In 1978, I was admitted to Harbin Institute of Technology

Chapter 282 A processing center that costs half the price of an import is going to be reduced by 10!
"They didn't even mention wanting more production orders?"

After dinner, Zhang Mingqiu accompanied Zhao Yan and Fan Zhiyong to Harbin No. 1 Machinery Plant. When they returned in the afternoon, he told Xie Wei that Changzheng Plant had indeed ordered 40 five-axis machining centers of various models.

As the first customer, Harbin No. 1 Machinery Co., Ltd. ordered 40 units at once. After discussing with the school, it prepared to provide Changzheng Machinery Factory with the largest 1070 machining center at a price of 460,000 yuan per unit.

Upon returning, Zhang Mingqiu immediately consulted with Xie Wei.

Xie Wei's focus, however, was on whether the Long March Factory was using machining center orders to request more rocket production orders.

"No."

Zhang Mingqiu stated definitively, "I've also probed them, and they currently have no such intention."

"The imported 1060 machining center costs at least $52, and its precision is not as good as ours. This one is much cheaper than theirs... It should be very competitive."

Zhang Mingqiu is more concerned about the price.

What are the production costs at Harbin No. 1 Machinery Plant?

Xie Wei did not answer Zhang Mingqiu's question, but instead inquired about production costs.

"Excluding R&D costs, the production cost of each unit is 16 yuan, and the maximum spindle speed can only reach 6000 rpm, which is not as fast as the minimum 8000 rpm of imported units..."

"The price is too high, let's lower it to 36!"

Xie Wei thought for a moment and then said in a deep voice.

"what?"

Zhang Mingqiu thought he had misheard.

Although the production cost is 16, the selling price is 36, resulting in a profit of 20. As production increases, the production cost will further decrease, leading to even higher profits.

But at 36, that's less than half the price of similar products from the Japanese!

"It's true that profits are needed to support the research and development of subsequent technologies. Harbin No. 1 Machinery also needs profits to upgrade its manufacturing capabilities. If we sell at too high a price, the import price will be even higher! Rather than that, we might as well take a loss and drive down their prices!"

Xie Wei said firmly.

He adopted the same strategy as with the previous program-controlled switches.

"This strategy of using program-controlled switches did not bring us more orders; on the contrary, it accelerated the entry of international suppliers... CNC machine tools are different from program-controlled switches. Once the price is too low, too many foreign companies flood in, and domestic machine tool manufacturers find it difficult to invest in this area if they cannot obtain sufficient profits..."

Zhang Mingqiu reminded Xie Wei.

A strategy of solely pursuing low prices is not conducive to the development of CNC technology in China.

Now that the country is shifting towards a market economy, most enterprises have lost a large number of planned orders and need to ask the market for profits and development funds.

A gross profit of 20 seems like a lot, even exceeding 55%. However, after deducting R&D costs, equipment costs, and management costs, the net profit will drop to less than 25%.

How many companies are willing to invest in this area of ​​research?

Domestic machine tool companies are unwilling to invest in research, and the huge domestic market will become a market for foreign CNC machine tool manufacturers.

"Furthermore, foreign technology is more advanced than ours. They sell our products at lower prices, using more advanced technologies that we don't have to earn more profits domestically, squeezing our profits..."

Zhang Mingqiu has a very clear understanding of this matter.

“Principal, you’re right. However, we need to consider this from a different perspective.”

Xie Wei still agrees with Zhang Mingqiu's statement.

Since he proposed using a low-price strategy, he must have fully considered these issues.

"???"

Zhang Mingqiu looked at Xie Wei with a puzzled expression.

"Let's invite the relevant person in charge from Harbin No.1 Machinery Group to come along, so we don't have to explain it several times later."

Xie Wei thought about it and felt that it would be useless to just talk to Zhang Mingqiu about this. Harbin No. 1 Machinery was the manufacturer, and the two sides had been cooperating from the beginning. Harbin No. 1 Machinery had also contributed a lot to the development of the CNC system.

The price of 460,000 yuan was only quoted by Harbin No. 1 Machinery Plant because Changzheng Machinery Factory was the first user and purchased 40 units at once.

Xie Wei directly cut the price of each unit by 10!
Forty units, that's four million. In the 1980s, when the average wage was less than forty, that was an absolute fortune.

Is Harbin willing to cooperate?

"Alright."

After observing Xie Wei for a while and seeing that he wasn't joking, Zhang Mingqiu suppressed his curiosity and asked Xie Wei the reason, to which Xie Wei nodded and said...

"Sigh~ Extraordinary times call for extraordinary measures. Who doesn't want to make more money!"

Knowing that Zhang Mingqiu strongly opposed his ideas, Xie Wei had no choice but to accept it.

really.

