Chapter 233: A Show of Power
Sur Electric is already quite famous in India, but its product range is not rich enough.
Water air conditioners and electric fans strictly speaking belong to the same category of household appliances, and they are obviously affected by the seasons.
If it is the rainy season or winter, the market presence of Sur Electric Appliances will drop sharply.
Therefore, television is Ron’s next core project, and it is an important opportunity for Sur Electric Appliances to enter thousands of households.
As early as the end of last year, he asked people to contact overseas manufacturers, and Ashish was responsible for technical follow-up.
"Have you gained anything in the past few months?" Ron asked.
"Boss, this is the fax they replied to." Ashish handed over the information.
Ron took it and glanced at it casually, then frowned.
“Are they all Asian companies?”
"European and American brands are not interested in our consultation at all." Ashish was also helpless.
"These guys must be scared." Ron muttered.
With the Coca-Cola incident as a precedent, Western foreign investors are very skeptical about India's business environment.
Coca-Cola was already gaining popularity in the Indian subcontinent in the 1950s.
However, with the signing of the Foreign Exchange Management Act, it withdrew from the Indian market almost overnight.
The bill stipulates that any foreign company that wants to operate in India cannot hold more than 40% of its shares, which means that Coca-Cola must hand over 60% of its shares.
That’s not all. The Indian government also requires Coca-Cola to disclose its formula and share technology with local companies.
It's like a joke. Coca-Cola didn't even pick up the barrel and just ran away.
It was not until the policy was opened last year that it announced its return to India.
It’s just that because the time is too short, other European and American foreign capital is now in a wait-and-see state.
A small and unknown company like Sur Electric Appliances came to the door on its own initiative, but the other party didn't even look at it.
The scale is too small to be ignored.
However, Asian TV manufacturers were very active, faxing each other and chatting enthusiastically.
The one at the top was the Korean company LG. Ron glanced at the English and realized it was the famous LG.
But the conditions of the Koreans are very harsh.
"They want to sell LG TVs in India, but we can't get one?"
"They agreed to help us introduce the assembly line, on the condition that Sur Electric could not produce its own televisions."
"OEM factory." Ron smiled.
Although India has lowered tariffs on electronic products in the past two years, the tax rate is still as high as around 50% for the sake of protecting local industries.
LG is eyeing the Indian market but is unwilling to pay high tariffs.
So what to do? Break the whole machine down into its parts.
LG's TVs are shipped to India in semi-bulk form and assembled by Sur Electric.
The imported assembly production line needs to be purchased at a price of US$2 million.
From the brand, pricing to sales of the televisions produced, it has nothing to do with Sur Electric.
It is definitely a foundry, and a low-end assembly foundry.
"How much profit can we make from producing one of their TV sets?"
"That works out to about $1.5 per unit."
"Damn, are the Koreans treating beggars like this?" Ron cursed angrily.
This is not the worst part. The assembly line has extremely low technical content.
All parts are manufactured in South Korea and arrive in India in a semi-finished state.
Ron doesn't need $2 million, he can get the job done with just 2 million rupees.
To earn $1.5 from manufacturing a TV set means that Sur Electric needs to manufacture 1.4 million TV sets to make a profit.
Damn it, the stick is so broken.
In fact, if the OEM factory is profitable, Ron would consider it.
Just train the workers and steal some technology at the same time.
As a result, the other party also asked Sur Electric to sign a contract explicitly prohibiting it from launching its own brand of televisions within three years.
What's his goal? Wouldn't it be nice to make your own water-cooling system?
The profit of a low-end water air conditioner is about 100 rupees, which is more than twice that of purchasing a television on behalf of others.
"Ask them if they are willing to provide a higher-end production line. The price is negotiable." Suddenly Ron was no longer angry, and his eyes became bright.
"Boss?" Ashish was puzzled.
"Trick him in first." Ron waved his hand.
"What?"
"What we lack is a production line with high technological content. If we can't assemble properly, we will be eliminated in a few years."
"The cost may be higher than 2 million US dollars." Ashish felt a little painful.
"Humph!" Ron sneered.
Two million dollars? The Koreans know nothing about the magical India.
Throwing LG's information aside, Ron continued to look at the conditions of other manufacturers.
The companies willing to quote are South Korean and Japanese companies, which are now in fierce competition and are competing all over the world.
Samsung has its own factories and disdains outsourcing to others. If it is interested in the Indian market, it will most likely come directly to invest, so there is no quotation.
However, Japan's Fujitsu, NEC, Panasonic, Hitachi and Sanyo all replied, expressing their willingness to further discuss cooperation issues.
Among them, NEC's conditions attracted Ron the most. They said they were willing to provide a complete set of CRT TV production lines, and in color.
The demand is also very simple. The two parties set up a joint venture to jointly develop the Indian market.
That sounds good, at least it's not as blatant a robbery as the Koreans.
"Invite them to Mumbai for detailed discussions." Ron immediately made the decision.
"Boss, NEC requires the joint venture to inject at least 10 million US dollars, which is more than 300 million rupees." Ashish blinked.
It is obvious that Sur Electric Appliances does not have that much money, and all their funds have been invested in the construction of the Sur Park.
