socalfunplaces Chapter 74 Orders Stolen
Chapter 74 Orders Stolen
In early 1968, the chill had gradually faded, and the sea breeze from Victoria Harbour blew across Hong Kong Island, carrying the salty smell of the sea, but it could not dispel the anxiety that permeated the Chung Wah Industrial Park.
Lin Zhou sat behind his mahogany desk in his office, a freshly lit cigarette between his fingers, the smoke curling upwards, blurring the thoughts in his eyes. Several documents awaiting signature lay spread out on the desk, the top one being the export customs declaration for Zhonghua air fryers, the neat handwriting in pen belonging to his secretary, Ms. Chen.
Since Lin Zhou finalized the overseas promotion strategy for lawnmowers at the steel mill in the Lou family, he has entrusted Ms. Chen with the responsibility of contacting distributors in Western countries. She is fluent in English and familiar with foreign trade procedures. In just half a month, she has already reached preliminary cooperation agreements with three European agents. Lin Zhou no longer interferes with the matter after that.
He picked up his pen, the nib gliding across the paper, leaving a steady signature. This air fryer business, while not the most profitable, was stable, providing a continuous cash flow for the Zhonghua Group and giving him more influence in Hong Kong's manufacturing circle. Putting down the pen, Lin Zhou rubbed his temples. Lately, he'd been swamped with琐事 (trivial matters), from repaying family debts to negotiating partnerships with other manufacturers—all requiring his personal attention.
Just then, there was a gentle knock on the office door, two soft "thumps" with a gentle rhythm.
"Come in," Lin Zhou said in a raised voice.
The door opened, and Su Wanqing walked in. She was wearing a well-tailored light blue work dress, her hair neatly pulled back, and a hint of worry on her face. As the general manager of Zhonghua Industrial Park, Su Wanqing was known for her competence and composure, and rarely showed such an expression.
"President Lin, this is this month's production report. I'm bringing it to you." Su Wanqing placed a thick folder on her desk, her voice gentle but unable to hide her lack of confidence.
Lin Zhou picked up the report and flipped through the data with his fingertips, his brows gradually furrowing. The data on the report clearly showed that the capacity utilization rate of air fryers had plummeted from full capacity last month to less than 30% this month, with most of the production lines idle. Only a few overseas brand OEM orders were keeping some workshops working overtime.
"What happened?" Lin Zhou put down the report and looked at Su Wanqing. The air fryer was Zhonghua Group's flagship product. With its unique design and practical functions, it had created a sensation in Western countries and even Southeast Asian markets, with orders booked up for three months. How could it suddenly be unsaleable?
Su Wanqing sighed, her tone tinged with helplessness: "President Lin, do you remember the patent licensing agreements we signed with Siemens, Philips, and Cyber last month? After they obtained the licenses, they immediately launched their own air fryer products, and their prices were 10% lower than ours."
Lin Zhou nodded; of course he remembered. The initial patent licensing agreement was signed partly to quickly recoup funds and invest in new research and development.
On the other hand, it is also to leverage the channels of these three major international manufacturers to expand market awareness of air fryers.
After all, in the 60s, brands like Siemens and Philips had extremely high brand recognition and well-established sales networks worldwide, while Zhonghua Group, as a newly emerging enterprise in Hong Kong, had far less influence in overseas markets.
"How can their production costs be lower than ours?" Lin Zhou asked, somewhat puzzled. Zhonghua Industrial Park uses the most advanced production lines, and the workers' skills are constantly improving, so production costs have been controlled to a very low level.
"It's mainly due to economies of scale," Su Wanqing explained. "These three companies have production bases all over the world, and they purchase raw materials in huge quantities, allowing them to get lower prices. Moreover, their production lines are more automated than ours, so their labor costs may not necessarily be lower than ours."
But most importantly, they leveraged their existing sales channels to distribute their products, saving significant costs on channel development, which allowed them to maintain such low prices.
Lin Zhou fell silent. He had to admit that Su Wanqing was right. Although Zhonghua Group was developing rapidly, it still lagged behind these multinational giants in terms of scale, distribution channels, and brand influence. Patent licensing seemed like a win-win collaboration, but the other party was clearly better at leveraging its own advantages to quickly seize market share.
"What about our long-term clients?" Lin Zhou pressed.
"Some of them snatched it up, and others are still watching and waiting." Su Wanqing's tone became even heavier. "Some distributors feel that since the same patented technology is available at a lower price from international brands, and the quality is also guaranteed, they are naturally more willing to stock their products. Now our order volume has plummeted, and there are already more than 2,000 workers idle on the production line. If this continues, we may have to consider layoffs."
The word "layoffs" weighed heavily on Lin Zhou's mind. Many of these workers were recruited from nearby areas, and many others had come seeking employment after seeing job postings for men in the newspaper. He simply couldn't bear to see them lose their jobs. Moreover, layoffs would affect the company's cohesion and be detrimental to its long-term development.
"Don't mention layoffs yet," Lin Zhou said in a deep voice. "Workers' wages will be paid as usual, and idle production lines will undergo equipment maintenance and upgrades first. We can't let the machines rust."
"But this will greatly increase our operating costs," Su Wanqing said with some concern.
"I know." Lin Zhou nodded, looking out the window. Not long ago, he was riding high, the air fryer market booming globally with a promising future. But who could have imagined that the production line for this core product would now be idle? "The most important thing now isn't cost-saving, but stabilizing the situation. The urgent task is to develop a new product, one that can disrupt the existing market structure and allow us to regain the initiative."
A glint of light flashed in Su Wanqing's eyes: "President Lin, do you have any ideas yet?"
Lin Zhou shook his head: "Not yet. However, we can't just sit idly by. The success of the air fryer has shown us the importance of innovation. Only by continuously launching new and competitive products can we remain invincible in the fierce market competition."
He paused, then continued, "Go back and make arrangements. Have the R&D department focus their efforts on gathering information on all types of home appliances currently available on the market, and analyzing market demand and technological trends. Also, ensure the quality and delivery time of orders from the OEM workshop; we can't let the slow sales of core products damage our reputation."
"Okay, Mr. Lin, I'll take care of it right away." Su Wanqing nodded, her anxiety easing slightly. She knew Lin Zhou was always resourceful and could always turn danger into safety, and this time should be no exception.
After seeing Su Wanqing off, Lin Zhou sat back down at his desk, picked up the production report again, and his gaze became even more determined. While the patent licensing decision had temporarily put him at a disadvantage, it had also made him acutely aware of how dangerous it was to rely on a single product. In this era of rapid technological iteration and fierce market competition, only by maintaining continuous innovation could one truly seize the initiative.