Reborn in 08, a heretical cultivator starting a business

Chapter 185 Home Appliances to the Countryside Program Begins, the Era of Vipshop Has Arrived!

"If the water purifier goes online ahead of schedule, then there's no problem. But will this product sell well?" Tang Zhi asked with some concern.

Wang Junshan greatly appreciated Tang Zhi's caution.

Being cautious is fine, but being too reckless can be a big problem.

"Of course they'll sell. Don't be fooled by the fact that only 100 million water purifiers were sold nationwide last year, and only 150 million this year. But next year we expect to reach 300 million, and within five years we'll exceed 1300 million, and within ten years we'll exceed 2300 million!"

Wang Junshan was well aware that the development of water purifiers was very rapid.

However, the current price is too high, which has led to slow development.

Ultrafiltration water purifiers, for example, can only perform simple filtration and cannot be used for direct drinking, and they cost between 1500 and 3000 yuan.

A reverse osmosis (RO) water purifier that allows direct drinking water costs between 3000 and 6000!

In 2008, the average salary was 3000-6000, which was equivalent to two to four months' salary.

That's equivalent to 9000 to 1.8 ten years from now.

It would be strange if it sold well!

This only covers the cost of the machine; consumables are not included!
The brand's mid-to-high-end water purifiers have abandoned universal filter cartridges and started promoting dedicated filter cartridges.

This caused the cost of filter cartridges to increase by two to four times or more.

The Dow 75G universal RO membrane is priced at only 250 yuan.

But by replacing the shell and interface with Smith's, it becomes a special filter element, which can be sold for 500 yuan, 750 yuan, or even 1000 yuan!
Although they all use the exact same Dow 75G RO membrane, the price can be two, three, or four times higher!
This will be true even ten or fifteen years from now.

The water purifier itself doesn't make money; the real money comes from consumables, especially RO membranes.

60% of the profits come from consumables.

Water purifiers are already so expensive, and consumables are even more expensive, which makes them inaccessible to many people.

This is why water purifier sales are currently dismal.

However, the market demand is huge. As long as the price comes down and the filter element price is reasonable, annual sales of 2500 million to 3000 million units will not be a problem.

It can be said that from 2008 to 2013, it wasn't that consumers didn't want to use water purifiers, but rather that they were too expensive and unaffordable.

There are too many opportunities for Future Technology to enter the market now.

In 2008, the water purifier market was practically nonexistent.

All the brands, big and small, combined only have a production capacity of 150 million.

Not enough for Future Smart Home to compete!
Wang Junshan's strategy was to offer large quantities to satisfy customers and to sell at high volume with low profit margins.

RO membrane reverse osmosis water purifiers priced between 3000 and 6000 are unaffordable for most people.

But the RO membrane reverse osmosis water purifier from 1999 is really great.

People think ultrafiltration water purifiers priced between 1500 and 3000 are expensive.

But for an ultrafiltration water purifier costing 999, there's no problem.

Including RO membranes and other filter elements, it's impossible for Wang Junshan to make no money at all, but he can make less.

If we set a fair price, and smart home products are profitable and affordable for consumers, then that's fine.

Currently, water purifiers and filter cartridges are expensive, hindering the development of the entire industry.

Only when prices reach a reasonable level and are driven down can the water purifier industry experience a major boom!
A RO membrane water purifier priced at 1999 yuan comes with a built-in filter that can last for three years.

Three years later, spend a thousand to replace a set of filter cartridges, and it will last for another three years!
For 3000 yuan, you can exchange it for six years of healthy drinking water for a family. Few people would refuse.

Wang Junshan had actually planned the product positioning long ago.

We prioritize technology accessibility, making RO membrane reverse osmosis water purifiers affordable for everyone!

"The water purifier R&D center will be established at the Little Duck headquarters initially. Once the Smart Home Industrial Park is completed in the future, the R&D center will be moved to the industrial park."

