Extraordinary Genius - Chapter 338 – Alliance
Shi Feng, the General Manager of YADU and one of the shareholders, was sitting on a sofa, looking at the people in front of them.
“Manager Feng, why is your Tai Hua Trading looking for us? We are competitors.” Shi Feng asked gruffly.
YADU had already developed humidifier and was about to introduce household humidifiers. But before they could introduce their product to the market, they discovered that there were already household humidifiers in the market. But it was only thermal humidifiers, and they did not care.
Based on their research, Chinese at that time had limited spending power, and not many can afford to buy those humidifiers. But soon Tai Hua Trading introduced the Ultrasonic humidifiers, and YADU knew how much profits Tai Hua Trading could make. The most surprising part was that this product was selling very well.
This produce was even exported overseas, and it was sold several times more expensive than in China.
YADU was only one step behind, and Wind and Rain brand had already captured the market. The most frustrating was this Tai Hua Trading had even patented the technology. YADU could not manufacture similar products. Even though they had introduced another type of electric humidifiers, but the household humidifier market was already owned by Wind and Rain brand. In the end, they could only concentrate on their industrial humidifiers.
But today, Tai Hua Trading people contacted him and wants to talk about cooperation. What cooperation was there to talk about between YADU and Tai Hua Trading?
“Manager Shi, our Tai Hua Trading and your YADU can be considered the leaders in China’s humidifier market. We specialized in household humidifiers, and you specialized in industrial humidifiers. Your company is also selling household humidifiers in the market?”
“What’s wrong? Only you can sell household humidifiers, and we cannot sell? I know you have the patents, but our products are different from yours!” When mentioned about household humidifiers, Shi Feng was furious. They had only used 3 days to figure out this ultrasonic technology, but because it was protected by patents, they could not produce!
“No, no, no. Manager Shi misunderstood us. Our purpose here is to exchange technologies with YADU!”
Shi Feng stood up: “What did you say? Exchange technologies?”
Wind and Rain Humidifiers was now the market leader, and if it were Shi Feng, he would never exchange these technologies. This Tai Hua Trading had gone bonkers?
“That’s right. We want to use our humidifier technology to exchange for YADU’s humidifier and dehumidifier technology. Also, we can have a fair competition and do not engage in a price war.” This was just like AIWA and Sony. Fair competition, legal and cannot be considered as monopolizing the market.
“You want to enter the industrial humidifier market?” Shi Feng felt that Tai Hua Trading wants to enter the industrial market.
“Currently, we are not very interested in the industrial humidifier market. We will still be focusing on household humidifiers. However, we will produce industrial humidifiers, but it will not in high quantities. Your company’s sales will not be affected.
Stop joking. In China, there was YADU, and there were many established industrial humidifiers companies overseas. Feng Yu was not confident to enter this market. He was already contented with the household humidifiers market.
Shi Feng does not understand why Tai Hua Trading wants to do this. But YADU was to stand to gain from this deal. Other than the humidifier technology, YADU had the patents of the other technologies. But other people can just modify the technologies a bit, and they could manufacture those products. However, other than the humidifiers, the market for other products was not that big. What does Tai Hua Trading want to do with those technologies?
“Just exchanging technologies? No cash involved?”
“Of course not. We will not only exchange technologies. We will also form an alliance and act as contractors to help each other manufacture products.”
YADU’s factory was a big factory and was located in a prime location in Beijing. If YADU was able to help Feng Yu manufacture humidifiers and dehumidifiers, it can increase Wind and Rain productions, and also lower the transportation cost. Feng Yu’s factory in Dongguan will also need to help YADU to manufacture their products. Feng Yu even decided to help YADU export their products through Fu Guangzheng company. This way, it will solve their Antitrust lawsuit//.
YADU was also a Government and privately-owned enterprise. This would be better than letting those foreigners earn. Furthermore, YADU’s technology in air purifying was one of the best in the world. In the future, Feng Yu might also need to work with them too.
Shi Feng thought about it. Helping each other manufacture products can also lower their cost and make use of each other advantages. This was not a bad move. Could it be that Tai Hua Trading wanted to make use of YADU’s manufacturing capabilities?
Shi Feng decided to test what was Tai Hua Trading’s baseline: “Manager Feng, I heard that Tai Hua Trading also owns the patent of the bladeless fan technology. Why not exchange this technology with us too? It will not be fair to use if we got to use two technologies to exchange for one technology.”
Feng Yu and Fu Guangzheng looked at each other. YADU was really greedy as they had expected. Before this meeting, they had discussed this before. Since they need to upgrade the bladeless fan technology, why not use it to exchange something with YADU. YADU still have the air purifying technology. This will be a massive market in the future.
“You want the bladeless fan technology too? This should not be a problem. But you must use your air purifying and vacuum cleaner technologies to exchange for it. We will be at a disadvantage if we do this exchange. So, your side should give us some benefits in our alliance. For example, the R&D to upgrade these technologies will be done on by YADU, and you must let us use it for free. Every year, you must also help us manufacture a minimum number of humidifiers, dehumidifiers, vacuum cleaners, air purifiers and bladeless fans at zero contractor fees. On my side, we will help YADU export your products to other countries. We will enter other countries’ market together and earn their money for China!”
Using two technologies to exchange for one profit-making technology was a great deal. There was no reason for Shi Feng to reject. Feng Yu’s additional conditions were also acceptable. The most intriguing part of this deal to Shi Feng was helping YADU exporting their products to other countries.
YADU was shouldering the whole country’s dream. In 1987, a total of 170 million was invested into this company. Until now, this company had not breakeven even after they had developed so many products.
If YADU could export their products, then their profits will increase by a lot. The only condition which Shi Feng dare not to agree immediately YADU had to research and upgrade these technologies and let Tai Hua Trading use these technologies for free.
R&D cost was the highest expenditure of YADU. He does not know how much Tai Hua Trading spent on R&D, but it should not be low. If not, why would Feng Yu wants them to research the upgraded version of their technologies?
But Feng Yu had not invested much in developing these technologies. He had only let the Aviation Factory get part of his earnings previously. Now, Feng Yu had owned all the shares of these products.
“Manager Feng, Mr. Fu, how long will the both of you stay here in Beijing? I need to discuss with the rest of the shareholders before I can give you a reply.”
“Is 3 days enough? If YADU does not accept our conditions within 3 days, we will consider other partners.” Feng Yu exchanged looks with Fu Guangzheng and gave a deadline.