Sail across the sea

Chapter 457 Everyone in East Asia Knows
Just as Gao Fan had predicted, many foreign businessmen passing by noticed the rare earth products on the Chinese booth and showed some interest after learning about them.

Rare earth is a product with relatively uniform quality. Once the purity is determined, there is actually little difference between rare earth products provided by different manufacturers.

Some foreign customers questioned China's ability to extract high-purity rare earth elements, but after Pei Hengxue's explanation, they were largely convinced. After all, purity indicators cannot be falsified; once the buyers purchased the rare earth elements, they could determine whether the product quality met the requirements simply by conducting tests.

Before departing from China, Gao Fan had already discussed with the leaders of the Zeyan Institute that all rare earth products would be priced at 70-80% of the international market price, aiming to project an image of high quality at low prices.

Rare earth materials command a very high premium from raw materials to high-purity finished products. In Gunan County, the price of mixed rare earth supplied by mines is 2.6 RMB per ton, equivalent to 9000 USD at the current exchange rate. If calculated using the exchange rate of 8.3 in the mid-90s, it would only be equivalent to 3000 USD.

From rare earth raw materials to high-purity rare earth, many processes are required, such as extraction and separation, precipitation, drying, and calcination. Considering the costs of various consumables, energy, and labor, the production cost of each ton of high-purity rare earth is between RMB 5 and RMB 8, which is equivalent to USD 2 to USD 3.

Based on this calculation, Zelian's cost of producing each ton of high-purity rare earth is less than 4 yuan. In the international market, yttrium oxide with a purity of 99.99% costs US$11 per ton, and gadolinium oxide with a purity of 99.9% costs US$13 per ton.

Based on a 70% price quote, which is equivalent to $80,000 per ton of yttrium oxide, there is still a 50% profit margin.

The people at Zeyan Institute were used to hard times and didn't have high expectations for profits. A net profit of $4 from one ton of yttrium oxide was enough to make them grin from ear to ear.

Foreign rare earth smelting companies, such as Japan's Yttrium Corporation and Sugon Alloy, have slightly higher production costs than Zehnder due to environmental requirements and labor costs, but their costs do not exceed $5 per ton. They ship at $11 simply because in the high-tech product market, everyone is accustomed to pursuing high profits.

Rare earth manufacturers overestimate the price of rare earths, and companies that use rare earths to manufacture electronic components also overestimate the price of their components. By the time the product reaches the consumer, the price has increased several times over. The electronic product that the consumer buys for 100 yuan actually costs less than 1/5 of the original price.

Chinese people are very honest and won't inflate prices. Even at 8 yuan per ton, Pei Hengxue felt he was being too greedy and wished he could quote a fair price of 5 yuan, making a profit of about 1 US dollars per ton.

Generally speaking, customers aren't particularly sensitive to rare earth prices, because rare earths are not like cabbages; the quantity used in production is small, so price isn't a major factor. However, since there are cheaper rare earths available, trying them out wouldn't hurt—what's the difference between buying from one source or another?

After receiving several groups of businesspeople, Gao Fan handed over the follow-up work to Pei Hengxue.

Pei Hengxue was, after all, a leader in the institute. Even though he was a little nervous when he first met foreign businessmen, he learned how to do it after watching Gao Fan's performance a few times. However, he still felt a little ashamed when reciting the advertising slogans provided by Gao Fan.

He could only pray that his performance at the exhibition wouldn't get back to China, otherwise he would be too ashamed to face anyone.

Compared to the smooth start of rare earth sales, the sales of photoresist were very pessimistic. Over the course of a few days, some purchasing personnel from integrated circuit manufacturers did pass by, inquire about the photoresist situation, but then nothing more was heard from them.

Different manufacturers' photoresists have different performance specifications. From the customer's perspective, changing to a different photoresist means adjusting parameters on the production line, sometimes requiring multiple adjustments to achieve the best results. Therefore, manufacturers generally prefer to use familiar photoresists.

Since most people hadn't heard of Chinese-made photoresist before, they were naturally unwilling to spend the effort to try a new brand. Some manufacturers, after seeing the presentations at the Chinese booths, would seek verification from established Japanese and German photoresist companies. These established companies, of course, would disparage Chinese technology, claiming it was unreliable and advising their long-term customers not to become guinea pigs for the Chinese.

"Xiao Gao, it's been three days now, and I still haven't made a sale. You should think of something, right?"

Bi Liansheng, with a mournful face, pleaded with Gao Fan.

"I've been trying to find a solution," Gao Fan said with a smile. "Director Bi, I haven't been idle these past few days either. I've taken some time to walk around the exhibition several times, just to find clients for our Fenglin Institute."

"Have you found it yet?" Bi Liansheng asked.

Gao Fan nodded: "We found them. Not only did we find them, we found several."

"Then what are you waiting for?" Bi Liansheng asked anxiously. "Have you talked to them yet? Do you want me to go with you?"

Gao Fan shook his head: "It's not the right time for you to step in. Besides, there are some things that are not convenient to discuss at the exhibition. I plan to invite them for coffee after the exhibition ends today."

"Fine, I'll trust you one more time!" Bi Liansheng said through gritted teeth, then plopped back down in his seat. He really couldn't do anything about Gao Fan.

As the afternoon wore on and the exhibition was nearing its closing time, Gao Fan left his booth and headed towards the other end of the hall. Bi Liansheng tried to follow him, but Gao Fan blocked his way. He could only stand inside his booth, tiptoeing to see which booth Gao Fan was heading to. However, with people coming and going in the hall, Gao Fan's figure disappeared in an instant, leaving Bi Liansheng stamping his feet in frustration.

Pei Hengxue walked to his side, gently patted his arm, and said, "Old Bi, don't worry, I think Gao Fan is very confident. Just wait for the good news."

"I must have been out of my mind! How could I have trusted such a greenhorn!" Bi Liansheng pounded his chest in frustration. "Our institute invested nearly 3000 million yuan in this project, not only putting up all our savings but also accumulating a huge debt to the bank. If we can't sell it in Atlanta this time, even if I cut off my head, I won't be able to face my colleagues in the institute."

At this moment, Gao Fan had walked to a fairly large booth, glanced at the name "Korea Guangchen Semiconductor" on the booth's backdrop, and said to the staff:

"Hello, I am Gao Fan, business manager of China Semiconductor Materials Export Company. I would like to discuss a very important matter concerning the future of your company with your person in charge."

That's right, Gao Fan's plan has always been to find a breakthrough by targeting South Korean semiconductor companies.

Sino-Korean friendship relies on Japan; everyone in East Asia knows this.

(End of this chapter)