This situation has occurred to varying degrees in more than ten important provincial markets, particularly in areas with concentrated electronics malls. In fact, major manufacturers are not afraid of this competition at all, and prices can remain stable.
The first to give up were some small assembly workshops. They had invested all their savings, and when they saw the market trend was not right, they wanted to sell and cut their losses as soon as possible.
Once one person starts doing this, it will create a chain reaction, causing a market collapse. As soon as users hear that someone has bought the same product at a low price, they will doubt the value of such products.
The situation worsened in the afternoon. Several Jinbao counters were completely unsellable. There were many people looking at the products, but very few actually buying them. After visiting several counters, the urge to buy was almost completely worn off. The only options were to buy something cheaper or wait and see, since it was a big purchase.
Zhu Lidong noticed the changes in the market immediately and called several distributors. The feedback he received made him panic.
After much thought, I decided to report to Lu Feng about the market situation and how he felt things were going to end badly.
Lu Feng made himself a cup of tea. He had a half-day off this afternoon. There was a VCD player in his office playing the Cantonese version of "Mr. Vampire." Although the movie was made in 1985, it was still very enjoyable to watch.
Zhang Fengxia was also engrossed in watching from the sofa, while Feng Zhiyao sat by the window, watching intently.
The phone on her desk rang, startling Zhang Fengxia. She turned around and asked, "Who is it? You scared me to death!"
Lu Feng answered the phone and asked, "Who is this?"
"Mr. Lu, it's me. There's been a huge fluctuation in the market. I noticed the increase in piracy some time ago, and today it's completely erupted. Distributors are reporting that many product prices have been driven down, causing our sales to plummet!" Zhu Lidong said urgently.
"Oh, I see!" Lu Feng asked, "Anything else? I'm watching a movie."
“Mr. Lu, I can sense that the market competition is extremely fierce. Should we back down? Many distributors have called me, asking us to crack down on piracy, otherwise they won’t be able to sell.”
"Piracy can't be eradicated, and price reductions are not allowed. If sales are low, just sell them slowly; it will get better in time." Lu Feng's voice was nonchalant as he said, "Don't worry or get worked up. It's useless. Everything's fine. The factory has already reduced production, so there's nothing to fear!"
Zhu Lidong sensed Lu Feng's calmness. If he thought there was no problem, then there was no problem. After briefly explaining the situation, he hung up the phone.
Then I called the distributor and told them directly that Mr. Lu said not to lower the price, not to panic, and not to be afraid of anything!
Since the last incident, the distributors have lost some trust in Zhu Lidong, but have placed extra trust in Lu Feng. This can be seen as Lu Feng unintentionally diminishing Zhu Lidong's authority in the marketing department.
As darkness fell, today marked the first time since the launch of Jinbao that it hadn't sold out. This situation made many people uneasy, but some still held onto hope, thinking that things would be better tomorrow, as it's the weekend and more people planning to buy VCDs would have time to come.
The next day, panic began to emerge in the market, led by young entrepreneurs. They dared not place any more orders. They had originally thought they could sell a hundred machines in two or three days, but yesterday they hadn't sold a single one.
Some manufacturers that couldn't hold on started to lower prices to clear inventory, while major manufacturers continued to produce at a frantic pace. Even large manufacturers like General Manager Zheng and Li Quanliang felt that there was too much inventory in the market and were ready to stop production at any time.
Too much product spillover is not being absorbed by the market, and the stockpiles in warehouses are tying up a lot of cash flow. Large manufacturers have already sensed something is wrong, but small and medium-sized manufacturers have not yet felt the crisis.
Furthermore, more people are entering this industry late to the party, secretly smuggling motherboards out of factories and wholesaling them. Motherboards from various channels are flooding into small workshops and resellers.
These people believe that the current VCD craze is like the smuggling of television sets back in the day—it will only generate huge profits and there will always be a market for it.
This force propels the market forward, and no matter how hard the major manufacturers try to apply the brakes, they can't stop it.
The news of the plummeting sales of Jinbao VCDs quickly attracted the attention of various media outlets. As another day of writing began, a middle-aged man in the newspaper office sighed as he looked at the headline and said to the young man next to him, "See? Yesterday they were still standing on a pedestal."
The young man glanced at it, then chuckled. The headline read: "Golden Leopard VCD Sales Plummet, Lu Feng Falls from Grace."
The room erupted in laughter as everyone remarked on how stable a newspaper job was, compared to the ups and downs of life where one could soar to great heights only to crash and burn to pieces the next day.
As night fell, the dinner party continued in full swing, but many people began to hesitate. Those who had decided to invest money in VCDs a few days ago were now afraid to go in.
"I heard Jinbao has stopped production? Mr. Liang, didn't you say you and Mr. Lu are good brothers? Why don't you give him a call and ask?"
"That's right, you've been saying you'd call President Lu over, but it's been days and he still hasn't arrived?"
"We can't just buy your materials and then not be able to sell them because the market is bad."
Liang Ligao looked embarrassed and hurriedly picked up his wine glass, saying, "Everyone, please be quiet. There are too many people making VCDs now. The market will eliminate some rubbish products, and then everything will be fine. Our PCB board supplier is my good brother. The quality is absolutely no problem. Let me tell you, the price has risen sharply these past few days."
"I think the price will drop after a while, so I'll buy a batch and stock up. When the VCD market takes off, I'll definitely make a lot of money. This product is the future driver, you know?"
The atmosphere at the scene was somewhat unstable, but everyone chose to believe.
Liang Ligao didn't take a photo with Lu Feng, but he relied on Lu Feng's name to swindle a lot of people and made a fortune during this period.
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