Rebirth 08: Rise from copycat phones

Chapter 562 Why was Xu Shenxue able to succeed?
The sixth large-scale production base planned by Weiku Industry is the Dongcheng Production Base.

According to the plan, VK Industries will invest heavily in the local area to build six branch bases, encompassing the production of dozens of types of spare parts and the assembly of finished products.

The entire base is expected to employ 250,000 people, mainly for the production of intelligent robots and virtual devices!
This is also the first large-scale production base planned by Weiku Industry that does not have a layout for various smart terminal product lines.

This is because the sales of various smart terminal products of Weiku Industry's two core customers, namely Zhiyun Group and Weiku Electronics, have stagnated for several years. At the same time, some of Weiku Industry's other customers have not seen much market growth.

Limited by the overall smart terminal market entering a saturated market, sales have not only failed to increase but have even slightly decreased, making it difficult for major global smart terminal manufacturers to significantly increase production and sales.

While sales figures for major brands may fluctuate, the production capacity of Vcool Industrial, the original manufacturer, remains largely unchanged. It simply means that more production is being made for Zhiyun Group, Vcool Electronics, or other contract manufacturers.

In fact, the combined production capacity of smart terminals from Vcool Industrial, BYD, Luxshare, Foxconn, and other domestic contract manufacturers is already somewhat excessive in the global market!
Incidentally, China's production capacity for various smart terminals, especially the core smartphone production capacity, has long accounted for more than 90% of the global total production capacity.

Last year, global smartphone shipments were close to 1.5 billion units, showing growth compared to the previous two years. In the previous year, global smartphone shipments had once fallen to 1.4 billion units.

Last year was better, with increased smartphone penetration in emerging markets and better-performing low-end phones that could meet the needs of more low-income groups, leading to a significant increase in global low-end phone shipments.

In addition, major mobile phone manufacturers are also making great efforts to promote their products and try every means to get people in middle- and high-income areas to change their phones, thus stabilizing the sales of mid-range and high-end mobile phones as much as possible.

Sales of mid-to-high-end smartphones stabilized, while the low-end smartphone market saw a significant increase. This led to a recovery in global smartphone shipments last year, returning to around 1.5 billion units.

However, the group that benefits from this sales recovery is not Zhiyun Group... Zhiyun Group's overall mobile phone sales remain unchanged, with little fluctuation. After all, Zhiyun Group's main S series phones are expensive, and the increase in sales of low-end phones in emerging markets has little to do with Zhiyun Group's mobile phone business.

The real beneficiaries are mobile phone manufacturers such as Vcool Electronics, Dami, Sixing, Huawei, and OV, who have a large number of mid-to-low-end mobile phone models.

For example, the Blue M series from Vcool Electronics, a flagship model priced between 1,000 and 2,000 yuan, saw a significant increase in sales last year.

Then, the sales growth of low-end mobile phones from DaMi also became very significant.

Other mobile phone manufacturers have all captured a portion of the market share to varying degrees.

The ones who benefit the most are not actually the well-known large mobile phone manufacturers, but Transsion, which specializes in the African market and is now expanding into South Asia, West Asia, and ASEAN markets.

Although Transsion's main business was feature phones, it started making smartphones a long time ago, but few people in China knew about it.

Because it is a mobile phone company that has been deeply rooted in the African market, after years of market cultivation, the company's brand is very famous in Africa and has long occupied half of the African mobile phone market.

Not only are their feature phones selling extremely well in the African market, but their smartphones are also selling very well.

However, due to the poor local economy in Africa, the local smartphone market was not doing well in previous years, so Transsion's smartphone sales in the region were not very high, only around 30 to 40 million units.

However, as the economies of Africa, ASEAN, West Asia, and South Asia gradually rise, and the cost of low-end smartphones gradually decreases, more and more Africans are becoming able to afford smartphones.

As a result, Transsion's smartphone sales in Africa have been increasing...

They sell tens of millions of smartphones a year in Africa alone, and they are also thriving in emerging markets such as West Asia, South Asia and ASEAN by relying on low-price strategies.

This mobile phone company has long been a supported enterprise of the Zhiyun Group's semiconductor division...

