Rebirth 08: Rise from copycat phones

Chapter 561 A Huge Economic Engine

After the Spring Festival, Xu Shenxue's various enterprises gradually resumed operations. The various production bases of Weiku Industry, which had been closed for many days during the Spring Festival holiday, once again entered a state of high-speed operation, producing various intelligent terminal devices, robots, virtual equipment and other new products for Zhiyun Group, Weiku Electronics and other domestic manufacturers.

The VK Industrial Dongguan City Production Base is the second largest but the most technologically advanced OEM production base under VK Industrial.

At this production base, the new generation of A-series mobile phones, as well as SX and SXL mobile phones, have begun mass production, preparing for their release and sale in March.

The new products being produced are not only mobile phones, but also a new generation of robots and virtual devices.

The new generation of intelligent robots, released last December, is equipped with solid-state batteries, resulting in significant improvements in battery life and safety.

Upon its release, Zhiyun Group's new generation of intelligent robots has ushered in a global sales boom. Whether in China or in the major countries where it was first launched overseas, Zhiyun's new generation of robots are in short supply.

In China, the delivery time for the new generation of Zhiyun robots, especially the best-selling entry-level bipedal C series and entry-level wheeled M series, has been extended to more than three months.

If you place an order now, the earliest delivery time will be three months!

Because of the overwhelming number of orders, the two main contract manufacturers, Weiku Industry and BYD, are simply overwhelmed.

In order to increase robot production capacity, Zhiyun Group has had its partner manufacturers, such as Weiku Industrial and BYD OEM, expand many production lines and set up more production bases in advance, but it is still difficult to meet the huge market demand.

The same applies to virtual equipment. Virtual equipment is also in short supply, and the demand for production capacity is very strong. Both third-party analysis agencies and the market research and analysis department within Zhiyun Group predict that Zhiyun Group's sales of virtual equipment this year are expected to reach more than two million units.

There is a huge market demand, but the problem is that production capacity is insufficient!

Core components such as APO graphics cards and ZY chips in the semiconductor field do not require foundries to handle them. Zhuyun Group has already invested heavily to accelerate the expansion of its 2.5D/3D advanced packaging process capacity and the corresponding HBM2/3 memory and 7nm advanced process capacity.

However, the supply capacity of other seemingly conventional spare parts requires the joint efforts of many suppliers to solve. For example, the large number of sensors used above, various pressure sensors, ultra-high precision lidar, etc., as well as the core components in the omnidirectional treadmill, various high-tech motors, etc.

Finally, there's the overall assembly and production... The assembly and production of these virtual devices is actually quite difficult.

Its technology is very advanced, and the various process requirements are also high, making it very difficult for Weiku Industry.

In order to further increase the production capacity of robots and virtual equipment, while optimizing the industrial layout and curbing rising costs.

VK Industries has already begun planning its sixth super production base!

Such strategic-level decisions naturally required Xu Shenxue's personal involvement.

Tan Yingwu, the new generation leader of Weiku Industry, personally reported to Xu Shenxue and sought his instructions.

Tan Yingwu has a very impressive resume. More than ten years ago, he served as a senior executive in the domestic OEM base of a multinational company. Later, he joined Weiku Industry and served as the general manager of the Dongguan production base and the vice president of Weiku Industry.

Last year, Weiku Industry was exposed to some problems, mainly due to significant environmental pollution issues at its production base in an inland city, which had a certain potential for pollution.

Logically, this problem shouldn't occur, because Weiku Industry has plenty of money and is very willing to invest in environmental protection in a production base with the potential for pollution... Even if Weiku Industry is unwilling, Zhiyun Group will require Weiku Industry to meet environmental protection standards.

Zhiyun Group has very strict requirements for all its supply chain companies, including Vcool Electronics, among which environmental protection is one of them... Zhiyun Group does not allow any negative news to occur during the production process of its products.

This is handing ammunition to competitors and will have an impact on overseas markets.

But problems still arose.

Subsequently, the internal supervision department of Liuhe Investment conducted an investigation and uncovered serious internal corruption problems within the subsidiary.

In order to make more money, the management of the local subsidiary cut corners on the environmental protection equipment配套的环保处理设备 (equipped with environmental protection equipment that did not meet technical requirements), allowing a batch of substandard environmental protection equipment to enter the factory. This ultimately led to serious environmental problems, polluting the surrounding environment and affecting the lives of local residents.

Then it was leaked online by local residents!

Xu Shenxue's intelligence gathering and analysis department discovered the relevant public opinion immediately and reported it to Xu Shenxue.

