Chapter 478: Price Increase
Chapter 478: Price Increase
In the guest house.
Wu Limin looked embarrassed, holding up his glass, and explained, "Mr. Yin, there is no problem recruiting workers and buying machines. But last year, we just allocated 120 mu of land for the park in Jintian Township to Feima, and we need to allocate more land. Some people are gossiping about it, and Mr. Wu feels it is difficult to deal with it."
Yin Zhaotang sat in the guest seat, full of confidence, and said in a loud voice: "Feima promised to relocate the factory. Has it moved? The Jintian Township main factory has already started operations and has already employed 12,000 workers."
“The employment generated by upstream and downstream enterprises exceeds 100 million per year!”
"All the materials that can be purchased by Feima are purchased domestically. Without Lao Zhong's orders, can the Dongguan zipper factory, which was on the verge of bankruptcy last year, survive again?"
Wu Limin smiled bitterly, unable to refute, so he could only nod: "Yes, yes, yes."
Yin Zhaotang immediately asked, "If Fei Ma encounters difficulties, will Shencheng help? What is Mr. Wu's attitude?"
Wu Limin protested weakly: "Pegasus is not in trouble, it's just too full. Orders have skyrocketed, and we need to urgently expand production capacity."
Yin Zhaotang slammed the table and shouted, "This is the biggest difficulty. The orders have been accepted, and the production capacity cannot keep up. Compensation will be due when the deadline comes. Old Wu, do you want to see Pegasus go bankrupt?"
Wu Limin was full of disbelief. He put down his wine glass and said in a loud voice, "Mr. Yin, let me ask you one question. What does the land grant have to do with Pegasus's production capacity? We will recruit people for you in Shenzhen, and we will transfer machines to you from all over the country."
“Without land, we can’t make sneakers, jerseys, and sports caps?”
Apart from sourcing synthetic rubber from Nam Yik Group and fabric raw materials from Lai Sun Group, Pegasus sources all its zippers, buttons and some decorative parts from the mainland.
When the first Feima branch was established in Futian, the Shenzhen government held a meeting to allocate resources and cultivate upstream and downstream factories in the clothing manufacturing industry. It was not obvious two years ago, but when the Feima headquarters moved to Jintian, it was strangely discovered that all accessories could be purchased locally.
Accessories of the same quality are two to three times cheaper than those from Hong Kong manufacturers and importers.
Mechanical equipment such as sewing machines, overlock machines, and applique machines do not require much technical difficulty, and domestic manufacturers quickly designed products that meet quality standards and are of good quality and low price.
Although the failure rate of domestic products is higher than that of imported equipment from Europe, domestic manufacturers provide lifetime warranty, free replacement of parts, and station engineers in the factory.
Just to serve Pegasus Factory well.
Foreign products have a five-year warranty, and each repair requires shipping across the ocean. If there is a price advantage, domestic products will definitely be chosen. Today, Shenzhen is developing rapidly, and land approval is much stricter than it was three or four years ago.
Land prices are also rising, and commercial housing is becoming available.
Yin Zhaotang still has 70 acres of undeveloped land in Jintian and 30 acres in Futian, which is definitely enough in the short term, but there is an item called "reserve land" in the development strategy of the big group. He would feel insecure if he didn't have 100 acres of land in his hands.
Yin Zhaotang lit a cigar, took a deep breath, and said as he exhaled, "Old Wu, I won't beat around the bush with you. The clothing industry doesn't have any technical barriers."
"The air cushion technology of Pegasus is a technology, but how many customers really come for it? The brand is well-known now, but the advertising fee to maintain the brand image is hundreds of millions every year, and it will increase every year."
"After all the calculations, the profit margin of clothing is very slim. If we don't buy more land now, we can wait until the land price in Shenzhen takes off and buy more land. We can just use it as pants crotch."
Wu Limin believed it a little, but he still felt that Yin Zhaotang was planning to resell the land. He smoked a cigarette and laughed, "It's exaggerated. Can the price go up to the sky?"
"Land prices in Hong Kong are a problem for the authorities, but Shenzhen doesn't have this problem!"
Yin Zhaotang smiled and flicked the ash from his cigarette: "Oh? You promise?"