The initial phase mainly involved developing integrated water circuits. We simply purchased components such as Dow RO membranes, Delta pumps, and KOBO solenoid valves, and assembled them. There wasn't much technical difficulty involved.

Further research and development of RO membranes will be carried out gradually, and it will be difficult to achieve a breakthrough in less than two years.

"Okay, boss."

Tang Zhi responded, "I'll make the arrangements quickly."

The 500-acre plan for the first phase of Future Smart Home has been completed long ago.

Generally speaking, production workshops account for 50%-55%, warehousing accounts for 15%-25%, R&D centers account for 10%-15%, and supporting facilities such as power stations, wastewater treatment plants, employee dormitories, and green spaces account for 10%.

For example, in Haier Industrial Park in Binhai City, production accounts for 55%, warehousing for 20%, R&D for 15%, and supporting facilities for 10%.

The industrial park of a second-tier washing machine brand is structured as follows: 50% production, 25% warehousing, 15% R&D, and 10% supporting facilities.

But the future smart home industrial park is different. In the first phase, production accounts for 75%, warehousing for 5%, R&D for 15%, and supporting greening for 10%!

The biggest advantage of this configuration is that it increases the number of workshops and creates enormous production capacity.

Our production capacity is 36%-50% greater than that of our competitors!

However, warehousing capacity has been drastically reduced, to only one-fifth to one-third of that of its competitors.

If other companies did this, they would have been overwhelmed with inventory long ago; 5% of their storage capacity is simply not enough!

But intelligent driving in the future doesn't care.

The reason is simple: the 800-acre Jeju International Warehouse is located not far from the Future Smart Home Industrial Park!

For Future Smart Home, warehousing is not important at all; it's just for transit.

All raw materials and products can be stored in international warehouses.

The Future Smart Home Industrial Park will be responsible for research and development and production!

The finished products are sent directly to the Jeju International Warehouse and then distributed to other warehouses throughout the country.

Then they load another truckload of raw materials back and continue production.

In this way, the future smart home industrial park can expand its workshops and shrink its warehouses to maximize production capacity.

Use 500 mu as if it were 700 mu, and use 1500 mu as if it were 2100 mu!

In addition, the production lines introduced are all the latest and have a high degree of automation, 80%-90%.

The first phase of the 500-acre industrial park, if used entirely for the production of washing machines, could produce up to 700 million units.

If all of it were used to produce water purifiers, that would be even more terrifying, reaching 1400 million units.

But it's clear that we can't possibly use that much production capacity.

In response, some have suggested using the excess production capacity to manufacture washing machines on contract!
Wang Junshan rejected it outright.

There was no other way; Xinle Electric's net profit margin for OEM manufacturing was only around 3%-4%, which was practically dirt cheap.

Even Midea, the leading OEM manufacturer, only has a net profit margin of 4%-6%.

Haier manufactures high-end washing machines, but its net profit margin is only 6%-8%!

If Future Smart Home continues to do OEM manufacturing, it will account for 4%-5%.

Wang Junshan has never done a job with such a low profit margin!

Even if it's a brand's directly operated flagship store on Vipshop, where Vipshop only provides the platform and the brand handles everything else, such as production, shipping, and after-sales service, Vipshop still takes a 5% commission!

Manufacturing washing machines on contract is time-consuming and laborious, and you only earn 3%-4% profit. It's outrageous.

It would be better to adjust the product line and launch water purifiers ahead of schedule!

Wang Junshan made a plan for this.

In the first phase of the industrial park, 50% of the workshops are used to produce washing machines, with an annual output of about 350 million units.

With the addition of the Little Duck factory and the Xinle Electric Appliances factory, the annual production capacity of washing machines can reach 700 million units in 2009 and 870 million units in 2010!

It basically meets the requirements.

If that's not enough, there's also a second phase of the industrial park, which covers another 500 acres and can be added at any time.

Alternatively, they could acquire land in Ningbo or Feicheng in the south to build another factory.

