industrial overlord

Chapter 550 Machine Tool Exhibition
Jinling, the ancient capital, is the main store of Jiankang home appliance store.

On the square in front of the store, dozens of huge balloons are flying high, and a long banner is hung under the balloons, with congratulatory words such as "Warmly celebrate the victory of the first Jinling International Machine Tool Equipment Expo" written on it.Pedestrians passing by in front of the store looked sideways, and all of them clicked their tongues, talking about who has such a big face, who can borrow a place like Jiankang Home Appliances Headquarters to hold an exhibition. You know, this is not an ordinary thing .

Prior to this, Jiankang Home Appliances Headquarters had only hosted an exhibition in the field of non-home appliances. It was 7 years ago when the China-Africa Economic and Trade Cooperation Forum was held here, and the chief designer was attracted to congratulate the meeting.That exhibition promoted the export of Chinese goods to African countries, and broke the blockade of Western countries such as Europe and the United States against China in a special period. To this day, officials from many ministries and commissions of the central government still sigh when they talk about that exhibition, saying that it is A stroke of genius.

After that, many units had their eyes on this blessed land, hoping to use the venue here to hold their own exhibitions, but all these requests were flatly rejected by the president, An Yan.Jiankang Home Appliances is rich and powerful, so it doesn't care about the rent of those exhibitions at all.The more this is the case, the more people feel that this venue is of great significance, and that an exhibition can be held here is a great news point in itself.

The exhibition halls on the first and second floors are all allocated to machine tool manufacturers in mainland China, and foreign exhibitors are arranged on the third and fourth floors.Originally, those foreign manufacturers were disdainful to participate in this exhibition, but when they heard that there were merchants from nearly a hundred countries around the world who came to visit and order, they didn't care about pretending to be reserved, and rushed to the organizer of the exhibition. Fang came here to register and ask to participate in the exhibition.They did not raise any objections to the fact that they were arranged on the third and fourth floors. The organizers said that this exhibition was originally only for Chinese manufacturers, and it was already a great honor to allow foreign manufacturers to participate.

In front of a booth on the west side of the third floor, Eiji Tanaka and Eizo Matsushita stood there with gloomy faces, watching the endless stream of visitors with mixed emotions in their hearts.

Like other foreign manufacturers, Xihu did not take this exhibition seriously at first.There are three or four well-known large-scale machine tool exhibitions in the world, and countless less well-known exhibitions.This is the first time that China has held such an international machine tool exhibition. In the eyes of Xihu Company, this is an unpopular exhibition. It is estimated that in the end it is just for Chinese machine tool manufacturers and machine tool customers to entertain themselves. The word, at best, is to find a few poor brothers from the third world to make up the number.

Unexpectedly, the development of the matter completely exceeded the expectations of Xihu Company.First, General Motors of the United States announced that it would send an official delegation to visit, and hinted that it would purchase a batch of considerable amount of equipment at this exhibition.Then, the Ford Motor Company of the United States also made a statement, saying that it would pay attention to the products displayed at this exhibition.Next, one after another large Western companies expressed their positions one after another, claiming to be "interested" in Chinese machine tool equipment.As for the developing countries in Asia, Africa and Latin America, they have released news in China early on, and they want to organize enterprises to go to China to purchase equipment.

It is not unreasonable for companies such as General Motors and Ford to cheer so much. Aside from the fact that Chinese machine tools are of high quality and low price, there is another more important factor, that is, they are all seeking to enter the Chinese market, and they all hope to purchase Chinese machine tools. Show goodwill to gain the favor of the Chinese government.You must know that in the invitation letter issued by the organizer of the exhibition, there are more than a dozen Chinese ministries and commissions, and which one of the ministries and commissions is very important to those foreign companies that intend to enter the Chinese market.

After learning about this situation, Xihu Company could no longer remain calm.So many important customers have gone, if I can't show a small face at the exhibition, others may doubt whether I still exist.In an event like an exhibition, the comparison is a sense of presence.You are at the exhibition, and others may not notice you.But if you don’t participate in the exhibition, the media will question you in lengthy articles the next day. Sometimes they doubt whether you have encountered financial difficulties, or they may directly assert that your company is numbered.

Before the deadline for exhibitor registration, Xihu Company registered its name.The organizing committee did not seem to discriminate against Xihu, and arranged a relatively good booth for it.However, after getting the exhibition pass, Xihu Company faced a headache, that is how to price the exhibited products.

