Rebirth 08: Rise from copycat phones

Chapter 431 Zhiyun uses money to attack others

Zhao Liquan is right. Bafang Technology and the local area are indeed eager for orders and support from Zhiyun Group.

Even more than Zhao Liquan expected!
After all, this is just a very inconspicuous fourth- or fifth-tier city. There is no high-tech industry in the local area. Before, Bafang Technology was just a small startup company founded by a rich second-generation who returned home to start a business and recruited a group of local talents.

But fate is so magical that such an inconspicuous small startup company actually developed a new resin material.

In fact, at first, no one thought that the resin material they developed would be used in AI glasses. After they developed this new material, they tried to promote it to the eyewear industry, but because the cost was too high, no one paid attention to them.

Last year, Zhiyun Group developed AI glasses and then looked for various available materials or technologies on the market.

The key technology of the diffraction optical waveguide technology they use is a surface relief grating technology. The volume holographic grating technology is a little worse, but it is a relatively mature and available technology route. Zhiyun Group is also developing a better volume holographic grating technology route, but it has not yet opened up the industrial chain and cannot achieve large-scale and cheap mass production.

For consumer-grade industrial products such as AI glasses, cheapness and mass production are two indispensable core conditions. If these cannot be achieved, it will be difficult to carry out large-scale mass production and market them... What's the point of making AI glasses that cost tens of thousands or even hundreds of thousands?
This is also the main reason why Zhiyun Group has currently chosen surface relief grating technology... Although it is a little worse, it can run through the entire industrial chain and can achieve large-scale and cheap mass production.

There are two key technical difficulties in surface relief grating technology. One is grating design, which is not a problem for Zhiyun Group.

Zhiyun Semiconductor has a subsidiary that specializes in this type of optical semiconductor sensor, so grating design is not a big problem for Zhiyun Semiconductor, a subsidiary of Zhiyun Group.

As for grating production, Zhiyun Microelectronics also has a subsidiary that uses nanoimprint technology to produce gratings.

However, in addition to grating design, diffraction waveguide technology also requires glass with a high refractive index, the higher the better.

Previously, the existing glass products on the market were either extremely expensive or had a low light refractive index, so the AI ​​glasses project team under Zhiyun Group began to work in this field... Of course, Zhiyun Group itself does not do this, it is looking for various suppliers all over the world.

We first searched our existing supply chain manufacturers but found no relevant products. We then consulted domestic and foreign manufacturers but still found no corresponding products.

How to do?
It’s impossible to directly start research and development by myself...the cross-industry issue is too serious.

But we can't simply rely on these optical supply chain manufacturers.

Therefore, Zhiyun Group took the lead in establishing a high-refractive-index glass project team, and brought in some supply chain manufacturers to conduct research and development, starting from various raw materials and moving forward step by step.

During this process, a new type of resin material from an unknown small company was found to be very suitable for use as a raw material for high-refractive index glass, so some tests were carried out in the laboratory and the results were found to be excellent.

And this unknown small company is Bafang Technology!
Zhiyun Group would naturally not leave the supplier of such key raw materials alone, so it contacted Bafang Technology many times and finalized its intention to make strategic investments and support the company.

Faced with the olive branch thrown by the world-class multinational enterprise Zhiyun Group, the young people at Bafang Technology were dumbfounded... To be honest, they are just a small company that makes ordinary resin materials. They claim to be high-tech, but their scale is very small. They mainly provide some cheap and low-end resin materials to some small-scale eyeglass lens manufacturers.

Even so, I often go hungry... The competition is too fierce and it's hard to get orders!

The promotion of the newly developed new resin material is not going smoothly... The cost of the material is too high and it is too good... If it is used in glasses, the cost is too expensive and their existing customers simply cannot afford it... The shipping price of the resin lenses produced by others is only a few dollars, and the cheaper ones are even less than one dollar.

You said you want to sell me a piece of junk material for more than ten yuan, that's crazy...

By the way, the eyewear industry is a very special and deformed industry, which is reflected in the extremely low cost of glasses and extremely high selling prices.

The factory price of most so-called high-end glasses is only a few dozen yuan, and the cheap ones are even a dozen yuan, but the terminal selling price is hundreds or even thousands of yuan.