Jeju Island is offering both money and land. Wang Junshan only needs to pay 5 yuan per mu to buy a 1500-mu industrial park, which will have a future annual output value of tens of billions! In contrast, even after discounts, land prices in Ningbo and Hefei are still 20 to 40 yuan per mu, and they don't offer loans or interest subsidies. Their tax breaks are also only half of Jeju Island's...

If Wang Junshan goes there, it will require buying land at a high price and spending a billion yuan to build a factory, which makes no sense.

The current smart home industrial park is sufficient; the remaining funds would be better used to acquire land in Shenzhen and build a mobile phone factory!

Next year, the production capacity of water purifiers will reach 350 million units or more, and the year after that, 700 million units or more!

By scaling up production, reducing costs, and lowering prices from 3000-6000 to 1999, coupled with a 13% subsidy for rural home appliances, it's entirely possible to achieve hot sales.

Even if we can't sell that many, we can still export them overseas through U-Tuan International!
The same high-end RO membrane reverse osmosis water purifiers are sold overseas at half the price of those in China, and are 30-40% cheaper than other brands. It would be abnormal if they weren't selling well.

By promoting home appliances in rural areas, we quickly developed the domestic market.

Then, through U-Tuan International, we will expand into overseas markets.

Two paths to take!

Three days later, the three newly introduced fully automated pulsator production lines at the Little Duck Factory completed their commissioning.

Next, we will begin full-scale mass production, adding another 120 million units of fully automatic pulsator annual production capacity.

At this point, the production capacity of Little Duck's main factory became 90 twin-cylinder units, 180 million fully automatic impeller units, and 20 roller units.

With the addition of Xinle's 200 million unit capacity, the total capacity reaches 490 million units!
Once half of Xinle's production lines are upgraded to fully automated impellers, the total production capacity of both sides will reach 520 million units.

That temporarily meets the requirements.

However, Wang Junshan postponed the upgrade of half of Xinle's production lines to fully automated impellers.

There was no other reason than that Wang Junshan had received inside information.

The nationwide "Home Appliances to the Countryside" program won't have to wait until the first quarter of 2009; it will be launched in the next few days!
Last year, only three provinces—Shandong, Henan, and Sichuan—were included in the pilot program for the "Home Appliances to the Countryside" program.

Next, the "Home Appliances to the Countryside" program will be fully launched nationwide, covering all provinces, municipalities, and autonomous regions...

Sales of twin-tub washing machines will surge again!
Next year's sales will be terrifying.

Therefore, some time ago, Tang Zhi not only reported all of Little Duck's existing washing machine models, but also the latest models he developed.

They also reported all the models under Xinle Electric's own brand.

Although Xinle Electric Appliances has a small own brand, it still enjoys good brand recognition in Jiangsu and Zhejiang provinces and has good sales in the local area.

Once all the applications are submitted and the products are included in the rural appliance subsidy program, these products will enjoy subsidies next year, leading to a surge in sales!
Meanwhile, Vipshop, as an e-commerce platform, also applied for the rural appliance subsidy program.

We also submitted an application to use WeChat Pay as an online payment channel for the rural appliance subsidy program.

If Wang Junshan were to push this forward himself, it would be very difficult, extremely difficult.

But with the capital city and Shandong province pushing for it, this matter becomes much easier.

It's good to have a big tree to lean against for shade!

The national subsidy for 2025 will be deducted directly from the payment.

But it wasn't that advanced back in 2008.

In its previous life, JD.com launched its online home appliance subsidy program for rural areas by requiring full online payment upfront, with subsidies being returned later. This is where the problem lies.

Therefore, WeChat offers direct online subsidies with a 13% discount. Alternatively, a fast settlement interface can be used.

In preparation for the upcoming nationwide home appliance subsidy program in rural areas, Vipshop is engaging in a massive procurement drive.

Xinle Electric Appliances has also ramped up its production capacity, fully manufacturing twin-tub washing machines.

Not only are there Little Duck models, but also some of Xinle's own models.

They are all promising candidates for the rural appliance subsidy program.