Prior to this, the price war between Xihu and its Chinese counterparts was already in full swing.Chinese manufacturers launched three rounds of price offensives one after another, reducing the price of each product by an average of 15%.The prices of Chinese products are already low, and after three rounds of price cuts, they are even lower. If Xihu does not follow up with the price cuts, there will be no chance of competition at all.In order to keep its market share, Xihu Company had no choice but to sell it in tears, and lowered the price by 15%, which barely stabilized its position.Now that you want to participate in such a machine tool exhibition, will Chinese manufacturers set off a new round of price cuts at the exhibition?

"We must be prepared for further price reductions by Chinese manufacturers." Before leaving Japan, Matsushita Yongzo said to Chairman Osawa, "Chairman, please give me an authorization to lower the average price at the exhibition. 5%."

"Panasonic, our current price has caused the company to face serious losses. If the product price is reduced by another 5%, it is hard for me to imagine whether the company can still support it." Osawa replied.

"I know." Matsushita Yongzo bowed to Osawahiko and said, "However, if we can keep a part of the market after we lower the price, we can at least recover some fixed costs. If we don't lower the price, our products will lose In the vast majority of the market, the company will be in a state of stagnation at that time, and the situation will only become more difficult."

The cost of an enterprise is divided into fixed costs and variable costs. Fixed costs refer to those costs that must be paid regardless of production or not, such as depreciation of factory buildings, basic wages of workers, etc.; variable costs are costs related to production, such as Raw materials, power, piecework wages for workers, etc.

The loss of an enterprise means that the sales revenue cannot offset the cost, and when converted to each product, the sales price of the product is lower than the cost price.But in this case, not producing is not the best choice.If the sales price of the product is higher than the variable cost, then although every product sold cannot make up for all the costs, it can at least offset some fixed costs and reduce the loss of the enterprise.

This is the current situation of Xihu Company. As a large enterprise, its fixed costs are very huge, and these costs need to be apportioned to each product.After the price war with Chinese companies in the previous period, the product prices of Xihu Company have been so low that they cannot share all the fixed costs. On the books, the company has suffered a large loss.But if sales are completely stagnant, then the situation can only get worse, because it means that those fixed costs that could have been allocated have nowhere to be allocated.

Of course Osawahiko knew about these situations, he was silent for a long time, and said to Matsushita Yongzo: "Okay, Matsushita-san, I can give you this authorization. However, the price reduction can only be limited to within 5%. The bottom line."

Matsushita Yongzo came to China with such an authorization.After the exhibition started, he arranged for several employees of the Chinese branch to go to the booths of various Chinese companies to inquire about prices. Matsushita knew that, that was a euphemism for cutting prices.As for the extent of the price reduction, all companies are secretive, and they will not disclose it until they meet real customers.

"Matsushita-san, the chairman has given you the authority to cut prices by 5%. Do you think this authority is sufficient for this exhibition?" Tanaka Yongji asked.

Matsushita Yongsan said with a wry smile: "Director Tanaka, you can also see that the Chinese came prepared this time. They put up such a big formation, obviously intending to hit us head-on. 5% The extent of the price reduction may not be able to stop the Chinese attack at all."

"Are these Chinese crazy? With the price of products falling to such a level, can everyone still make a profit? Could it be that their purpose is to drag us to death? In order to achieve this goal, they would rather die with us?" Eiji Tanaka said in surprise.

Matsushita Yongsan shook his head: "No, they are betting whether they can drag us to death. If they can drag us to death, their market share will be greatly expanded, and then they can generate profits by virtue of the scale effect."

"So, how much room do you think they have to cut prices?" Eiji Tanaka asked.

Matsushita Yongsan said: "I estimate that they can at least have more than 10% room for price reduction."

Tanaka Yongji said: "It is impossible for us to support a 10% reduction. If our products also reduce the price by 10%, I am afraid that within a year, the company will go bankrupt."

"If we don't lower the price by 10%, we won't even be able to support it for a year." Matsushita Yongsan responded.

"Since that's the case, why are we here to participate in this exhibition?" Tanaka Yongji said, "This is a doomed ending. Did we come here just to see how the company went bankrupt?"

"Maybe there is still a glimmer of life." Matsushita Yongsan said, he pointed forward with his hand, and said: "Look, isn't that the purchasing manager of the American Hall Corporation, Powes? Some time ago, the sales department reported that, Hall Company is planning to purchase a batch of welding robots, and I think Powers should be here for this, this is a big order. You see, he walked towards us."

　It's a bit of a cavan, you have to think about the development of the plot later, and write very slowly.

　　
　
(End of this chapter)