Chapter 863 - They will be doomed if they don’t invest in technological developments
Chapter 863 – They will be doomed if they don’t invest in technological developments
Bankrupt?!
Director Fang was shocked to hear this from Feng Yu.
Also, what did Feng Yu say? Pagers will be obsolete after 5 years? How is that possible?
The pager industry is on the rise now, and last year, there are more than 16 million new sign-ups in China, and paging centers were set up all over China. How is it possible that pagers will be obsolete in 5 years?
“Feng Yu, you are saying that pagers might be replaced by mobile phones?” Director Fang saw Feng Yu looking at his mobile phones on the table and asked.
“This is reality. Why do people use pagers? People use pagers to be contactable when they are outside, and mobile phones can solve this problem. You think mobile phone charges are high? But SMS is very cheap, and people will rather send SMS than calling the paging centers to send messages.”
“No… the price of pagers had dropped to below 2,000 RMB, and the cheapest mobile phone in the market is around 6,000 RMB.”
“Director Fang, when pagers cost 4 to 5 thousand, the average annual salary of our people is around 1,000 RMB. That means an ordinary worker got to save all his salary for 4 years to afford a pager. But how come so many people can afford pagers now? Is it because the price of pagers had dropped, or the average salary of the people had increased? Our country’s economy is improving rapidly, and we have more middle-income families. If there is a better telecommunication device, they will not get it? Also, how do you know that mobile phones’ prices will not fall below 2,000 RMB like pagers in the future?”
“What? Mobile phone prices will drop below 2,000 RMB?!” Director Fang’s eyes grew wide. How much is the production cost of a mobile phone? The returns from the mobile phone are very high!
“I am talking about the future. Just look at pagers. When we developed the pagers, the production cost is around 2,000 to 3,000 RMB. But now, the production cost is not even 1,000 RMB. Only the production cost of our latest product, high-speed Han characters pager, is more than 2,000 RMB. The production cost of pagers can be reduced so much within 2 to 3 years, why can’t mobile phones’ production cost be lowered?”
“But a few days ago, Minister Zhao of the Ministry of Telecommunications reported that our country’s pager users will increase by more than 15 million or more annual in the coming two years.”
“I believe there will be so many new sign-ups. But don’t forget about the ones canceling their pager services.” Feng Yu smiled and looked at Director Fang.
Director Fang was stunned and remembered that he is also one of the people who had canceled his pager services. The figure reported by the Ministry of Telecommunications is not accurate. This is like giving a report on the population. There might be a lot of newborns, but there might be more people who passed away.
People who canceled their pager services should be switching to mobile phones. That means the mobile phone industry’s potential is higher than the pagers!
Yes. The government must not grant any more Pager’s Network Access License and encourage more companies to take up to Mobile phones’ Network Access License. If most of the pager users switched to mobile phones, it would be a considerable market. Feng Yu cannot swallow the whole pie by himself and the government should not let those overseas companies take advantage of this.
“What’s wrong? Are you thinking of developing the mobile phone industry?” Feng Yu laughed and asked.
“That’s right. Your company’s production should not be high enough to meet our domestic demands, right?” Director Fang said this shamelessly. After all, he is doing this for the country and not his personal gains.
“Of course. It is a good thing if there are more mobile phone companies and it will open the market faster. However, if it is still those pager companies switching to mobile phones, they might make some money in the initial phase, but after that, they will close down.” Feng Yu replied.
Director Fang was not pleased to hear this. “You are saying only your company can survive and others can’t? I admit your companies are doing very well, but you should not look down on others.”
Those companies are all state-owned enterprises and have the support of the local government. How can they fail? Close down after the initial phase? I don’t believe it!
“Director Fang, have you notice what’s common in all my companies?” Feng Yu asked.
“What’s common? The management of the brands?” Director Fang guessed.
“That’s right. But branding is not the most important. My companies emphasized on R&D to keep improving our technologies. Our researchers and engineers are paid more than middle management staff. You should still remember what the ‘Great One’ said. Technology is the best productivity! Did those companies who follow the trend blindly look into developing their technologies?” Feng Yu asked.
“Why not? They also hire experts to develop their technologies.” Director Fang retorted. You think only your company has experts?
“I know they have experts, and some of their experts are more skilled than our researchers. But how many experts do those companies have? How many people are there in their development team? A professor and a few of his students? Do you know how many researchers and engineers are there in Aiwa Electronics? Just in China alone, there is more than 100 technical staff. We still have staff from the former Soviet Union and Japan. When we developed this mobile phone, we still seek help from my other companies and there is a few hundred staff in the R&D departments of those companies. More than 1,000 researchers and engineers participate in the development of this mobile phone.”
“It is only a mobile phone. You can just buy one from the market and bring it back to reverse engineer it. Why do you need so many people?” Director Fang doesn’t believe what Feng Yu said.
This is only a small device and should not require so much manpower to develop it. Feng Yu must be lying.
Feng Yu had lied, but what he said was not wrong either. Wind and Rain Electronics, Aiwa Electronics, Wind and Rain Home Appliances, Aiwa Home Appliances, etc. have more than 2,000 R&D staff in total, but only a few hundred of them are involved in the development of this mobile phone. Most of them are working on improving their existing technologies to compete and exceed overseas companies.
“Those companies have the same thinking like you, and this is the reason why those companies can only get leftovers. My companies will get the meat, and they can only get soup. When we switch to another piece of meat, they are still drinking from the previous bowl of soup. Even if the soup turns bad, they still must drink it because they don’t have anything else to eat. I am rearing pigs and selling the pigs for money. Whenever I want to eat pork, I can just slaughter one of my pigs. Those companies can only wait for my leftovers.”
Seeing Director Fang about to say something, Feng Yu waved his hand and continued. “There is a saying when doing business. ‘Owning what others don’t; If others have it, mine must be better; if others are better, I will switch.’ Did those companies achieve this? If they are not Chinese companies, I will wage a price war and make them vomit blood. Those companies don’t have any technologies or capital. All they know is to use salespeople to push their products. What do you think they can achieve? I can don’t suppress them, but what about those overseas companies? If the foreign companies decided to suppress them, what do you think will happen to them?”
Why did Feng Yu allow those companies to exist? It is because the market is significant, and he does not need to suppress anyone to sell his products. At the same time, he also makes use of them to increase his product’s status. Of course, he also needs these companies’ products to lower the impact of imported products.
But Feng Yu cannot tell Director Fang this. He got to put it in a way to show how generous he is to those companies!
Director Fang kept quiet. Feng Yu had been giving in to those companies, and it’s a good thing. Those companies might seem to be doing well now, but these are all false.