parentshiftbook Chapter 101 The Chessboard Overturned
Chapter 101 The Chessboard Overturned
April 16, 2020. Hong Kong.
Haotai Capital's office in Pacific Place usually quiets down by 6 p.m. But tonight, the meeting room on the 18th floor was still brightly lit at 8 p.m.
Xia Kanghao sat at the head of the long table. Three printed articles were spread out in front of him. The top one was the one from 36Kr, and he had circled the title in red pen: "Hongyuan Su Chen: 999 Yuan Redefines the Entry Barrier of the Drone Industry".
Besides him, there were four other people sitting in the conference room: Yang Ruian, Chief Investment Officer of Haotai Capital; the Director of Strategic Analysis; the Legal Counsel; and Lu Weimin, CEO of Tianying Technology. Lu Weimin sat in the seat furthest from the head of the table, his face ashen, and he hadn't uttered a single word since entering the room.
Xia Kanghao raised his head.
He has clearly lost weight in the past six months. The dismal performance of the S2 Pro, the withdrawal of the lawsuit in court, the news of the cooperation between MicroSense and Hongyuan, and the entry of Lianchuang Group—each event has carved a crack in the chessboard he has carefully built.
And yesterday's news—
He tapped the circled numbers on the printed manuscript with his fingertip.
"Nine hundred and ninety-nine yuan."
The sound wasn't loud, but everyone in the conference room could hear it clearly.
"A standalone module equivalent to the complete flight control capabilities of an F4 fighter jet is priced at 999 yuan."
He looked at Lu Weimin.
What is the current status of the Tianying self-developed flight control project?
Lu Weimin's lips moved slightly.
"The team currently has eight people. The overall architecture design is about 40% complete. Based on the current progress, the first testable version is expected no earlier than the second half of next year."
"The second half of next year." Xia Kanghao slowly repeated these four words.
He stood up and walked to the window. From the floor-to-ceiling window on the eighteenth floor, the Hong Kong night view resembled a slowly flowing golden riverbed.
"The Tianying's flight control system will still be in the lab for parameter adjustments in the second half of next year. Meanwhile, Su Chen has already launched an F4-level flight control system to the entire industry for less than a thousand yuan."
He turned around.
"Tell me—by the second half of next year, which company in this industry will still need flight control systems made by Skyhawk?"
No one answered.
Yang Ruian—Haotai's chief investment officer, in his early forties, with his consistently calm gaze behind his gold-rimmed glasses—flipped through the analysis report in his hand and spoke a few words in a reporting tone:
"Mr. Xia, we've done a preliminary breakdown of the Feiniao platform's pricing model. For the high-end 999 module, Hongyuan's gross profit is around 200 yuan. The profit per module isn't high. But if annual shipments can reach 300,000 units—hardware revenue alone will approach 300 million yuan. Add to that the SDK development licensing fees surrounding the modules and scenario-customized technical services—the total annual platform revenue is estimated to reach 200 to 300 million yuan."
"The 300 million in revenue isn't the point," Xia Kanghao waved his hand. "I don't care whether he earns 200 million or 300 million a year. What I care about is—once this platform is launched, how many companies in the industry will be using Hongyuan's flight control system?"
"Given the current landscape of the drone industry—" Yang Ruian adjusted his glasses, "a conservative estimate is that within two years, 150 to 200 companies will adopt Flybird modules."
"Two hundred."
Xia Kanghao placed his hands on the table.
"Two hundred drone companies use Hongyuan's flight control modules. The flight data generated by every drone they manufacture is aggregated into Hongyuan's algorithm optimization system via its data feedback architecture. This makes Hongyuan's flight control increasingly powerful. The more people use it—the more flight hours—the more scene data accumulated—the more accurate the algorithm becomes. It's a positive cycle, and an accelerating one."
His gaze swept over everyone in the conference room.
"Looking at Tianying from the opposite perspective, its flight control system is still based on the PX4 open-source framework. It lacks its own data feedback system and a continuously iterating engine. Even if Tianying's flight control system is successfully developed next year—its competitors will not be today's Hongyuan Flight Control. It will face a system of a completely different scale, nurtured by two hundred companies, hundreds of thousands of drones, and hundreds of millions of flight hours."
