Extraordinary Genius - Chapter 630
Chapter 630 – Nurturing the market
“Brother Feng, why is the Super VCD player not launched yet?I heard from Jiang Wanmeng that the Super VCD technology, your 9 imaging, 4channel stereo, countdown timer, etc. are all developed. What are you waitingfor?” Fu Guangzheng was getting impatient. The overseas VCD brands had startedto enter the Chinese market and lowered Wind and Rain Electronics profits.
Fu Guangzheng wanted to introduce the Super VCD player now.Although the technology was not perfect, they can introduce a transitionproduct first. A few months later, they can introduce a better product.
It hurts to see money flowing into someone else pockets.
“Brother Fu, what’s the hurry? The market is booming yet.The traditional VHS is not completely out of the market. The Laserdisc is stillmaking profits. Let’s wait for a while more.” Feng Yu took a sip of his coffeeand replied calmly.
“Wait for the market to be booming? The market is alreadybooming elsewhere outside of China. Many foreigner brands are fighting formarket share. Although we are receiving patent fees, the fees compared to theprofits if we were to produce ourselves was too low.”
The authorization fees for a VCD player was 50 USD. But ifthey were to produce their own VCD players, the profits will be more than 300USD! Even when there are more brands now, and the profits are declining, thereare at least 200 USD profits.
What was Feng Yu thinking? Giving up all these profits?
Fu Guangzheng was overjoyed when Feng Yu decided tocollaborate with Philips to set the industry standard, increase the R&Dfunds, and successfully develop the second-generation of technology.
He knew that if a company set the standard format for anindustry, that means the company was one of the top companies in the industry.
But you cannot only set the industry standards. Now, manycompanies were racing to develop their encoding technologies. If you succeed indeveloping your encoding technology, it’s okay. But if you fail? Then you willhave to follow another company’s encoding technology. We will fall behindothers.
Fu Guangzheng wanted to keep their brand’s advantage and letWind and Rain VCD continue to be the world’s biggest VCD player manufacturer. Theywill lead the industry and make profits at the same time. But Feng Yu refusedto listen to him.
Fu Guangzheng understood the importance of beating thetraditional VHS and Laserdisc. But what’s the difference with beating them oneyear earlier and one year later? These were what Feng Yu said in the past. Whywas he acting this way now?
“Brother Fu, don’t be too anxious. Soon, those companieswill be lagging behind us again. You have also seen the performance of ourSuper VCD player. But the Super VCD player is still not perfect. It is tooheavy, and the production cost could not be lowered. The heat dissipation isanother problem. All these need to be sorted out, and it will be sorted outsoon. Since we are going to introduce a new product, then we must introduce adifferent product. We will let the other brands eat our leftovers!”
“How different do you want your Super VCD player to be? Itis good enough. Didn’t you say the newer technologies are for the DVD players?What if the market is saturated when we introduce our latest product?” FuGuangzheng was worried.
A family can only afford one VCD player. How many familiescan afford to buy two? Although the income of most families, especially China,had increased, this VCD player was like TV. Many families will use it for morethan 10 years after they bought a TV. As long as it is still working, they willnot change it.
By the time Wind and Rain introduce the Super VCD, mostpeople would have bought the regular VCD players. The new players might bebetter, but those people will not change to the newer ones. Even if the marketbecame prosperous, but the market will not belong to only Wind and RainElectronics and Aiwa.
Many of those VCD companies were world class consumerelectronics brands. In many regions, they have loyal followers. Even if theirproducts were not as good as other brands, but the consumers will still stickto them.
Those top consumer electronics brands had their ownterritories. It’s hard for another brand to enter its territory. Look at SonyWalkman. Even Aiwa had overtaken them, but Sony Walkman was still ranked number2 in the world. It was because Sony still has a lot of loyal followers.
Furthermore, it was Sony who allowed Aiwa to grow. Now, FengYu had increased the number of brands competing in this industry. Wind and RainVCD players might not be kicked out of the market, but the market share andsales had been declining. If this carries on, this VCD brand might be obsolete.
“Brother Fu, before the other brands appear, how much is ourtotal VCD player sales? Wind and Rain, Aiwa and AIWA brands add up to about afew hundred thousand units. The results are not satisfying. But now, manybrands had entered the market. I am not sure of the total number of VCD playerssold. But I know how many units of VCD players were produced by them. In lessthan a month, these companies had produced more than 500,000 units of VCDplayers. It is more than our previous two years of sales.”
Fu Guangzheng frowned. Why was Feng Yu so happy? Shouldn’the be worried?
“Brother Fu, can you still remember if every household ownsa TV when you are young?” Feng Yu asked.
“Although Hong Kong is more advanced than China, when I wasyoung, not every household owns a TV. Even now, there are still households thatcould not afford a TV. Poor people exist in every region.”
“Brother Fu, that’s not what I mean. What I am saying is thepopularization rate of the TV. I am not sure about Hong Kong. But I know aboutChina. 10 years ago, it was still the black and white TV era. At that time,most households in China cannot afford a TV. TVs were only bought at people’swedding. 5 years ago, black and white TV died out and were replaced by colorTV. Now, even with color TV, people want clearer and bigger screens. This isthe trend.”
“But did you realized that TV technology has had beenevolving and the number of users kept increasing. Every time the TV technologyevolves, the number of users increases. This was what happened when TV evolvesfrom black and white to color. It was the same when the TV screen increasesfrom 10+ inches to 20+ inches. The initial TV market was created by the blackand white TVs, and it was the color TVs that made the market prosperous. In theend, it was those companies that produce big screen TV that gets most of themarket shares!”
Fu Guangzheng was confused. “Are you saying that we are theblack and white TVs and those companies are the color TVs? We will be thebrands that will produce better quality color TV?”
Feng Yu nodded. “The future of VCD will be the same as TV.Every household will be buying one, and the market is vast. We do not need toworry now. We will focus on developing new technologies and nurture the market.Those companies are opening up the market for us!”
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