Replay 07: Opening the Temple of Learning

Chapter 315: The extremely entangled Bidi

OEM cooperation means giving up part of the profits to the OEM factory, but there is no other way because the cost of building a production line from scratch is too high.

The cost refers not only to the direct economic construction cost, but also the time cost.

It will take three years to mass-produce graphene batteries, and the lost profits cannot be counted on one hand.

Such a good thing must be rolled out as quickly as possible to seize the market so that you can have an advantage in the future.

Furthermore, is it necessarily the most economical to build your own production line factory?
not necessarily!

This kind of factory needs to manage a large number of workers, a large amount of equipment, and also allocate a large amount of materials, vehicles, and land resources. There are too many things to worry about.

Therefore, it is better to let others earn this money first, unless Lu Shan can build a super smart processing factory in one go that does not require too many people or too much land. Only then will it be worth thinking about.

While he was thinking, Wu Jun suddenly said, "Boss Lu! There is a factory that might be suitable, but it may not be the case."

"Which one?"

"Bidi! It specializes in making batteries, but they are lithium batteries. It is already very large in the Shenzhen Stock Exchange and is already the leader in China."

Lu Shan suddenly realized how he could have forgotten about this company! In the future, news reports said that BYD would develop excellent electric cars and even export them overseas, driving the development of the electric car industry around the world.

"It doesn't matter. Although graphene batteries and lithium batteries are not the same thing. But the basics of the battery industry have many in common. As long as we provide the technology and let technicians transform the key equipment, then BYD can help us produce graphene batteries." Lu Shan decided half a beat.

"Or should I contact him?"

"Let's find someone to connect us now, and we'll go to Shenzhen City to talk to Biddy in person!"

Lu Shan stood up and quickly booked a flight to Shenzhen with Wu Jun.

Lu Shan’s employees said that this kind of efficiency was normal. Lu Shan never procrastinated. He would do something as soon as he thought of it. If it didn’t work, he would change his thinking. He never got entangled and would just do it.

Wu Jun kept making phone calls along the way, asking about Bidi's schedule in many ways. After confirming that Bidi had no plans to go out recently, he immediately asked the company to send a formal document to Bidi, saying that they wanted to carry out business cooperation.

Such a formal document, plus it is a negotiation invitation from Shenchuan, Bidi will definitely take it seriously and give feedback to Bidi’s CEO Wang Fu.

In this way, Lu Shan can ensure that he can meet with Wang Fu and improve efficiency.

Wu Jun knew Lu Shan's character very well. Even if he had a sudden impulse, he could quickly build a negotiation framework and determine the content of the negotiation.

Lu Shan's brain was so useful, like a supercomputer, he seemed to know all the payment requests from all the companies.

Wu Jun knew he couldn't do it, so he admired him very much.

You have to know that any slight change in the negotiation will have a significant impact on the development of the company. There are also other complex terms with many pitfalls and deep waters, so it is usually the team that makes the plan.

However, Wu Jun had never seen Lu Shan lead any legal team. He heard that all the contracts were instructed by Lu Shan and his subordinates would review them after they were done.

Shenchuan is already a well-known notebook brand in China, with annual sales exceeding 10 million. It has become one of BYD's most important customers.

The batteries for Shenchuan laptops are basically purchased from BYD.

Since such an important client wanted to have business cooperation, Bidi’s CEO Wang Fu naturally did not dare to neglect it and personally received Lu Shan, Wu Jun and his party. Wu Jun asked several assistants to come here in advance.

Lu Shan is smart and doesn't need an assistant, but Wu Jun's brain is not that smart, so he has to work in a team, otherwise he really can't remember anything!

Shenzhen Stock Exchange, Bidi headquarters.

"Hello, Mr. Lu, hello, Mr. Wu!" Wang Fu is also a seasoned businessman. He speaks in a humorous and witty way that makes people approachable.

When he greeted Wu Jun, he focused on asking about Wu Jun's hobbies. When he greeted Lu Shan, he focused on saying that Lu Shan was young and promising and had a bright future.

The words praising Lu Shan were not just polite talk. After all, Lu Shan was indeed too young. Wang Fu couldn't understand how such a young person could be so powerful.

After the greetings, Wu Jun spoke first as per the rehearsal: "Mr. Wang, let me get straight to the point. Today I want to talk about cooperation on laptop batteries."

"That's great! I'm all ears." Wang Fu still had a smile on his face, and Bidi's team immediately had high expectations in their hearts.