Xu Shenxue directly dispatched an investigation team from the parent company, Liuhe Investment, to investigate...

At the same time, Weiku Industry was ordered to immediately rectify the local environmental protection facilities and provide substantial compensation to the affected residents, which can be considered as calming the incident.

Then, following the clues, they discovered that several senior executives at Weiku Industry were involved in corruption and dereliction of duty... This was not just one case; there were many other cases that have not yet been exposed.

Not only in environmental protection equipment, but this group of people also engaged in huge amounts of corruption in the procurement of other equipment and raw materials.

In order to control the situation and prevent negative consequences, these events were not publicly reported at the time.

In reality, Xu Shenxue dealt with a large number of people at the time. A large portion of senior management at Weiku Industry, especially a large number of managers in the supply chain system, were directly dismissed by Xu Shenxue.

In some serious cases, the police were called directly, and a number of people were successfully sent to prison.

Although An Dayu, the CEO of Weiku Industry, was not involved in these events, the occurrence of these incidents proves his poor management skills.

As Weiku Industry grew larger and its management became more complex, An Dayu's capabilities became increasingly inadequate.

An Dayu struggled with the decision for a long time before finally choosing to resign from Xu Shenxue's position. A number of his subordinates were dismissed or sent to jail for questioning. Even if An Dayu was foolish, he knew he could no longer stay in the CEO position of Weiku Industry.

Xu Shenxue readily accepted his resignation.

Of course, to give An Dayu some face, Xu Shenxue still transferred An Dayu back to Liuhe Investment, giving him the title of deputy general manager. After all, he was the CEO of Weiku Industry, which was equivalent to a senior vice president in Zhiyun Group. He couldn't just kick him out like ordinary management. He had to give him some face!
Giving him the nominal title of deputy general manager of Liuhe Investment Co., Ltd., and having him manage some logistical affairs within the company, is essentially a way to "retire".

Xu Shenxue generally doesn't discard company executives who are no longer capable or have lost in factional competition... As long as there are no serious violations such as illegal activities, corruption, or dereliction of duty, he usually gives them a chance to retire.

Some who made obvious mistakes were sent to second- or third-tier subsidiaries to retire, while those who made no mistakes were transferred back to headquarters and given a sinecure to retire.

Xu Shenxue has quite a few former "big shots" in some of his second- and third-tier, less important subsidiaries... including many former senior vice presidents and vice presidents.

Some of these people are truly retired.

Some people haven't done anything wrong, they're just unlucky enough to be implicated, and need to be sidelined for a while. Find an inconspicuous subsidiary for them to lay low for a while, and then make arrangements for them later.

Some were people Xu Shenxue felt were alright, but had made mistakes and were still worth redeeming. So he would send them to a subsidiary to reflect on their actions and see if he could continue using them...

There are actually all sorts of situations.

These people are actually quite familiar with Xu Shenxue; they've been colleagues for many years, working together on the business. They still have influence with Xu Shenxue... Who knows, they might reappear one day and take on a senior management position in some company again...

Such examples do exist. Xu Shenxue has helped many people go to retirement homes over the years, but he has also reinstated several retirement home management teams.

However, An Dayu probably doesn't have much of a chance... Xu Shenxue felt that this person's abilities couldn't keep up, so he should just come back to headquarters and retire.

An Yu himself accepted reality. Over the years, he first started a business with Lao Xu, and then started a business with Xu Shenxue, serving as the general manager and CEO of Weiku Industry. He has already made a lot of money.

Holding a large number of shares in Weiku Industrial, he now has a net worth of over 20 billion yuan.

You could say they have plenty of money.

Moreover, he's getting older and his energy isn't keeping up, so he's unwilling to keep going. When he returned to work at Liuhe Investment, there wasn't much to do. He worked sporadically, leaving most of the logistical tasks to his deputy, and he rarely went to Liuhe Investment himself.

He usually chats and jokes with Ji Chenghe, Bai Qiwen and other old colleagues, then tends to his flowers and plants, plays with antiques, and enjoys the feeling of his children and grandchildren being filial to him. He lives a pretty carefree life... He is old and got married and had children early. Now his son has been married for several years and his grandson is over three years old.

He was the first grandfather among Xu Shenxue and his group.

After An Dayu stepped down from Weiku Industry, Tan Yingwu succeeded him as the new CEO of Weiku Industry.

