Chapter 1203 – Teaching Fatty Huang
In the afternoon, Feng Yu started scrolling through the forums in his office. Tomorrow is New Year’s Day. Many of his employees from other places, including the higher management staff, are on leave. That’s why he, as a ‘local,’ remained. Anyway, he had nothing to do too.
“Boss, there are some people downstairs wanting to meet you. They are the DVD factories’ bosses in China, and had come from Guangdong.” Wu Zhigang reported.
Wu Zhigang is the Deputy General Manager of Tai Hua Holdings now and is stationed in Beijing. He is one of the first few who followed Feng Yu, and many people said he had mastered Feng Yu’s style. His temperament is too similar to his Boss.
When Wu Zhigang is in a good mood, he doesn’t mind giving the other party more profits in cooperation. But when he is in a bad mood, he will ignore you even if you are giving him money!
If this is any other company, Wu Zhigang might not qualify to be in the middle management, let alone the top management. But in Tai Hua Holding, this is not a problem.
Firstly, Wu Zhigang has a good memory like Feng Yu. He can remember the names of everyone he met and takes his work seriously. He is fair to all the staff and is the one who sets high bonuses for them. Feng Yu had instructed him to issue a certain percentage of their annual profits as bonuses to the staff and allocate according to their contributions.
“What do they want?”
“They want to speak to you. Wind and Rain Electronics and Aiwa Electronics had introduced HD DVD players. They are asking if we can lower the authorization fees for the other DVD patents. I can tell they are struggling and want to seek help.” Wu Zhigang replied.
In Guangdong, there are more than 50 DVD manufacturers. They supply to the Chinese market, but they also export to the rest of Southeast Asia. Feng Yu had set lower authorization fees to the domestic factories, and with the cheap labor cost, their cost is not high. As such, they can set competitive prices.
But as more people started using PCs, most people prefer to buy PCs as it comes with optic drives. They can also watch movies but on a smaller screen. The common monitor is only 17 and 19 inches, and 14 inches had just been obsolete. The 21-inch monitor is just starting to become popular.
There are too many factories in Guangdong, and it is very competitive. This resulted in rising manpower costs. Sony and other Japanese brands had also lowered their DVD players’ prices, causing Wind and Rain, Aiwa, and Philips to lower their prices. Hence, these factories lost their competitiveness.
This might be fine for a short time, but they cannot survive if this carries on. In a year, at least half of the factories will shut down. Their goods cannot be sold, and even if they sell, it will be at a loss. The more they produce, the more losses they suffered.
“Call them up. No matter what, they had helped us introduce DVD in the past. If they are really facing difficulties, we can lower the authorization fees further.”
Feng Yu can let these factories shut down and acquire them to produce HD DVD players. This will be the best for him, but Feng Yu did not do this. They are his fellow countrymen, after all. Of course, it still has to depend on these bosses’ character. If they are driving luxurious cars, living in big bungalows, but is not paying their workers because their factories are not making money, Feng Yu definitely not help them.
Around twenty to thirty people entered Feng Yu’s office. Feng Yu’s office in Beijing is not that big to accommodate them, and he brought them to the meeting room.
Feng Yu took a sip of tea and looked at the bosses with a smile. “You all look familiar. I can remember some of your names. What is it do you all want from me?”
Feng Yu puts down his teacup. Those bosses looked at each other, and no one wants to the first to speak.
“Fatty Huang, we had been doing business for around ten years. Are you the one who brought everyone here?”
Fatty Huang had started dealing with Tai Hua Trading when Feng Yu was selling electric fans, followed by the humidifier, bladeless fans, motorcycles, cars, etc. He is selling almost all of Feng Yu’s products. As the distributor for Guangdong, Hainan, and Guangxi, he had made at least a few billion RMB now.
Furthermore, Fatty Huang had also set up VCD and DVD player factories and had made a lot of money then. The rest might be struggling, but Fatty Huang is definitely not one of them.
Fatty Huang smiled. “Manager Feng, I had only said I want to seek your help, but they insisted on tagging along. You must trust me. I am not here to create problems for you.”
Feng Yu rolled his eyes. If Fatty Huang is an honest businessman, has a good reputation, and is also his long-time partner, Feng Yu will never believe him.
“Manager Feng… these other countries are no longer producing VCD players, but we car still producing. Can the patent authorization fees be lowered? We really have no choice as we are not making money now.”
“There’s no need to produce VCD players anymore. Alright. I will lower the DVD authorization fees by half for you all. Hmmm…. The Super VCD patent fees will also be lowered by half. Wind and Rain and Aiwa’s Super VCD will stop production tomorrow, and you all can share the market.”
The Super VCD and DVD players can play VCD disc, but VCD players cannot play the higher-grade disc. That’s why there’s no point in producing VCD players anymore. Feng Yu knew these people want to enter the village market, and they should be selling Super VCD players. If not, those villagers might buy the cheapest player but cannot play any discs.
Fatty Huang and the rest are overjoyed. “Thank you, Manager Feng. We are also thinking of stopping VCD players’ production and only produce Super VCD and DVD players. Oh, when can we get the authorization for producing HD DVD players? Also, how much is the patent fees for encoding disc?”
“I can only sell the authorization to you all next year, and the pricing will depend on the market then. But my suggestion to you all is to try to switch to another business. You all had not to build your brands and will not grow big.”
Feng Yu shook his head. These people are third-tier businesses and only depends on pricing, and their risk resistance is too weak. If he did not lower the authorization fees, at least half of them will go bankrupt within a year!
The rest looks at each other and doesn’t know what to do next. At least they can still make money for the next three to five years by selling HD DVD players.
They would accumulate a few millions after three to five years, and it’s not too late for them to switch trades.
Everyone left, but Fatty Huang remained.
“Manager Feng, what do you mean by switching to another business? Can you give me some guidance?”
“Your workers are not bad, but they have no advantages in other areas. You should focus on their forte.”
Increase my workers’ advantage? Fatty Huang looks at Feng Yu blankly. He doesn’t get it.
“OEM (Original equipment manufacturer). Do you understand?”
Original equipment manufacturer
