Chapter 447 New Gameplay
Just after the New Year of 1988, Shirakawa Kaede was staying in the courtyard of Setagaya District, watching the news boredly.
Shirakawa Electric has gone through more than half a year of adjustment, and the pain of the appreciation of the yen has basically passed.
In October and November of last year, the Walkman factory in China was successfully put into production.
According to statistics, the cost of producing the same model of Walkman in China is nearly 40% cheaper than in Japan.
Even though Baichuan Feng had anticipated this, the range of the decline still far exceeded his expectations.
The two most prominent cost-saving aspects are labor and material costs.
The monthly salary of a worker in Neon is basically over 300,000 yen.
But in China, a worker's salary is only around 60 to 80 yuan, in RMB, which is still considered high.
After conversion, China's labor cost is only less than 2% of Japan's? !
When Baichuan Feng saw this data for the first time, he was also shocked.
He expected that there would be a slight gap between China and Japan in terms of wage at this time, but he did not expect the gap to be so huge.
No wonder China became the world’s factory in later generations.
The choice of capital is the most practical.
In addition to labor costs, the cost of alternative raw materials and parts is also much cheaper than in Japan.
For example, let’s take the processing of transmission gears in a Walkman.
In Neon, the cost may be 200 yen, which is about 4 yuan in RMB.
But in China, it only costs 50 cents, a difference of nearly ten times. Not to mention Baichuan Feng, even Hasegawa and the others were amazed.
It was really too cheap, so cheap that Shirakawa Feng even called the local government to ask whether they should give the workers a raise.
Although he wanted to pursue profits, he also didn't want to be branded as a black-hearted company that exploited workers.
After some inquiries , I found out that the salary that Shirakawa Electric offers to its employees is already in the top first tier.
At this time, the salary level across the country was between 30 and 50 yuan for most people.
The high salary of Shirakawa Electric is already the envy of countless people. Adding more would be too prominent and a bit inappropriate.
After receiving such a reply, Baichuan Feng felt relieved.
However, a heated discussion broke out within Shirakawa Electric afterwards.
Everyone thinks that since China's processing costs are so low, they might as well move most of the factories there.
But after careful evaluation, Baichuan Feng gave up this idea.
This is because some components cannot be localized in China, especially for products with higher technical difficulty.
For example, China cannot meet the needs of laser heads, brushless motors, chips, and LCD panels for CD players and LCD TVs.
If it is shipped thousands of miles from Neon, not to mention the high shipping costs, the damage to the LCD panel on the way will be a considerable amount of money.
So just proceed step by step, there is no need to rush.
Moreover, the processing cost of the Walkman can actually be reduced further. It is only because some parts need to be shipped from Japan that the shipping cost is added.
Otherwise, it is still unknown whether the processing cost can be reduced to 50%.
At the same time, because it is a joint venture, Baichuan Feng has to consider more.
Let’s wait for two years until China approves the wholly-owned OEM factory.
Because of the limited technology of today's Walkman, Shirakawa Kaede doesn't mind sharing the technology.
However, Shirakawa Electric must master some core technologies and unique skills.
Of course, when the Chinese market matures in the future, Baichuan Feng will agree to exchange technology for the market.
He would never be like his colleagues in Japan who hold on to the little things they have as if they were their treasures.
Baichuan Feng sees very clearly that in the future, only a part of the high-end manufacturing industry in Japan will be retained.
Most others will slowly lose their competitiveness over time.
The local manufacturing industry is gone, so why are we still holding on to those things?
Without continuous investment and technological updates, it is only a matter of time before we are overtaken by China.
So Baichuan Feng thought very clearly, it would be better to hold on to the technology which is gradually depreciating in value.
It would be better to open up technology licensing to China as soon as possible. At the very least, you can collect some patent fees every year, right?
Otherwise, your colleagues in China will be forced into a corner. Believe it or not, they will go straight to Huaqiangbei and not give you a penny.
After weighing the two options, Baichuan Feng still felt that it was more cost-effective to open up the technology directly.
By the way, maybe you can even gain some goodwill.
At present, Huaxia's joint venture factory produces radios and tape recorders in addition to Walkmans.
All three products have special editions for local supply, with Chinese characters printed on their bodies and in their instruction manuals.
Originally, considering China's consumption level, Baichuan Feng planned to keep the price of the tape recorder at around 50 yuan and the price of the walkman at around 90 yuan.
According to China's current salary level, this is actually expensive enough.
After all, a worker needs to spend a month's salary to buy a radio, which is really expensive.
However, when Shirakawa Electric reported its own pricing, it was rejected by the Price Bureau.
The reason is not that it is too expensive, but that it is too cheap.
Similar products include Shanghai and Wu brand radios. The cheapest ones are 50 yuan each, and the better ones can be sold for 120 yuan.
Let’s take a look at imported products such as Sanyo and Sharp. The cheapest is over 500 yuan, and the most expensive is over 2,000 yuan.
Comparing the two, the gap is too obvious.