Although he wasn't one of the early adopters of VCO Electronics, he wasn't too late either. He joined VCO Industrial in 10 and subsequently led the construction and production of VCO Industrial's Dongguan base. He has a knack for managing super-large production bases!
He managed the Weiku Industrial Dongguan production base well in all aspects, which led to his becoming the vice president of Weiku Industrial.

During the management turmoil at Weiku Industry last year, he was one of the few senior managers who were not affected at all. After comprehensive consideration, mainly to avoid business turmoil at Weiku Industry, Xu Shenxue tried his best to select personnel from the remaining senior managers and finally chose Tan Yingwu.

As the newly appointed CEO of Weiku Industry, Tan Yingwu's first strategic project is the sixth large-scale production base!

"The core objective of the new large-scale production base is to mass-produce two core products: virtual equipment and robots!"

"Currently, the manufacturing of these two products is scattered across the Shenzhen, Dongguan, Ancheng, Jiangcheng, and Chuancheng bases. However, this manufacturing layout still has some problems. After all, these five main bases were primarily built around various smart terminals."

"This applies to both the logistics system and the supporting supply chain construction!"

"The subsequent addition of robots and virtual equipment production lines has led to numerous issues in supply chain coordination, resulting in decreased production capacity and increased assembly costs!"

"The most important issue is the difficulties in increasing production capacity. These large production bases are located in areas facing problems with human resources and industrial land!"

"For example, our headquarters in Shenzhen has seen a rapid increase in labor costs as Shenzhen continues to develop, and industrial land in the surrounding area is also becoming increasingly scarce, making it difficult to supply us with large-scale industrial land. This has led to difficulties in expanding our production capacity significantly in the future."

"Going forward, we plan to gradually reduce the size of our Shenzhen base and carry out continuous upgrades and transformations towards an intelligent factory, while also gradually transferring some labor-intensive production capacity to other bases!"

"In order to control the rapid rise in wage costs, to expand human resources, and most importantly, to significantly expand production capacity, we have formulated a new large-scale production base plan."

"According to our projections and the demand plan provided by Zhiyun Group, we need to increase the production capacity of robots to more than five million units per year and the production capacity of virtual equipment to more than five million units per year within the next three years!" "According to our projections, in addition to the existing production lines and the expansion potential in the production base, we estimate that at least two super production bases will be needed in the future to handle these new production capacities. We are currently advancing one, and we plan to advance the second next year."

The two core products of Zhiyun Group, intelligent robots, are jointly produced by Weiku Industrial and BYD's contract manufacturing plant, but Weiku Industrial undertakes the majority of the production tasks.

As for virtual devices, there is currently only one OEM manufacturer: Vcool Industrial.

Therefore, if Zhiyun Group wants to expand the production and sales of virtual devices and intelligent robots, then the task for Weiku Industrial is very heavy.

Tan Yingwu continued, "Based on factors such as supply chain, logistics, human resources, and business environment, we have initially selected three candidate locations!"

"These three candidate regions each have their own advantages and disadvantages. The final decision on how to choose will depend on Chairman Xu's decision!"
Xu Shenxue took the report and looked at it. The report made a detailed comparison of the three candidate locations, but in truth, each of them was acceptable.

The supply chain and logistics conditions are excellent, human resources are plentiful, the economy is slightly weak, there is an urgent need for labor-intensive industries like Weiku Industry, and the local business environment is also good, all of which make it very suitable as a large-scale production base.

Finally, after asking in detail and discussing with Tan Yingwu, Xu Shenxue said, "Let's go to Dongcheng. It's a good place. The local human resources are more abundant, the labor costs are lower, and it's easier to recruit employees. Although there are some disadvantages in logistics, these will not be a problem as infrastructure develops."

When Xu Shenxue carefully reviewed the report, he also made a thorough comparison. Dongcheng had the best overall conditions, so he naturally chose it.

Moreover, it is true that labor costs are low. Although the employees of Zhiyun Group have very high incomes, often with annual salaries of millions, the salaries in many industries and places in China are actually relatively low.

Many companies that want to invest overseas talk about rising labor costs in China, but that's because they haven't gone to some economically underdeveloped cities to take a look.

In many places, factory workers typically earn three to four thousand yuan a month, while those in the service industry earn even less, with many earning just over two thousand.

Therefore, all of this is to reduce labor costs. Weiku Industry has chosen to gradually withdraw its production capacity from the economically developed coastal areas of China and transfer it to inland cities with relatively underdeveloped economies, lower labor costs, and better transportation.