The specific selling price depends on the customer's affordability... If the customer is rich, he can go to a high-end eyewear store and sell it to you for a few thousand yuan; if the customer is poor, he can go to a small street shop and sell it to you for a few hundred yuan.

As for the things, they are pretty much the same...

But don't simply blame the eyewear store owners for being cruel. The eyewear industry is a very niche market with a relatively low replacement rate, and eyewear stores can't do many orders a month... At the same time, there are various rent, labor, equipment costs, etc.

Fewer orders means that a very small number of customers bear all the expenses of the eyewear store for a month, including the boss's profit... This means that the average customer spending must be high enough, otherwise the boss will lose money.

At the same time, when getting glasses, you also need to test the degree of myopia, astigmatism or hyperopia. You cannot just buy glasses and use them directly. This means that large-scale sales and online shopping channels are difficult to open up, and you can only get glasses offline.

This one-to-one sales model is doomed to make it difficult to implement large-scale price cuts.

Finally, various situations have led to a very special and deformed market for glasses: extremely low cost and extremely high selling price!

But... the terminal selling price of glasses is hundreds or even thousands of yuan, which has nothing to do with the glasses factory. Their shipping price is still only tens of yuan or even a few yuan.

When it comes to the purchase price of various spare parts for glasses, it is even cheaper, a few dollars or a few cents is the norm.

At the same time, Bafang Technology’s existing customers are all small-scale customers who make mid- and low-end eyeglass lenses, and their ability to bear prices is even lower.

So, although Bafang Technology had clearly developed a better resin material, it found that it couldn't sell it because the price was too high... It was so embarrassing, so it could only look for new opportunities in various other industries.

During this process, it was noticed by the supply chain employees of Zhiyun Group.

At that time, Zhiyun Group's supply chain employees were searching the world for ultra-high refractive index glass lenses and corresponding raw materials.

I just happened to see Bafang Technology at a product launch event in the eyewear industry, and then I saw their introduction to their own resin materials. They said that their resin materials can be used to make resin lenses with very high light refractive index.

When the purchasing staff in the supply chain asked this question, they thought, Wow... they didn't expect to find such good materials at a routine recommendation meeting.

I reported it immediately.

Immediately afterwards, Zhiyun Group made formal contact with Bafang Technology, took more resin material samples from them, and then handed them over to a resin optical product supplier for research and development and production. In the end, they actually produced very good high-refractive index resin lenses.

This type of resin lens was eventually used in the diffraction optical waveguide technology in the AI ​​glasses project and became a key raw material in the entire display module.

This led to subsequent contacts between Zhiyun Group and Bafang Technology.

Prior to this, Zhiyun Group’s investment department and supply chain department had jointly conducted a detailed review and negotiation on Bafang Technology, and the preliminary intention had been finalized.

Of course, the preliminary intention is just a preliminary intention, and it does not mean that Zhiyun Group will follow the intended plan... Zhiyun Group must confirm the reliability of Bafang Technology, including its overall R&D capabilities and potential, the factory's future production capacity, and stable supply.

Once Bafang Technology enters a company's supply chain, the company must subsequently provide products stably and continuously, and there will absolutely be no unplanned production stoppages, insufficient production capacity, etc.

At the same time, the company needs to have the ability and ambition to continue research and development. Zhiyun Group has always had very high requirements for various supply chain manufacturers. Although the orders given are large and the profits are sufficient, they will also consider the product life cycle more attentively. Sometimes they will even produce some inventory reduction products to help supply chain manufacturers make more money using mature products.

However... after receiving these orders and profits, the supply chain manufacturers cannot just sit there and wait for death... The high profits that Zhiyun Group gives to the supply chain manufacturers are not for their shareholders to distribute as dividends, but for them to invest in technological research and development.

It is actually OK not to invest in R&D, but after a few years, the product technology of the supply chain manufacturer will not be able to keep up with the pace of other suppliers, and then lose orders, or even be unable to enter the supply chain of new products...

Once the company loses orders from Zhiyun Group, its revenue will become very ugly and bankruptcy is possible.

