Feng Zhiyao had heard his father mention that the Chen Capital matter might only be in its early stages, with the real drama yet to come. After thinking for a moment, he said, "My father mentioned it."
"What did he say?" Lu Feng asked with interest. "No need to repeat his exact words, just summarize it briefly."
"Let's watch the show!" Feng Zhiyao concluded.
Lu Feng raised an eyebrow. It seemed that waiting a little longer was the right choice. Su Yourong was very smart, and Lu Feng could indeed get some money to help her.
The problem is that in a local financial circle, what matters most often is not money, but connections. Ms. Chen's most powerful tool is not money, nor Chen's Capital, but her network of contacts.
If no one suppresses her connections, she can mobilize ten times more funds than herself. Chen's Capital, with its nearly 10 billion yuan size, is not something that ordinary people can easily challenge.
“Talk to your dad more often these days. A mother worries when her son travels far away, and so does his father!” Lu Feng patted Feng Zhiyao on the shoulder and said, “You’ve grown up now. You should understand how precious companionship is for someone who is getting older.”
Feng Zhiyao nodded heavily, slightly moved, and said, "I know!"
Back at the factory for a few days, Lu Feng spent his time either resting or attending meetings. Currently, Jiafeng Electronics' product lineup relies entirely on the single product of VCD. Although the VCD market is expanding rapidly and further encroaching on the videotape market, piracy is still rampant.
With the launch of a new generation of televisions, featuring larger sizes, clearer screens, and further improvements in display technology, VPT's sales have declined further.
The reason they can still sell now is because of Lu Feng's early layout in rural markets. Sales in big cities are really not good. Don't underestimate the changes in just three short years from 1991 to 1993.
Over the past three years, China's GDP has surged, and the currency has depreciated rapidly due to some major international events. However, per capita income in both urban and rural areas has been steadily increasing, especially in large cities.
The economy has passed the most dangerous period and is now firmly grounded. Domestic industrial upgrading, coupled with inflation, has led to a decrease in the price of electronic products. People have more money in their hands and want to buy some nice things.
With sales declining, WEPT's cassette players and radios have been severely impacted and unable to recover. In the radio segment, monthly sales are less than 30,000 units, resulting in thin profits and low sales volume, which is barely enough to make a difference for the company as a whole.
It is very dangerous for a single product to support the entire company's product line. Another issue is that the factory in Suzhou has been unable to operate at full capacity for a long time due to low market demand.
One or two months shouldn't be a problem, but if it goes on any longer, the employees' salaries will become a burden. If there are a large number of layoffs, it goes without saying that Huang Youwei will talk to Lu Feng the next day.
With the phone on speakerphone, Lu Feng leaned back in his chair, expressionless, deep in thought.
“President Lu, the market for Wepda is already saturated. Even if we expand into other markets, sales will still be sluggish. Our current flagship product is still the Jinbao VCD player.” Zhu Lidong was also somewhat worried and said, “There’s nothing we can do about the market. We can only wait for the R&D company to release new products.”
"How are things in overseas markets? We need to plan ahead for that," Lu Feng said.
“I talked to you about the overseas market a while ago. You also said that we can’t go out into the overseas market. Moreover, there are too many uncertainties in the overseas market, the procedures are very troublesome, and there is also quality inspection!” Zhu Lidong’s head was spinning just thinking about those approval procedures.
"Let's use an export agent."
“Agency? The profit margins are terribly low. Those companies take a huge cut. I’ve heard that for some medium-sized enterprises, the profit margin isn’t even one percent. They can’t even put a brand logo on their products; they can only write down which country the goods come from.” Zhu Lidong sighed and said, “With that little profit, it’s not even enough to fill a tooth gap in a year.”
"Of course I know, the problem is that we need to support workers. I can't lay off a large number of employees. Several production lines are not operating right now. We can sell whatever we can, even if it's just OEM. The key is to get the company running. This year is a special year."
Zhu Lidong was even more worried because the return on investment for this export trade was very slow. It required the goods to go through quality inspection by those companies first, then be loaded onto the ship, unloaded at the destination, and then the company there would conduct the transaction before the payment process could begin.
The money first goes to the agency, who takes a cut before giving the money to the manufacturer. This process normally takes about half a year, and that's if sales are good.
If the product doesn't sell well, the process will be even slower.
Another risk is that the agency company runs away with the money. There are too many agency companies running away these days. They act as agents for many export trading companies, and sometimes the one-time payment is hundreds of millions of yuan.
Many agency companies simply pocket the money and go abroad to enjoy themselves, causing people to avoid this agency export model now.
All the risks are yours, most of the profits are taken by the other party, and there are even cases where you get nothing at all.
Those who take on these overseas orders are either trustworthy individuals or companies that are truly on the verge of collapse. They take on an order, then use the invoice as collateral at a bank to obtain cash, hoping that even without the money, the company can survive in six months.
“Mr. Lu, if you want to do it, you can give it a try. But I think the chances of getting scammed are extremely high.” Zhu Lidong warned, “Lenovo was scammed before and almost couldn’t get the money back.”
Lu Feng didn't know much about overseas exports. Back then, he only heard bits and pieces from some veteran businessmen, which was very confusing. Sometimes, it wasn't business, it was outright robbery!
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