"Negotiation is just like buying vegetables. You can bargain." Ron was not panicked at all.
"Then I'll contact them."
"Arrange it at the Taj Mahal Hotel, so these little guys can experience the charm of India."
"Okay, very good!" Ashish shook his head happily.
He also wanted to go to the Taj Mahal Hotel. It was a status symbol for successful people and the ultimate goal of many slum dwellers.
Perhaps NEC was genuinely interested in the Indian market, as after Sur Electric extended the invitation, the other party finalized the itinerary within a week.
The leader was called Xiaotian. As soon as they met, he kept bowing to Ron, making him look like the financial sponsor.
How did Ron respond to him? Of course, he shook his head in Indian style.
It's a little funny, but the scene is still friendly.
Ron led them up the white marble steps of the Taj Mahal Hotel, pointing out the Gateway of India.
Being a tour guide was his forte, and he could easily tell you a lot of secrets, which amazed the Japanese group.
They booked a private room at the Shamiana restaurant on the first floor, and the waiter led them to a long table.
There are high windows nearby, through which you can see the sparkling sea.
The sightseeing ferry to and from the Elephanta Caves climbs up the small waves and then slides down again with a cocky and practiced ballet step.
Hundreds of smaller boats ducked in the shallows, bobbing like birds preening their feathers.
The huge cargo ship anchored at the horizon stands motionless like an island on the calm sea surface where the sea and the bay meet.
On the street not far away, tourists strolling through the tall stone corridors of the India Gate weave colorful garlands.
The Japanese were quite satisfied with Ron's arrangements. They liked the scenery and praised the hotel food.
Ron wanted to take them to visit nearby attractions, but Oda declined.
"Mr. Soul, is it convenient for me to visit your company's workshop?"
"Of course." Ron stood up calmly.
Ashish and the others looked at each other in bewilderment. They had never met Japanese people before. According to Indian business habits, they would definitely eat, drink and have fun for a few days before making any decisions.
There are wonderful shows like the palace, and when all these steps are completed, the deal is almost done.
The Japanese are really weird, they don't know how to enjoy life at all.
Ron first took them to the Sur Park, which was bustling with activity.
The yellow tower crane is extremely eye-catching. Clouds of dust are rising from the construction site below it, and scaffolding is rising from the ground.
Busy workers circled around it like ants, and the big mouth of the cement mixer kept turning.
Stone, steel, and cement were piled up like a small mountain. Freshly poured concrete columns had already formed the building's load-bearing skeleton.
"This area, two hundred acres, is all within the planning of the Sur Park." Ron said proudly.
"That's amazing." Xiao Rizi was indeed shocked by such a huge construction site.
In a small area like Japan, it is difficult to allocate such a large plot of land to build a factory.
"The building over there is the future headquarters of Sur Electric Appliances. There is also a high-standard factory building being built simultaneously. That is the area we have reserved for the TV production line." Ron introduced the construction sites one by one.
"The strength of your company is truly amazing." It must be said that after seeing the scene at the construction site, Oda felt much more at ease.
To be able to acquire such a large industrial land in a metropolis like Mumbai, both political and financial background are indispensable.
Apart from anything else, this at least makes NEC feel more at ease with Sur Electric, and this is not a trick of getting something for nothing.
"I heard that your company also produces a magical electric fan. Would it be convenient for me to go and have a look?" Oda was still thinking about the workshop of Sur Electric Appliances.
"Please follow me." Ron led them around to the south.
In a workshop, there's nothing to be shy about. Water-cooled air conditioners aren't high-tech, so there's no need to worry about people seeing them.
Moreover, given their daily lives, they look down on such things. Air conditioning has long been widely popularized in Japan.
Unexpectedly, after arriving at the workshop, the Japanese changed their friendly expressions.
They criticized the workshop of Sur Electric Appliances and said it was a complete disaster from production management, equipment, environment to employees.
They looked so grief-stricken, as if their wives were being humiliated in front of them.
Ashish was furious and wanted to retort angrily. Soul Electric was clearly the company with the highest quality workshops in Mumbai, but they were saying it was like a garbage dump.
Ron stopped him. NEC wasn't a competitor to Soul Electric. What's the panic? He could say whatever he wanted.
"Mr. Oda, there are only a handful of manufacturers in India with more advanced workshops than Soul Electric, and I'm not making this up."
"Advanced?" Xiaotian seemed to have heard a joke. "Let me show you what advanced means!"
He reached out and took a color booklet from his assistant, which was an introduction to NEC's workshop.
Ron opened it, and Ashish beside him immediately fell silent.
From an Indian perspective, NEC's production workshop looks like something out of a science fiction film.
Seeing that Sur Electric was shocked, Oda felt more and more pleased.
If we don’t launch a technical dimensionality reduction attack first, how can we seize the initiative later?
Ron remained calm, thinking it was just a small matter.
“NEC’s workshop is very advanced, but it is not suitable for India and we don’t need it.”
"What?" Oda thought he had misheard.
"Gentlemen, it's time to sit down and talk." Ron extended his hand to invite, calmly and confidently.
(End of this chapter)
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