We're just waiting for the full rollout of the "Home Appliances to the Countryside" program, which will lead to a massive boom for Vipshop and Little Duck!

Wang Junshan was not disappointed; on the 20th, a piece of news shocked the whole country:
The coverage of the "Home Appliances to the Countryside" program has expanded from a pilot program in three provinces last year to all parts of the country.

[Any product listed in the "Home Appliances to the Countryside" program is eligible for a 13% subsidy for rural residents.]

Vipshop, as a pilot e-commerce platform for the "Home Appliances to the Countryside" program, supports subsidies for home appliances in rural areas across the country.

When purchasing home appliances from Vipshop, the courier will need to verify your household registration certificate upon delivery. If you have a rural household registration, a 13% subsidy for rural home appliances will be deducted directly from your cash payment! If you pay online, the 13% subsidy will be refunded via WeChat Pay.

Looking at this news.

Wang Junshan smiled: "The rural appliance subsidy program has begun, and the era of Vipshop has arrived!"

From beginning to end, Wang Junshan had made two preparations.

Acquire Little Duck!

Vipshop applies for online home appliance rural subsidy program!
If Vipshop's application fails, Little Duck washing machines will be a backup option.

Little Duck's double bars, pulsator, and roller models are all basic models, all of which are covered by the rural appliance subsidy program, and the prices are low enough!

These are all best-selling items.

For example, the Little Duck basic twin-cylinder has an offline retail price of 800-868 yuan, but with the 13% subsidy under the Home Appliances to the Countryside program, the price drops to 696-720 yuan!
It's almost as good as Vipshop's 20% off sale!

It would be abnormal if it didn't sell out.

And the price is even lower online!

The price is still 20% off for non-rural appliance purchases, at 699.

Home appliances in rural areas are 20% off, plus an additional 13% subsidy, bringing the price down to 608!

The news caused an uproar:

"The rural appliance subsidy program actually supports online shopping through Vipshop. I checked it out, and the prices are incredibly cheap."

"Yes, Vipshop's online prices are already much cheaper than offline prices, and with an additional 13% subsidy, they are even cheaper."

"The Little Duck dual-cylinder is only 608 yuan, so I bought one for my home."

"Can it still be operated this way?"

"Of course, you can place an order online, fill in the township address, and have RRS deliver to your door. When you receive the goods, have your parents show their household registration book to the courier, and you can enjoy the home appliance subsidy for rural areas. You can pay 608 yuan in cash at that time. Or you can pay 699 yuan online via WeChat, and the subsidy amount of 91 yuan will be returned after the review."

“I’ve learned something new. This is a great idea. I’ll buy my grandma a Peugeot 608 right away. It’s a steal.”

"The range hood I bought was also two hundred yuan cheaper."

"I bought a Hisense TV for my home on Vipshop, which was more than a thousand yuan cheaper than offline."

"The difference is so big, Vipshop is still the best. I'll just call and ask if my family needs anything."

"Vipshop's discounts plus the rural appliance subsidy are such a great deal. Even my dad praises me for being a money-saving expert."

"Take advantage of this opportunity to buy some things for the house. It's rare to find such cheap prices. College students don't have much money, so cash on delivery is fine."

Similar scenes have appeared on various forums and online communities.

Everyone was excited.

There are few home appliance stores in rural towns, and the variety of products is limited, while prices are high.

Even with a 13% subsidy, it's still significantly more expensive than online.

Vipshop offers discounted prices, and with the added 13% subsidy for rural home appliances, it's even more attractive.

In no time, college students far from home contacted their families to discuss what to buy.

However, some are happy while others are sad.

Seeing that Vipshop had become the pilot platform for the rural appliance subsidy program, and also the only platform, people were concerned.

JD.com's Chairman Liu was so angry his face turned green:

"why?"

"JD.com also applied to become a pilot platform for the home appliance subsidy program in rural areas, so why was Vipshop selected instead of JD.com?"

"Why should I?" Chairman Liu became angrier the more he thought about it.

(End of this chapter)