The reason is simple: this is the third major mobile phone manufacturer, besides Zhiyun Group and Vcool Electronics, to exclusively use various chips from Zhiyun Group.

Other mobile phone manufacturers, whether it's Xiaomi or OPPO and Vivo, although they also mainly use various chips from Zhiyun Group, they also use Qualcomm's SOC, Samsung or other manufacturers' storage chips... While it's understandable, it's not 'single-minded' enough!
Transsion is different; they use only Zhiyun chips!
Back when they first entered the smartphone market, because their products were positioned as low-end and priced cheaply, they wanted to find inexpensive chips.

However, because the chips are too cheap and the production volume is not large, some major international semiconductor manufacturers don't pay much attention to them.

It's not that we don't want to sell, it's just that the compensation isn't good enough.

At that time, Zhiyun Semiconductor had just developed its own mobile phone SOC chip. In order to practice, the R&D team specially designed a 65-nanometer outdated mobile phone chip for them, and that's how the cooperation began.

Every year thereafter, Zhiyun Group would sell them a large number of mature mobile phone SOCs, memory chips, and flash memory chips at very favorable prices.

They even sent a technical team to help them solve some technical problems and provided them with some outdated technologies that Zhiyun Group no longer uses.

So don't be fooled by their cheap prices and outdated hardware; with the technical support of Zhiyun Group, they actually do an excellent job in software and hardware optimization.

The ability to produce a smartphone that's barely usable from parts that are several years outdated is at least sufficient for use in places like Africa.

Over the years, the partnership between the two parties has become very deep...

The reason for this situation is related to Transsion's market positioning. They are able to absorb a large amount of mature process capacity from Zhuyun Semiconductor and extend the lifespan of mature processes.

So even though the revenue and profit from Transsion are not much, Zhuyun Semiconductor actually attaches great importance to digesting outdated technologies and production capacity.

Well, while other manufacturers are vying for Zhiyun Semiconductor's advanced chip production capacity, Transsion is quietly packaging and digesting Zhiyun Semiconductor's mature chip inventory every year...

Although Zhiyun Semiconductor deals with advanced chip technologies, it sometimes needs to extend the production cycle for outdated and mature technologies in order to recover costs and even make a profit.

Sometimes, some technologies are several years behind, but because too much was produced in the past, there is a backlog of outdated chips that other manufacturers don't want, or they will only buy them if they offer a drastic discount.

But Transsion dared to take it... They patted their chest and said, "Don't worry, I'll buy all these chips with mature technology for you. Others can't sell them, but I can."

Moreover, it not only sells well, but it also makes a lot of money... By the way, don't be fooled by the low price of Transsion's phones; their smartphone business, especially in Africa, has a pretty good gross profit margin, reaching over 30%.

This gross profit margin is quite outrageous... In comparison, Vcool Electronics' gross profit margin in the Indian market is only about 18%, in the ASEAN market it is 15%, and in the domestic market it is a pitiful 12%.

In terms of gross profit margin alone, globally, only Zhiyun's gross profit margin of over 40% and Fruit's gross profit margin of around 40% can consistently outperform Transsion.

Other mobile phone manufacturers don't have as high a gross profit margin as Transsion...

Transsion's mobile phones are priced too low. Even though the gross profit margin is high and the efficiency is high, the total revenue and profit figures are relatively low... After all, they only have a little over three billion US dollars in revenue a year.

This revenue scale isn't very impressive, but as I said before, many manufacturers order advanced chips from Zhiyun Semiconductor every year, especially the recently shipped 7nm flagship chip W1106 and 7nm mid-range chip W1107.

Manufacturers are vying to purchase these chips and secure priority supply. This year, a large number of mobile phone manufacturers will release high-end or mid-range phones based on these two types of chips.

In addition, Qualcomm also launched its own 7-nanometer process chip of the same generation.

This year, the global mainstream smartphone market will rapidly enter the 7-nanometer era, not only for high-end models but also for mid-range models.

The W1107 from Zhiyun Semiconductor, a mid-range chip based on a 7-nanometer process, is designed for a large number of models priced around 2,000 yuan.