The conference room was so quiet that you could hear the hum of the air conditioner vents.
Xia Kanghao walked back to the window. He turned his back to everyone and looked at the night view outside the glass curtain wall.
"I'm only now realizing what move Su Chen is making."
His voice became low.
"He's not selling flight controllers. He's building the gravitational core of an ecosystem. Once this core starts operating—every company without its own flight controller development capabilities will be drawn in. The more companies drawn in, the stronger the attraction. After a certain tipping point—wanting to leave Hongyuan's ecosystem will require rebuilding the entire flight control system from scratch. No small or medium-sized company can afford that cost."
Lu Weimin's face was almost ashen.
"President Xia—" he finally spoke, his voice a little hoarse, "So, how should we deal with this now?"
Xia Kanghao didn't turn around immediately. He stared out the window for at least ten seconds. Then he spoke slowly.
"First, tell me what your thoughts are."
The Director of Strategic Analysis cleared his throat. He was in his early forties and responsible for industry research within Haotai, and he spoke at a rather fast pace.
"Mr. Xia, frankly speaking, our current means of directly countering the Feiniao platform are very limited. We can't wage a price war—Hongyuan's module pricing is already close to cost; we don't have the capability to produce modules of equivalent quality at a lower price. Supply chain pressure—with Lianchuang and Weigan entering the market, Hongyuan's sensor supply chain has backup plans, and our leverage with Bosch and TDK has significantly decreased. Legal means—Wu Zheng's non-compete cooling-off period has ended, and there's no new legal basis for filing another lawsuit after the previous withdrawal."
He paused, seemingly considering how to say what to say next.
"Therefore—if Tianying cannot develop its own flight control system, we will essentially have no leverage to fight back in the consumer hardware market."
Xia Kanghao turned around.
"Then let's not go head-to-head with him in the consumer market."
Everyone was looking at him.
"I'm making two decisions today."
He walked back to the head of the table and sat down. He tapped his fingers rhythmically twice on the table.
"First—the Tianying's self-developed flight control project has been accelerated immediately. The team has expanded from eight to twenty people. The budget has been increased from fifteen million to forty million. A usable version must be available by the middle of next year. If we can't do that—"
He glanced at Lu Weimin.
"—Tianying's consumer hardware business will be shut down directly. Resources will be concentrated on areas where there is still potential."
Lu Weimin's lips twitched slightly. But he didn't say anything.
"second."
Xia Kanghao's tone changed. It wasn't furious, nor anxious. It was the calmness one displays when a new move has been discovered on the chessboard.
"Arrange an informal meeting with DJI. Not to discuss cooperation, but to sound them out and see what DJI's attitude is towards the Hongyuan Flying Bird platform."
Yang Ruian raised his eyebrows slightly.
"What Mr. Xia means is—"
"DJI's flight control system has always been a closed ecosystem. They've never opened it up to the public. That's their moat. But what Hongyuan is trying to do now is to turn flight control into an open industry standard. If Hongyuan really succeeds, DJI will face a very delicate situation. Although DJI's own products won't be directly impacted, in emerging application markets such as agricultural spraying, industrial inspection, logistics, and emergency response, Hongyuan's flight control platform will quickly penetrate the products of many small and medium-sized competitors. These competitors may not seem like much individually, but two hundred of them together represent a collective force that DJI has to take seriously."
"so--"
"So DJI faces two choices. Either ignore Hongyuan and continue down the closed path—but watch Hongyuan build an increasingly deep foundation in emerging markets through its platform strategy; or—develop its own open flight control solution and compete with Hongyuan for the right to set standards."
Xia Kanghao leaned back in his chair.
"If DJI chooses the second path—then we'll have a potential ally. Haotai's capital, Tianying's brand and distribution channels, plus DJI's flight control technology—a three-way collaboration to launch an alternative open flight control standard—could potentially shake Hongyuan's monopoly expectations."
Yang Ruian's glasses glinted under the light.
