Chapter 389 Forced to compromise

The man from Takamiya looked at the label on the microwave oven with a surprised expression. The words Made in China appeared on the microwave oven of Whirlpool, completely subverting the man's cognition.

I read it right, this microwave oven is made in China? Can Chinese people make microwave ovens too? Yuto Takamiya said with a look of disbelief.

In the early 1990s, the traditional manufacturing powers of Europe and the United States began to decline. Japanese industrial products have spread all over the world, and Korean manufacturing has replaced the status of Japanese products and has become synonymous with copycats and low quality.

As for Made in China, what is that?

In the eyes of foreigners, China is probably only equipped to produce simple primary products such as clothes and socks, and it also needs to compete with Southeast Asian countries.

Selling a billion pairs of socks can only be replaced by a plane. That is the norm in China, but any industrial product with a bit of technical content has nothing to do with Made in China.

Microwave ovens are considered products with certain technical content in home appliances. How could they be products made in China?

Next to him, Shigeru Inoue explained: This microwave oven should be made in China. After all, it is a Whirlpool microwave oven. I don't think Whirlpool will deceive American consumers on this kind of thing.

Can a microwave oven made in China work! Takamiya still had a questioning expression on his face.

Inoue Shigeru said: I have tried it, and this microwave oven can be used normally.

It's incredible. Whirlpool in the United States is actually selling microwave ovens made in China. If I hadn't witnessed it with my own eyes, I would never have believed it to be true. Takamiya's tone was still full of incredible.

Shigeru Inoue explained: It now appears that Whirlpool closed its microwave oven factory in Milwaukee and transferred the microwave oven production line to China. It's just that Whirlpool invested in setting up factories in China, or whether it was contracted by Chinese companies, it is unknown. .

But what is certain is that the cost of producing microwave ovens in China must be very low, so Whirlpool will have the confidence to keep cutting prices and start a price war with us.

What you said makes sense. Takamiya Xiongren nodded and continued; I will report this matter to the headquarters immediately, and ask the people from the headquarters in China to investigate this matter.

...

In later generations, a lot of information can be found by searching the Internet. However, in the early 1990s, information dissemination was underdeveloped, not to mention that China was relatively closed, and it was not a developed economy. It was very troublesome to obtain business information in China.

Fortunately, Panasonic started its layout in China very early, and Panasonic’s staff stationed in China quickly found out that it was Li Weidong’s Puppy Electric, who was doing OEM for Whirlpool microwave ovens.

At the same time, the staff of Panasonic also discovered that the Puppy Electric was actually a foundry of Xizhi, producing hair dryers and irons for Xizhi.

At the same time, Xizhi Electric is also suffering from a sharp drop in the sales of microwave ovens in the North American market.

President, the reason why Whirlpool is able to fight us on price has been found out! They closed the Milwaukee factory and moved the microwave oven production line to China. Now Whirlpool's microwave ovens are all made by Chinese manufacturers. The man said. Reports.

Tanaka nodded suddenly: It turns out that, no wonder Whirlpool's microwave ovens will reduce the price. They use Chinese OEMs to reduce production costs. Have you investigated how much production costs can be reduced if Whirlpool chooses Chinese OEMs? ?

According to our estimates,

The processing fee for each microwave oven in the United States is about 45 to 50 US dollars, while the OEM fee for each microwave oven in China is only 10 US dollars. ' replied the subordinate.

If we manufacture microwave ovens in Japan, the processing fee for each microwave oven is close to 4,000 yen, or about US$30. In this way, Whirlpool's processing fee for each microwave oven is US$20 lower than ours!

President Tanaka frowned, and then said: If it is really this price, we will have no chance of winning the price war with Whirlpool. Is your cost estimate accurate? Chinese OEM production is really only $10. OEM fee?

The subordinate nodded immediately: This data is absolutely accurate, because the OEM for Whirlpool is our foundry Puppy Electric in China. Puppy Electric also mentioned to us at the beginning, hoping that we can transfer the microwave oven production line. To go to China, the OEM fee he gave was exactly $10!