Wu Limin was secretly worried, not daring to say anything, and evaded the question by saying, "In short, I don't believe it, but what you said is not unreasonable. If you want to get more land, no problem." "Move the electronics factory to Shenzhen, and I'll give you as much land as you want."
Yin Zhaotang blew out white mist and said calmly: "The electronics factory will be back after 97. Hong Kong Island is back, so won't the electronics factory be back? You should communicate with Mr. Wu. If not, I will go to Dongguan."
Wu Limin raised his glass with a smile: "Mr. Yin, drink first, I will try my best to arrange it."
Although, according to Yin Zhaotang, the garment industry was not very profitable, but in 1984, Shenzhen had no right to be picky. If it did not set up a garment factory, it would have to wait to build airplanes and cars.
Without fully understanding the labor-intensive industries, accumulating technological expertise and foreign exchange reserves, and relying on the people of the country to sell their blood, are we going to catch up with the high-tech industries of Europe and the United States?
Wu Liming just wanted to try and see if he could take advantage of Yin Sheng's recent success to move part of the electronics factory to Shenzhen.
There's no need for a R&D department with huge investment, no need for hot-selling Walkmans, but there's nothing wrong with moving the product line of OEM radios and setting up a factory with a thousand people, right?
However, Yin Zhaotang is a clear-headed person and is not easy to fool.
After two days in Shenzhen, he finally got a piece of land of 80 mu, paying HK$150,000 per mu. When Yin Zhaotang returned to Hong Kong Island, Zuoshou had also negotiated preliminary cooperation with foreign agents. First, Reebok, Converse, Asics and other brands wanted Pegasus to manufacture insoles, T-shirts and other products.
Depending on the type of product, the profit margin ranges from 20% to 35%. In addition, there are consortiums from 12 countries that want to obtain the regional agency rights of Pegasus.
Including Japan's Mitsui, South Korea's Lotte, the United States Wal-Mart, France's Decathlon, etc. Specializing in the production of sports goods, there is less competition for agency rights, and retailers have become the main force.
The agency fee varies from one million to fifty thousand dollars, depending on the regional market. There are strict requirements on the number of stores opened and the turnover of the agents each year.
If the minimum number of stores opened each year is not met, Pegasus headquarters has the right to terminate the agency agreement at any time. At the same time, a two-year store preparation period is stipulated, which is not only to prepare for the agency fee, but also to leave time for increasing production capacity.
The product department is working intensively to expand its product line from the previous sneakers, sportswear, and sports caps to gloves, spikes, basketball shoes, quick-drying clothes and more categories.
It is estimated that Pegasus Sneakers will earn tens of millions of dollars in agency fees each year in the future. The profit from supplying goods to agents will also be more than tens of millions of dollars.
When Yin Zhaotang, as the chairman of Pegasus' parent company Zhongyi Group, and Pegasus' president Zuo Shou, were very busy, they constantly met with foreign companies to discuss cooperation, and held internal meetings to adjust strategies.
On the day the Summer Olympics ended, the headquarters of Li & Fung Group, Pegasus' largest fabric supplier, sent a letter.
"Due to the strike on Taiwan Island, the price of spinning and cloth will increase by 15 percent starting next month."
In the conference room, Yin Zhaotang circulated the telegram to everyone. After Zuo Shou, Chu Zhongde, Ding Jiahao, Zhang Gaoming and other key executives read it, someone immediately spoke up: "Mr. Yin, Lixin Group is asking for an exorbitant price. They are jealous of Pegasus's good business!"
Ding Jiahao looked unhappy and spoke even more fiercely: "The old Pixiu surnamed Lin said that he was being polite when he asked for a sky-high price. He clearly wanted to rip Lao Zhong off and suck his blood and skin him."
The options held by these people at the Pegasus factory are worth millions of Hong Kong dollars, and their annual salary is over 300,000 Hong Kong dollars. All their wealth is tied to the factory, and they have devoted their entire lives to it.
How can we allow outsiders to take advantage of the company?
They have a share of this 15%!
His left hand was more steady. He folded up the letter and said, "Ten or five points are just words. Sending a letter means that you are willing to negotiate. Boss, how much do you accept?"
(End of this chapter)