Not long after Zhang Mingqiu left, Du Guowang and Mu Zhiping, the technical director sent by Harbin No. 1 Machinery Plant, found Xie Wei.

"We are the only company in China that can provide CNC systems and machine tools. If we don't seize the opportunity to capture the market and obtain more R&D funding now, we will run into problems with our R&D funding once similar foreign products and technologies enter the domestic market on a large scale!"

Mu Zhiping's face turned extremely ugly.

400 million!

Moreover, as Harbin No. 1 Machinery Group sells more machining centers, the losses will increase further.

He is indeed a technician.

That's not the problem.

Although Harbin Institute of Technology has allocated funds to the research and development of CNC technology, Mu Zhiping has been working with Du Guowang and is aware that the funding for the entire research and development process is not sufficient.

With sufficient funding, progress will be even faster.

"Ms., I'll explain this to the leaders from Harbin No. 1 Machinery Group when they arrive. Don't worry, there will be no shortage of funding for continued research in CNC technology!"

Xie Wei knew that.

Explaining them one by one is just too difficult.

"Our low-price strategy has not led to a rapid market share for our program-controlled switchboards. In fact, it has prompted international suppliers to accelerate their entry into the domestic market after learning of our technological breakthroughs. Currently, there are seven or eight joint ventures established for program-controlled switchboards. This is a move to encircle and suppress domestically produced program-controlled switchboards!"

Du Guowang also reminded Xie Wei.

He always felt that young people were too idealistic.

The current situation of the program-controlled exchange is very dangerous, but Xie Wei may not have paid enough attention to it.

Import prices have decreased, and the country lacks foreign exchange, leaving many post offices and local governments that want to import program-controlled telephone exchanges with nothing to do but watch.

The emergence of joint venture products perfectly solved the problem of lack of foreign exchange.

The price is much cheaper than imported ones.

In most people's eyes, foreign technology is ultimately more advanced than domestic technology, and they would rather pay a higher price to use foreign technology.

“There is indeed a risk in this regard.” Xie Wei nodded, indicating his agreement with Du Guowang’s statement.

"then you……"

Du Guowang couldn't understand why Xie Wei, such a shrewd young man, would do something like this if he knew the consequences.

"Director Du, I'll explain to everyone later. Explaining it one by one is just too difficult. However, our CNC team needs to speed things up. Although there's the COCOM embargo, once we make a breakthrough, international suppliers will offer technology that's slightly better than ours in order to suppress domestic companies..."

"We've been working tirelessly, and the entire team, starting from developing the CNC system, hasn't even had a break!"

Mu Zhiping looked dissatisfied.

"Xie Wei, you know the state the whole team was in before. From the moment we started working on the CNC system, everyone was working day and night, trying to narrow the gap with the international level as much as possible. Now it seems we've made some breakthroughs, but the funding needed to further improve precision and technology is increasing exponentially... Harbin No. 1 Machinery also needs funding to improve its manufacturing capabilities... The speed of the machining center isn't that we can't design it, but rather that the current materials and processing technology can't meet the requirements..."

Du Guowang complained.

As technological research continues to advance, the demand for funds in CNC technology is becoming increasingly enormous.

It's not just the CNC system that needs extensive research; the core structure of the machine tool itself also needs further improvement.

Funding!

The university-enterprise cooperation office earns a lot of money every year, and even more and more. But there are also more and more places to spend money. Not only does it need to continue to invest in the research and development of existing technologies, but it also needs to invest in the research and development of related supporting technologies.

Xie Wei's current price reduction means he will lose more profits in the future.

"Director Du, CNC technology is of paramount importance, and there will definitely be no shortage of funding. Once the leaders from Harbin First Machinery Group arrive, I will explain the situation to everyone. If you think what I said makes no sense, then we can discuss the pricing issue."

Xie Wei didn't want to argue with Du Guowang.

Because of insufficient supporting components, it is necessary to drive down the price of CNC machine tools as soon as they are launched!
It sounds like a paradox, but in reality, only by lowering prices can supporting industries develop rapidly.

"Dingling bell~~"

Just as Du Guowang was getting angrier, the phone rang in Xie Wei's office.

The call was from Zhang Mingqiu.

Principal Zhang told Xie Wei that the leaders of Harbin No. 1 Machinery Group had arrived at the school and asked Xie Wei to go to the small conference room next to the principal's office.

When they learned that Xie Wei had rejected the factory's offer of 460,000 yuan and even demanded that the price be further reduced to 360,000 yuan, the leaders of Harbin No. 1 Machinery Plant couldn't sit still. After receiving a call from Zhang Mingqiu, they rushed to the school.

Xie Wei was not surprised at all.