They think that Shenchuan’s visit this time is for a larger lithium battery cooperation plan.

Shenchuan's sales are growing fast and its sales are large, so it must want to buy more lithium batteries. Then, BYD will be able to pay out more bonuses this year.

Wu Jun started talking. He talked about some experiences in the development of lithium batteries. These were things that everyone knew, and Wu Jun spoke very briefly, so there was no reaction from Biddy.

The topic soon turned to the inherent shortcomings of lithium batteries. Currently, the performance of lithium batteries has reached its peak and it is difficult to make any breakthroughs. The only way to increase the power is to increase the volume, otherwise safety cannot be guaranteed.

Although this is common knowledge in the industry, it did point out a shortcoming, and the people on Biddy's side began to change their expressions.

What does Wu Jun mean by this? It must be to lower the price!
Wang Fu still had a smile on his face. He kept his composure and wanted to see what Wu Jun was trying to do, whether it was to lower the price or to let BYD improve its technology and develop smaller, safer and more powerful lithium batteries.

"I've finished speaking. Now please let Mr. Lu and Mr. Wang talk about the future cooperation plans." Wu Jun spent two minutes making an introduction and then stepped aside, allowing Lu Shan to take the stage.

Only Bidi’s people understood that Wu Jun was the appetizer and Lu Shan was the main course.

"I want to cooperate with Bidi to start the mass production of graphene batteries." As he said this, Lu Shan asked his assistant to hand over the two papers.

Wang Fu's face changed instantly, but immediately returned to normal. After flipping through the paper for a while, his heart was already in turmoil.

Wang Fu had heard of these two papers. As a leading battery manufacturer, how could it not pay attention to breakthroughs in the theoretical field?

But what he didn't expect was that less than half a month after the paper was published, Lu Shan had already progressed to the point where mass production could be carried out. This shows that Lu Shan wrote the paper only after the production process was mature.

"This young man is really patient. If it were someone else, they would be eager to tell the whole world about some of their breakthroughs."

Wang Fu realized that Lu Shan was not easy to deal with, like an old monster.

He dared to propose the so-called OEM cooperation. I am afraid he must have mature key technologies in his hands and wanted to borrow the chicken to lay eggs from Biddy.

"I would like to ask Mr. Lu, what kind of cooperation model are you planning to adopt?" Wang Fu also calmed down and got into the state.

"I provide the technology, and Bidi Processing will earn the OEM fee." Lu Shan was very straightforward.

Is there something wrong with this model?

At least not at the beginning. BYD started out as an OEM, manufacturing batteries for South Korea and Japan, and earned its first pot of gold. It then started to establish its own business after accumulating some technology.

This was also Lu Shan’s original intention. If Bidi could complete the OEM task well, the market response would be enthusiastic.

Only then did Lu Shan consider technical cooperation, that is, licensing part of the technology to Bidi to enhance Bidi's autonomy and initiative.

However, authorization also requires Biddy to pay a part of the profits. We can talk about it later. It’s a bit early to talk about it now.

The total amount of OEM fee is calculated by Bidi based on the factory's labor, material and machinery equipment costs, plus a portion of profit, but the prerequisite is that Bidi agrees to this mode of cooperation.

"Well, the plan looks good. I'll go back and study it. Mr. Lu, Mr. Wu, it's a rare opportunity for you two distinguished guests to come here. How about we have a meal together? The cooking skills of our company's old chef are quite good." Wang Fu didn't say yes or no. He just laughed and invited the two to dinner.

Of course, Lu Shan and Wu Jun politely declined, saying that they were busy. At this level, everyone understood that these were just polite words. If they really wanted to treat everyone to a meal, they would have booked the table long ago, not just now. Lu Shan and Wu Jun wanted to give Wang Fu some time to think it over as soon as possible.

Lu Shan could naturally see Wang Fu's hesitation, but there was no better choice to promote graphene batteries now.

Bidi’s factory is located in Shenzhen, and Shenchuan Computer’s factory is also mainly located in Shenzhen. Is it still necessary to calculate this account?

The proximity principle can minimize costs.

After Wang Fu saw Lu Shan and Wu Jun off and returned to the company, the expression on his face changed rapidly. His shrewd and capable temperament suddenly emerged, and his heroic demeanor was evident at a glance.

After thinking about it, Wang Fu called all the senior management over.

During the meeting, Wang Fu looked like that smiling Buddha again.