President Tanaka immediately recalled this incident. At that time, he was the one who rejected the proposal because he was worried that the foundry would have too much technology, which would pose a threat to Japanese companies.

Unexpectedly, Li Weidong did not give up the microwave oven OEM business, but instead got the microwave oven production line of Whirlpool and became the foundry of Whirlpool microwave ovens.

As a result, Whirlpool has also greatly reduced production costs, and then launched a price war in the North American market. As a result, the Japanese microwave ovens were defeated, and there is a tendency to drive Japanese microwave ovens out of the North American market.

Li Weidong's backhand slap made President Tanaka very depressed.

I still underestimated that Li Weidong. I didn't expect him to find another way and find an American! President Tanaka sighed in frustration.

The production cost of Whirlpool microwave ovens is lower, and if the price war continues, Japanese brands will definitely be unable to bear it. And if Japanese brands don't offer lower prices, they won't be able to compete with American brands, and they will be lost in the North American market.

The problem is that the labor cost in Japan, the processing fee of microwave ovens produced in Japan is absolutely possible to be reduced to 10 US dollars, that is to say, microwave ovens produced in Japan cannot be cheaper than microwave ovens made by Chinese OEMs.

For Japanese brands, the only way is to move the production line of microwave ovens out of Japan and set up factories in places with lower production costs.

Do you really want to move the microwave oven production line to China and hand over our technology to the Chinese?

President Tanaka was extremely unwilling in his heart, but he was helpless.

With such a big market in the United States, we can't give it to others! President Tanaka could only be forced to compromise.

After thinking for a while, President Tanaka said: Call Minister Watanabe, he is familiar with Chinese people, let him talk to that Li Weidong, try to get a better condition!

In addition, I remember that Thailand and the Philippines have always been very interested in us setting up factories. Contact our representatives in Thailand and the Philippines and ask them to talk to the local government and tell them that we are willing to invest in setting up factories and see if we can get What a preferential policy!

We can't put all the production capacity in China. There must be an alternative plan to spread the production capacity to other places, so as not to be given too much say by the foundry. I think Southeast Asian countries are very suitable places.

...

Li Weidong received a call from Watanabe Yu.

After the two exchanged a few words, Watanabe Yucai cut to the topic: Li Sang, are you making microwave ovens for Whirlpool in the United States?

It's true. Li Weidong didn't hide it either.

Then do you know that Whirlpool's microwave ovens have launched a price war in the North American market, leaving our Nishiba microwave ovens in a very passive situation. Watanabe continued.

I don't know. Li Weidong continued calmly: I am a foundry manufacturer, and I am only responsible for the production of products. As for the sales of products, or what kind of marketing strategy the manufacturer adopts, it has nothing to do with me. already.

But if you didn't manufacture microwave ovens for Whirlpool, Whirlpool would not have launched a price war against us! Watanabe Yu said with some strong words.

Li Weidong smiled slightly, and said equally arrogantly: Mr. Watanabe, if you have not entered the North American market, then Whirlpool will not launch a price war against you!

Watanabe Yu was suddenly at a loss for words, and he was talking, but Watanabe Yu did not take advantage of it.

Li Weidong went on to say, Mr. Watanabe, you called me, shouldn't you just complain? You'd better tell Xizhi Electric's requirements directly!

Okay! Watanabe Yu continued: We, Xizhi Electric, hope that you will stop making microwave ovens for Whirlpool.

Li Weidong did not refuse immediately, but asked, Then what can I get?

We can add some orders for hair dryers and electric irons. In addition, we can also give you a part of the production business of electric ovens. Watanabe Yu said.

Li Weidong said directly: Mr. Watanabe, I work as an OEM for Whirlpool, and the annual OEM fee exceeds 5 million US dollars. How much is the OEM fee for these new businesses that you Xizhi Electric gave me?

Li Weidong provides 200,000 microwave ovens to Whirlpool every year, which is only a OEM fee of 3 million US dollars. He said that 5 million US dollars was deliberately exaggerated by Li Weidong to test the bottom line of Xizhi Electric.