"Director Du, Ms. Mu, the leaders from Harbin No. 1 Machinery Group are here. Let's go to the small conference room."

Seeing that Xie Wei showed no sign of backing down, Du Guowang could only sigh silently and turn to walk outside.

When we arrived at the Civil Engineering Building, Jeep 212 was already there.

Although the distance isn't too far, it still takes quite a bit of time to walk there, which shows how anxious the relevant personnel were about Xie Wei's proposal for a significant price reduction.

Selling 100 units means losing 10 million in net profit; selling 1000 units means losing over 100 million!
With hundreds of millions of yuan invested in research and development of CNC technology, at least a significant breakthrough can be achieved.

There weren't many school leaders involved. Besides Zhang Mingqiu and Liu Debao, there was Du Guowang and two professors from the Department of Mechanical and Electrical Engineering. Five or six people from Harbin No. 1 Machinery Group came.

As soon as Xie Wei entered the office, everyone at Harbin No. 1 Machinery Plant stared at him with unfriendly expressions.

The only one who did not show any abnormal reaction was Liu Debao.

"...Ladies and gentlemen, I know you all think that 46 is already a very low price, almost half the price of imported ones..."

Before anyone could voice their objections, Xie Wei spoke first.

"Our low-price strategy for program-controlled switches now appears to be facing a united attack from international telecommunications giants..."

"Since you know this, why do you still do it?"

Du Hong, deputy director of Harbin No. 1 Machinery Plant, rudely interrupted Xie Wei.

Knowing Xie Wei's influence at Harbin Institute of Technology, they refrained from interfering with the project's development throughout the entire collaboration process. In fact, the entire Harbin First Machinery Plant cooperated fully with Harbin Institute of Technology's research efforts.

Of course, this is also largely due to Harbin Institute of Technology contributing the majority of the research and development funding.

"Deputy Factory Director Du, please calm down! Xie Wei is explaining to everyone!"

Liu Debao was unhappy.

He was very displeased that Du Hong had interrupted Xie Wei.

Would Xie Wei, who is so shrewd, do something that would put him at a disadvantage?
Even if you do something that seems like a loss now, you'll make up for it in other ways in the future.

"..."

Seeing Liu Debao so unprincipled in protecting his own, not only were the leaders of Harbin No. 1 Machinery Group finding it hard to accept, but even Zhang Mingqiu and Du Guowang found it unbelievable.

In their view, Xie Wei's request to voluntarily reduce the price by 10 yuan was a completely wrong move.

Xie Wei glanced at Liu Debao with surprise.

"Comrade Xie Wei, ignore them and tell me your thoughts..."

Liu Debao is no longer worried about people saying he has no principles.

If others can secure nearly $10 billion in equipment export orders, Liu Debao will unconditionally support them without any principles. He just received news today that the higher-ups have approved the new contract Xie Wei negotiated with Abdullah, and Abdullah has returned to the school with his entourage; they'll arrive tomorrow.

There must be a reason why Xie Wei voluntarily lowered its prices.

Xie Wei glanced at Liu Debao, not understanding what was wrong with him.

Addressing the crowd, he said, “Distinguished leaders, three-axis CNC machining centers are strategic equipment that is absolutely prohibited from being embargoed on the COCOM embargo list. Before we possess the technology, no matter how the relevant units negotiate, no one in the world will sell us a single three-axis CNC machining center… not even an outdated machining center for punching holes in paper bags…”

"As various organizations shift from planned orders to market-oriented reforms, most companies with a solid domestic technological foundation need to upgrade their manufacturing capabilities. CNC machine tools are key equipment for this upgrade..."

The initial dissatisfaction of the crowd was quickly replaced by embarrassment.

Strategic equipment!

These strategic equipment can be used by all machinery processing units across the country.

Not every organization that needs a CNC machining center can secure the funds to purchase one.

They vaguely understood Xie Wei's purpose: to accelerate the technological upgrading of domestic manufacturing enterprises!
"If we rely solely on selling CNC equipment, how slow would it be to train operators and technicians? For imported CNC machine tools, foreign countries need to provide technical training... But when they establish joint venture factories, they can't possibly send skilled workers or technicians from their own countries, right? In order to suppress us, the joint venture factories want to price the same type of products much higher than us. Is that feasible?"

Xie Wei's voice was not loud.

But it struck like a heavy drum, resounding loudly in everyone's minds.

They only care about the interests of their organization.

Xie Wei was indeed considering the interests of the entire country and the industry.

Foreign investment helps cultivate talent; to suppress Harbin No. 1 Machine Tool's CNC machine tools, foreign companies must drastically lower prices to capture more market share, which reduces the technology upgrade costs for companies in need; and the greater the market demand for CNC machine tools, the more talent is trained in the industry…

(End of this chapter)