Go back in time and be a chaebol

Chapter 2526 The King of Scrolls Goes to War (First Update, Please Subscribe)
This price is definitely not going to sell!

This is outrageous!
For a moment, everyone turned their attention to these colleagues from the foreign trade department. Their bloodshot eyes conveyed only one message—they wanted to hear their explanation.

Faced with such a gaze, Comrade Fang slowly said:
"Well, it's very simple. Our products have never been competitive in the international market, even compared to Soviet goods. In order to open up the Western market, our products are priced at about 50% lower than domestic prices!"

"what?"

His words stunned everyone in the conference room, who all asked:

"50% lower? How are we supposed to make money then?"

Although they don't know how to do business, they still know that doing business is about making money; who would do a business that loses money?

"No, you don't understand. Export trade is different from domestic trade. You can't look at the issue from the perspective of whether it makes money or not."

Comrade Fang took a cigarette from the cigarette box on the table, lit it, and began to lecture these people.

"The important thing is foreign exchange. As a latecomer, if we want to enter foreign markets, our prices must be competitive. Therefore, we must lower the prices, which often results in losses."

And what about the government? It assigns "export earnings targets" to foreign trade companies, not profit targets. The primary goal is to sell products and earn foreign exchange; profit and loss are secondary considerations.

In order to meet foreign exchange earnings targets, even if the export price is lower than the domestic cost, the losses of foreign trade companies can be offset through "export subsidies."

Upon hearing this explanation, everyone in the conference room was stunned. They clearly hadn't expected that foreign trade would be conducted in this way.

This is equivalent to using domestic fiscal resources to subsidize international buyers in exchange for foreign exchange. This is known as "loss-making exports," and its purpose is to obtain foreign exchange.

"Isn't this still a loss for us?"

"To suffer a loss? Even if you want to suffer a loss, someone else has to buy it first."

Comrade Fang took a puff of his cigarette and said:

"There are so many buyers, it's not like they have to buy from you."

"That's right. Most of the industrial products we export are low-value-added primary processed goods or light industrial products, which face competition from other countries in the international market. If we don't lower the prices, we simply can't sell them."

After hearing their explanation, everyone was speechless for a long time before someone finally spoke:
"What do we do now? Are we going to have to cut the price by 50%?"

"Well, let's report this to our superiors first, and wait for them to study it before making a decision."

Just as the people in the conference room were racking their brains over this sudden turn of events, dawn had broken. In the hotel restaurant, Song Guoqiang and Tang Zhijie were having breakfast when a man wearing black-rimmed glasses walked over with a broad smile. Before the bodyguard at the next table could even stand up, the man said:
"Oh, you must be Mr. Song. I have a business deal to discuss with you."

Are you here to discuss business?

Song Guoqiang shook his head at the bodyguard, looked at him curiously, and asked:
"you are?"

"I'm from the Ministry of Light Industry..."

The visitor actually took out a business card. When Song Guoqiang took the card, he was taken aback when he saw the ink on his hand. It was obviously a newly printed business card, and even the cut of the card looked very rough.

interesting.

Looking at the man who appeared to be in his fifties, Song Guoqiang asked:

“Mr. Xu, I don’t know what kind of business you want to discuss. As you know, I have always only done business with your trading company.”

“That was ordinary business, which was handled by the foreign trade department. The business Mr. Song is doing now is different.”

Xu Qingan shook his head and said:
"The weapon I'm talking about."

"Oh?"

Curious, Song Guoqiang found it rather strange.

"You're from the Ministry of Light Industry, aren't you?"

"Among the enterprises under the jurisdiction of the Ministry of Light Industry were also arsenals. Many military mobilization lines and third-line factories were managed by the Ministry of Light Industry."

This was also determined by the special circumstances of this era, because many military mobilization lines were produced by enterprises from other departments, so management, production, and other aspects were still the responsibility of their original departments.

Therefore, the Ministry of Light Industry also had its own arsenals.

After giving a brief explanation, Xu Qingan continued:
"We can provide you with submachine guns, light machine guns, mortars, and rocket launchers at the best prices..."

They've come specifically to steal our business!

Before Xu Qing'an could give a price quote, two comrades from the Fifth Light Industry Department arrived. Upon seeing this, they immediately said:

"Comrade, where are you from? Don't you know that Mr. Song is a guest of our department?"

"No, the higher-ups said that all ministries are now focused on trade and generating foreign exchange for the country. It can't be that only you are allowed to sell goods, but we, the Ministry of Light Industry, are not!" "You are the Ministry of Light Industry, you are in charge of production..."

"They can also make guns."