However, only Transsion contacted Zhiyun Semiconductor and asked, "How much stock of the 28nm W707 chip do you have left? I'll pack it up for you."

This chip is a low-end chip based on the 28LP process that Zhiyun Semiconductor designed specifically for the low-end market a couple of years ago. Actually, it is still a relatively new chip, using a new architecture. It's just that the 28LP process is relatively outdated, so it is very cheap.

Previously, a large number of no-name mobile phones from Huaqiangnan, as well as some low-end mobile phones from second- and third-tier manufacturers, used it, but Transsion used it the most, and to some extent it can be considered Transsion's exclusive chip.

"Also, don't rush to stop production of the 12nm W907 chip. I still need to use this chip to launch a new flagship model."

"Then send me another batch of W909 chips. I'll use them in my new 'flagship' product that I'm releasing this spring, to give the Africans a little shock!"

The fact that Transsion made its procurement efforts feel familiar to the people at Zhiyun Semiconductor...

In the era of full-scale entry into the 7-nanometer process, only Transsion found Zhiyun to help them digest their inventory of 28-nanometer process chips and significantly extend the lifespan of several mature 12-nanometer process chips.

Therefore, sometimes, Zhiyun Semiconductor will also customize and design chips for customers based on their technical requirements. On several occasions, they have modified the design of mature W-series chips before supplying them.

Transsion is a rather unique mobile phone manufacturer. Their market strategy of focusing on economically underdeveloped overseas regions has allowed them to thrive.

Although the profits are not much, the sales volume is really large... And in mass-produced products, sales volume is very important, as it can significantly reduce the initial R&D costs and subsequent manufacturing costs.

It was thanks to mobile phone manufacturers like Transsion, along with the low-end phones from Vcool Electronics and Dami Mobile that were cultivated and shipped in large quantities in various emerging markets, that the overall sales of the smartphone market recovered last year.

However, this recovery in sales is unlikely to last long.

After all, the mobile phone market has entered a period of saturation, and people in the mainstream market are replacing their phones less and less frequently.

Analysts predict that if there are no major breakthroughs in mobile phone technology that significantly stimulate a large-scale replacement of mobile phones, mobile phone sales will gradually decline in the next few years, eventually stabilizing at between 1.3 billion and 1.4 billion units, before entering a relatively stable stock market.

This is especially true for the mid-to-high-end mobile phone market.

Ultimately, this feedback extends to the mobile phone manufacturing industry, where even giants like Vcool Industrial have stopped increasing their mobile phone production capacity.

In the newly built sixth large-scale production base of Weiku Industry, smartphone production capacity will no longer be deployed. Instead, the production capacity for virtual devices and intelligent robots will be deployed.

For Zhiyun Group, virtual devices and intelligent robots are new core businesses driving revenue growth.

The same applies to Vcool Industrial, which manufactures for the company!
After all, strictly speaking, the core business of Vcool Industries is to provide OEM services for Zhiyun Group. As for other customers, including Vcool Electronics, their contribution to Vcool Industries' revenue and profit is relatively low.

The OEM orders from Zhiyun Group are the lifeline of Weiku Industrial. The better Zhiyun Group's virtual equipment and intelligent robots sell, the more orders Weiku Industrial receives, the more money it makes, and the more workers it hires.

After finalizing the deal for its sixth large-scale production base, Weiku Industry signed a cooperation agreement with the local government within just a few days.

When the cooperation agreement was signed, Xu Shenxue also prepared to personally fly to Dongcheng to attend the signing of the cooperation agreement for the production base, in order to demonstrate the importance he attached to the production base.

When Xu Shenxue's private plane arrived at the small airport in Dongcheng, he once again felt the local representatives' eagerness for economic development and their expectations for the Weiku Industrial Dongcheng production base!
Before coming, he had already learned about the situation of this place in detail!

The transportation here is quite good; there's an airport, highways, and railways, making logistics and transportation very convenient.

Of course, the most important factor is that the area has a large population and there are no large-scale industrial cities in the surrounding provinces, which means that the labor resources are very abundant.

Labor resources are a core factor for VK Industrial in selecting candidate locations for large-scale bases.

