Chapter 899 Balance
Song Yuanchao's words left Qin Zhengguo speechless. Song Yuanchao was right. Although Shenghua owned the patent, and the patent was in the hands of Shenghua's American company, the VCDs produced by Pengcheng Shenghua Electronics were actually produced through patent authorization from the American company. On top of the existing costs, they still needed to pay a considerable amount of patent fees to the American company.
Of course, this so-called patent fee is just a means to transfer part of the profits overseas, thereby sharing the tax ratio, and at the same time, the profits can be appropriately converted into foreign exchange.
This kind of operation has already been done by Shenghua Telecom, and its pager products are operated in this way. Now VCD products also use this operation mode, but compared with pager products, the market of VCD products is much more complicated.
Pager products are different from VCD products. Pagers are communication products. To sell them in the mainland market, they need to obtain network access permission from relevant departments and sign an agreement with the paging station before they can be sold publicly. Shenghua has advantages in this regard. In the past few years, through cooperation with mainland switches, Shenghua has opened up this channel. In addition, Shenghua has also obtained a license for the establishment of mainland paging stations. Except for Motorola, which has already entered the pager market, Shenghua can use these aspects to achieve exclusivity for other companies, thereby preventing other companies from entering the market.
But the latter is different. The latter is a home appliance product. There is no barrier to entering the market and the entire market is completely open.
Once other manufacturers also start to launch VCD products, VCD products will inevitably become a common thing in a very short time .
In the past, this was the final outcome of the VCD product. Although at that time the patent had not been registered, coupled with the fact that traditional videotape player manufacturers were secretly playing tricks, the technology was leaked to the public, causing domestic manufacturers of all sizes to flock into the industry and start launching crazy VCD projects.
In less than two years, with the emergence of these manufacturers and the overwhelming appearance of VCD products on the market, the price of VCD began to plummet, from the initial sales price of more than 2,000 yuan to 1,800 yuan, then 1,500; 1,200; 1,000; 900; 800 and even 700...
In addition to the plummeting prices and declining profits, the overall inventory volume is also frighteningly large because there are so many manufacturers.
At that time, the overall market demand for VCDs was only about 10 million units at most, but the production volume of VCD manufacturers across the country reached a staggering 15 million units, which exceeded the demand by 50%. The consequences can be imagined.
Under such circumstances, the glory of VCD became a flash in the pan, and the final result was a mess.
By the time this product became obsolete, better and more advanced DVD equipment easily replaced the VCD market. By this time, domestic VCD products had reached an annual scale of 50 million units. Except for a few large manufacturers who switched to DVD production, the rest of the small and medium-sized manufacturers in the entire industry were wailing.
Although Song Yuanchao made many preparations in the early stage to avoid such a situation and to extend the life of VCD as much as possible, he also knew that VCD was just a transitional product. Although it could replace videotapes, it also had irreparable flaws and defects.
Due to technical reasons, the storage capacity and picture clarity are not as good as the more advanced DVD products. From this point of view, VCD products are destined to not go far, and Song Yuanchao understands this very well.
According to the current domestic market demand for VCDs, Shenghua's production is nothing, even if the production is doubled several times, it still cannot meet the demand. But Song Yuanchao is considering other aspects. One is how to make better use of this patent, and the second is that he does not want to kill this product all at once. Once VCDs are everywhere in the market, it will be difficult to maintain the current high profit. In addition, there is the problem of technology leakage mentioned by Song Yuanchao. To put it bluntly, VCD technology is not a great thing. If the traditional VCR market is defeated all at once, the other party may resort to desperate tricks.
Qin Zhengguo finally agreed with Song Yuanchao's opinion, hung up the phone and went to arrange the follow-up matters.
Song Chaoyuan waited until midnight that day for the final data from all places to be summarized. According to the summary of data, a total of 6,533 VCDs were sold in various markets that day, including 1,192 in Hong Kong. The best sales in other markets were in Yanjing, Shanghai and Guangzhou, with 988, 1,002 and 878 respectively. The remaining 2,500 or so sales were created by cities in other provinces. This data may be slightly different, but it is accurate overall.
Song Yuanchao was very satisfied with the result. After all, VCD was a new product and the price was not low. Apart from Hong Kong, not many people in the mainland could afford it. In addition, it was just launched on the market. Although there was an effect of early advertising, people were not familiar with the product and the market needed some time to ferment.
