Sail across the sea

Chapter 420 What misunderstanding exists regarding Moriya?

"If this is the case……"

Fujiki thought for a moment and asked:
"May I inquire about the scale of production your institute plans to establish?"

Yun Zhongming shook his head and said, "We haven't fully considered this issue yet. It might be a production scale of 10 tons per year, or it might be a production scale of 100 tons per year. We can't be sure yet."

Fujiki smiled and said, "Mr. Yun, you may have misunderstood. I inquired about this matter entirely out of good intentions. According to Moriya Company's experience, the most economical production capacity for photoresist manufacturing equipment is in the range of 400 to 800 tons per year."

"If, as Mr. Yun says, you only hope to build a facility with an annual output of 10 tons, then you are already at a cost disadvantage. Even if you produce at a scale of 100 tons per year, you will still lack a cost advantage. With such a production scale, it will be very difficult to participate in international competition."

These words struck a nerve with Yun Zhongming and Bi Liansheng. Both of them were in the chemical industry, so how could they not know that the larger the scale of a chemical plant, the lower the cost?

The existing photoresist manufacturers within the science and technology system all have an annual production capacity of less than 10 tons, resulting in domestically produced photoresist being several times more expensive than imported ones. If it weren't for the government's requirement to maintain production capacity and force electronics companies to accept a portion of domestically produced photoresist, these photoresist companies would have already ceased production.

The idea of ​​building a large-scale facility had been in the minds of Yun Zhongming and Bi Liansheng for some time. However, this "large-scale" facility was only capable of producing 50 tons per year, a far cry from the hundreds of tons produced by foreign companies.

Encouraged by Gao Fan, Yun Zhongming proposed to the institute the establishment of an export-oriented photoresist production enterprise, which included three plans: low, medium and high, with annual production capacities of 20 tons, 50 tons and 100 tons respectively.

毕连生带着他的团队做了粗略测算，确定在包括设备、土建、测试等费用的情况下，三个方案的投资分别是400万、1000万和2200万，生产i线光刻胶的单位成本则分别是每公斤440元、350元和300元。

There is currently no international market price for i-line photoresist. Based on the previous price of G-line photoresist, Bi Liansheng estimates that the international market price of i-line photoresist, calculated in RMB, would be roughly between 400 and 600 yuan per kilogram.

If the above estimates are correct, then the products produced using a 20-ton-per-year facility will be completely uncompetitive in the market. However, if a facility is built to produce 100 tons per year, there is the question of whether it can even be sold.

Once a chemical plant is started, it cannot be stopped at will. The losses caused by shutdown can even be greater than the production and disposal of the finished product. If a plant with an annual production capacity of 100 tons is built, but only a dozen tons of product are actually sold each year, then the plant will be operating at a significant loss.

Previously, to bolster Fenglin Institute's confidence, Gao Fan promised to expand the market for Fenglin Institute and ensure orders of no less than 500 million yuan per year. At the time, Yun Zhongming and Bi Liansheng thought this figure was huge, but after thinking about it, they realized that based on a price of 500 yuan per kilogram, Gao Fan's promised sales volume was only 10 tons per year.

If the production facility that Fenglin plans to build has an annual output of 20 tons, with Gao Fan's promised sales of 10 tons, and with some of it being absorbed by domestic enterprises, this facility can indeed meet the requirements for full-capacity production.

But after making such a big decision, all they ended up building was a 20-ton-per-year production facility. Yun Zhongming and Bi Liansheng were somewhat dissatisfied because it meant that Fenglin Institute was still standing still and couldn't participate in international competition at all.

However, when it comes to building a 100-ton device in one go, people lack the courage to try.

Now that Fujiki had directly brought up this awkward situation, Yun Zhongming and Bi Liansheng were at a loss for words. "I do have a suggestion, I wonder if you two would be interested in hearing it," Fujiki said.

“Please speak, Mr. Fujiki,” Yun Zhongming said.

Fujiki said, "Since your company intends to enter the international market, it would be best to build a large-scale facility at once, with an annual production capacity of at least 200 tons, so that your products will be competitive."

“But…” Bi Liansheng hesitated, unable to finish his sentence.

In Bi Liansheng's view, Fujiki's words were somewhat detached from reality. Everyone knows that building a large-scale facility is essential for competitiveness, but with an annual production capacity of 200 tons, the investment for a single facility would exceed 4000 million yuan. If the products couldn't be sold, that money would be stuck in their hands. How could Fenglin Institute afford such a huge investment loss?
However, he couldn't say this to Fujiki Suke, because it would be too humiliating for him.

Fujiki smiled slightly and said, "I completely understand Mr. Bi's concerns. As I mentioned before, Moriya Company attaches great importance to Sino-Japanese friendship, and we are very willing to help your research institute."

"I'm going to propose a plan to President Tanihara: if your institute is willing to build a facility with an annual production capacity of 200 tons, and the i-line photoresist produced can meet the specified quality, Moriya Corporation can help you sell 25%, which is 50 tons per year. Of course, we will take a commission, which will be calculated at 10% of the sales price."

"What? You can help us sell 50 tons?" Yun Zhongming could hardly believe his ears.

10%的佣金，不是一个小数目。如果每吨光刻胶的价格是50万元，50吨就是2500万，10%的佣金就相当于250万元人民币。

However, from another perspective, with a 200-ton device, the cost of photoresist can be stably controlled below 300 yuan per kilogram, which translates to 300,000 yuan per ton, equivalent to a profit of 200,000 yuan. 50 tons would yield a profit of 10 million yuan, so paying a quarter of that to Senya as commission wouldn't be unreasonable.

Yun Zhongming understood the concept of commissions and was perfectly capable of accepting it. He believed that Fujikisuke's proposal was definitely not for the purpose of earning commissions from Maple Forest, because 250 million yen in commissions per year was insignificant for a behemoth like Moriya Company.

Since it's not for making money, there's only one explanation: Moriya Company is truly a good friend of the Chinese people.

Could it be that I had some misunderstanding about Moriya before?
Before Yun Zhongming could figure it out, Fujiki waved his hand and said, "Mr. Yun, you misunderstood. I didn't say 50 tons, but 25%."

"What's the difference?" Yun Zhongming didn't react for a moment.

“Of course there is a difference,” Fujiki said. “We just want to help our Chinese friends solve some difficulties, but we don’t want to completely take over their sales, because that would not help you learn the rules of the international market.”

"So, if you only produce 100 tons of products a year, then the sales volume we promise can only be 25 tons. You have to solve the problem of the other 75 tons yourself."

(End of this chapter)