Losing Money to Be a Tycoon

However, it became Chang You’s turn to hesitate after he heard that Pei Qian’s intention was to create a cell phone priced at around eight thousand yuan.

“Boss Pei, this price range is meant for extremely high-end models. At the moment, even Pineapple hasn’t taken that step…

“If you set the price at that range, there would only be two possibilities.

“One, we could explain the high price based on our brand’s high added value. However, that would only succeed if the market already has an impression of our brand.

“Two, we could explain the high price based on the technology, services, and the like. We would have to ensure that the value of our cell phone and the peripheral benefits actually match this price range.

“The former is definitely impossible. The latter… Would be quite difficult.

“Personally, I think we should make high-end cell phones priced at four to five thousand yuan. That would increase our chances of success.”

Chang You had never thought that these words would come out of his mouth.

When he had been working at Hongcheng Technologies, Chang You always pushed the boss and other managers to work on high-end cell phones and not to always stick to low-end models priced at one thousand yuan or mid-end models priced at two thousand yuan. He always insisted they had to try producing cell phones in the four- to five-thousand-yuan price range.

However, no one had paid attention to him. They had been too obsessed with producing low-end models and earning quick bucks.

Now, it was completely the opposite.

His boss was insisting on producing cell phones worth eight thousand yuan, and the normally-ambitious Chang You had become the conservative one.

At that moment, Chang You found it difficult to adapt. He never thought that people would one day label him as ‘conservative’.

However, Pei Qian was already prepared for this.

Do you think I didn’t consider any of these things before I decided to work on high-end cell phones?

Even if I wanted to charge an IQ tax[1], the System wouldn’t let me!

If Pei Qian worked on a three-thousand-yuan cell phone model and tried to force its price up to eight thousand yuan, the System wouldn’t allow him to. That was because the cell phone’s selling price would obviously be much higher than its cost price.

The System allowed Pei Qian to set a selling price within a fixed range, but he could not exceed that range.

Big international brands that charged high premiums had an approximately thirty-percent profit margin, but local brands’ profit margins were only about ten percent.

That meant if Pei Qian wanted to produce cell phones, he could not have a profit margin of more than thirty percent.

In fact, Pei Qian wanted to minimize his profit margin as much as possible.

That was because the high-end market would only target ballers. Pei Qian had already learned from his experience with the Red Kilin. Ballers would be happy to spend eight thousand yuan. Spending five hundred or a thousand yuan more would not mean anything to them.

In other words…

If they failed to sell their cell phones, their price would not matter. Boss Pei would still incur losses.

However, if they managed to sell a few cell phones, the higher Pei Qian priced them; the less loss he would incur.

Thus, setting a lower price would ensure he minimized any profit he could earn. Even if they did manage to sell some cell phones, Pei Qian would not earn much. He would still be able to incur overall losses.

Then, he would invest a huge sum of money in producing hundreds of stocks to be stored in the warehouses. If nobody bought them, he would keep lowering their prices. He would be happily incurring losses then, right?

Pei Qian smiled confidently and said to Chang You, “If we increase our cell phones’ added value, it would be akin to charging an IQ tax. How can we do that? It’s despicable behavior!

“We have to spend as much as we can on the hardware and technology!

“As for profit margins, I think five percent is good enough. We’ll fight for more sales first.”

Chang You fell into deep thought.

He had many opinions about the cell phone business, but at that moment, he was completely at a loss for words.

Spend as much as we can on hardware and technology? A profit margin of five percent is good enough? It sounded like there was still the possibility of success. Yet, the plan sounded so unreliable at the same time.

Looking at Chang You’s pained expression, Pei Qian became very concerned. He asked, “Is there a problem with making sure our hardware and technology reaches this price range?”

Chang You hesitated and then said, “It’s not impossible if we insist on pushing the hardware and technology into this price range.

“However, there will be two problems.

“First of all, we will not sell that many cell phones. The high price is set by the low supply. That’s one.

“Two, if we want to push for expensive hardware and technology, we have to be prepared that they would not be fully mature. Little problems might crop up here and there, and we would not be able to guarantee our cell phones’ final pass yield.

“The former can be easily dealt with; we would only need to spend more money. However, the latter will be dangerous for a high-end cell phone brand. In fact, I would say it’s fatal.

