parentshiftbook Chapter 61 Negotiations between the two countries
Chapter 61 Negotiations between the two countries
August 20, 1996, Jinan.
The conference room at Xinghuo Electronics Factory was filled with a tense atmosphere. On one side of the rectangular conference table sat the factory representatives, led by Ling Yun: Factory Director Ma Baoguo, Finance Section Chief Wu, and the Production Manager; on the other side sat Li Wentao, a trader from Hong Kong, and his two assistants.
Li Wentao was about forty years old, dressed in a sharp suit, his hair neatly combed, speaking Mandarin with a Cantonese accent, his eyes shrewd and sharp—a typical Hong Kong businessman. In front of him were samples of mice, keyboards, and mousepads from Xinghuo Power Plant.
"Mr. Ling, you are young and promising." After exchanging pleasantries, Li Wentao got straight to the point, "Your products have good designs and feel decent. We at Global Trade are optimistic about the potential of the mainland market and plan to introduce these cost-effective products to Southeast Asia. We are here with sincerity, hoping to establish long-term cooperation."
"Mr. Li, you flatter me. We also look forward to cooperating with your company to open up export channels," Ling Yun replied with a smile, neither humble nor arrogant.
"Okay, let's talk about the specifics then." Li Wentao picked up the mouse. "Our initial order for this mouse is 50,000 units. I'd like to set the price at 65 yuan."
As soon as he finished speaking, Ma Baoguo's expression changed slightly. This price was almost at the cost line, with negligible profit.
Ling Yun remained expressionless, lightly tapping the table with his fingers: "Mr. Li, we're afraid this price is difficult for us to accept. Our mouse uses a configuration superior to comparable products on the market in terms of internal structure and microswitches; the cost is there. Moreover, the custom-made mouse pad we're including costs nearly three yuan to produce on its own. Our sincere offer is eighty-five yuan."
"Eighty-five?" Li Wentao shook his head with a smile and looked at his assistant, "Qiang, show the quote we got from Shenzhen to President Ling."
The assistant immediately produced a document listing quotations from several factories in Shenzhen, all generally below seventy yuan.
"Mr. Ling, I'm very familiar with the labor and material costs in the mainland." Li Wentao leaned forward, his tone imposing. "Sixty-five yuan, that already takes into account that your quality is slightly better. In business, you have to consider market prices."
"Mr. Li, of course we understand the market situation," Ling Yun replied calmly. "But the market also varies by quality. Our product is benchmarked against Taiwan's Double Swallow, not Shenzhen's generic brands. Double Swallow's comparable products retail for over 130 yuan in mainland China. We offer a factory price of 85 yuan to ensure your company has sufficient profit margins and price competitiveness in Hong Kong and Southeast Asia. If we blindly pursue the lowest price and sacrifice quality, it will ultimately damage both of our brands and long-term interests."
He paused, then added, "Furthermore, we can accept printing the words 'Global Trade Authorized Supplier' on the packaging according to your company's requirements, which in itself is a brand enhancement for your company's distribution channels."
Li Wentao pondered for a moment, then tapped the keyboard with his finger: "Where's the keyboard?"
"Keyboard, 110 yuan," Ling Yun quoted the price.
"That's too high," Li Wentao immediately retorted. "Ninety-five yuan. President Ling, this is a large order of 50,000 sets, not a small matter. This quantity is enough to keep your factory operating at full capacity for a long time."
"Precisely because it's a large order of 50,000 sets, we need to ensure a reasonable profit margin to guarantee stable quality and delivery time." Ling Yun was uncompromising. "One hundred and ten yuan is our bottom line. Mr. Li can compare the feel of the keycaps, the material, and the internal steel plate structure. You get what you pay for."
Negotiations reached a stalemate. Price became the focal point of the tug-of-war between the two sides. The meeting room was filled with smoke, and tea was changed repeatedly. Li Wentao sometimes emphasized the order size, and sometimes hinted at the flexibility of other suppliers; Ling Yun, on the other hand, consistently argued his case based on product value, quality assurance, and long-term cooperation prospects.
After nearly two hours of intense exchanges, both sides realized that compromise was necessary.
"Alright then," Li Wentao took a deep breath and made a concession, "Mouse, eighty yuan. Keyboard, one hundred yuan. That's the highest price I can accept. As for the mouse pad, we'll do as you said, five yuan, included in the package."
