Chapter 98: Monthly Profit of Yuan

Chapter 98: Monthly Profit of Yuan

Chapter 98: A Monthly Profit of

Time quickly came to March 3st.

In Changxing Industrial's new factory, 36 machines are running at full speed.

After Yang Wendong and Su Yiyi took a tour of the factory, they came to the office located at the entrance of the workshop.

When I was in the old factory, the office was very small because the space was too small. Now that we have moved to a new place, things are completely different. Yang Wendong alone has an independent office of over 200 feet (22 square meters).

The others have independent or public offices. For example, Wei Zetao, as the company manager, also has a small office. Two people in the finance department have an office, and the others in production, purchasing, and sales have their offices together.

Everyone’s office space is not crowded.

Wei Zetao, who was sitting at his desk, heard the noise at the door. He looked up and saw that it was his boss. He stood up quickly and said with a smile, "Mr. Yang, Ms. Su."

"Old Wei." Yang Wendong smiled and then asked, "Has there been any feedback from the United States in the past two days?"

Wei Zetao replied: "Yes, I received a call last night, and they hope we can provide more sticky notes as soon as possible.

According to Mr. Robert, the sticky notes we shipped by air were very popular in California and Nevada, and many companies had demand for them.

"Nevada? I remember Robert said before that they would only sell it in California at first!" Yang Wendong was a little surprised after hearing this.

When he was solely in charge before, he was the only one who handled all kinds of clients.

Now that he has more subordinates, he has handed over non-core negotiation client matters to Wei Zetao, who is not only a management talent but also proficient in English.

In Hong Kong, any British foreigner with a little ability or status must know Cantonese, and conversely, English is also a must for Chinese people who want to get ahead.

However, Wei Zetao no longer needs to stay in the company and wait for calls like he did in the early days. Instead, he can just stay at home. He has a telephone at home, and several major overseas clients have also been informed of the new number.

Wei Zetao replied: "I didn't ask, and it's not a big deal. It might be because the two states are close and the message was accidentally passed on."

"Well, that doesn't matter." Yang Wendong didn't care, and then asked: "It's unlikely that bulk sticky notes can be shipped by air. As for sea transportation, how can we get them to the United States as quickly as possible?"

Wei Zetao replied: "I have consulted several shipping companies in Hong Kong that mainly serve the US route. The fastest ship only takes two weeks to reach the west coast of the United States, including the Port of Los Angeles."

"So fast?" Yang Wendong asked in surprise.

Wei Zetao said: "This is a passenger ship, it is relatively fast, and the cabin is loaded with cargo."

"Passenger cargo ship? That's good, the speed is fast enough." Yang Wendong nodded after listening.

In the 50s, the most common way to travel across continents was not by plane, but by ship!

The first reason is naturally cost. Shipping is definitely much cheaper than air shipping, but it takes a little longer. The economy after World War II could not support so many rich people to take planes. Therefore, except for business trips that require efficiency, most people choose shipping.

The second reason is naturally that aircraft technology is still immature and not safe enough to reassure the public. The Boeing 747 capable of intercontinental flights has not yet been released. Also, most people are not able to accept new technologies and new products.

At present, there are many shipping companies in Hong Kong that are engaged in long-distance passenger transport. People sit on the boat, and the ship naturally does not use the slow and cost-saving mode like ordinary cargo. Instead, it chooses a balance between cost and time, and is much faster than ordinary sea cargo ships.

Wei Zetao added: "The price is a little higher, but for us now, fast delivery and quick turnover are the most important, so it is still very cost-effective to pay a little more in exchange for an earlier delivery time."

"Yes, by sending the goods to the United States by sea, we can get the payment back faster, which is the most important thing." Yang Wendong agreed: "With more transactions, Liao Chong Hing Bank will trust us more."

Wei Zetao nodded and said, "Yes, according to the current shipment trend, we may be able to easily pay off the loan in a few months."

Yang Wendong shook his head and smiled: "Loans can be repaid. It is important to have the ability and maintain the financial strength, but the more capable you are, the less you should repay it and borrow more.

Our current scale cannot even meet the needs of the markets in two states in the United States, let alone the markets in Europe and Japan. "

In the past, people on the Internet often said that banks only add icing on the cake, but never provide timely assistance;

But for the non-financial group, the logic is actually the same. The richer you are or the more certain you are to make a lot of money in the future, the more you should take out loans. Conversely, when you are not sure, you cannot take risks.

Wei Zetao smiled and said, “That’s true. To do business, you have to use more money from the bank.

Mr. Yang, I also have some contacts in Europe and Japan, and we can also develop these markets through them.”

Yang Wendong asked: "They are traders, right? How are their connections?"

