set up factories in developing countries because of the low labor cost. Labor cost is a significant factor in the production cost.
Fu Guangzheng shook his head. “You want to set up the factory in Brazil? I don’t suggest this. Although the labor cost in Brazil is lower, Brazilian workers are not efficient and the public security there is too poor. Without the help of an authoritative figure there, you will suffer massive losses. You can also forget about making use of China’s diplomatic relationships. China and Brazil are not on good terms.”
That means I need to pick a place where public security is good and can influence the US market. Then I can only set up the factory in the US? Wait… I can also set up a factory in Canada. Superman Li and his family have a significant influence on Canada.
“Brother Fu, wait a while. I will call Brother Kai now. He should have connections in Canada.”
Feng Yu had decided to set up a factory in North America. One or two factories have no impact on his funds, and more importantly, this will let Wind and Rain Mobile phones penetrate the US market.
In China, Feng Yu is not afraid of any world-renowned companies. Even in the US, Feng Yu was determined to be number one!
Fu Guangzheng was disappointed. If Feng Yu were to cooperate with Li Zekai, he would be out of the picture.