"Theoretically, it's feasible. But persuading DJI to open up its flight control system—that might be even more difficult than persuading them to cooperate with us. DJI's entire business logic is built on a closed ecosystem. Getting them to reveal their core technology—"
"I don't need to convince them to open up," Xia Kanghao interrupted him. "I just need to make DJI realize one thing: if they don't create their own open standards, Hongyuan will become the only open flight control platform in the industry. At that point—even DJI—will have to face the reality that Hongyuan flight control will be operating in every emerging market. Fear is the best persuasion tool."
His fingers tapped the table one last time.
"Ryan, you arrange the contact with DJI. First, sound them out with the middle management at their Shenzhen R&D center—no need to alert the higher-ups. Figure out their attitude first."
"clear."
Xia Kanghao stood up.
Then he glanced at Lu Weimin one last time.
"Mr. Lu, regarding the flight control system—you know what that means. The deadline is the middle of next year."
Lu Weimin's Adam's apple bobbed.
"……clear."
That concludes today's meeting.
Xia Kanghao paused for a few seconds at the elevator after leaving the conference room. He was the only one in the corridor. Through the glass curtain wall, the lights of Victoria Harbour below cast a flowing, dark golden glow.
He was thinking about something.
More than three years ago—when he first heard the name Su Chen. A young man in his twenties took over a small factory with only 1.2 million yuan in cash on hand. At that time, Hong Yuan wasn't even a word in Xia Kanghao's dictionary.
Three years later, this young man stood at a press conference in Shenzhen and announced that he would make his flight control system the infrastructure of the entire industry.
And he—Xia Kanghao—with billions of dollars in capital, launched two attacks, and tried to exert pressure three times—in the end, he not only failed to suppress Hongyuan, but was forced to the point where he needed to persuade DJI to join forces.
He recalled what he had said at that media briefing last year.
"I'm not interested in the word 'far'."
Looking back now, the word "far" is precisely what he should have valued from the very beginning.
The elevator doors opened silently. He stepped inside.
Late at night on the same day. Longhua, Shenzhen.
Su Chen was still in his office on the seventeenth floor.
Two windows are open side by side on the computer screen.
On the left is a summary of the first-day pre-order data from the Feiniao platform—in just over ten hours since the press conference, 47 companies have submitted letters of intent to pre-order modules. The total number of pre-orders exceeds 20,000. The high-end version accounts for over 60% of these.
On the right is a list of acquisition candidates that Xu Lang has reorganized today. The third company on the list is "Zhongyi Aviation Technology," headquartered in Chengdu. It has 460 employees. For seven years, it has been integrating commercial drone systems—it has its own production lines for motors, gimbals, and image transmission systems, but it has always relied on external procurement solutions for flight control.
This company's revenue last year was 120 million. Its valuation is estimated to be between 500 and 600 million.
Su Chen stared at the document for a long time.
Then he opened a new document. He typed a few words in the title bar:
"Hongyuan's Second Three-Year Plan - Action Plan for the Second Half of 2020"
He wrote four lines in the body of the document:
I. Flying Bird Platform: The first batch of deliveries was completed in the second quarter, and the number of signed customers will exceed one hundred by the end of the year.
II. Acquisition of Zhongyi: Initial contact and evaluation will be completed in the second quarter, due diligence will be initiated in the third quarter, and the signing will be completed before the fourth quarter.
III. H-Link Low-Altitude Communication Module: The radio frequency team has been assembled and proof of concept will be completed by the end of the year.
IV. F5: Small-scale testing will be completed in the second quarter, and it will be officially released in the fourth quarter.
Four lines. Four directions. None of them are easy. Each one is related to where Hung Yuan can go in the next three years.
He saved the document and shut down his computer.
The April night in Shenzhen outside the window was hot and humid. In the distance, at a construction site in Longhua District, the red warning lights of several tower cranes flashed slowly. That was the direction of the new factory in Dongguan.
He stood by the window for a while.
2020. Hongyuan's fourth year.
The bird has left the launch pad. The question now isn't how high it flies, but whether it can stay stable in the wind.
He drew the curtains.