Wei Zetao replied: "It can't compare to 3M's position in the United States. There is a gap. They used to make plastic flowers, toys, and daily necessities, but they didn't need exclusive distribution rights."

“No.” Yang Wendong rejected it, “But we have to keep the relationship. They are just not suitable for sticky notes. If we make other daily necessities or toys in the future, maybe we can cooperate.

The existence of Post-it Notes relies entirely on patents to ensure our profit margins.

In the European or Japanese markets, you cannot rely on ordinary traders, you must find local partners who are powerful, have resources and connections.

Although I don’t want 3M to dominate our dealer system, if I have no choice, I would rather go back to them than to those traders without strength.”

A powerful distributor is able to ensure that there is no piracy within its scope, or at least no large-scale piracy. In any country, the premise for the patent law to be effective is that it targets people with resources and connections.

Otherwise, even if a country's laws and courts are absolutely fair, the time and energy spent on litigation, as well as the problems of market occupation, may be too much for the plaintiff to bear; even if he wins, he may not get much compensation.
Wei Zetao nodded and said, “I have also arranged for people to check for distributors in Europe or Japan that have a certain level of strength in terms of company office supplies;

This way, whether these people discover the Post-it Notes market in the U.S. and come to us later, or we take the initiative to find them in the future, it will be more convenient with detailed information.

It’s just that this might take a little time.”

"Well, there's no rush. As for the American market, it will probably take a long time for us to feed it." Yang Wendong said with a smile.

Even in the era of mobile Internet with information explosion, it is quite difficult to find out which distributor in other countries is No. 1 in the field of office supplies sales, let alone now.

It was only because 3M was so famous that Yang Wendong was confident in giving it the US distribution rights.

However, this was also related to the fact that Yang Wendong had no other better options at the time. Now, with the shipments to the US market, the economic problems have gradually improved, and he has the capital to slowly choose.
Wei Zetao said: "Okay, I will keep an eye on the matter of European and Japanese distributors. Even if it is not urgent, we need to find the information as soon as possible, and then slowly do a more detailed investigation."

"Okay." Yang Wendong nodded and said, "Our profits in the US market are not low, but not very high either. Now that the US market has been opened, we will be more confident next time we talk with Europe and Japan. Perhaps, we can even raise the price a little bit."

Wei Zetao said with a smile: "Yes, as long as it sells well, we should raise the price. When plastic flowers in Hong Kong first came out, the price was very cheap. Later, they sold very well, so we have raised the price several times." "Well, it's a problem of market supply and demand. The plastic flower factory has competitors. In terms of legality, my sticky notes should not have any competitors." Yang Wendong said with a smile.

From an ordinary person's perspective, as long as you don't control the basic necessities of life such as food, oil, salt, etc., then price increases and price decreases are normal behaviors. Business is done for profit, as long as you don't force others to buy.

Wei Zetao said with a smile: "Yes, if the sticky notes are made well, Mr. Yang's net worth will be enough to rank among the top Chinese in Hong Kong."

"The prerequisite is that we must ensure that we are exclusive, so we need to rely more on powerful channels." Yang Wendong nodded and said.

The original Post-it Note was one of 3M's core products, with annual net sales exceeding $10 billion;
However, this figure is from the 21st century. Taking into account decades of inflation, this figure may become much smaller, but at least tens of millions a year should be no problem.

"Yes." Wei Zetao nodded, and after a while, he asked again: "Mr. Yang, what about the mouse trap? Some of my connections also want to introduce mouse traps."

Yang Wendong asked in return: "What market do they want to develop?"

Wei Zetao replied: "There are European and American ones, as well as Southeast Asian ones, and also Indian ones."

Yang Wendong thought for a moment and said, “For Southeast Asian and Indian products, it’s up to them. They can buy whatever they want and I have no control over how they sell.

In the early days, I did not give exclusive distribution rights to the traders I had previously worked with in Europe, America, and Japan. In fact, I wanted to find someone with some connections to work with for a long time, just like sticky notes. "

Wei Zetao thought for a moment and said, “In theory, it is possible, but for products like sticky notes, the end customers are enterprises, which are a small group and have a relatively large demand.

But the user group of mouse traps is almost everyone, and such a wide range of products will inevitably require multiple distributors. "

Yang Wendong nodded, and then said: "But we still have to find a general distributor, otherwise it is impossible for us to contact hundreds of people in the United States? Our shipments are too chaotic and we can't control the costs."

"Then we can only learn the traditional model." Wei Zetao said: "We will directly send it to the general distributor in the United States, and then there will be one, two and three layers of distributors under the general distributor, gradually relying on each person's different connections, and finally delivering the goods to the terminal.

