Extraordinary Genius - Chapter 486 - Ministries and Commissions recommendations Part 2 of 2
“Manager Feng, how can you be sure that you will be able to sell off all the pagers you produced? From the research we conducted, it seems that Motorola, the world-renowned pager manufacturer, is the market leader in China. Their China sales last year was only about 500,000 units. This figure consists of both Chinese Characters and numeric pagers. Furthermore, there are still other companies, like Panasonic and NEC in the market. Even if we help you to promote, do you still think that you will sell off all your pagers?” Director Fan looked at Feng Yu and asked.
“Director Fan, we do not need to text each other. We had also conducted market research ourselves. We had looked into the demands, the consumer’s income growth and many other factors. We are sure that although there are only about 3 million pager users now, there will be more than 10 million next year. In two years, there will be more than 20 million users!”
Director Fan raised his eyebrows. He was shocked. This Aiwa Electronics analysis was about the same as theirs. The Ministry of Telecommunications also felt that the demand for pagers will increase. They could tell from the number of pager companies’ application. The pager era was about to start!
The Ministry of Telecommunications had access to all this information and could analyze the future trend. But how did this Aiwa Electronics get the same result? Through market research? Or they have other ways?
What Director Fan did not know was Feng Yu had not conducted any large-scale market research. Sun Lijie had only conducted simple market research in Zhejiang, and the results were the same as Feng Yu’s previous life. The pager boom was coming!
Feng Yu remembered that before Hong Kong was returned to China, China was the world’s number one pager market. There were more than 80 million pager users! Then the numbers fell as pagers were slowly replaced by mobile phones!
The real boom was in 1994 and 1995. These two years, there were more than 10 pager brands in China, and many of these brands were small companies from the cities. These companies made use of the subsidies and benefits offered to them by their local government and sold their pagers at very low prices. These two years were the most profitable years for these companies.
But in this life, those small factories will not be able to survive. Later this year, Feng Yu will increase his investment in his pagers and set up a third factory. This factory will start operation early next year. The total production will be over 5 million! But Feng Yu was afraid that Director Fan would not believe him if he told him the truth.
Feng Yu was clear that even if he gave up the numeric pagers market and concentrate on the alphanumeric pagers with Chinese characters, his pagers will still not meet the market demand.
Master Lu was also shocked. Feng Yu was willing to give up so many profits? At first, he thought that 10 RMB per pager was only a small amount. But when he heard Feng Yu’s production, the amount was too shocking!
Director Fan was worried that this Aiwa Pagers will not have such good sales.
“Manager Feng, why not we change your proposal to the total amount of pagers you produce, and you give us a certain sum per pager?”
“Director Fan, are you worried that our pagers will not be popular?” Feng Yu laughed and shook his head. If the post offices were willing to promote his pagers, coupled with his established sales distribution channels and they still can’t control the market, then there must really be a problem with the product!
“I cannot disregard this.”
“But Director Fan, our pagers are not only sold at the post offices. We are also selling our pagers at some shopping malls and some pager companies. Your department cannot help us in those places, right? We also have our concerns. What if our pagers remained on the shelves and we still have to pay your ministry? If we were to pay your ministry based on the number of pagers produced, you should also agree to let us add in that sentence in our commercials and advertisements.”
Director Fan shook his head. How can the Ministry advertise for a company? This company was still not the Ministry’s subsidiary!
“Impossible! Then we shall go with your initial proposal. But 10 RMB per pager is too low. I think 20 RMB is more suitable!”
“20 RMB? Director Fan, don’t you think you are too greedy? Actually, I can go straight to the Post offices. I think they will be satisfied even if I offered them 5 RMB.” Feng Yu smiled.
Damn, if it wasn’t Feng Yu wanted to build a good relationship with this ministry to prepare for his mobile phone, why would he be willing to offer so much money to them?!
“Then can you guarantee that the post offices’ sales will be at least 50%?” Director Fan asked.
“Based on the market research on the pager sales, 60% of the consumers bought their pagers from the Post Offices. Also, the post offices have an advantage. Their branches are located all over China in every province! No other sales distribution channels can be compared to the Post Offices’ network. This was the reason why I am willing to forgo part of my profits.”
Feng Yu was not wrong. In another two years, the demand for pagers in the cities will be met. However, there will still be demands in those counties and districts. But by that time, there will be retail shops in almost all those districts and counties!
Feng Yu estimates that the Ministry of Telecommunications will get at most 10 million RMB a year. Although the sales of the pagers will increase, there will be more shops selling pagers everywhere. The post offices’ sales will fall.
“Fine. It’s a deal. I will report to the leader tomorrow and give you an answer!”
All of them continued with the dinner, and after dinner, Master Lu sent Director Fan back.
The next day, Feng Yu received a call asking him to go to the Ministry of Telecommunications. The leader wants to meet him.
“You are Aiwa Electronics’ Manager Feng? You are quite young. I know about what you had discussed with Xiao Fan yesterday, and I think it is doable.”
Xiao Fan? Hawker? Feng Yu looked at Director Fan and almost laughed. (Xiao Fan have the same pronunciation as a hawker in Chinese.) For someone in his fifties, and still, a Director to be called as a hawker, Feng Yu wonders how he felt!
Maybe Feng Yu’s proposal was too attractive to the Ministry, or Director Fan had put in a lot of kind words for him. The whole negotiation went on smoothly. The Leader did not make things difficult for Feng Yu, and almost all the terms of this collaboration remained the same except for the duration. Both parties had different views on the length of this collaboration. Feng Yu suggested 3 years and the ministry wanted at least 10 years!
10 years? Pagers will cease to exist in 10 years! Feng Yu had only planned to manufacture pagers for 5 years. After 5 years, the number of new pagers users will drop drastically, and mobile phones will replace pagers!
In the end, both parties took one step back and agreed on 6 years duration. Although Feng Yu was forced to sign the 6 years contract, he did not regret his decision. This amount was nothing if he was able to set up a new sales channel and increase his brand awareness. Furthermore, his relationship with this ministry would be better.
The agreement was simple. Both parties will record the sales figures and will tally the statistics every month, and Aiwa Electronics will pay the Ministry. The Ministry was not afraid that Feng Yu would terminate this agreement as the Ministry could issue an order to take Aiwa Pagers off the shelves and barred them from this industry!
Feng Yu will not beak this agreement on his own. This amount was nothing compared to the vast profits from these pagers! Furthermore, if there were any changes to the telecommunication policies, he will be the first to know. The Ministry will even give special treatment to Aiwa Electronics. There was nothing to lose!
With the agreement, Feng Yu left with a wide grin on his face. Let’s see who can stop Aiwa Pagers from growing big?!