Sure enough, when he heard the number 5 million US dollars, Watanabe Yu hesitated for a few seconds, and then said: The new business that Xizhi Electric gave you, although it is less than 5 million US dollars, is about the same. But business should be In the long run, in the future, we Xizhi Electric can give you more orders!

Li Weidong knew that Watanabe Xiong was painting a big cake, and he decisively refused: Mr. Watanabe, I am very sorry, I have thousands of workers here, they have to eat every day, and they have to receive wages every month, if I have this month If I don't get paid, the workers will stop working immediately and beat me up by the way, so I can't wait for a better future.

Watanabe Xiong also knew that it was impossible for Li Weidong to give up OEM for Whirlpool, and his previous request was nothing but a sky-high price, so he lowered his request and continued:

Li Sang, since you insist on OEM for Whirlpool, then I hope you can increase the price of the OEM, so that our microwave ovens from Xizhi Electric will be more competitive in price.

Li Weidong still did not refuse immediately, he said; According to the contract I signed with Whirlpool, we will renegotiate the OEM price every three years. If I change the OEM price in advance, I will pay a huge amount of liquidated damages. May I ask Xizhi Are you interested in electrical appliances and help me hand over the liquidated damages?

How much is the liquidated damages? Watanabe Yu asked subconsciously.

After changing the foundry price, 150% of the difference will be incurred! I mean, if I increase the foundry fee by $10, I will pay Whirlpool a $15 liquidated damages.

Li Weidong laughed, and then said, I think Whirlpool should be happy for me to raise the price, so they can make a fortune instead.

Hearing the 150% liquidated damages, Watanabe fell into silence again.

Li Weidong felt that the time was almost up, so he said, Mr. Watanabe, I actually have a better proposal that can solve your troubles.

You Xizhi Electric only need to transfer the production line of microwave ovens to China and let me do it. I can guarantee that the OEM fee I charge is definitely lower than that of Whirlpool.

In this case, the production cost of your microwave oven will be lower than that of Whirlpool's microwave oven, and it will be more competitive in the North American market!

Watanabe Yu pondered for a moment, then said: Li Sang, to be honest, you are not the only choice for us at Xizhi Electric. We have contacted the Thai and Philippine governments, and they are very interested in us setting up factories.

And both Thailand and the Philippines are willing to give us favorable terms. The labor cost in Southeast Asian countries is also very cheap. We can also achieve low-cost production by moving the microwave oven production line to Southeast Asia!

In addition to microwave ovens, the hair dryers and irons that you are now OEM for us may also be moved to Southeast Asia, and you will lose such big customers as us.

Li Weidong realized that Watanabe Yu revealed this information to himself, which was threatening, but it was by no means aimless.

Before the Asian financial crisis, Japan invested wildly in the four tiger countries in Asia. It is also true that Xizhi Electric will transfer its production center to Southeast Asia.

But he did not succumb to Watanabe's threat. He knew that when the Asian financial crisis came, almost all of Japan's investment in Southeast Asia became a burden, so Li Weidong was not worried about Xizhi Electric's investment in Southeast Asia.

So Li Weidong said: Mr. Watanabe, you should know how profitable microwave ovens are. An ordinary hair dryer can be sold for 1,000 yen in Japan, while a microwave oven can be sold for 60,000 yen in Japan! Selling a microwave is equivalent to selling 60 hair dryers. Do you think I will give up the microwave for the hair dryer?

What's more, you directly hand over the microwave oven production line to me, and I will do the OEM, which can not only keep the microwave oven market, but also don't need to lose the hair dryer market. This is a win-win situation, why not do it!

Watanabe Yu was silent for a while, and then he asked: If we hand over the production line to you, how much will you charge for the foundry fee?

$15 per microwave! Li Weidong continued: I can tell you one more piece of news, Whirlpool's OEM fee is $25!

In terms of OEM fees, Li Weidong lied again, the purpose is to raise the price and prevent Watanabe from lowering the price.