For example, this bottle of Coke has also gone through countless layers of distribution systems before it reaches my hands. Even a giant like Coca-Cola relies on the Swire Group for smooth sales in Hong Kong and some Southeast Asian countries. Such a giant company actually also relies on channels. "

Yang Wendong smiled and said, "So we also need to find such a general distributor."

Wei Zetao said: "Almost the same, but it is foreseeable that if mousetrap is sold on a large scale in Europe and the United States, the profit will definitely be far less than that of sticky notes."

"I had expected this a long time ago," Yang Wendong said. "I didn't expect to make much more money from the mouse traps. It's enough if they can create a lot of jobs for us."

Wei Zetao added: "In fact, our products are quite good. They can all be produced in Hong Kong and then shipped to the world. Some heavy goods, such as Coke, are produced in different places around the world."

"This is also what I like." Yang Wendong smiled and asked, "Speaking of profits, let's calculate the recent situation of sticky notes."

"Okay." Wei Zetao immediately took out a stack of information from the folder next to him, and then placed it in the direction of Yang Wendong, saying:

"Dongsheng's equipment is modeled after that of Japan. The speed is basically the same. Generally, one device can produce 100 sticky notes per hour. 36 devices can produce 3600 sticky notes per hour.

We use a shift model, with people stopping but machines not running. Taking into account some equipment maintenance, repairs, production errors and other issues, we can produce about 7 to 8 Post-it notes a day.

According to our export prices, the sales revenue for one day is about 7 to 8 Hong Kong dollars.”

"Seven or eight thousand Hong Kong dollars!" Yang Wendong nodded after hearing this.

The price of Post-it Notes given to 3M is US$1 for 50 pieces, which is about to yuan based on the exchange rate between the US dollar and the Hong Kong dollar this year.

Wei Zetao went on to say: "Taking into account our costs, all equipment and factory rental calculated on a five-year basis, and deducting labor, utilities, taxes, etc., the net profit is about 40%, or HK$3000 a day."

"3000 a day, that would be a month, right?" Yang Wendong said with a smile.

The purchasing power of one hundred thousand Hong Kong dollars in this era is very amazing. Taking the housing prices that everyone knows as an example, one hundred thousand Hong Kong dollars can buy two luxury houses (10 square meters) in Central, Hong Kong today.

And such a house will be worth tens of millions of Hong Kong dollars in the future.

Of course, this is only comparing the housing prices which have seen the largest increase. If compared with gold or ordinary food, it would not be so exaggerated.

But in any case, this is also a huge profit. If it weren't for the patent, it would be good to make ten thousand a month for such a simple thing.

Wei Zetao added: "But there is one more thing. According to our agreement with 3M, we also bear the cost of intercontinental transportation. However, 3M recently rushed us to use air transportation for early promotion. They paid for the cost, which indirectly reduced our sea transportation costs.

In the future, when the goods are delivered normally, we will still have to pay for it."

Yang Wendong nodded and asked, "Then how much would it cost if the goods we produce in a day were shipped by passenger ship?"

Wei Zetao replied: "According to our current production capacity, the shipping cost of one day's production of sticky notes is about HK$300-500.

This depends on the global ocean shipping prices and the differences in ship numbers. In addition, our products are afraid of water. Although the protection is relatively strict, we still bought extra space in the center of the cabin to ensure that there will be no problems. "

"The shipping industry has huge profits. Just these things of ours would cost several hundred yuan." Yang Wendong smiled.

Post-it notes are not very big, so the value of each unit is relatively high. Even so, 10-15% of the profit still needs to be spent on ocean transportation.

Other ordinary industrial products that are large in size or heavy in weight simply cannot afford this cost. Before containers became popular, ocean transportation was more expensive than train transportation.

It is also because of the popularity of containers that global trade has become possible. Otherwise, the huge costs of ocean transportation would have forced many developed countries to retain basic industries.

The deindustrialization of Europe and America in the future is also due to the contribution of containers...

Wei Zetao nodded and said, "This is the case in the shipping industry. In the past few years, many wealthy people in Hong Kong have been scrambling to enter the shipping industry."

"Yes, that's true." Yang Wendong nodded. In this era, shipping tycoons are much more popular than real estate tycoons, and the latter may not even be able to come to the stage.

During busy times, a cargo ship can earn several million Hong Kong dollars a year, which is more than the value of the ship itself.

Wei Zetao added: "But it's also because we have to hurry up. Otherwise, if we were to go a little slower, for example, the cost of sending mouse traps to sea would be much lower."

"Well, we still have to be quick." Yang Wendong naturally knew the importance of time: "We will speed up the staff training later. Once everyone is familiar with it, we will need to expand production capacity and buy more equipment."

(End of this chapter)