Judging from the current sales situation, the promotion was maintained for the first three days without any problems, but the production after that could not keep up with the sales. This was also intentional by Song Yuanchao. He wanted to see the reaction of other manufacturers in the market first, and then use the VCD product as a bargaining chip for negotiation.
In a flash, a week passed, and the sales of VCDs in the national market were getting better and better. Although Shenghua was currently the exclusive product, the current output was far from meeting the market demand. In addition, according to Song Yuanchao's instructions, the sales volume of VCDs had been controlled within a range. This ensured the result of exclusive market share while maintaining high profits.
Even so, VCD still brought a certain impact to the traditional VCR market. Many customers who originally intended to buy VCRs turned to buy VCDs. There are two main reasons why some customers did not buy VCDs. One reason is that they do not trust new products. They think that VCRs are already mature products. VCDs, as new products, may have various defects. These conservative groups think it is better to buy VCRs.
The second reason is the issue of VCD sources. Currently, the videotape sales and rental market is already very complete. No matter what movies or TV series you are looking for, you can find them in specialized audio-visual stores or videotape rental places.
But VCD is different. VCD has just been launched, and the source of films is still a big problem. The resources in this area are certainly not as complete as those of videotapes. Considering this, people will choose VCR instead of VCD.
But these are not problems. It is a general trend for new products to replace old products. Even though VCRs still have a certain market, their era is doomed to end. As for the source of films, there is no need to worry. Pirated merchants like Zhang Bin are now busy reproducing discs. It won't take long for VCDs to have the sources of films on videotapes. In addition, the price of VCD discs is much lower than that of videotapes in terms of cost and sales.
The sudden emergence of VCD had a direct impact on the VCR market. Several VCR manufacturers quickly came to their senses and were shocked to find that the emergence of VCD had already shown a trend of replacing the VCR market.
Under such circumstances, these companies will certainly not sit idly by. You know, the VCR market is a huge market with annual profits in the hundreds of millions. How could they possibly give up?
Under such circumstances, these enterprises hurriedly held an emergency meeting to discuss countermeasures. However, they found out that the patent of VCD products was in the hands of an American company. Although from a technical point of view, VCD technology is nothing to these large enterprises, it is easy to figure out how to produce it with the technical principles, but it is impractical to bypass this American company to produce VCD.
Although they can do this privately in the mainland, either by investing on their own or cooperating with some private manufacturers in the mainland to produce VCDs in a patent-infringing manner, the risks of doing so are extremely high.
Due to patent reasons, the products produced can only be sold in mainland China and cannot be sold in overseas markets. Moreover, it will lead to lawsuits from American companies. Once the lawsuit is successful, the lawsuit will undoubtedly fail. According to American laws, the final amount of compensation will be astronomical, and the impact on the corporate image is immeasurable.
Although they could ignore the patents of American companies and directly seize the market in mainland China, doing so would inevitably cause the entire VCD market to have a comprehensive impact on the VCR market. You should know that the emergence of VCD has caused the sales of VCRs to lag behind. Once this happens, the consequence is nothing more than smashing the pot directly, and no one can get the meat.
Faced with such a situation, some of these companies were hesitant to act. When someone raised the question that the VCDs produced by Shenghua, the only company currently authorized by the patent, were not outsourced in large quantities, and were only maintaining an appropriate output in the face of a market with huge demand, was there any requirement from the American company?
This question made the decision makers of these companies think deeply. When someone mentioned that the American company with the VCD patent technology had contacted their company and expressed its intention to cooperate, everyone's thinking was suddenly opened up. They felt that the current situation in the VCD market should be caused by the American company deliberately doing so. Its purpose was not to directly destroy the original VCR market by tyrannical means, but to send a signal to these companies by launching this new product.
In this case, then there may be a possibility of negotiation. Western business is different from the current barbaric development of the mainland business community. In many aspects, it is more about everyone sitting down to discuss and cut the cake together. Eating alone is abominable, and monopoly is even more condemned by everyone. Sharing the benefits is the kingly way. Everyone cooperates, cuts this big cake together, and gets the greatest benefits from it, which is in line with the market rules.
Soon, several large companies took the initiative to contact Shenghua's American company and tentatively proposed cooperation. Faced with this situation, Song Yuanchao was relieved. Although Shenghua Electronics was thriving with the hot sales of VCDs, Song Yuanchao knew that the initial hot sales of the product were just the beginning. If the subsequent steps were not taken well, once VCD products were flooded, the product would have no future, and the current high profits would soon become short-lived.
