Chapter 103 – The Development of the Machinery Company
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Before Feng Yu had the time to go to the city to prepare the paperwork, he received a call from the Machinery Company that there will be a meeting at 10 am with regards to the arrival of businessmen from other places.
Feng Yu does not interfere with Machinery Company’s sales as their sales channels were more established than what Feng Yu expected. Their sales personnel did not even need to do sales visits. All they need to do was to make some phone calls, and there will be foreign businessmen coming over to visit the company.
Li Mingde had instructed his staffs to tell other parties that the Machinery Company was now manufacturing China’s most advanced agricultural machinery. The design and quality were all above average, but the price was only slightly higher.
Businessmen knew that these products will bring them lots of profits and came rushing over. This was also considered a big deal for the Machinery Company and must inform Feng Yu as part of their procedures.
Fu Guangzheng, on the other hand, was not too bothered by these matters. He was not worried as he had hired someone to monitor and audit the finances. Furthermore, Feng Yu was there to take care of things.
Feng Yu wanted to go and look at the development of the Machinery Company. If there were any problems, he would voice out immediately. This concerned the future of the company!
This time, the Machinery Company had mainly produced plowing machines. It includes the spare parts. These products would be very popular in Spring.
In the meeting room, all the leaders in the Machinery Company were beaming with joy. Yesterday they had shown some samples, and they were surrounded by customers. Their sales prospects were looking good!
“Everyone, now we are going to discuss the pricing. First, it is the supplier prices and second would be the retail prices. Please speak your mind if you got any suggestions!” Li Mingde already had a price in mind, but he was saying these to be ‘democratic’.
In the past, these subordinates would either refuse or say some ambiguous answers. In the end, everyone would use the prices on a piece of paper, which Li Mingde passed around. But today, it was different. After he finished asking, someone spoke.
“I think we can set the wholesale prices, but there is no need to set the retail prices. The market is developing fast now, and if we were to set the retail prices, especially if we set the retail prices too high, it would be hard for us to capture the market share fast!” Feng Yu looked at Li Mingde and said.
Li Mingde looked at Feng Yu unhappily and said: “Xiao Feng, you don’t understand the market well. The quality of our machines is better and more durable. Of course, we must price it higher.”
Feng Yu shook his head: “General Manager Li, I feel that these wholesale prices are also very high. What is the most important thing for us now? It’s market! If we are able to push our products to the whole China and let our Bing City Machinery Company’s brand position in the minds of the consumers, then it’s worth it even if we had to suffer some losses now. Furthermore, if we use the old prices, the profits will not be low either. There is no need to raise the prices.”
Li Mingde did not say anything but look over to the Chief of the sales department. The Chief of sales department immediately retorted: “Xiao Feng, you think we don’t need money for our manufacturing machinery? You think the technologies don’t need money? If it was the same prices, there might be some profits. But when can we recoup our costs?”
Feng Yu kept quiet. Seems like everyone was against him. No matter what he said, there will be no difference. Just let them be. They have no concept of branding. If the brand was established and had a firm position in the minds of the consumers, giving the consumers the impression of good quality and durability, and they increase the prices to be a top-tier brand, they would be making much more profits!
Forget it. He was lazy to reason with them. When Feng Yu becomes the major shareholder in 1 to 2 years’ time, he would like to see if they can still be so arrogant!
“Anyone else objects? Then that settles it. The Chief of sales department will sign the contract with those dealers later. When these products are sold, every one of you will get a big bonus. The bonus will not be less than 100 RMB!”
Everyone clapped except for Feng Yu. 100 RMB was considered a big bonus? Wait till after the New Year and inflation increases, then they will know that their money is worthless!
In the afternoon, Feng Yu saw the contract signing ceremony. The machines were more popular than he expected!
Those businessmen were as if there were free money up for grabs. In less than an hour, the twenty plus businessmen had all signed the contracts. Half of them were from other provinces.
Feng Yu casually asked the Chief of sales about the total value of the contracts, and he replied arrogantly that it was about 8 million RMB.
Humph! This kid thinks that he had connections with the Soviet Union and he can teach us what to do? I am way better than him when it comes to machinery sales!
8 million RMB? This figure was something to be proud. This Chief of sales was not bad after all. Based on the costs and supplier prices, after deducting the taxes, the profits should be around 20% which amounted to about 1 million profits.
But this was only the initial phase. If they increased the sales channels and the factory increased its productions, there should be no problem for the profits to be over 10 million RMB. This was only counting plowing machines and its parts. Later, when engines and tractors were produced, the profits would be much higher.
This was good for Feng Yu too. The faster the Machinery Company develops, the better it was for Feng Yu.
Li Mingde was a proud person and wanted to keep climbing up. The better the company perform, then he would be promoted in the coming year, and the City Government would assign a new General Manager for the company. When Li Mingde is not around, the rest would not be so united, and it would be an excellent opportunity for Feng Yu to take over the company!
This Machinery Company in the hands of these government officials might be able to give the City Government a significant amount of taxes, but if it were in the hands of Feng Yu, the taxes would be more than ten folds!
Feng Yu do not have the habit to help others for free. Using technologies to buy a stake in the company, was part of his plan. He wanted the company to have a taste of success, and then he would use more technologies to increase his stakes slowly and dilute the shares.
For example, Feng Yu could work with the company using this batch of refrigeration compressors. He wanted the company to set up a new workshop to manufacture refrigerators, ice storages. The profits would be better than selling these compressors by itself.
But when Feng Yu mentioned this corporation with Li Mingde, he rejected him. Refrigerators and ice storages? How can these things be sold? It was winter now. Even if it were summer, the sales in the Northeast region would not be good either. You mentioned that you want to sell to the South? But there were already refrigerator factories there.
Li Mingde was not corporative, and Feng Yu was a bit disappointed. However, he still had his ways. The Motor Factory missed working with Feng Yu. Although the Motor Factory’s financial situation was better now, who doesn’t want to earn more?
Feng Yu had just mentioned this project, and the Motor Factory agrees immediately. It was the same as last time. The Motor Factory would only manufacture and assemble for Tai Hua Trading, and the brand would not be the Motor Factory. The profits for the factory was at least 100 RMB per refrigerator!
Feng Yu agreed without any hesitations. He wants to let the Machinery company knows that even the products they look down upon, would be a success if he was the one managing it! In future, if Feng Yu were to propose any corporations with the Machinery Company, they would not reject him!
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