But Watanabe Yu said immediately: What you said before was the OEM fee of 10 US dollars!

One time and another! At that time, I didn't work for Whirlpool, so I only charged 10 US dollars for the foundry fee. But now, by contracting Whirlpool's microwave ovens, our technology has grown a lot, and the foundry fee is naturally also required. Increase. Li Weidong said without blushing.

President Tanaka didn't agree when it was 10 dollars, but now it's 15 dollars, and President Tanaka is even more unlikely to agree! I can't report your price to President Tanaka at all! Yu Watanabe replied. .

Li Weidong pondered for a few seconds, and then he said, Well, since we have cooperated for so many years, I will still give you a OEM fee of 10 US dollars, so that you have plenty of room for price reduction. , can deal with Whirlpool's price war! But this is the reserve price I can give you.

Watanabe Yu pondered for a moment, then said, Well then, I will report to President Tanaka.

...

Going around, although it was still a OEM fee of 10 dollars, it blocked the mouth of Watanabe Yu, so that he had no way to lower the price.

Li Weidong is willing to pay Watanabe Yu $10 for the foundry fee, also in order to obtain the microwave oven production line of Xizhi Electric as soon as possible.

Because Li Weidong knew that the price war of microwave ovens would start in two years, and the microwave ovens that originally cost 3,000 yuan would be reduced to 300 yuan. More than 100 microwave oven manufacturers across the country were also knocked down less than 30.

If Li Weidong wants to survive in the price war, he must first cultivate his inner strength.

This internal strength is not only technology, but also productivity. If two years later, the annual production capacity of Puppy Electric's microwave ovens will not reach 1 million units, and it is estimated that they will not even be eligible to participate in the price war, and they will be cleared out of the battlefield.

According to Li Weidong's understanding of large Japanese companies, such as the relocation of microwave oven production lines, it may take a long time for Xizhi Electric to make a decision.

The efficiency of the Japanese is actually not high, but they are very good in execution. Once the Japanese are given the prescribed process, they will implement it meticulously, even if there is a shortcut, they will not go.

There are many enterprise management tools in Japan, which have been learned from all over the world. However, if you analyze these management tools carefully, you will find that all management tools are SOPs, which are standard operating procedures.

This standard operating procedure is helpful for execution, but not for decision-making.

Someone once joked that the most efficient place in Japan is the Congress. No matter what, once it enters the Japanese parliament for decision-making, it will enter a long waiting period.

However, in Japan's parliament, a group of Japan's most elite people gathers together. Such a group of elites gather together and take the slowest time to make decisions. This is also a major feature of Japan.

This culture of being good at execution but not good at decision-making has also penetrated into Japanese companies.

In the era when chaebols directly controlled enterprises, there was no such difficult decision-making situation. At that time, Japanese enterprises were still very capable of decision-making.

After the end of World War II, Japanese chaebols gradually retreated behind the scenes, and the decision-making ability of Japanese companies began to slowly degrade. Especially after the popularization of standard operating procedures, decision-makers of Japanese companies began to solve problems in accordance with standard operating procedures.

In standard work, the first thing is to identify the problem, then stand in different departments and different angles to observe the problem, contact people related to the problem, collect data and study the problem to ensure that the problem can be fully understood, and then start to enter the solution to the problem. .

In theory, this standard operating procedure to solve problems is very rigorous. However, after one program is executed, the efficiency becomes low.

For example, if the ground is found to be too slippery, the Chinese will probably put up a Slip Carefully sign to remind passers-by.

The Japanese have to study what material the floor is made of, which direction is easier to slip, how do men feel about the ground being too slippery, how do women feel about the ground being too slippery, and what happens if someone slips Whether the head touches the ground or the butt first, whether to send it to the hospital, whether to pay compensation, etc.

After a series of studies were completed, it was finally decided to put up a Slip Carefully sign to remind passers-by.

This is Japan's decision-making model, which is completely in accordance with the standard operation, although it is very rigorous, but it is extremely inefficient.