“An eight-thousand-yuan cell phone cannot be breaking every two or three days. What kind of impression would this leave our customers with?

“Of course, things wouldn’t be that bad. I’m not saying that eight in every ten cell phones would be unusable. However, if eight or nine in every hundred cell phones are problematic, our reputation would still take a huge hit.

“The more new technologies we make use of, the more serious the problem would become.”

Low final pass yield?

Pei Qian smiled. “That’s easy to resolve. We can create a data transfer function. If our customers’ cell phones break down, we can deliver a new one to their doorstep. Since ours is a high-end brand, we can only replace cell phones and not repair them.”

Pei Qian was thinking that few people would buy the cell phone anyway. They would have so many stocks in their warehouse. Even if someone unfortunately received a problematic phone, they could promise to replace it unconditionally.

At that point, Pei Qian thought of another problem. They could solve it at the same time. “One more thing: we have to think of additional unique services that we can provide for our customers.

“One example would be free doorstep delivery. If customers’ cell phones break down and they stay in Jingzhou, our men would send a new one to their doorstep. They would help with the data transfer on the spot and recall the old cell phone. They would also bring a gift with them to express our apologies.

“If they live outside Jingzhou, we can partner with other delivery companies to get their cell phones delivered to them, have their data transferred, and bring their old cell phones back.

“They could also get a few free hours of gaming at Fish-Catching Internet Cafe every month if they show their phone or something

“All in all, we need to add a few additional services to make the price customers would be paying worth it.”

Since the System insisted that the cell phone had to be worth its price, Pei Qian thought about adding a few more expensive technologies in the supply chain and a bunch of useless additional services. At least this would roughly deal with the System’s restrictions.

Chang You stared at Boss Pei, his eyes filled with confusion and a hint of respect.

There were so many problems, but Pei Qian had dealt with them so decisively.

Of course, Chang You could not tell if these solutions would work out in the end. Yet, at least they had a game plan.

Chang You pondered for a moment and suddenly jumped. Inwardly, he questioned himself. Chang You, Chang You… since when did you transform into the very person you hate?

He recalled the environment in Hongcheng Technologies. Back then, he had tried hard to persuade his boss to use new technologies, set a higher price for their cell phones, and move away from the low-end market. However, his boss and other high-ranking employees kept finding problems with his suggestions in order to run away from adopting them.

Every day, he heard arguments like ‘we can’t work on high-end models’, ‘the customers wouldn’t like it’, ‘we can’t guarantee the final pass yield’, and ‘this isn’t appropriate’.

At the time, he had been very angry. These problems existed, but they could not sit back and do nothing just because that was true! Instead, they should have worked hard to deal with those problems!

Yet, now, Chang You was playing a completely different role in front of Boss Pei.

He kept raising problems. On the other hand, Boss Pei kept resolving them!

Chang You, Chang You… why should Boss Pei trust you if you keep running away from problems and shirking responsibilities?

After asking himself this question, Chang You made up his mind. “Alright, Boss Pei! I think this plan will work! I’ll work as hard as I can to do this well!

“However… Boss Pei, I have a bold request to make.”

Pei Qian nodded. “Go ahead; speak your mind.”

Chang You said, “When I was working at Hongcheng Technologies, I had a band of brothers. When the company collapsed, each of us went our separate ways. Some of them waited for job openings while some transferred to other companies. We still keep in touch.

“If you don’t mind, could I bring all of them over to Tengda? Don’t worry, Boss Pei. You don’t have to pay them that much!”

Huh?

When Pei Qian heard this, his eyes lit up.

Isn’t this the dream team that caused the collapse of Hongcheng Technologies? That’s great! It saves me from having to look for more people to recruit!

Pei Qian knew very well that Chang You was not well-liked in the industry. However, the new tech company would be Tengda’s subsidiary. No matter what, it would be a part of Tengda.

If Chang You tried to recruit others based on Tengda’s reputation, he might find big shots in the industry. Even if those big shots did not like Chang You, they could still join on account of Tengda’s fame. If Chang You managed to recruit a few big shots to join his team, the business could really succeed. What would Pei Qian do then?

Now, Chang You was intending to bring the dream team that caused Hongcheng Technologies’ collapse over to the new company. Of course, Pei Qian was pleasantly surprised.

