Chapter 399 Fall
Three months have passed since the Asian financial crisis broke out in July. It is now October.
Ron was very busy, but he had never come to Suol Electric for a meeting.
As soon as I sat down, a bunch of bad news came in, mostly about export trade.
First, Sri Lanka almost cut all orders for imported televisions this year.
As a result, Sur Electric lost the export of 600,000 televisions of various models, with a total value of 4.4 billion rupees, or about US$100 million.
The entire economic output there depends on exporting agricultural products, and the financial crisis has dealt a devastating blow to Sri Lanka's export trade.
Without income, there is naturally no money to buy entertainment items such as televisions.
Although the situation in the Persian Gulf countries is not as exaggerated, orders have also dropped by 30%.
There hasn't been much change in Africa, except that most televisions exported there are black and white, so the profit margin is limited.
In fact, the impact of the financial crisis began in May, when Sur Electric's export orders began to shrink.
After several months of fermentation, even the domestic market is turbulent.
The company exports not only televisions but also other small appliances, which are also very popular in the Persian Gulf countries.
These are high-volume products that originally had a clear upward trend, but now seem to have been forcibly suppressed.
Summarizing several months of data, the small appliance division, white appliance division, and television division have an average monthly profit of around 9 billion rupees.
This number is slightly lower than the peak last year, and the impact is multi-faceted.
First, there are more and more localized manufacturers, competition is fierce, and there is already a trend of price war.
Secondly, the depreciation of the rupee and the rise in raw material prices have further squeezed profit margins.
Foreign trade has suffered a heavy blow in recent months, causing Sur Electric's profit growth to enter a weak phase.
"Boss, are you considering raising prices? Some companies can't stand it and are already raising prices," asked Ashish.
"Not yet. The more you stay calm now, the more you need to remain patient. The financial crisis won't last long. There will be a turnaround by the end of next year at the latest."
"But many international financial experts are pessimistic about the Asian economy. They believe this is a long process." Yash pays more attention to overseas news.
"Experts know nothing about economics. They even predicted the collapse of the University of Tokyo. But they've made these predictions dozens of times, and none of them have come true."
"Uh" Ash touched his nose, it seemed to make some sense.
“Our confidence comes from India’s population of one billion, but currently only fewer than 50 million households own a television, a considerable number of which are in shopping malls and the public sector.
This financial crisis hasn't had a significant impact on the Indian subcontinent. As long as people's livelihoods remain stable, demand for televisions will continue to rise over the next few years. This is the general trend."
Neither India nor Southeast Asia has fully liberalized its economy, so the so-called financial crisis has had limited impact on them.
In addition, the crisis did not last long, so there was no need to raise prices to protect profits.
It's only a year, Ron can afford to wait.
“How are the new products performing this year?”
"Very good." Ashish was visibly cheered up when he mentioned this.
"How do you say that?"
"On the streets of Mumbai, pagers have become the most popular fashion product among young people." He handed over a few newspapers.
It was obvious that it was carefully preserved. That was in June when the Sur pager was just released.
Newspapers used sensational headlines like "Soul Pagers Enslave Today's Youth!" to attract attention.
The content was nothing more than reports about young people being addicted to pagers, a new communication tool, and the language was extremely exaggerated.
The reason why the word "addicted" is used is because Sur Electric and India Mobile have jointly launched a set of code books.
This code booklet is only a few pages long, with different combinations of English letters or numbers corresponding to different sentences.
For example, "IMU" means "I miss you" and "SYOP" means "see you at the old place".
It is true that a pager is a one-way communication device, but it can receive messages sent by the paging station.
The dialer simply took out a booklet and told the operator the code to be sent, and the information was then transmitted through the signal tower to the designated pager.
If the party receiving the message is familiar with the code book, they will know what the other party means.
Young people especially enjoy this kind of furtive and ambiguous behavior, even though they can sometimes just call a public phone.
Some veterans even memorize the entire code book and can chat with others at any telephone booth on the roadside.
To put it bluntly, this is a complicated version of the SMS function, but young people enjoy it.
Pagers are not expensive, only 1,600 rupees, and many people can buy two with a month's salary.
As soon as it was launched on the market, the Sur pager experienced explosive sales growth.
"Boss, 500,000!" Ashish gestured. "Four months! And it's still rising rapidly, almost doubling."
"Are there more bare-metal phones or contract phones?" Ron's eyes lit up.
"Most of them have bare-metal phones, but almost everyone has chosen India Mobile's services because we are the only one with the matching code book."
"Well done!" Ron praised sincerely.
At Sur Electric Appliances, he is basically in a state of focusing on the big and letting go of the small.
He only attends meetings when new product development is confirmed.
He did not take charge of the subsequent technical research and development, engineering machine trials, mass production, promotion and sales.
Facts have proven that Sur Electric is already a mature and excellent company, and is a top player in India.
