Chapter 124 – Registering the Patent
Although the humidifier was still not up to Feng Yu’s expectations, it was the right size. He can change the exterior design, and if that doesn’t work, he could always hire a product designer to do it for him. Product designers were not expensive in that era.
The humidifier was switched on, and mists came out of it immediately. This was much faster, more efficient and uses lesser electricity compared to the older version of the humidifier. Those that did not experience that era could not imagine what it was like to have a shortage of power. Even in the cities, the residents had limited electrical supply and priority were given to the state-owned factories and government agencies.
Feng Yu had thought of manufacturing air-conditioning. Air-conditioning would have higher profits than electrical fans. But because of the electricity shortage issues, he shelved this plan. Now, there were only 2 kinds of air-conditioning which were central air-conditioning and vertical air-conditioning. Those hanging small air-conditioning had not yet appeared.
Those from the future era would know how high the electricity consumption was for vertical air-conditioning. There were air-conditioning factories in China, but their sales were pathetic. That was because the government had a regulation that if a household wants to install an air-conditioning, they must meet the energy-savings standards. Many factories do not meet this requirement.
So, most of the air-conditioning in the market were imported, and their primary markets were those senior leaders and the wealthy businessmen.
To install an air-conditional, one would have to pay a sum of about 3,000 to 5,000 RMB electrical bills first. This was somewhat like a tax. There were not many people who use air-conditioning in the whole of China and how could Feng Yu, who only have a brief knowledge of how air-conditioning works and how one looks like, manufacture one?
Even if he gets experts to research on it, the investment will be massive. It was not worth the efforts. So, Feng Yu chose to manufacture electric fans at the start and the profits from the fans made him smile for a long time.
This new humidifier let Feng Yu sees the next pot of gold. There were not many humidifier factories in China, but some state-owned factories started to research and develop humidifiers and were successful. But those humidifiers were used for industrial purposes and not used by the civilians. Furthermore, the size of those humidifiers was not small.
Overseas, there were household humidifiers, but those were also electrothermal humidifiers. These humidifiers were not imported to China yet. That’s why if the humidifiers were produced domestically, it would be able to capture China’s market fast and create a monopoly.
Feng Yu was also confident that if he exports this ultrasonic humidifier, it would also be popular in markets like Europe and the US, and countries in the northern hemisphere where the environment was drier.
The only issue Feng Yu was facing now was the threat of imitation. The humidifier imitations that appeared affected Wind and Rain humidifiers sales significantly. Even though Wind and Rain humidifier was still the market leader, but it was only a matter of time when the imitations take over the position.
Finally, they had a new product which was more high-tech, safer, consume lesser electricity and look classier.
But this technology was also not too complicated. The Aviation Factory was able to develop this humidifier in a short period of time, that means that other factories might also be able to do the same too. The factories that produce imitation fans and humidifiers were mostly state-owned enterprises. They had no concept of branding, and if you can produce this product, they will also produce the same thing. Even the designs will be the same. Some were shameless enough to even print Wind and Rain logo on their products!
No one could do anything to these factories as they had the protection of the local government. These factories were not afraid of getting caught, and if they were really caught, the most they would do was to remove the logo. The design would remain the same.
When Feng Yu first knew about this, he was frustrated but could not do anything. The issue of counterfeits exists even in his previous life. Even though the copyrights laws in his past life were adequate, but it still does not deter people from manufacturing counterfeits as the profits were huge.
Factories could quickly grasp the technology behind by buying a few finished products, dismantle and reverse engineer it. This would save the R & D cost, and the total cost will be lowered. Once the cost was reduced, it could be sold at a lower price for a similar product.
But all these were in the past. This time, Feng Yu will not let these factories imitate his humidifier. He was going to apply for the patent!
Feng Yu was to have the ownership of this patent, and this was discussed with the Motor Factor and the Aviation Factory. Within 10 years, all 3 parties will split the earning based on the agreed proportions. They had thought that there will be new products launched to replace this humidifier after 10 years and this patent was not important. But what they did not expect was Feng Yu could authorize other factories to use his patent to manufacture similar products and the profits from this would belong to him alone.
To apply for patents in China was very troublesome in that era. It will take at least 6 months, and if it was applied by individuals, it could take 3 to 5 years for the approval.
Luckily the Aviation Factory and the Motor Factory used to be military factories, and although they were converted, they still had the connections. Feng Yu made use of their relationships, coupled with the help of Zhang Ruiqiang, and calling his own contacts to request the Patent Office to expedite his application. The approval was estimated to be ready within 1 month.
The patent issue for China was considered settled. Feng Yu now got to apply for the overseas patent. This, Feng Yu could only ask Fu Guangzheng for help. Applying for Europe and US patent from Hong Kong was more convenient and faster than China.
Also, Feng Yu needs to set up a sales office for the overseas market, and it was much more convenient to set up the office in Hong Kong. Of course, Feng Yu would not let Fu Guangzheng help him for free, and he got to share some of the profits with him.
After receiving the phone call from Feng Yu, Fu Guangzheng flew to Bing City. It was almost the end of winter and this time, Fu Guangzheng was not as cold as the last time.
“The both of us will set up a company in Hong Kong, and the sales for the overseas market will be handled by this company. Then how do we split the profits?” Fu Guangzheng asked Feng Yu.
Fu Guangzheng knows about humidifiers and humidifiers were sold in the South too. However, the sales of humidifiers were not fantastic in the south. But Fu Guangzheng was the same as Feng Yu. He knew that there would be a market for these humidifiers in the northern hemisphere as the environment was drier there and there were more inland cities. This business would not fail!
Feng Yu smilingly asked: “How much does Brother Fu want?”
“Although there are no proper sales distribution channels set up, my family has. My family’s sales channels cover the whole southeast Asia, and we have partners in Europe and the US. We can guarantee that we can cover the whole Europe and the US within the shortest period. You should know the importance of distribution channels so I will not talk much about this. I want 40%.” Fu Guangzheng stretched out his hand and put up 4 fingers.
Damn, so high? Feng Yu had wanted to give him only 20%, but he knew what Fu Guangzheng said was true. The Fu family was a big family. Even though Fu Guangzheng was not very capable and Fu Rongjing’s company was not very big, but the head of the Fu family’s company was big.
IF Feng Yu were to sell the humidifier by himself, he could make 10 million USD in a year. But if he let the Fu family sell these humidifiers, he would get at least 30 million USD in a year! They were more professional and was able to control the market better than Feng Yu.
Feng Yu hesitated for a while and said: “Brother Fu, 40% is a bit high. I admit that the Fu family have the ability, but other families in Hong Kong also had the same abilities. Furthermore, I own the patent, and this is a constant flow of profits. 30% profits. The earlier you agree, the earlier we can earn money. This would also help with your status in the Fu family, right?”
Fu Guangzheng looked at Feng Yu. He felt that Feng Yu knows a lot about his family. Could it be there was someone powerful behind Feng Yu, like what his father told him?
He was quite satisfied with 30% profits. Feng Yu was right. With this company, his status in the Fu family would rise to be on par with his elder brother or even surpass him.
He agreed to this term!