Sail across the sea

Chapter 392's algorithm also has problems.
Facing the eager and greedy gazes of the crowd, Gao Fan smiled slightly and said to Zhu Jian:

"Director Zhu, you just said that as long as your research lab receives an investment of around 100,000 yuan, you can build a factory specializing in the production of wetting agents, with an annual profit of no less than 500,000 yuan. I would like to ask, Director Zhu, how can you prove this?"

"How can you prove it?" Zhu Jian was caught off guard by Gao Fan's question. After thinking for a moment, he said, "We have done the calculations. Using the wetting agent we developed can effectively reduce the dust concentration in the mine. The dust removal efficiency is 48% higher than that of using water, and the drilling speed can be increased by 20%."

"By reducing the operating time of the compressed air blower and lowering ventilation costs, the overall cost per ton of ore can be reduced by 0.21 to 0.41 yuan. Our wetting agent, calculated based on production costs, is only 0.12 yuan per ton of ore. Even if we increase our profits by half, that is, by an additional 0.06 yuan per ton of ore for wetting agent expenditure, it will still be profitable for the mine."

"Based on a profit of 0.06 yuan per ton of ore, all mines in China, including coal, iron, copper, tin, and tungsten mines, produce no less than 10 billion tons of ore per year. How much is that again?"

"6000."

Someone below calculated it instantly, demonstrating the mental calculation ability of a science and engineering talent.

"6000 million..."

Zhu Jian was taken aback by the number. He looked at the person who had given the number, tilted his head, thought for a moment, and said:
“My calculations just now might have a problem… I just remembered, the mines we used for our experiments are several tungsten mines in Zeshan. Tungsten mining is difficult and consumes a lot of water. If it were another mine, the water consumption might not be so high. I think, taking one-tenth, around 600 million a year, might be more appropriate.”

“Old Zhu, there’s a problem with your calculation,” another person said. “You said that the mines across the country produce 10 tons of ore a year, which includes open-pit mines, where they don’t need pneumatic drills. So, your figure should be reduced by at least half.”

"Even if you discount it by another half, it'll still be 300 million," Zhu Jian said.

He was quite grateful for his colleague's addition, which made his estimated figure seem more reasonable. As an industry insider, he naturally knew that his previous calculation had flaws. At the very least, a profit of 6000 million a year was extremely exaggerated. Even after cutting it down to only 10%, the resulting figure of 600 million still seemed unbelievable to him.

As for 300 million a year...

Could there really be that many?

The equipment for producing wetting agents isn't complicated; a few hundred thousand yuan is enough. If you invest a few hundred thousand yuan, the profit alone can be 300 million yuan a year—that's fantastic!

Gao Fan found it amusing to look at Zhu Jian's lustful expression.

This is the most typical example of how these scholars, who have always relied on government funding to make a living, were encouraged to go into business.

They have no understanding of the market size; they simply multiply a few numbers, draw a conclusion, and then think they have discovered a business opportunity.

Later, this kind of joke often appeared on the internet, saying that with a population of 14 billion in China, if only 1% of them bought their products, that would be 1400 million customers. If you earned 1 yuan from each of them, you could earn 1400 million yuan.

As for why it's 1% instead of 1%, they couldn't explain it. Doing business with this kind of mindset, no matter how much investment you give them, will be a waste.

"Director Zhu just calculated that the annual market size for wetting agents is 300 million. So, what percentage of that can Zeshan get?" Gao Fan asked.

"What percentage?" Zhu Jian was stumped again. After a moment of hesitation, he said uncertainly, "Judging from the current situation, there are only five or six types of wetting agents developed domestically. Our ZSII type wetting agent is the best performing among them. It shouldn't be a problem for us to occupy two or three tenths of the market, right?"

Gao Fan shook his head: "Director Zhu is probably too optimistic. First of all, market share is not solely determined by performance; sales are a more important factor. I'd like to know, if Zeyan Institute were to start producing wetting agents now, how many salespeople does Director Zhu plan to send to promote them in order to reach mines across the country?"

"..."

Zhu Jian was speechless; he genuinely hadn't thought about that question.

"The tungsten mines in Zeshan have a good relationship with the Zeyan Institute, so buying their wetting agents is definitely not a problem. But will the iron mines in Qidong abandon their own province's products and accept the wetting agents from Maolin?" Gao Fan continued to ask.

Pei Hengxue replied softly, "I'm afraid it's unlikely. The Metallurgical Technology Research Institute in Qidong has also developed a wetting agent. If those iron mines in Qidong go to great lengths to buy our Zeyan Institute's wetting agent, I reckon the Qidong Economic Commission will hold them accountable."

"Also, Director Zhu said that the ZSII type wetting agent from Zeyan Institute has the best performance. This judgment is a bit too confident. In fact, a wetting agent is nothing more than a combination of several surfactants, such as fatty alcohol polyoxyethylene ether, lauryl ether phosphate, and dodecyltrimethylammonium bromide. Find a suitable ratio, add some additives, and it's not that difficult to formulate a wetting agent with better performance, is it?" Gao Fan said with a chuckle.

Zhu Jian's eyes widened: "So Manager Gao knows chemistry too?"

"Manager Gao is a student in the Chemistry Department of Peking University," Xiao Ping reminded him irritably. Zhu Jian's words were really quite unrestrained; a more narrow-minded person would have gotten angry with him by now.

Gao Fan didn't mind these things. He said, "Actually, it's a coincidence. The earliest products of our Canghua Science and Trade were chemical cleaning agents, which are actually combinations of several surfactants. Using our company's production equipment and changing the formula, we can certainly produce a wetting agent that can rival ZSII."

"I don't think Manager Gao would be interested in this," Zhu Jian said hesitantly.

After their research lab developed the ZSII type wetting agent, they conducted experiments at several mines, leaving the engineers there completely bewildered, thinking they had mastered some kind of high technology.

In fact, those who are in the same boat know their own business. Zhu Jian and his subordinates are well aware that wetting agents are nothing mysterious. They are simply surfactants that can reduce the surface tension of water when they seep into it, thereby enhancing the adsorption capacity of dust.

The reason why not many people research this kind of product is ultimately because the market is too small and not worth pursuing.

Everyone thinks that wetting agents are not a worthwhile product to produce, so how did you calculate a profit of 300 million yuan a year?
If a factory is built and can generate 300 million yuan in profit a year, wouldn't companies like Canghua Science and Trade flock to it? How much market share can I still hold then?
(End of this chapter)