Chapter 262 – Good Friend of the Soviet Union
Hou Haitao helped Feng Yu again, and this time Chief Chen could not take it anymore.
“Xiao Hou, I had also worked at the Aviation Factory and manufactured aircraft before. You think I do not know about the cost price? The cost price of Tupolev Tu-154 will not be over 20 million RMB, and the cost price of Ilyushin Il-76 is not more than 50 million RMB. How did you calculate this cost price?”
Hou Haitao did not know how to answer Chief Chen, and Feng Yu stepped in: “Chief Chen, you cannot calculate the cost price this way. Don’t you need to factor in the R&D cost? Don't you need to factor in the factory’s setup and maintenance? What about the sales and marketing cost? There are lots of costs which I did not factor in if not, the cost price will be higher. Since Chief Chen had worked at the Aviation Factory before, then you should also know about this.”
Chief Chen could not rebut Feng Yu.
“How about this? All of you know that Ilyushin Il-76 is a cargo plane and modifications are needed to convert it into a passenger plane. I will pay for the modifications and ask the Soviet Union factory to do the modifications according to your requirements. But, your requirements should not be too harsh. I am a businessman. If I can’t earn money from my businesses, then how would I feed my family?”
Director Cheng: “……”
You can sell 30 large passenger planes, and you are telling me you are unable to feed your family?
However, if Ilyushin Il-76 was modified in the factory before sending over, it will save them a lot of trouble and time.
The representatives from the airlines looked at each other and then turned to Chief Chen. Chief Chen was the one who could make the final decision. After all, he was the one who had set up this bulk purchase.
“40 million RMB for Tupolev Tu-154 and 75 million RMB for Ilyushin Il-76. Also, you will modify the Ilyushin Il-76. Manager Feng, I believed that you will still have profits at this price. We can sign the contract first, and we will pay after the planes are delivered to us.”
Chief Chen bargained further and even proposed a new condition which was making payments after the planes were delivered. He guessed that Feng Yu would not have so much money for so many planes. Feng Yu should be using some sleight of hand tricks.
If it weren’t for the airlines needed large passenger planes urgently, they would not be so nice to Feng Yu, even though his aircraft were considered the cheapest they could find.
Chief Chen stated this condition was to force Feng Yu to lower the price further. Feng Yu surely do not have the capital to buy these planes first.
“Chief Chen is really an expert in bargaining. Fine. I will treat this as a contribution to the nation. I will accept this price. I also have no problems with you making payments after the planes are delivered as long as it is stated clearly in the contract. But Ilyushin Il-76 modifications will take some time. I will deliver the Tupolev Tu-154 before the end of the year, and Ilyushin Il-76 will be delivered after the modifications are completed. I estimate it to be not later than next year’s May.”
What?!
Chief Chen was shocked. Feng Yu agreed to his condition? How was this possible? 32 aircraft and the total will cost at least a few hundred million RMB. This Feng Yu decided without batting an eyelid?
“Dear leaders, I will prepare the contract and tomorrow we will sign it here.”
Feng Yu will definitely not sign the contract with the Civil Aviation Administration. But instead, he would sign with the respective airlines. This was to prevent them from denying payments. Airline companies were enterprises, and the Civil Aviation Administration was a government agency after all.
That night, Feng Yu made a call to Kirilenko. It was 11 pm in China, but in Moscow, it was 6 pm.
“Feng, I remembered that it should be almost midnight in Bing City. Why are you calling me at this time? Is there anything urgent?” Kirilenko was worried that Feng Yu had some bad news for him.
“Hahaha. Brother Ki, don’t worry. It is not bad news. It is good news. I remember you telling about the two aviation factories. One factory has 18 Tupolev Tu-154, and the other factory has 8 Ilyushin Il-76 Ilyushin Il-76. What about the number of aircraft that were still in production?”
“Those in production? What do you mean? Feng, those existing planes are not enough?” Kirilenko’s eyes widen. How many aircraft did Feng Yu sell?
“I need 20 Tupolev Tu-154 and 12 Ilyushin Il-76. Also, I need you to install passenger seats in Ilyushin Il-76 planes. We will be using Ilyushin Il-76 as passenger planes. Will there be any problems?”
“No problem. Guess who I am having dinner with now? It’s factory director Ivanovic of XX Aviation Factory. We were just talking about this just now. This is indeed good news!”
Kirilenko was overjoyed. Ivanovic was still asking Kirilenko to help him sell 4 Ilyushin Il-76. A European company had canceled their order for these 4 planes, and Ivanovic was willing to sell them at a lower cost.
The Soviet Union was in turmoil now. Even small countries dared to take advantage of them now. If it was two years ago, which European country would dare to cancel their orders?
There was an oversupply at the factory, and they had no use for the planes. They could not sell their aircraft. Although the government had given factories subsidies, the factories could not last long if this carries on. When Kirilenko suggested using daily necessities to exchange for his aircraft, Ivanovic immediately agrees. Of course, it was also because of some other benefits Kirilenko promised to give him.
Ivanovic had already reported to his higher-ups that these 4 planes were sold. But he never expects the other party would cancel their orders.
Maybe it was because, in the past, no one dares to cancel their orders. As such, the penalty for breaking the contract was very low. This will make him look incompetent to his higher-ups. Since things had already turned out this way, why not sell these planes at a lower cost to Kirilenko. He could still get a sum of money from Kirilenko, and even if the factory closes down, he could also retire comfortably.
After hanging up, Kirilenko told Ivanovic: “Fine. Since you are in difficulties, I will help you think of a solution. But Ilyushin Il-76 does not meet my friend’s requirement. You need to modify the planes to passenger planes. Will there be any problems?”
“No problems. If you are able to sell all my planes, I will modify all the Ilyushin Il-76 for you for free. I will also guarantee that you will receive the planes first.”
“Fine. I will try to persuade my China friend to buy our planes.” Kirilenko said.
……
The next day, Feng Yu and the representatives of the airline companies signed the contract. The reps noticed that the company stamp used by Feng Yu was different. It was not Tai Hua Trading, but instead, it was a company that was registered in Hong Kong.
Feng Yu explained that it was because of the procedures. Using a Hong Kong company will be easier to import the aircraft. The aircraft will still land in Bing City and handed over to the respective airlines.
With this shell company set up by Feng Yu in Hong Kong, he was not afraid of the airline companies defaulting on the payments. Feng Yu could blow up this matter in Hong Kong and would affect the return of Hong Kong to China. The airline companies dare not to take on this blame.
Kirilenko also contacted the other aviation factory and told them that he wanted 20 Tupolev Tu-154 planes. The factory director, Alex, was overjoyed. He could not help but sighed: Kirilenko’s Chinese friend is really a good friend of the Soviet Union!