The reason why the Price Bureau reversed the pricing of Shirakawa Electric was actually to protect the development of local enterprises.
The radio produced by Shirakawa Electric is much more advanced than those produced by Shanghai and Wu brands. It only costs 50 yuan per unit. Who would still buy local products?
So there was no other way, until Shirakawa Electric raised the price of the radio to 150 yuan, the Price Bureau finally approved it.
As for the Walkman, since there is no comparable product in China, the price can only be set based on domestic cassette recorders such as Panda, Peony, and Haiyan.
The price of Shirakawa Electric's Walkman is fixed at around 200 yuan. It is still the cheapest among imported products, but also the most expensive in China.
But what is more dramatic is that you can buy an original imported Shirakawa Electric Walkman from Nihong for only about 125 yuan.
The fact that a genuine locally produced product costs as much as 200 yuan makes Baichuan Feng helpless.
But that's the market rules in China, and he has no choice but to abide by them.
However, because the market has not yet developed, Baichuan Feng does not care too much about the profits in China for the time being.
The most crucial thing is that we have the strong support from China and the production capacity supplement from Yizhou.
Most of the portable players shipped overseas are provided by these two places.
As for the remaining production capacity in Japan, it can just meet its own consumption needs.
What are the benefits of doing this? This is also related to the anti-dumping strategy of Lao Mi.
The United States stipulates that the selling price of Japan's export products in the North American market cannot be lower than a certain percentage of the cost.
For example, if the cost of a product is $100, then its selling price is at least 150% of the cost, or 300%.
If the price is lower than this, then you are suspected of dumping.
Now the cost of Walkmans produced in China and Yizhou is only 60% of that in Japan, so the selling price in North America can be set according to the production cost in China.
For example, if the original cost is $100 and now it becomes $60, then it is 150% or 300%, which is much cheaper.
This means that Shirakawa Electric's products can continue to reduce prices in North America without violating the regulations of the U.S. Department of Commerce.
Therefore, with this move by Hua Xia, Shirakawa Electric not only reduced costs and maintained profits, but also maintained the market in North America.
Win-win! And it also bypasses various agreements between the United States and Japan.
The United States can’t say anything about this loophole.
After all, if you look at the Walkman on the shelves in American supermarkets, you will see "Made In CN" printed on the bottom.
Or maybe other Southeast Asian countries. It is too easy to change the place of origin.
The parts from China are taken to the next door factory to be assembled into finished products, and the place of origin becomes Made in Korea.
In short, as long as we don't focus on Japan where the yen is surging, it is a foregone conclusion that production costs will be reduced.
Because it was the first to pioneer this business model, Shirakawa Electric's profits have been slowly recovering since the end of 1986.
After seeing the impressive operations of Shirakawa Electric, people within Keidanren were amazed and began to follow suit.
There is no doubt that the planning began just before the Plaza Accord began.
Shirakawa Electric was the first company to relocate its production capacity to Southeast Asia; neither Panasonic nor Sony was faster than it.
After all, before the Plaza Accord was signed, everyone expected the yen to appreciate by 20%.
As for the current 35%, no one expected it and no one had made any relevant preparations.
So after seeing Shirakawa Electric get the chance, Panasonic couldn't wait to set up a joint venture TV factory in Yanjing.
The scale of its investment is 28.7 billion yen, which is equivalent to 175 million US dollars based on the exchange rate.
Tsk, it was also a big project, and it was ready to go into production in the fall of 1987.
Look, my colleagues are very quick.
Thanks to the market recovery and the hot sales of LCD TVs and LCD notebooks, Shirakawa Kaede can now lie at home leisurely and watch the news.
LCD TVs and LCD laptops, there are no substitutes for these two things in North America.
Only Sharp can compete with Shirakawa Electric in LCD TVs. As for notebooks, Shirakawa Electric is the only one now.
Therefore, in the North American market, such products maintain super high profits and do not have to worry about sales.
Baichuan Feng was in a very good mood, looking very relaxed.
"Yuko, stop working so hard and take care of yourself."
Seeing Tanaka Yuko straightening her back and bringing him a plate of fruit, Shirakawa Feng quickly asked her to put it down.
She is pregnant again, but still so restless.
"You seem to be in a good mood lately~" Yuko Tanaka put down the fruit plate and walked over with a smile.
Helping her sit down, Bai Chuanfeng said proudly, "Of course, the money for your son's milk powder has been found."
"Hey." Although she knew he was joking, Yuko Tanaka still cooperated with him and showed a curious look.
"Ahem~" Baichuan Feng was about to speak, but a piece of news on TV caught his attention.
In 1987, the U.S. fiscal deficit hit a record high, reaching an unprecedented $168.7 billion.
Compared with 148.5 billion US dollars in 1986, it increased by 13.5%.
On January 8, Treasury Secretary Baker told Congress that a continued decline in the dollar was more in line with market rules.
Now the neon bubbles are going to cover the sky.
Baichuan Feng stared at the TV, lost in thought.