In short, Zhiyun Group hopes that supply chain manufacturers can keep up with its pace and maintain a state of continuous research and development... Sometimes, even when supply chain manufacturers have invested too much in research and development and are unable to sustain funds, Zhiyun Group will provide some financial support, either by increasing orders, or raising the purchase price to make some profits, or simply providing loans or even making strategic investments.

Because Zhiyun Group needs these supply chain manufacturers to maintain technological advancement!
Otherwise, no matter how awesome the product is, it will not be produced! On the contrary, if a supply chain manufacturer does not make progress, Zhiyun Group will immediately launch a backup plan and directly support other similar supply chain manufacturers.

If you don’t engage in research and development, I will support your competitors to engage in research and development... This is basically the idea.

Therefore, some bosses of supply chain manufacturers have a love-hate relationship with Zhiyun Group... What they love about it is that they pay a lot of money!
What I hate is that there are so many damn demands. They control this and that, even the food standards and accommodation conditions of the workers in the factory, whether overtime pay is given, whether social security is paid, etc.!

Moreover, technology is iterating too fast. In order to meet the various high-tech requirements put forward by Zhiyun Group, huge annual R&D investment is required... This means that a considerable part of the money earned by Zhiyun Group by supply chain manufacturers is invested in R&D, making it difficult for them to obtain large dividends every year.

So many people feel that being a boss is like working for nothing...

Of course, this is just a superficial understanding of some people!

In fact, most bosses of supply chain manufacturers made a lot of money. Even if the profits were finally invested in research and development, their stock prices also skyrocketed.

The stock price goes up, whether you pledge shares to cash out or directly sell shares to cash out... you can make a lot of money.

Many business owners, especially those of high-tech companies, do not make money from the profits and dividends of the business itself, but from the increase in the company's market value...

This is the situation for other supply chain companies, and if Bafang Technology wants to enter Zhiyun Group's supply chain, it must also meet these conditions.

The management team must be stable and not chaotic, have stable production capacity, and have potential and ambition in R&D. At the same time, it must also meet the many detailed requirements of Zhiyun Group for supply chain manufacturers.

And what Zhao Liquan came here to inspect this time were these things!
Previously, it was some low-level employees who came to negotiate. Although the reports said they were all good, the credibility of low-level employees’ reports was limited. It was okay for ordinary suppliers...but this kind of relationship is the supplier of core raw materials for a new smart product in the future, and Zhiyun Group will not underestimate it.

Therefore, Zhao Liquan, the deputy director of the M7 level group, came to inspect.

After Zhao Liquan arrived at the local area, his first stop was Bafang Technology, and he did not go to any hotel or anything like that.

But after I got there, I found that it was different from what the information said. The Bafang Technology mentioned in the information was just a small company with only a few hundred people including the factory, and it was located in a small industrial area in the suburbs.

But now, their convoy appeared in an office building with more than ten floors, and outside the office building were four big words "Bafang Technology".

Someone nearby explained to him that this was part of the local government's support for Bafang Technology, and that an office building was rented to Bafang Technology at a very low price.

Then he said that the local government had approved a large piece of industrial land for Bafang Technology at an extremely low price, almost for free.

Although the land in small places is not worth much, especially industrial land, the sincerity is still quite sufficient.

If a small city like this can attract strategic investment from Zhiyun Group, let alone giving away industrial land, it would even pay for it...

Although this investment is nominally just a strategic investment in Bafang Technology... in reality everyone knows that it is Zhiyun Group that is in charge.

And the investment does not necessarily have to stay in the local area... What Zhiyun Group actually wants is just a kind of resin material, or more precisely, the technology and patent of this resin material!
As for the company's administrative, R&D and other departments and factories, it is not necessary to choose to be here.

If necessary, Zhiyun Group can also directly acquire Bafang Technology, or acquire their technology and patents, and then find another supply chain manufacturer to start production... In short, do it somewhere else!

However, Zhiyun Group generally does not do such hateful things.

The small local families have spent several years or even more than ten years creating a good environment, supporting various entrepreneurial activities, and begging for help from everyone.

We finally managed to incubate this high-tech enterprise started by a college student who returned to his hometown. Just as it produced results, your Zhiyun Group abducted it. Isn't this disgusting!

