Sail across the sea

Chapter 334 It's time to lower some prices
New York, USA.

In the office of Dorian, the vice president of Master Feed Company, Pedley, the Americas sales representative of West German Lloyd's Pharmaceutical Group, was stunned when he heard the request Dorian made to him.

"What? You want us to reduce the price of vitamin C by 15%?" Pedley looked at Dorian in disbelief and asked.

He came today at Dorian's request to discuss the 1984 vitamin C supply contract. He had prepared in advance to ask Meister to increase the purchase price by 5%. He had already thought of a whole set of strategies before leaving. He planned to first propose a 10% price increase, and then gradually reduce the price increase to 5% under the other party's strong opposition. If possible, he also hoped to get the other party to agree to some other conditions in the process as the price of reducing the price increase.

The international vitamin C market is basically an oligopoly, with the main manufacturers being Lloyd's, Japan's Imperial Pharmaceuticals, and the United States' Reyes Pharmaceuticals. Among them, Lloyd's Pharmaceuticals has the largest production capacity and the lowest production cost. The costs of Imperial Pharmaceuticals and Reyes Pharmaceuticals are slightly higher, and their competitiveness is not as good as Lloyd's Pharmaceuticals.

For these three pharmaceutical companies, vitamin C is useless. The price of vitamin C per ton in the international market is US$10000, while the production cost is more than US$7000, with a cost-profit margin of less than 50%. In contrast, the cost-profit margin of some innovative drugs for rare diseases can be as high as more than 500%.

In recent years, labor costs and environmental costs in Western countries have continued to rise, and the profit margin of vitamin C has become lower and lower. Only because the absolute profit is still acceptable, these companies are still maintaining production.

According to information obtained by Lloyd's Pharmaceuticals, the top management of Ray's Pharmaceuticals was already discussing the abandonment of vitamin C production. As a result, Lloyd's issued a notice to sales centers around the world, requiring a general price increase of 1984% to 5% for the 10 vitamin C supply contracts.

When Pedley went to Meister, he was confident that he could reach an agreement with the other party to increase the price by 5%. After all, when Ruishi Pharmaceuticals could not be relied upon, how could Meister negotiate?

What he never expected was that before he could ask for a price increase, Dorian asked Lowe's to lower the price by as much as 15%.

Could it be that this fat guy drank too much early in the morning and started talking in his sleep?
“Mr. Dorian, I think the request you just made is very imprudent. In fact, with the increase in raw material prices and labor costs, our company’s cost expenditure for producing each kilogram of vitamin C has increased by nearly $1.

"I have received a notice from the headquarters asking us to inform all customers that the supply price of vitamin C in 1984 will increase by 1983% based on 10, that is, to US$10.8 per kilogram.

"In this case, you ask us to lower the price by 15%, which is totally impossible. I think you might be talking about something else."

Pedley said to Dorian calmly.

He didn't think he needed to show any dissatisfaction or anger, because Dorian's request was ridiculous, and Dorian himself probably didn't take it seriously.

Dorian shook his head and said, "Mr. Pedley, I am serious. As you just said, the prices of raw materials and labor are rising throughout the Western world, and our Meister Company is also facing very great cost pressure. The price of vitamin C provided by your company has always been high, which has greatly increased our production costs. I think it is time to lower some prices."

"15% reduction?"

"Yes. Of course, if it can be reduced by 20%, we will not refuse it."

"The current price of vitamin C per kilogram is $9.8. A 15% reduction means it will have to drop to $8.3, which is not even enough to cover the production cost. Are you sure there is any company that can provide you with vitamin C at such a low price?" "I am sure."

"Are you sure?" Pedley stared at Dorian, trying to read something strange on his face.

Dorian shrugged as an answer. His fat face was calm, but he felt very happy. Just as the young man from China had said to him half a year ago, it was really nice to kick the ass of Law's Pharmaceuticals.

Pedley was really confused. He firmly believed that Dorian was playing tricks on him, but he didn't understand the purpose of Dorian's tricks.

A 15% price reduction is a completely impossible thing, and it is not really a smart move to propose such an impossible condition during a negotiation.

If Dorian was a newbie in the workplace, it would be possible for him to play such self-righteous tricks. But Dorian was not that kind of person. In Pedley's previous contacts with Dorian, he knew that this person was not very fond of playing tricks.

You know, Dorian is a fat man weighing more than 300 pounds. When have you ever seen a fat man like to play tricks?

Playing tricks is also a way to burn calories, okay?

"Mr. Dorian, I think we don't need to waste time on such issues. We should reach an agreement with a more frank attitude, so that our company can provide this year's products to your company as soon as possible. Many feed companies in Europe have increased their orders this year, and our supply pressure is very high. If the Meister agreement is delayed, our supply to your company may be delayed for some time."

Pedley decisively put aside the issue of price reduction and began to threaten Dorian.

His words were rather tactful. To put it simply, they were warning Dorian that if he continued to talk about these useless things and delayed the signing of the contract between the two parties, the time for him to get the vitamin C would be postponed.

Lowe's has always adopted the method of hunger marketing in the market, and the supply to each company is relatively tight. Pedley knows that Meister does not have much vitamin C in stock. If Lowe's delays, Meister's production will be affected.

In the past, when Pedley negotiated with Dorian, he often threatened to cut off supply. Faced with such threats, Dorian, out of consideration for maintaining production continuity, often had no choice but to accept some unequal conditions.

This time, Pedley originally wanted to put off the threat of supply cut off for later, but he didn't expect to be disrupted by Dorian's request for price reduction, so he threw it out in advance.

As soon as he said this, he regretted it. Could it be that Dorian's purpose was to use an obviously unreliable request to trick him so that he could no longer ask for a price increase?

(End of this chapter)