Restart life

Chapter 450 0440 [I took a side trip to DJI]

A domestically produced smartphone from 2010, excluding R&D costs, had a factory cost that accounted for approximately 40%–55% of its official selling price.

If R&D expenses are also included, then it would account for 50% to 70%, or even higher.

When the three major telecom operators negotiate customized contracts, they usually start by offering 55% of the contract value. As long as the volume is large, the cost can be spread out, and the mobile phone manufacturers can still make a profit.

Huawei is currently so comfortable in the customized phone market that it doesn't want to move.

Only popular models from major brands like Nokia can be negotiated down to close to 80% of their original price.

Currently, China Mobile, China Unicom, and China Telecom have different 3G license standards, and a mobile phone can only support one of them: making calls and sending text messages can be done interchangeably, but to enjoy 3G services, you must choose one of them.

HarmonyOS A1 chose China Mobile, even though China Mobile is suppressing the HarmonyOS camp, China Mobile has the largest user base. Chen Guiliang is a businessman; he doesn't need to go against the market.

Currently, developing a customized version for the telecom market based on the mobile version would take approximately 4-6 months.

By then, both distributors and contract manufacturers will have expanded their production capacity to a sufficient level. Not only will there be no problem with delivery, but they will also be able to reduce costs by increasing sales volume.

By supplying 60% of the selling price to the telecommunications company, Chen Guiliang would definitely make a profit.

The more telecommunications services Chen Guiliang customized, the higher his profit margin became.

Therefore, the focus of the next round of negotiations will not be on price, but on the quantity of customized phones.

If the quantity is insufficient, the price will have to be raised!
The telecom company planned to order 30 units initially, and would continue ordering if sales were good. HarmonyOS Technology insisted on 80 units, and after negotiating down to 50 units, they refused to budge.

The final contract terms agreed upon by both parties are as follows: China Telecom will order 50 A1 units from Hongmeng Technology, to be delivered 10 months later. A 30% prepayment will be made upon signing the contract, a 30% progress payment upon acceptance, and a 30% payment upon delivery of all goods to the designated warehouse. The remaining 10% will be held as a security deposit and will be settled within six months to one year after delivery.

The delivery locations are clearly stated, all uniformly set at a warehouse in Shenzhen, not far from BYD's contract manufacturer. HarmonyOS doesn't handle transportation for telecom companies.

Making money is important, of course, but gaining the "friendship" of the telecommunications company is equally important.

This deal has long-term strategic value!
……

Pengcheng.

DJI moved to the Silicon Valley Startup Park last year, next to the Harbin Institute of Technology Pengcheng Campus.

Later news reports often stated that DJI previously operated from a residential building. However, they failed to mention that the building belonged to its founder, Wang Tao, and had been vacant for a long time.

The other shareholder, Xie Jia, is no ordinary person either.

He and Wang Tao knew each other since high school. As soon as he heard that his good friend's company was short of money, he immediately sold his house in Hangzhou to help.

Young people who graduated from university less than two years ago already have houses to sell in Hangzhou...

Xie Jia, a shareholder, had been a hands-off manager for the past few years. After the Spring Festival this year, he finally came to work at the company as DJI's Chief Marketing Officer.

The main reason was that during the economic crisis, most of the employees left, and the founding team had to disband. Xie Jia was appointed to find a market direction in a time of crisis.

DJI currently has only three bosses, two accountants, and five R&D personnel. There are also two mentors, one of whom is an angel investor.

The three bosses each occupied an office and held administrative, sales, and other positions.

Xie Jia, using her newly purchased HarmonyOS phone, said while playing a match-3 game, "People from Xiyi Investment came several times last year. Do we really not accept venture capital?"

"There's no need. Let's just muddle through for now," Wang Tao said. "We don't even know how the company will develop. What's the use of getting more venture capital if we don't even know how?"

Employee number seven, Zhao Tao, said, "That's Chen Guiliang's investment company. It seems like all the companies he invests in have succeeded. This shows that DJI has a bright future!"

Wang Tao laughed and said, "You believe the news in the newspapers?"

On the table in front of Zhao Tao was a HarmonyOS A1. He picked up the phone and said, "But let's be honest, HarmonyOS phones are really awesome."

Xie Jia said, "HarmonyOS A1 is indeed impressive, but it's only about the same as Meizu M8. What's truly amazing about Chen Guiliang is that he completely opened up the phone's operating system. This really surprised me. Vision, courage, and magnanimity are all indispensable; otherwise, he couldn't have done something like this."

Yang Mozhan is a very senior employee. Before DJI moved to Shenzhen, she was the first employee of Hong Kong and received a small number of company shares (not stock options).

