Journey 1995:Non-Stop

Chapter 312 Disheartened
Price increases are not good for construction sites, which are consumers, but a 10% increase is acceptable to them.

Prices for all goods and services have been rising in recent years, including wages. There's usually a price surge at the beginning of each year, so Yan Hui has to take advantage of this special period to raise prices.

For Yan Hui, a 10% price increase means almost doubling his profits, which is certainly a good thing. However, things aren't that simple. Some customers who were already wavering might choose other options. If it weren't for the need to make more money, Yan Hui could have chosen not to raise prices, which would have made it impossible for other new distributors in the market to survive.

After the new year, Yan Hui announced this decision and held a meeting with everyone.

Prices are never fixed. The purchase price varies from site to site depending on the channel and the amount used. We need to analyze the specific situation this time.

“Yongjun, this construction site has only a so-so relationship with us, and they’ve always been using cheap secondhand boards mixed in, so their quality requirements aren’t that high. For a construction site like this, we can only raise the price by a maximum of 3 yuan. A price increase is necessary, there’s no doubt about it.” Yan Hui began to explain one by one.

"But for this construction site, where we've been cooperating for a long time and all the plywood is from us, we can raise the price by 9 yuan. However, we can't raise it that much all at once. We can give away some boards initially as a token of our appreciation, and then we can stop giving them away later..."

Yan Hui began to pass on some "shady businessman" quotes.

Proactively raising prices is an art for any supplier. Yan Hui even consulted General Manager Han about this.

Sometimes costs do increase significantly, but customers may not accept it, so there are many techniques involved. In the early stages, price wars are necessary to capture market share; once market share is secured, prices can be appropriately raised to generate profits.

Raising prices will give other competitors room to survive, and it will also make it easier to accumulate funds quickly, gaining a huge advantage in the next wave of competition.

In addition to raising the price of plywood, Yan Hui also appropriately increased the rental price of steel formwork. There is less competition now, so there is no pressure to raise prices.

Yan Hui didn't go home for the holidays. He visited all his major clients, discussed the price increase in advance, and gave them all the necessary gifts. So this year's price increase was relatively stable, and he didn't lose any clients due to the small price increase.

The downsides of the price increase haven't even started to show yet, but the benefits are immediate.

The plywood business quickly generated over 25 yuan in monthly profit, while the steel formwork business achieved around 10 yuan in monthly revenue, and the timber mill's profits were also rising. Yan Hui's plan was to keep the steel formwork company's money entirely off for its own expansion, with all profits used to continue purchasing steel formwork.

He also plans to use the profits from the timber mill to add new equipment and further expand the scale of the timber processing plant.

In terms of chemical experiments, Yan Hui only needs to cover the cost of plywood. The monthly income of over 20 yuan from plywood isn't all of it; at least 5 yuan needs to be used for customer maintenance each month. I won't go into the details of how that's done.

In April, after about 10 failures, the two senior students that Chen Jian had invited finally had time to come over.

The two men looked around the lab, somewhat dissatisfied; it was rather rudimentary for them. However, for the money, they were still willing to help out for a while. Seeing their attitude, Yan Hui couldn't bring himself to offer them any stock options. Clearly, they didn't believe Yan Hui could build a decent factory. In short, Yan Hui didn't particularly like these two, but he still treated them with great respect. He even came to observe the experiments twice.

Yan Hui was an amateur, but he could still tell that the two of them were more professional than Chen Jian and his wife. They took the lead in the experiment, while Chen Jian was always in a subordinate position. This made Yan Hui feel very good, and he felt that the money was well spent.

After observing the experiments twice, Yan Hui left. The chemical engineering lab was now a bottomless pit, costing him nearly 20 yuan a month just for materials. Adding in salaries, rent, and other expenses, Yan Hui's plywood business simply couldn't keep the business afloat. He was as busy as a spinning top, trying to earn money from anything, his mind constantly filled with countless complexities.

Every day, Yan Hui has to think about at least ten things. His phone is constantly ringing, and his driver, Li Pengfei, is also very busy, running around with him every day. To outsiders, President Yan must have already made a fortune, but only Yan Hui himself knows how much of a headache he's going through. He maintains such a large network of resources and business relationships just to fill the hole left by the chemical industry.

This situation continued until June, with chemical consumption exceeding 600,000 yuan, yet Yan Hui still hadn't received a response.

The purity of the current experimental samples is already acceptable, but the problems of bubbles and particles still cannot be solved. Chen Jian even had an argument with his senior about this.

After these two postdoctoral fellows arrived, Yan Hui enjoyed a period of glory. He applied to the government for a postdoctoral exchange station, and the government provided some support. The three postdoctoral fellows also received a monthly subsidy of 3000 yuan from the government!
Chen Jian's wife is not eligible for the subsidy because she has not yet graduated with her doctorate.

But after June, the problem became more and more serious. Chen Jian and his senior began to deviate from each other's ideas, and their thoughts were completely different.

Yan Hui didn't understand the specific direction of chemical experiments, but he knew that he had to support Chen Jian at this time.

During a conversation, Yan Hui clearly expressed this meaning, and ultimately the two postdoctoral fellows felt disrespected and chose to leave on their own initiative.

Before leaving, the postdoctoral fellow surnamed Luo discussed this matter with Yan Hui.

“Chen Jian’s approach is wrong, but he’s been here a long time, and I know you’re willing to respect his ideas. But if he’s wrong, he’s wrong. After we leave, he might never be able to produce a qualified single-component polyurethane. I’m telling you this now not to discourage him, but because after spending these past few months together, I think President Yan is a good person, and I’m just offering a few words of advice.” After saying this, Dr. Luo settled the wages with Yan Hui and left.

Yan Hui was left alone, sitting at the entrance of the laboratory.

From last year to July of this year, the chemical experiments have cost approximately 800,000 yuan in total, yet there has still been no good output. Moreover, the plywood business is now facing challenges, with several competitors starting to compete in the surrounding area. Yan Hui has had to proactively lower prices to maintain market share, and profits have dropped from 250,000 yuan per month to less than 200,000 yuan.

Hearing Dr. Luo say this now, Yan Hui was still inevitably a little disheartened and sat alone at the door for a long time.

(End of this chapter)