This not only reduces labor costs, but also allows continued utilization of the domestic industrial chain, industrial base, and logistics system. Furthermore, it eliminates tariffs on spare parts, making the overall cost even cheaper than going overseas…

Some factories that choose to go overseas and invest abroad may seem to have lower labor costs on the surface, but in reality, labor costs are not much lower, and supply chain costs and other additional costs, such as tariffs, will increase significantly, ultimately resulting in a greater loss!
Xu Shenxue has always preferred to keep factories in China, whether it's high-end advanced industries like semiconductors, important factories representing the future such as smart electric vehicles and power batteries, or labor-intensive industries like Weiku Industrial that simply engage in assembly and OEM manufacturing.

Whether it's low-end or high-end, keep it all in the country!
The reason for keeping high-end technology in China is to maintain technological advantages, avoid intensified competition caused by the rapid diffusion of technology, and for all sorts of other reasons. In short, no matter what, it is impossible to move it away.

The reason why low-end industries remain in China is because of lower costs, and at the same time, a large number of ordinary people need these low-end jobs more.

These ordinary people are also consumers of Xu Shenxue's various companies... Even ordinary workers buy Zhiyun phones worth several thousand yuan!
Even if you don't buy a Zhiyun phone, buying a phone from Weiku Electronics would be fine too... Weiku Electronics is also Xu Shenxue's company.

You can even buy other domestic brands of mobile phones. Most of the chips, SOCs, and storage chips in these domestic brands are made by Zhiyun.

To be honest, I wouldn't say every single one of them, but 90% of Chinese people are actually Xu Shenxue's customers... including a whole bunch of underage kids, who will eventually need to use mobile phones when they grow up.

Once someone uses a mobile phone, there's a 90% chance they'll be Xu Shenxue's customers; the only difference is how much they earn.

When you've reached the level of someone like Xu Shenxue who's involved in business, your choices in doing things are more macro-level, even idealistic.

We don't make decisions based on factors like cost or profit alone!
Some of my business operations have high costs and low profits, so I can just sell them at a slightly higher price... Anyway, my robots and virtual equipment are monopolized, and consumers at home and abroad have no choice. I am the only one in the world!
The mobile phone industry also has a significant advantage in the semiconductor field, which can support a higher premium.

Even a slight increase in prices, just a few percentage points, would be enough to pay the wages of these low-skilled workers.

For Xu Shenxue, it was almost like a simple favor... a matter of course!
There's no need to build factories overseas just to save on a tiny, negligible amount of labor costs.

Looking at the report, Xu Shenxue continued, "However, the other two places are also good, and the conditions in all aspects are quite good. Let's not build a large base for now, but first build a medium-sized base with a scale of 50,000 to 60,000 people and go there to see how it goes."

"After the production base in Shenzhen is gradually reduced, we will choose one of these two places as the seventh production base. We can't let them waste a lot of time doing useless work for you!"

Many places have done a lot of preparatory work in order to win over Weiku Industry's projects.

These three places have entered the final stage. In order to continue to compete for projects and completely trap Weiku Industry, this fat wolf, they have also sacrificed their children!

It would be bad if such a huge initial investment turned out to be a waste of time. The two places that were not selected should at least receive some consolation prize.

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Every round of capacity expansion and every location selection for a large-scale production base by Weiku Industry is a huge investment.

This has a significant impact on Weiku Industry itself, and also on Zhiyun Group.

Of course, the biggest impact will be on the location of the production base!

Weiku Industry has many different types of production bases, ranging from factories with several thousand to tens of thousands of employees. Depending on the supply chain, they are located in many cities across the country.

However, the five large production bases that are generally referred to as large production bases have a minimum workforce of over 100,000 employees, with the Guancheng and Ancheng production bases each having a workforce of over 300,000.

Moreover, Weiku Industry will not only go alone, but will also bring a large number of supply chain companies with them.

These supply chain companies will build, produce, and supply goods around Weiku Industry's factory!
They say they're setting up a production base, but in reality, they're trying to create an industrial cluster... Once it's really done, these factories will be distributed throughout the local urban areas and even the surrounding counties.

The reason why Weiku Industry's large-scale production base is prefixed with a place name is because it is so large that it is not concentrated in one place. In fact, it consists of many branch factories scattered in many places in the local area.

You can't really cram a contract manufacturing plant with 300,000 employees, plus a bunch of factories from supply chain companies, into a small area... If you did that, it would be an industrial city with hundreds of thousands of people.

This scale is too large for a production base, making it difficult to manage and causing many problems.

Therefore, it is divided into several sub-bases, and then combined with some industrial zones composed of supply chain companies.