She was using a Hong Kong version of the iPhone 3GS, and muttered to herself, "Can Candy Crush and Fruit Ninja be downloaded and installed on the Apple device? I see you guys playing them and I'm really envious."

“I don’t know, you should ask the HarmonyOS community,” said another employee, Zhou Li.

Wang Tao said, "Stop chatting idly and let's arrange this year's work."

Everyone was bewildered by this statement.

Two years ago, DJI launched its first drone. But it wasn't a multi-rotor drone; it was a scaled-down version of a traditional helicopter.

What's the use of this thing?

The market for things like pesticide application and aerial surveying is very narrow, with a pitifully small number of users.

Aside from continuing to develop flight control systems, no one knew what else the company could do or where its future direction lay.

Flight control systems, on the other hand, have become inexplicably popular, with sales approaching 400 million yuan last year.

Xie Jia said, "How about I go to Europe and ask the distributors there what the users actually want to do with our flight control system?"

That's quite ridiculous.

The company's products inexplicably became bestsellers, but the boss had no idea why the customers were buying them.

But that's the reality.

They know that European users buy them to make drone parts, but they don't know what type of drone parts they're using them for.

Multi-rotor drones!

Wang Tao said, "Let's focus on developing the Ace One first. The surge in flight control system sales is likely due to a growing number of drone enthusiasts in Europe. This is a good thing for us."

The meeting lasted for over 40 minutes. The bosses were very approachable; it was basically just everyone sitting together chatting and exchanging ideas.

In addition to three offices, the company also has a 200-square-meter R&D center. The R&D center is divided in two: the left side is used for offices and meetings, while the right side is a large warehouse that also serves as an operating room.

Zhao Tao, a master's graduate from Harbin Institute of Technology, still has to do welding himself in the workshop.

"Boom boom boom!"

There was a knock on the door.

The cashier ran to open the door and, seeing that the person looked somewhat familiar, asked with a puzzled expression, "Who are you looking for?"

Chen Guiliang smiled and said, "My name is Chen Guiliang. I sent people here several times last year."

The cashier was both surprised and delighted, calling out as she looked inside, "Chen Guiliang is here! Chen Guiliang is here!"

Everyone rushed over to watch the spectacle, and the two bosses didn't stop them—one of the bosses had even gone to Huaqiangbei to make purchases.

Zhao Tao, who was welding equipment, arrived the fastest. After shaking hands with Chen Guiliang, he took out his HarmonyOS phone and said, "Mr. Chen...Mr. Chen, my name is Zhao Tao, and I'm your fan!"

"Haha, hello, feel free to call me Old Ancestor Chen if you want." Chen Guiliang was quite pleased.

Before long, the two bosses came out to greet them.

Chen Guiliang followed them inside and looked around the DJI company: "Your decoration is nice, it's minimalist just like my mobile phone experience store." Wang Tao laughed and cried at the same time: "I was just too lazy to spend money on decoration, this whole wall of the warehouse and control room is just a bare shell."

Chen Guiliang glanced around: "Is this all the people in the whole company?"

Wang Tao said, "During the economic crisis, many employees left the company because the company was not doing well at the time. However, after they left, our product sales surged. Now DJI is not short of money, so if Mr. Chen wants to invest, I'm afraid I'm very sorry."

“You’re just operating on a small scale right now, doing workshop-style production, just like when I sold physical cards of ‘Three Kingdoms Kill’,” Chen Guiliang said. “If you want to grow bigger, you need to have enough capital.”

Xie Jia asked, "I've always been curious why President Chen is interested in DJI. He sent people over several times last year, and now he's come in person."

Chen Guiliang said, "I am a drone enthusiast. I really love... well, you could call me a drone fanatic."

Mr. Chen has always had many hobbies. When he first started his business, he also loved football, basketball, and anime. This is something that various student clubs at Peking University are very aware of.

Wang Tao clearly didn't believe it and asked, "What kind of drone is most popular among drone enthusiasts in China right now?"

Chen Guiliang said, "I really don't know what other people's situations are. I like playing with multi-rotor drones."

Wang Tao commented, "It's definitely suitable for beginners."

Wang Tao looked down on multi-rotor aircraft, believing that they were too low-tech and had never considered making one.

Accompanied by others, Chen Guiliang took a tour of DJI.

"Where do you usually conduct test flights?" Chen Guiliang asked.

Yang Mozhan said, "The playground of the school next door."

Yang Mozhan, a graduate of the Business Administration program at HKUST, had an excellent first impression of Chen Guiliang. Mainly because he was handsome, and also possessed fame, talent, and wealth.

As she spoke, she couldn't help but glance at Old Master Chen a few more times.