Xu Qingan didn't even pay attention to the other party. He took out a black handbag, quickly grabbed a sample, and handed it to Song Guoqiang.

So simple and crude?
Actually, it wasn't crude at all. Yesterday, after learning that someone had come to him wanting to buy weapons, Xu Qing'an asked his superiors for permission to "intercept" them. He even took over the samples that various companies in the ministry had sent to him for the ministry's excellent product selection.

That's an AK47!
He took the sample, examined it carefully, and then touched it, as if confirming that the materials were consistent. Just then, Song Guoqiang heard Xu Qingan say:

"Mr. Song, if your purchase quantity exceeds 10000 units, each unit will only cost $75. If it exceeds 20000 units, each unit will be discounted by another $5..."

Just then, someone nearby came over.

"Mr. Song, our submachine guns are priced at only $70 each!"

The man spoke, then glanced at Xu Qing'an.

"If we sell more than 10 units, each unit will only cost $65!"

what!
$65 each!
Surprised by the low price, Song Guoqiang looked at Xu Qingan and said:
"Mr. Xu, I'm very sorry, but I'm afraid I can't purchase new products from you anymore. Your competitor has the same product as you, but at a lower price."

Slightly taken aback, Xu Qing'an spoke:
"Sir, we can also provide the same product, and a set will only cost $60!"

"Our products have a delivery advantage, and we can supply them in the shortest possible time!"

“Our prices are absolutely the cheapest, Mr. Song, you should still consider our products.”

And so, the group started a price war around the table. Seeing this, Song Guoqiang fell silent. He just sat there quietly with a slight smile on his face.

At this point, he even regretted it a little... He should have talked to those factories directly.

Perhaps those factories will offer even lower prices.

In order to export and earn foreign exchange, they went all out, even lowering prices regardless of costs. At this time, it was a competition of who was more ruthless to themselves!
Looking at the scene before him, Song Guoqiang murmured to himself;
"I knew it would turn out like this!"

In fact, Song Guoqiang had anticipated this turn of events. Starting last year, foreign trade companies began to emerge in the region. The appearance of these companies directly disrupted the previous situation where one or two companies monopolized foreign trade.

As a seasoned veteran in the business world, Song Guoqiang could foresee what might happen once this situation was broken—foreign trade companies would engage in price wars to export their products.

In fact, he was already used to foreign trade companies engaging in price wars. After all, from the very beginning, their products were generally 30%, or even 50% or more cheaper than international prices.

Back then, only a few companies controlled foreign trade. What about now?

With the emergence of numerous local foreign trade companies, they will undoubtedly do everything possible to enhance the competitiveness of their products in order to earn foreign exchange through exports.

And what is their only competitive advantage?
It's all about the price!

The SEA approach, which involves increasing technological content through research and development while maintaining a price alliance to avoid vicious internal competition and thus gain control over product pricing, is not something that all companies can learn.

When faced with competitors, most companies don't think about technological research and development or forming price alliances; instead, they engage in price wars, adopting a "better to lose than lose" attitude. In the end, they may get orders, but their profits will be greatly reduced.

Today, Song Guoqiang is facing just such a company.

Although there aren't many yet, there will only be more and more such companies in the foreseeable future, since the trend of decentralizing foreign trade authority will not change.

The companies that are able to participate in the Canton Fair at the first opportunity are all state-owned enterprises with a strong foundation. These large entrepreneurs have deep pockets and can afford to lose money even if they lose a little.

Moreover, in the eyes of these large state-owned enterprises, export earnings are more important than profits.

Currently, years of trade deficits have depleted the region's foreign exchange reserves, so they will spare no effort to export and earn foreign exchange.

The same was true for the Soviet Union and Eastern European countries. However, the Soviet Union could export oil to earn foreign exchange, but what about here?
Oil, coal, and ore are all important export products for earning foreign exchange, but these products are ultimately limited, and they need to export industrial products.

Therefore, for leaders of state-owned enterprises, being able to export and earn foreign exchange represents outstanding political achievements.

With achievements in politics, there is hope for promotion, such as being transferred to a government agency or becoming a leader in a larger company.

Even if they lose money on every item sold, as long as the sales are in US dollars and the goal of earning foreign exchange through exports is achieved, the company leaders are willing to make this loss-making deal.

After all, profit is not the most important thing for these companies.

Having done business with them for so many years, how could Song Guoqiang not know what they consider most important?
Sometimes, even foreign exchange isn't important, especially now.

Sometimes, price isn't important; what matters is making a friend, and the price for making a friend will definitely be very satisfying.

What's even more impressive is the speed of delivery; just one week later, over 15 pieces of various types of munitions were loaded into containers and shipped overseas...

(End of this chapter)