“No problem! Recruit whoever you want. Just say the word, and I won’t interfere.

“However, there’s something else I must make clear. If you bring your brothers to Jingzhou for work, we have to make sure they are treated well. Each of them will be paid additional moving and accommodation allowance!

“We won’t be stingy towards your brothers either; their salary will be at least thirty percent more of what they used to earn!

“Once the products are complete—no matter the sales volume, we will award bonuses and benefits according to the holding company’s standards. We won’t shortchange them!”

Chang You’s hands trembled slightly. He felt both excited and moved.

What was this? It was his boss trusting him absolutely!

Just like that, Chang You was given the power to hire and dismiss whomever he wanted. Would Pei Qian have given him such a power if he did not have complete trust in Chang You’s skills and talents?

At first, Chang You thought that research and development would be extremely stressful. He would be working with technologies that had not matured yet. Even if he would just be piecing them together, there were bound to be many problems.

Yet, now, he would have the same group of brothers who had worked alongside him before. They could continue working on the projects that they had been forced to stop midway before.

What’s more, Boss Pei trusted Chang You so much. Even if the latter had to offer his life to resolve these problems, he would willingly do

so!

Pei Qian thought of another problem and figured that it would be best to clarify things as early as possible.

“Vice President Change, there is another matter.

“Although you will be in charge of all the projects under this new company, Tengda will also appoint a director. Formally, she will be ranked higher than you in the company.

“However, you must have your own opinions. If both of you meet with any conflict, just let me know. I’ll mediate between you, understand?”

Pei Qian had not forgotten that there was a secondary aim for this cell phone business. That was to push Lin Wan to take over her family business as soon as possible. If Pei Qian allowed Lin Wan to wash her hands off the cell phone business, she would remain unaffected even if it failed later on.

Thus, Pei Qian had to make sure that Lin Wan remained in charge of the cell phone business over all, even if it was only in name.

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The end goal was to let Lin Wan have a hand in managing the cell phone business but not to let her micromanage her employees. The best-case scenario would be if the business failed, and Lin Wan felt responsible.

Thus, Pei Qian had to help Chang You in secret.

Chang You nodded. “Don’t worry, Boss Pei. I’ll get along well with the director.”

Chang You obviously did not understand the gravity of this problem. However, Pei Qian could not explain much more. He could only wait until real problems started to arise.

At that moment, Chang You recalled another critical issue. “Boss Pei, we haven’t thought of a name for the company.”

Pei Qian only remembered this after Chang You reminded him. That’s right. They had already thought about the development plan, and yet they had not even decided on the company’s name yet.

Pei Qian pondered for a moment about what name would be best.

What kind of name should a high-end cell phone brand have? One that sounded low-class! The name of the brand would greatly influence customers’ first impression of it.

Many brand names sounded low-class and tacky. Thus, even though they produced high-end models, most people did not see their products’ true value.

That was why Pei Qian had to think of the tackiest name possible.

Yet, he could not name his company ‘Goudan Mobile’ or ‘Cuihua Cell Phones'[2]. Chang You would never allow it.

After some thought, Pei Qian said, “To pave the company’s way into the international market and in hopes of becoming a big, international brand; we should come up with a name with a single English word. That would be easy to remember as well. “It will be a transliteration of a Chinese name with a deep metaphor.”

Chang You expressed approval. “Yes, that’s a good idea.”

Pei Qian considered for a moment and said, “We’ll be called Otto Technologies. In Mandarin, it would be Outu Technologies.

” ‘Ou’ stands for the mew gull, which travels all over the world in the space between the sky and sea. This is a metaphor for our company expanding all over the world like the mew gull. Our company’s prospects would be as vast as the sky and as magnificent as the sea.

” Tu’ stands for our ambition to become the master of the universe. Naturally, it symbolizes our company’s lofty goals!”

In actual fact, Pei Qian hoped for the company to become highly paralyzed and collapse as soon as possible.

Chang You fell into deep thought once again. The name’s metaphor was quite good, and it rolled off the tongue as well.

Yet, Chang You inexplicably felt that it sounded faintly foreboding.

[1] This is a Chinese internet slang to describe a hefty price that only uninformed customers would pay.

[2] Goudan and Cuihua are common and tacky names of people in the countryside.