Journey 1995:Non-Stop

Chapter 250 Harmony brings wealth
"Change suppliers?" Yan Hui was slightly surprised, not expecting that the factory manager would bring up this crucial issue right away.

To achieve a profit margin of over 15% for plywood without compromising quality, Yan Hui must optimize the entire process.

The Mr. Li I met at the restaurant that day only supplies a maximum of 1,000 cubic meters per month, but his spending power is very high, and he even has a mistress, which indicates that his profit margin is considerable. However, the factory manager mentioned that Mr. Li's prices are not high, which creates a contradiction.

It seems that Mr. Li's supplier is quite special.

“Yes, Mr. Li made things quite awkward for me last time. We still have some contracts, and I was thinking that once these contracts are finalized, we can gradually start getting goods from you, which should further reduce our costs,” the factory manager said directly.

"The problem is, Mr. Li isn't stupid. Since his price isn't high, how can I guarantee that my price will be lower than his?" Yan Hui couldn't easily accept this offer.

As the factory manager said, he and General Manager Li still have an ongoing contract, and they can't switch suppliers instantly. So, this is a huge pie in the sky; if Yan Hui takes it, where will he find the initiative?
"Didn't you hear Mr. Yan mention it last time? Mr. Yan's timber..." The factory manager was somewhat surprised, not expecting Yan Hui to not respond to him.

“I don’t have much of a problem with Mr. Li. I’m sure you, Factory Director, understand why he was unhappy last time. This little conflict is nothing to me. Although I’m not doing timber business in Quancheng now, if I were, I wouldn’t offend a fellow businessman so easily. Factory Director, you need to explain Mr. Li’s background to me.” Yan Hui was very cautious.

If Yan Hui had come with the scale of Jianye Group, he wouldn't have needed to fear President Li at all. He could simply start a price war and carve out a path for himself.

Business warfare is not as complicated as people imagine. Price wars are something every businessman must consider and be prepared for.

The reason Yan Hui can't return to Jianye to do business is because he'll inevitably be squeezed out of the market by Putian merchants through price wars, leaving him with no profit at all. They can withstand it, but Yan Hui can't. This plan is mindless and simple, but it really works!
"It's my fault, it's my fault. I heard that Mr. Li's poplar wood came from Siyang. Siyang is in Jiangsu Province, right? Mr. Li is a well-known figure locally, but he's nowhere near as powerful as Mr. Yan, I can guarantee that. I used his wood mainly because the price was reasonable; our relationship is only so-so." As he spoke, he pushed the plate towards Yan Hui, "Mr. Yan, please eat first, we can chat while we eat. Let me pour you some juice."

Yan Hui ate something and nodded. "I know Siyang. When I was in the timber business in Jianye, there were indeed poplars from Siyang in the market. The poplars there are Italian poplars, and it's one of the earliest regions in China to plant poplars on a large scale. It's not a secret."

Siyang is in Jiangsu Province. Yan Hui, having lived in Jianye for several years, naturally knew the place; he even knew three business owners from Siyang. The area is near Hongze Lake, and Yanghe Daqu (a famous liquor brand) originates here. The local liquor and textile industries are quite developed. Siyang also has a strong drinking culture; many people enjoy drinking.

"I also heard that Mr. Li has a relative over there, but I don't know exactly what he does." That was all the factory manager knew.

"Mr. Xiang, I know exactly what you're trying to say. I have a suggestion for you, I wonder if you'd be interested in hearing it." Yan Hui picked up a crab, ate it, and started chatting. "Please go ahead, Mr. Yan," Factory Director Xiang immediately perked up his ears.

"Actually, you've misunderstood me all along. If I were to supply poplar timber to your factory, of course, there wouldn't be a problem, and I could guarantee a reasonable price. But there are two issues. The first one is simple: I don't know Mr. Li's specific background, which might cause some minor trouble. Of course, as I said, it's a simple issue. The second issue is slightly more complicated: I came from Jianye mainly to enter the construction industry. I know some of the major timber merchants in the area, and I'll try not to get involved in this, otherwise it might offend some friends. Right now, I want to keep a low profile."

"I understand what you mean, Mr. Yan. Sometimes, the bigger the tree, the more the wind will blow against it. I see you're always very low-key." Factory Manager Xiang nodded immediately. "Your suggestion?"

“This matter between Mr. Li and me isn’t something I need to make a fuss about. I have no relationship with him, nor have we cooperated. His offense against me only affects you here. But we don’t have any strategic partnership, right? Director Xiang, there’s no need to bring this up with me. It’s not that you lack sincerity; I can see your sincerity. But business is business. What I need right now is low-priced plywood.” Yan Hui skillfully peeled a crab.

"Mr. Yan, I'm a very honest person, and I don't quite understand. Could you please explain it more clearly?" Director Xiang was increasingly unable to understand Yan Hui.

He became insecure.

“You could use this to cause trouble for General Manager Li, thereby pushing down the price of poplar wood and reducing his profit margin even further. He would surely agree. In that case, wouldn't the cost of plywood also come down?” Yan Hui looked at the factory manager. “Does what I’m saying make sense?”

"Huh?" Factory Manager Xiang was so focused on how to get Yan Hui as a client that he was surprised to hear Yan Hui say that!
He had assumed that if Yan Hui was offered a new profit opportunity, he would be willing to accept it, especially since Yan Hui had mentioned that he started his business in timber. Unexpectedly, Yan Hui didn't take the offer!
Yan Hui thought about it more complicatedly. He calculated the situation of poplar trees yesterday and compared it with the data that Lao Guo had given him. He found that the poplar trees in Northeast China were not very competitive! Now, fast-growing poplar trees are being planted more and more, and the cost of artificial forests is lower than that of natural forests.

Fast-growing poplar trees are planted in Shandong Province and surrounding areas. They are transported from Yichun. Since Lao Guo doesn't make a penny, he can only maintain about the cost.

If Yan Hui were to go to Siyang and other regions to find suppliers, he could certainly find some, but the profit margin wouldn't necessarily be substantial. Developing new products isn't that simple. And the crucial issue is that Yan Hui doesn't have enough capital to go ahead with it. What will happen to President Han if any funding issues arise? Abandon the main business for the sake of profit? Foolish!
At this moment, everything Yan Hui does must be accountable for the lead provided by President Han!
If that's the case, why kick out General Manager Li? General Manager Li is petty and concerned with saving face; let him pay for his pride. Just bring this matter up with the factory manager and talk to General Manager Li; he'll definitely make concessions. All the prices negotiated with the factory manager, and the profits ultimately conceded, will still be reflected in Yan Hui's profits. Outsiders might not understand this, but Yan Hui does.

"In business, harmony brings wealth," Yan Hui said with a slight smile.

"Yes, yes, yes," the factory manager realized he had no initiative at all.

(End of this chapter)