What Wan Feng said makes sense. If property rights are not clearly understood, there will indeed be many problems in the future.
It's simply unrealistic to invest in a factory yourself. How much capital would that require? It's simply impossible.
The only feasible way is to make use of existing conditions.
“Then how do I clearly define the property rights?”
"The nature of the business must be clear, and the company's assets must be clearly divided. Which ones were originally owned by others, and which ones were acquired with your own money? Don't make it a mess. If you do a good job, what if someone comes to reclaim it? You must have a response plan now, and these measures must be effective when the time comes. Dealing with the government is not easy."
Wan Feng could only speak so vaguely.
"I'll consider this."
"Now, let's talk about business operations. Honestly, our company does have electric motors, and we're capable of mass production. Unfortunately, we're not producing them now. We'll be at least five years from now before we can start mass production. If your company opens five years from now, I can allocate 100,000 or 200,000 units, and you'll have no problem making ends meet. Obviously, this isn't enough. The question now is, what should you do?"
Li Xianrong listened carefully.
"According to the current market conditions of electric motors, I can't help you with anything. I can neither help you sell nor help you produce. Do you have any thoughts of changing careers to work on other projects?" Wan Feng asked directly.
Li Xianrong was clearly unprepared for this answer: "Another project? What?"
"Our group is going to phase out a number of carbureted engines in the next three years. I wonder if you'd be interested in taking on the next step?"
Li Xianrong was dumbfounded. From electric motors to engines, the gap is too big, right?
He knows a lot about engines, but he knows nothing about them!
"Although the carburetor engine has been eliminated by our company, it still has five to seven years of survival in the market, perhaps even longer. This is also a huge market. If you have enough food to eat in the future, and if it fails in the next few years, and if your products are still acceptable, I will give you some of the replacement engines to produce. In this way, your company will survive, and it is not impossible for it to expand."
Carburetor engines can still survive for a few more years in China. After all, electronic fuel injection engines have only been around for two or three years. It will take some time to completely replace carburetor engines, and three to five years is definitely no problem.
It may take longer in the Chinese market.
Those foreigners will not launch any new technologies into the Chinese market first. They use outdated products and will only make a little profit in China.
If it weren't for Nanwan Group, it might take several years for electronic fuel injection engines to appear on a large scale in China, except for a small number of models.
Although Li Da Lao talked about Wanfeng in his ear, Li Xianrong didn't know much about what Wanfeng's companies did. Although he knew that Nanwan Group made cars, he never thought that they also produced engines.
It's not his fault for having this idea. At that time, there were very few domestic car manufacturers that made their own engines. They all relied on buying ready-made engines for assembly.
"Boss Wan! How big can this market be?"
Wan Feng pondered for a moment. "Let me put it this way. If you can get your product through quality control, the market won't have a problem absorbing 50,000 or 60,000 units a year. You don't have to worry about that. If you don't have a sales channel, I'll find one for you and I guarantee I won't take a cent from you as a middleman."
Sales of 50,000 or 60,000 units? How much profit can you expect?
Li Xianrong is a complete novice when it comes to engines and has no idea about them at all.
"This type of engine isn't very valuable on the market. The most valuable engines right now are direct injection or multi-point electronic fuel injection engines, both of which cost over ten thousand yuan each. Carburetor engines are currently half to two-thirds the price of these engines, generally around six thousand yuan. We make a 40% profit on this engine ourselves, and if you make it, you can probably get a 20% profit."
Nanwan Group can now fully produce engine parts by itself, and even if it does not produce them itself, there are supporting factories to follow up.
If Li Xianrong were to do this, many of the parts would have to be purchased from outside, such as carburetors, pistons and crankshafts, so it would be normal for the profit to be reduced by half.
To put it simply, Li Xianrong just builds the engine block and cylinder head by himself, and forges the oil pan and exhaust cover, etc. The rest, including the piston, cylinder sleeve, crankshaft, oil pump, nozzle and carburetor, has to be purchased from outside.
That's an assembly plant.
With a selling price of 6,000 to 7,000 yuan and a profit of 20%, the profit of one engine is about 1,000 yuan.
Fifty to sixty thousand units means a profit of fifty to sixty million! After deducting various expenses, there should be at least thirty to forty million left!
Li Xianrong's breathing became rapid.
When he contracted the electric motor installation business, his biggest wish was to make a million or eight hundred thousand a year, and he never thought about making a profit of tens of millions.
"Boss Wan! How long will it take for our workers to master the technology if we start to operate the engine?"
"The engine itself has blueprints, so if your workers have the basics, it shouldn't be difficult to learn. But the difficult part about gasoline engines is the carburetion and circuitry. Even though your electric motors also involve circuitry, it would take you a while to learn how to produce these engine circuits yourself. And since you can't produce things like crankshafts and pistons, you'll have to buy finished products and assemble them. We have all the finished products here, so you can just bring them back and assemble them."
“How much does the assembly line cost?”
Having accessories without assembly lines is useless.
"Assembly line? Considering your father's diligent work at the company for over a decade, I'll give you a 50,000-unit assembly line for free. But don't be too happy too soon. Talk it over with your father tonight, and then with the factory workers. If you don't have any start-up capital, I'll lend you 5 million. I'll stay here for two days to see if there are any good attractions in Hengren."
Wan Feng spent an hour visiting Li Xianrong's factory, but only spent ten minutes talking to Li Xianrong about business. Then he came out and started studying the beautiful scenery in Hengren County.
Li Xianrong recommended Wanfeng to go to Wunv Mountain, because standing on Wunv Mountain you can see Huanlong Lake and Wanle Island, the largest island in the lake.
These are the three most famous scenic spots in Hengren.
Li Xianrong promised to take Wan Feng and others to see the scenery tomorrow.
Of course, today’s plan is in vain. It’s already 2:30, and it will probably be dark by the time we get to Wunv Mountain.
Wan Feng didn't let Li Da and his son send him off, so the urban area of Hengren County was too powerful and they couldn't get away.
After Wan Feng and his companions left, Li Xianrong reported Wan Feng's plan to his father.
"I think it's possible! Although I, your father, specialize in machine tools in Nanwan and have never tinkered with engines, Nanwan's engines are absolutely competitive in China. I saw that Nanwan has built an engine factory with a production capacity of 300,000 units, and the second phase of the project will have a production capacity of another 300,000 units. Although the technology transferred to you is outdated, if Xiao Wan said it will be no problem in three to five years, then there is no problem."
I made the final decision, and Li Xianrong immediately felt confident.
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