Although this price is slightly lower than Lingyun's initial quote, it has entered a range that Xinghuo Electronics Factory can accept and that allows for reasonable profits.
Ling Yun exchanged quick glances with Ma Baoguo and Section Chief Wu, and nodded slightly.
"Alright, since Mr. Li is so sincere, the price will be set as you said." Ling Yun made the final decision.
With the price war over, the next step is the battle over payment methods.
"We prefer payment in full within 30 days after the goods arrive in Hong Kong and are inspected," Li Wentao requested.
This time, Ling Yun's attitude was unusually resolute.
"Mr. Li, that's impossible." He directly denied it. "To complete this order, we need to advance a huge amount of money to purchase raw materials and expand production. Cash on delivery would put too much pressure on our finances and pose too much risk. We must receive a 30% prepayment to start production. After the goods are shipped, we will pay 95% upon presentation of a copy of the bill of lading. The remaining 5% will be held as a quality guarantee deposit, and will be paid in full one year after the goods are received and inspected, provided there are no batch quality issues."
"The prepayment ratio is too high!" Li Wentao's assistant couldn't help but interject.
"This is a fundamental condition for ensuring the production of large-scale orders," Ling Yun said firmly. "Without an advance payment, we cannot trust your sincerity in placing the order, nor can we place orders with our raw material suppliers. Mr. Li, this is our first collaboration, and trust needs a foundation. The advance payment and warranty deposit are the cornerstones of our mutual trust."
Another round of intense discussion and deliberation ensued. Ultimately, Li Wentao accepted Ling Yun's proposed payment plan. He understood that to secure high-quality, stable-supply products, providing manufacturers with certain financial support was standard practice.
The tense atmosphere in the meeting room gradually eased when all the terms were finally finalized and the legal teams from both sides began drafting the formal contract.
The final purchase contract clearly states:
Products and prices: Spark brand mouse, 80 yuan per unit; keyboard, 100 yuan per unit; mouse pad, 5 yuan per unit. 5 sets of each.
Total contract amount: (80 + 100 + 5) * 50000 = 9,250,000 yuan (nine million two hundred and fifty thousand yuan).
付款方式：合同签订后支付30%预付款（2,775,000元）；货物发运后，凭提单複印件支付至合同总金额的95%（6,043,750元）；剩余5%（462,500元）作为质量保证金，货到验收合格一年后支付。
After seeing off Li Wentao and his entourage who had just signed the contract and were rushing off to their next stop, Ma Baoguo rubbed his hands excitedly: "President Ling, a huge order of over nine million! Our factory... it's finally come back to life!"
Ling Yun's face also showed a satisfied expression. This order not only brought in nearly ten million in revenue and considerable profits, but more importantly, it opened the door to the international market for Xinghuo Electronics, greatly boosting brand confidence.
"Director Ma, get to work immediately!" Ling Yun ordered. "Once the advance payment arrives, go all out to purchase raw materials! At the same time, urgently recruit 500 assembly line workers and provide them with pre-job training! The production line must operate at full capacity, three shifts a day, to ensure quality and delivery time! This is Xinghuo Electronics' first battle to make a name for itself; only success is allowed, failure is not an option!"
"Yes, President Ling!" Ma Baoguo's voice was loud and clear, full of enthusiasm.
The entire Xinghuo Electronics factory seemed to have been injected with a powerful stimulant, instantly starting to operate at high speed. Job postings were plastered all over the factory gate, and applicants lined up in long queues; the purchasing department's phones rang incessantly; inside the workshops, experienced workers began debugging equipment and planning the layout of new production lines.
Amidst this bustling scene, Ling Yun's phone rang again. It was a call from the secretary of the district party secretary.
"President Ling, just letting you know. Secretary Zhang of the District Committee has learned that your factory has secured a large export order from Hong Kong, which has created numerous jobs and is of great importance to the matter. Tomorrow morning, Secretary Zhang will lead a team to Xinghuo Electronics Factory for inspection and research. Please make the necessary preparations for their reception."
After hanging up the phone, Ling Yun's gaze was deep. Secretary Zhang's sudden inspection and research visit certainly wasn't because the electronics factory had signed a big order. Ling Yun needed to carefully consider Secretary Zhang's true intentions.