Such a large-scale production base has a tremendous impact on the local economy!
Ancheng production base is a typical example. Currently, hundreds of large-scale manufacturing enterprises of various types have gathered around Weiku Industry's production base... and these supply chain enterprises themselves also need a bunch of supporting enterprises or services.

As a result, when Weiku Industry went to Ancheng to build a super-large production base, various industrial zones sprang up like mushrooms after rain. As a result, Ancheng, a place with abundant human resources, even experienced a labor shortage, and a large number of migrant workers from surrounding cities went to work there.

Back then, when Weiku Industry went to Ancheng to build a factory, it was because of the abundant local human resources. But now, the local human resources are not enough, and it has attracted a large number of people from surrounding provinces and cities to come and work!
Moreover, industrial manufacturing requires the support of various primary and tertiary industries related to clothing, food, housing, and transportation...

Putting aside everything else, these hundreds of thousands of newly added workers also need various forms of consumption. As a result, a whole host of service industries have sprung up to provide services for these people, such as restaurants, barbershops, convenience stores, clothing stores, express delivery, and ride-hailing services.

With each link in the chain working together, the local economy can experience explosive growth.

Therefore, Weiku Industrial's large-scale production base projects are extremely sought-after projects... In many places, Weiku Industrial's production base projects are even more popular than Zhiyun Group's ordinary branch offices.

The branches of Zhiyun Group in some ordinary cities are basically sales and after-sales service branches. To be honest, these branches have little effect on economic development and employ few people.

Meanwhile, major subsidiaries of semiconductor manufacturing companies and other industries, such as design and R&D centers, which employ a large number of workers, are located in first- and second-tier cities.

Because Zhuyun Group has very high requirements for its employees, and it is also a high-tech enterprise that is technology research and development oriented.

The employees that Zhiyun Group needs are all highly educated, and these people are generally located in first- and second-tier cities... Even the factories that Zhiyun Group operates are top-notch semiconductor factories!

Advanced semiconductor factories are special factories that treat PhDs like ordinary oxen and horses.

Therefore, in the semiconductor factory of Zhiyun Microelectronics, many people may seem to be just ordinary technical employees, but in reality, they are all highly skilled talents from 985 and 211 universities, and their income is very high.

Because of the high demand for talent, Zhuyun Group's semiconductor base and other R&D design centers are mainly concentrated in first- and second-tier cities.

Shenzhen, Guangzhou, Shanghai, and Beijing are key areas where Zhuyun Group has made strategic investments.

The total number of employees in these four first-tier cities alone exceeds 250,000, accounting for one-third of the total number of employees of Zhiyun Group worldwide.

Then, some second-tier cities with strong educational resources or excellent technological environment are also key areas for Zhuyun Group to deploy. For example, in places like Jiangcheng, Tongcheng, Hangzhou, and Sichuan, Zhuyun Group has made key investments, mainly in R&D centers and semiconductor manufacturing.

Tongcheng has been transformed into the world's number one semiconductor base by Zhiyun Group, boasting the world's largest and most advanced logic chip manufacturing base.

Jiangdu is also quite remarkable. This single city accounts for about 10% of the world's advanced memory chip production capacity, and the city even calls itself the global memory chip capital...

If an accident occurs in the area, causing a large-scale power outage, the global supply of memory chips will immediately be in short supply, and the impact on the industry is quite significant!
As for the subsidiaries of Zhiyun in ordinary cities, they are mostly sales and after-sales service departments, with a few being data centers, which do not actually provide many jobs or generate much output value.

Of course, it's quite useful as a brand name. After all, it's a subsidiary under the Zhiyun name, so you can say something like, "We also have a world-class high-tech company here!"

In comparison, Weiku Industry, which seems to be just a labor-intensive assembly factory, doesn't seem to have much technical content. The salaries it pays its employees are at a standard level, with ordinary employees only earning a few thousand yuan a month.

But its economic impact is even greater!

Simply put, it provides so many job opportunities!
In the competition for Weiku Industry's production base, various regions are employing all sorts of unique methods and strategies.

The three candidate locations selected by Weiku Industry were all the result of years of investigation and thorough preparation by the local authorities.

So even though we can only choose one this time, we can't easily give up the other two.

We won't build a large-scale factory with 200,000 to 300,000 employees for now, but we can still build a small base with 50,000 to 60,000 employees in one of the two unsuccessful locations!

In this way, we can prepare two more candidates for future capacity expansion, which is simple and convenient!
(End of this chapter)