"The marketing team believes that the sales of pagers are expected to exceed one million units by the end of this year." Ashish reported another piece of good news.
"How's the profit?" Ron asked.
"After mass production, the cost has been reduced a bit. Now the net profit per unit is about 500 rupees, with a profit margin of 31.25%."
"It's slightly lower than expected, but that's due to the broader environment. Asia's import and export trade is currently in a downturn, so we'll see if chip purchases can further drive down prices."
"Yes, boss."
When the pager was first designed, the net profit per unit was set at Rs 600.
Then the financial crisis hit, the rupee depreciated, and raw material prices rose, all of which squeezed profit margins.
Fortunately, pagers are high-volume products and their prices are not high.
Unlike televisions, which cost thousands or even tens of thousands of rupees, a family would buy one and have seven or eight people watching it.
Pagers are personal items, and it is entirely possible for adults to have one.
The market is vast and the potential is huge. One million units will definitely not be the peak.
Tsk, this little thing brought Sur Electric a profit of 500 million rupees in just half a year. It's in great demand.
"How about VCD?" Ron became concerned about another flagship product.
"Boss, you should go to the streets and take a look." Ashish became excited.
"Um?"
"Eight out of ten restaurants in Mumbai have Sur's VCDs on display. It's almost become standard."
"So popular?"
"Who among Indians doesn't love movies? When people go out for a stroll and see how lively the teahouses and restaurants are, they will sit down and have a cup of tea, even if they're not thirsty or hungry."
"This marketing strategy is good. It can quickly increase the popularity of VCD." Ron nodded with satisfaction.
"That's not all!" Ashish said proudly. "Many hotels also put a VCD player in the room, especially those with movies like The Seafood Merchant, which are very popular among couples. Oh, and there are also screening rooms."
Ashish said that the marketing of VCD was very successful. They initially targeted the streets, hoping to use the foot traffic to promote the new product, which is a very efficient way to launch the product.
They succeeded, and this new type of movie player quickly became popular in shops on the streets of Mumbai.
As long as you turn up the volume a little, passers-by on the roadside will stop and be attracted to enter the store.
In terms of the effect of attracting customers, it can be said to be immediate.
For the sake of business, the shop owner naturally does not hesitate to spend several thousand rupees on a VCD.
The next customers who came to the door were not the expected street customers, but the hotel.
The kind of hotel that is between a youth hostel and a hotel, which is not as star-rated as the better ones, but looks down upon by the worse ones like the shabby youth hostels.
In order to attract customers, the hotel owner had the ingenuity to install a VCD player in the room, and the discs that came with it were all restricted-level films such as adult and erotic films.
The hotel owner has a very clear goal, which is to target young couples.
Men and women in the passionate period of love are always very passionate, and if there is a movie to liven up the mood, it will be extremely exciting.
It turns out that Indians, who grew up eating curry, love the atmosphere of this private cinema.
Through word of mouth, couples would ask before checking into a hotel whether there was a VCD player.
Where there is demand, there is a market.
The order demands from inns and hotels are even more numerous and more urgent than those from street restaurants.
"In the past few months, we've shipped a total of 260,000 VCD players, and the shipments are increasing by 70,000 to 80,000 units each month. Most of them are supplied to these stores and hotels."
"It's growing very fast, but this part of the market is limited. We can talk to those big hotels. Since they focus on high-end experiences, it makes sense for them not to provide private cinema services to their customers. If you make a large one-time purchase, you can give them a discount."
"Yes, Boss. We are currently focusing our sales efforts on major cities like Mumbai and New Delhi, and will gradually expand to other cities. Orders from merchants alone are enough to sustain us for more than half a year."
"How is VCD performing among home users?" This is the biggest market that Ron has in mind.
"We're still quite cautious right now, but more and more people are starting to try our VCDs. Sales from the public have already exceeded 20,000 units in the past month, and we're expecting even higher sales in the future."
"You can increase the advertising budget appropriately, and you can also run promotions, such as combining it with a TV set. In short, you decide the details. I think the market for VCDs in India is huge."
"Understood, boss." Ashish will faithfully carry out these instructions.
He also believes that VCD will have great prospects. Even if it is not as in-demand as television, it will always have one-third or half of the market share.
Sur Electric will definitely make a big bet, which is the key layout for the company to enter the home entertainment market.
The profit margin on VCD players was also very good, with a net profit of 2,000 rupees per unit. With sales of 260,000 units, the final profit was higher than that of 1 million pagers.
It's no wonder that Ron attaches great importance to this. Whether Sur Electric's monthly profit can return to its peak depends on the market performance of these new products.
"By the way, VCD players are selling so well, how do you get the discs that contain the content?"
"Well," Ashish scratched his head, "we have to thank that guy Anand."
"Huh?" Ron asked in surprise.
I hope that guy is not going to do anything weird again.
(End of this chapter)
Continue read on readnovelmtl.com