He told Lu Shan's proposal to many senior executives and asked for their opinions.

"I don't think it's appropriate! We can't even handle orders for lithium batteries right now, so why do we suddenly change our strategy? It's fine if Shenchuan pays more, but such stingy conditions are really unsatisfactory!"

After these words were spoken, everyone nodded continuously.

Bidi started out as an OEM, but now it has embarked on the road of independence, and its positioning is completely different.

How can you make more money doing OEM than working independently?
They were enjoying making money, but Shenchuan forced them to go back to the old OEM path. Who could tolerate this?

This is not just a question of income, it is also a question of face.

Starting out as an OEM, it feels naturally inferior to others, and the senior executives of Bidi, which has grown rapidly, try hard to downplay this history.

If they really had no choice, they would embellish this history and describe how they learned quickly during the OEM process.

But deep down I'm still unwilling to accept it.

Apart from this concern and the question of how much money one makes, there is another very important reason.

"Lithium batteries are still in their infancy and there is still room for improvement. It is still unknown how Shenchuan's graphene battery will be received in the market. If Shenchuan bears our trial and error costs, it is not unacceptable."

You hit the nail on the head. It's always just a question of whether the price is right or not. There's no need for so many reasons.

Wang Fu shook his head: "Zemeng and Shenchuan Ship are responsible for providing technology and helping to transform the production line, but the production line is still purchased by us."

"Then we have to be cautious. After the production line is modified, it can only adapt to the production of graphene batteries. It will be very difficult or even impossible to change back. This may lead to high sunk costs."

"The Divine Ship is really bold in wanting to get something for nothing!"

Most executives do not agree with this way of cooperation. They are already leaders in the industry and it is relatively easy for them to make money, so they naturally subconsciously resist new ways of cooperation and new products.

A few executives still had doubts and looked very solemn. Wang Fu took note of their reactions.

"It seems that Bidi has become a little old. When a company becomes big, it is inevitable that all kinds of people will appear." Wang Fu sighed inwardly.

"You guys also tell me what you think." Wang Fu threw the topic to the minority, and the scene instantly became much quieter.

After much hesitation, the minority finally spoke.

"When a new product appears, I think we should take the initiative to learn about it, rather than avoid it. I also read those two papers, and they are indeed very feasible. Now that Lu Shan says he has mastered the technology for mass production, it should not be a bluff."

After looking at everyone's expressions, the executive continued to express his views: "If graphene batteries can really be mass-produced and affordable to ordinary people, it is likely to end the lithium battery market."

As soon as these words were spoken, the atmosphere exploded.

"No way!"

“It is predicted that something that has not yet been released can replace the lithium battery market?”

"Alarmist?"

Wang Fu still had a smile on his face, and he signaled everyone to be quiet and continue listening.

"The development of lithium batteries has entered a very slow stage of improvement. We have actually raised the limit of lithium batteries to more than 90%. It is difficult to make major breakthroughs if we go further. This is because lithium itself has significant limitations, which have locked the upper limit of lithium batteries.

The lower limit of graphene batteries is higher than the upper limit of lithium batteries. You will understand it after reading the two papers. My preliminary estimate is that the performance difference is at least ten times or even dozens of times. "The executive has a technical background and is quite capable. When he faces a group of senior executives who don't understand technology very well, he sometimes feels overwhelmed.

It is not impossible for a layman to lead professionals. The prerequisite is that they should not give blind orders. They should give money when money is due and give people when people are due, and just control the results.

If outsiders mix their own half-understood ideas into the research and forcibly change the direction of the research, big problems will definitely arise.

This is pretty much the situation right now.

Many senior executives had a "are you kidding me" look on their faces. A gap of more than ten times or even dozens of times? Are lithium batteries so vulnerable?
Seeing these expressions, the executive changed his angle and persuaded: "Let's cooperate first to see if it's true or not. There's no need to bet heavily all at once. If it's true, it's also a good learning opportunity. If it's false, that's even better. It's nothing more than paying a small price."

This proposal was very reasonable, and the management's expressions improved a lot.

Wang Fu nodded at this time. This really touched his heart. Only by maintaining awe and curiosity about new things can a company go further.

"Then let's talk specifically about the conditions for cooperation." Wang Fu raised a new topic.

"We can't be too polite. If graphene batteries don't cooperate with us, their promotion is doomed to be slow. We can take this opportunity to get more benefits."

(End of this chapter)