Journey 1995:Non-Stop

Chapter 338 Successfully Negotiated
After Yan Hui and Chen Jian finalized the price, they didn't plan to change it. Heng Hui Chemical is an advanced polyurethane production company and actually has market power. The current price is 55% of that of imported products, which is already very competitive. There's no point in continuing to offer discounts.

When Yan Hui was in the plywood business, he raised prices once, by only 5%-10%, but he immediately felt the pressure and had to lower them again.

Things are different now.

"If the quality can be guaranteed, I can agree to a price of 68 yuan, but 75 yuan is not an option." Manager Wang looked hesitant.

“Manager Wang, the cost of buying 3000 polyurethane tubes before could be used to buy at least 5000 tubes with our product. You can go back and do the calculations carefully. If you use polyurethane for all of them, firstly, the cost isn't particularly high, and secondly, you can save on this subsidy. As for the price, to be honest, if our company weren't relatively new and still establishing its brand, we wouldn't be offering such a low price. After all, you know the prices of Henkel and Sika.” Yan Hui shook his head helplessly.

Negotiating the price is out of the question, but we can offer value-added services. For example, sending someone to provide guidance, or covering all shipping costs. These are negotiable, but the price is absolutely non-negotiable.

That's the allure of leading products.

"Mr. Yan, is there really no room for negotiation on this price?" Manager Wang didn't expect Yan Hui's quoted price to be the final price, and it seemed he wasn't going to budge at all.

"To be honest, the carbon black we use is all imported, and the related raw materials are all from top-tier companies. They give us fixed prices. I always believe in the saying: good things don't come cheap. If you find problems with our quality, we will humbly accept them and actively correct them. But if it's about price, then I'm really sorry." Yan Hui was very firm in his communication regarding price.

"In that case, we'll order 10,000 units every three months. Will that allow us to get a price of 68 yuan?" Manager Wang asked again.

“Manager Wang, we need to increase production capacity and negotiate costs with raw material suppliers. We’re not making a profit right now; we need to increase production capacity to reduce raw material costs and then we can make a profit.” Yan Hui shook his head.

He doesn't want a large, one-time order; he wants long-term, large-volume orders.

"If we order 10,000 units a month, what kind of discounts can we get?" Manager Wang was skeptical.

Yan Hui's price was incredibly favorable for them. Even at 75 yuan per 3000 tubes, it was still significantly cheaper than Sika's products! Assuming each tube was 40 yuan cheaper, they could save 12 yuan a month just on polyurethane!
What does 12 mean? That's roughly the wages of 80 workers.

Therefore, Yan Hui took the initiative from the very beginning of the negotiations, which was completely different from previous negotiations.

“Ten thousand units would cost 68 yuan. We will entrust the most professional transportation company in Shandong Province to transport the goods and insure them. We will cover the freight costs. You should know that it is about 2000 kilometers from Shandong Province to here.” Yan Hui offered the maximum discount.

Ten thousand tubes, or 7000 liters, are about 8 tons, since polyurethane has a slightly higher density than water. Including the weight of the boxes and pipes, it's about 10 tons.

Ten tons of goods worth 680,000 yuan—this is something no one in the timber industry would even dare to dream of. The freight from Quancheng to Suining would only cost a few thousand yuan, which is negligible compared to the value of the goods.

"Hmm," Manager Wang thought for a long time, but couldn't come up with a good idea to negotiate the price.

The price was already quite reasonable, but people always tend to haggle over it.

Finally, Manager Wang made a token attempt to argue: "We'll test the new sample, then I'll report to the boss. Wait for my news today."

“Okay, that’s only right.” Yan Hui nodded.

For car factories, glue is not even in the top 50 of the supply chain. Car factories like this one do not produce many parts on their own, so it is not difficult to negotiate.

Passing the tests and having a significant price advantage—those two points are enough. As for environmental protection, Manager Wang understands it, and so does everyone. If the entire workshop were free of that unpleasant acetic acid smell, that would be a great thing. Moreover, they could use it as a selling point when selling cars.

Manager Wang knew all of this, and so did Yan Hui, but Yan Hui didn't mention it. He wasn't an expert in the automotive industry, so there was no need for him to show off his limited knowledge.

After Manager Wang finished his conversation, he took the samples and left. Yan Hui and the others were then invited to the reception room by the staff.

Upon arriving at the reception room, Yan Hui was deeply moved.

Back in the autumn and winter of 1999, when he went to the steel mill to discuss steel procurement, he entered a similar reception room and later slunk out.

Today, he finally arrived at this reception room again, and sat very calmly, drinking the good tea brewed by the staff and chatting easily with his subordinates.

He finally got to participate in the automotive industry he had always dreamed of!

Yan Hui's passion for the automotive industry began in 1995 when he first went to Fengtian and accompanied Brother Shan to the forest farm, where Brother Shan talked for a long time about automotive knowledge. When he heard that a car cost 23 yuan, he knew that this industry was very profitable, and he dreamed of one day being able to participate in it.

Today, we finally got involved, and now we even have the initiative.

They chatted, drank tea, and ate fruit, and soon it was noon. At that moment, the company boss came over in person.

"Hello, Mr. Yan. This is our General Manager Liu, the company's big boss. I've explained the situation you mentioned," Manager Wang introduced.

Yan Hui immediately stepped forward and shook hands with General Manager Liu: "Hello, General Manager Liu, I am Yan Hui, the person in charge of Heng Hui Chemical."

"Mr. Yan is so young, yet he's the head of the company?" Mr. Liu asked, somewhat surprised.

"Yes, I founded Heng Hui Chemical in 2003. I am the legal representative and the largest shareholder of the company." Yan Hui spoke calmly, as if he were talking about a trivial matter.

"Truly, heroes emerge from among the young! To build a company like this, Mr. Yan must be a highly educated individual!" Mr. Liu remarked with some emotion. "Our generation of entrepreneurs doesn't have much formal education, but seeing Mr. Yan today, I have nothing but admiration!"

Upon hearing this, Yan Hui waved his hands repeatedly, almost losing his composure.

Him? A highly educated person?
I guess Mr. Liu thinks of him as a second-generation entrepreneur, someone who returned from overseas and used his family's resources to run a business for three years. In this era, the average level of overseas returnees is still quite high.

"You flatter me," Yan Hui shook his head. "It seems our cooperation will be successful since President Liu came in person."

"Haha, I also had a meeting this morning. Basically, there shouldn't be any major problems, but we have high standards for product quality. We'd like to order 5000 units this month, and we'll make the payment after the tests are completed. How about that? If there are no issues, we'll start ordering 10,000 units per month from next month onwards," General Manager Liu said with a smile.

“No problem, we’ll still cover the transportation for the first 5000 units and sell them at the same price of 68 yuan,” Yan Hui said generously.

(An extra chapter will be added later)
(End of this chapter)