Chen Guiliang sat down and said, "To be honest, I know nothing about drones. But I know how drones should be commercialized in the future, I mean large-scale civilian commercial use. Not like now, where customers are only a few institutions and enthusiasts."

"Large-scale commercial use?" Xie Jia listened with skepticism.

Chen Guiliang laughed and said, "If it can't be used on a large scale, why would I bother to invest? I've even sent people here several times, and now I'm making a trip in person."

Hearing this, the crowd believed it even more.

Wang Tao asked curiously, "How can it be commercialized on a large scale?"

Chen Guiliang asked, "If I explain my development strategy, would you be willing to let me invest?"

“That depends on whether I agree. And you can’t hold too many shares, nor can you interfere in the company’s management,” Wang Tao said.

Chen Guiliang then asked, "How can I guarantee you won't go back on your word?"

In front of all shareholders and employees, Wang Tao said, "I guarantee with my personal reputation that as long as the development strategy you mentioned has prospects, I guarantee that you will be able to invest in DJI."

That's a very frivolous statement.

But sometimes, saying such things is very serious, and promises must be kept.

Especially for small companies like DJI, apart from employee number 1 Yang Ranmo, key technical personnel such as Zhao Tao have not yet been rewarded with shares.

They were willing to stay at DJI, even during the most difficult times, mainly because they loved doing it, and also because of the personal charisma of their boss, Wang Tao.

If Wang Tao goes back on his word, his image in the eyes of the technical backbone will be ruined.

At that time, Chen Guiliang could recruit these people and start his own drone company. The compensation would definitely be better than DJI's!

Shi Jun, in particular, joined the company as an intern in 2008 and is currently the only one in the company who can work on flight control systems—everyone else has resigned.

Chen Guiliang took out a HarmonyOS phone: "What do you think of the future of smartphones?"

"The outlook is very good. I heard that Meizu has sold 50 phones," said Yang Moran.

This woman really lost out. She was rewarded with DJI shares, but two years later she chose to resign, and DJI bought back her shares.

If we stay...

Chen Guiliang said, "I believe that in the future, smartphones will be able to combine the functions of computers, cameras, televisions, and many other things."

Wang Tao said, "These functions are already available."

Chen Guiliang said, "I'm not talking about something as primitive as it is now. Take cameras, for example; in the future, mobile phones might even be used to make movies. Do you understand what I mean?"

"Maybe," Wang Tao seemed to have made a connection to something, but couldn't quite grasp the inspiration.

Chen Guiliang said, "How about you two bosses have a private talk with me?"

"Okay." The two looked at each other.

The other employees quickly left, leaving only Chen Guiliang, Yang Shuo, and the two bosses in the meeting room.

Chen Guiliang said, "I started out with SNS websites. Future social networking sites will integrate all current Web 2.0 products. You can chat, write articles, and post videos anytime using your mobile phone. The content uploaded by countless netizens will be received by even more netizens in real time. A market with unlimited potential is right in front of us!"

The two of them still seemed somewhat bewildered.

Chen Guiliang said, "Drones can also integrate video recording functions, so ordinary people can use drones to shoot aerial videos. Even when communication technology is sufficient, drone aerial footage can appear on mobile phones in real time, making it convenient for users to operate drones for aerial photography."

The two bosses looked at each other in bewilderment.

Chen Guiliang continued, "If there were a drone that could easily take aerial photos, and the footage was connected to your phone in real time, would you buy it?"

Xie Jia nodded: "Of course I'll buy it!"

Chen Guiliang said, "Future civilian drone products should be selected based on the simplest structure, lowest cost, and most stable operation. Only in this way can they be promoted on a large scale!"

Wang Tao said, "Then it should be a multi-rotor."

In fact, even if Chen Guiliang didn't say it, Xie Jia would find out in a few months when he went to Europe that the flight control system that sold so well last year had been used by European drone enthusiasts to make multi-rotor drones.

From then on, DJI determined its development direction.

Chen Guiliang patted his behind and stood up: "Whether you're willing to accept my investment or not, you can reconsider. Please give me an answer within a week. If you refuse, I'll start my own drone company. Let's see who can develop faster and who can do better marketing."

Chen Guiliang just left like that.

Wang Tao asked, "Do you think he's right?"

Xie Jia nodded: "Making multi-rotor, low-cost aerial photography drones is very promising!"

"Accept his investment?" Wang Tao asked.

Xie Jia smiled wryly, "He made it clear when he left, such an obvious threat. If he really invested in starting a drone company, he could easily recruit a bunch of technical talents, and he also has a clear research and development direction. If it comes to marketing, we can't compete at all."

Wang Tao thought for a moment and said, "Then let's accept the investment, on the condition that he doesn't interfere in the company's daily affairs."

(End of this chapter)