The local representatives must be going crazy!
Therefore, unless there are special circumstances, Zhiyun Group still prefers to let the strategically invested enterprises stay in the local area, which is good for everyone. When the scale of the enterprise grows and needs to be expanded, it will choose to invest and build factories in other places with more convenient conditions based on the actual situation.

Zhao Liquan's visit this time was not only to inspect Bafang Technology itself, but also to investigate the various local conditions.

And initially, things look pretty good.

Bafang Technology Company was founded by a group of college students. A second-generation rich man led a group of classmates, and some other young people joined in. The whole team is very young and energetic.

Although there were some problems with the equity structure in the early stage, the investment personnel under the strategic investment department of Zhiyun Group have reorganized and redistributed their equity structure through strategic investment to ensure that the core management team can have sufficient operating rights, avoid team splits, and avoid irrelevant people eroding shares.

When it comes to investment, what matters is the people, not just the founder, but also the core team he leads!
Therefore, Zhiyun Group’s strategic investment will often assist the team with the founder as the core to increase actual control over the company, ensure that the operating rights will not be lost, ensure the company’s stable operation, and develop according to the established strategic route.

In short, just avoid all kinds of nonsense!

When it comes to Zhiyun Group’s strategic investments, it does not mess around, nor does it allow others to mess around.

Provide support to the core team in terms of funding, legal affairs and autumn!
The core team of Bafang Technology is very good, and Zhao Liquan is still very optimistic about them.

There is nothing good to see on other hardware. The only thing about this company that Zhiyun Group is interested in is their new resin material. The rest is not worth mentioning.

Then there were some local conditions. Zhao Liquan looked at a lot of them, especially went to the local industrial zone to take a look, and he felt it was pretty good!

Of course, this was just his apparent feeling. In fact, many of his employees had already arrived quietly in advance to collect various information locally.

That evening, Zhao Liquan saw the information and feedback collected by the employees who arrived early.

The overall feeling is quite good. There is strong support for technology companies, the local small industrial zones are also very successful, and the feedback from some local small and medium-sized enterprises is also quite good.

As long as there are no problems with these, Zhao Liquan will not find any fault with them.

During the third day of the inspection, he also allowed public interviews and disclosed to the media for the first time the news that Zhiyun Group intended to make a strategic investment in the local area.

In fact, in the afternoon of the same day, Zhao Liquan, together with the strategic investment department, a wholly-owned subsidiary of optical materials that is specifically responsible for the business, formally signed a strategic investment contract with Bafang Technology on behalf of Zhiyun Group!
A wholly-owned subsidiary of Zhiyun Group will make a strategic investment in Bafang Technology, investing 200 million yuan and holding 50% of Bafang Technology's shares.

For such key core resin material suppliers, Zhiyun Group generally seeks to acquire controlling stakes. Of course, in addition to holding controlling stakes, it will also provide sufficient monetary returns to the management team of the acquired company.

Therefore, Zhiyun Group also allowed the founding team to cash out... cash out according to the valuation after the strategic investment. On the one hand, this was to give them money, and on the other hand, it was also to obtain more shares to complete the controlling stake in Bafang Technology.

Before this, Bafang Technology’s net assets were only a few million... Zhiyun Group invested 200 million to get 50% of the shares, and then spent another 10 million to purchase a portion of the shares held by the management, thereby obtaining controlling stake.

Such a huge and exaggerated premium is, on the one hand, because this new resin material is indeed worth the price, and it is worth spending hundreds of millions to buy this material. On the other hand, it is also to make the founding management team willingly give up the controlling stake!
Zhiyun Group has never liked to use its power to pressure others... When they want something, they don't waste any words and just throw money at it. After throwing money, they will also take you to continue playing together.

Not only does this produce better results, but it also creates a particularly good reputation in the entrepreneurial circle!
Many startups dream of being picked up by Zhiyun Group... They are really generous with their money and will not burn bridges after crossing them. They will give you money while continuing to play with you.

This has made many other big companies envious and jealous... You, Zhiyun, are always throwing money at people and destroying the market, do you understand?

You spend hundreds of millions to buy an innovative company with great potential that could be acquired with a few million or tens of millions of dollars, plus some conspiracies, sneakiness, and various pressures... Aren't you stupid?
Zhiyun: I have money, I am happy!

(End of this chapter)