Such a large-scale production base would require over 200,000 workers from Weiku Industrial itself, potentially reaching a maximum of 250,000 during peak production season. Add to that the workforce of a large number of supply chain companies, and the final demand would be around 400,000 workers!

If there isn't a sufficient local labor force, even if the factory is built, there won't be enough workers available.

The local area boasts excellent transportation, abundant labor resources, and a favorable business environment, making it an exceptionally well-off location overall.

They initially competed with Ancheng for the project, but Ancheng had better overall conditions in all aspects, so Weiku Industry ultimately chose Ancheng.

However, this place has also achieved some results. In recent years, Weiku Industry has also invested in and built a branch base with a scale of more than 30,000 people in the area. The operation of this branch base has been quite good, and the support in all aspects is in place. No problems have occurred in the three years of operation.

This is a huge plus for Dongcheng!

Ultimately, this massive production base project, expected to employ 250,000 people, came about!
After disembarking from the plane, Xu Shenxue, accompanied by staff from Liuhe Investment, Weiku Industry, and Zhiyun Group, left the airport with local representatives who had come to greet him.

Then I went to one of the planned production base construction sites to take a look... Actually, there wasn't much to see, just a large area of ​​wasteland on the outskirts of the city.

The place is huge!
After all, this is a super-large production base with an estimated workforce of 80,000 people, so a small place wouldn't work.

There are four other similar, smaller-scale factory sites in the area.

VK Industries' industrial layout in the area will consist of five newly built bases and one existing base.

Although the main base on the outskirts of the city is still a wasteland, some infrastructure has already been built. The eight-lane dual carriageway leading directly to the expressway has been completed, and the high-standard road leading to the dock and the train station has also begun preliminary construction.

These roads are crucial for subsequent production, logistics, and transportation, and VKU Industrial attaches great importance to them.

In Xu Shenxue's view, the conditions here are very good, and the overall transportation advantages are even better than those of Ancheng. If managed well, it will become the core production base of Weiku Industry in the future, and will be able to undertake the larger virtual equipment and intelligent robot business strategy of Zhiyun Group in the future.

The next day, Xu Shenxue continued to visit several other planned branch factory sites and also went to see the existing factory of Weiku Industry in the area. The situation was quite good.

Subsequently, Xu Shenxue officially attended the signing ceremony of the cooperation agreement between Weiku Industry and the local government.

Later, Weiku Industry officially announced that it had launched the Dongcheng production base plan, and that it would take nine months to complete the first phase of factory construction, with small-batch production expected to begin in January next year.

The entire project is expected to be completed within a year and a half, reaching the designed production capacity!
As a listed company, Weiku Industry needs to promptly disclose these major business decisions to the public.

Xu Shenxue did not stay in Dongcheng for long, only two days. After attending the signing ceremony on the second day, he left by private jet in the evening.

However, instead of going directly back to Shenzhen, he made a trip to Ancheng.

Ancheng is currently the largest production base of VKOOL Industrial and the largest intelligent robot production base, which is of great importance to VKOOL Industrial and even to Zhiyun Group.

Xu Shenxue has been here quite a few times, and he's become quite familiar with the area. He plans to take a stroll around the area, see the scenery, and maybe go hiking.

After all, the local cultural and natural landscapes are quite nice, but they haven't been developed much before.

With the recent economic boom, the tourism industry has also flourished.

With a better economy and more money, there are hundreds of thousands or even millions more new jobs created, which in turn creates a consumer base. This leads to a virtuous cycle in all aspects, including the development of the tourism industry.

Upon hearing that Xu Shenxue was planning to take a break from his busy schedule and explore Ancheng, Lin Yaxian brought her three children over the next day, ready to go hiking with him.

It wasn't that Lin Yaxian wanted to travel or anything like that; she personally wasn't very interested in those things... It was mainly because Xu Shenxue was relatively busy on weekdays and wasn't very interested in traveling, so he rarely took his family on trips... The only exception was probably going to Qiongzhou Island to play at the beach. Xu Shenxue often took the kids there to watch the rockets and play on the beach.

They rarely go to other places.

So when Lin Yaxian heard Xu Shenxue say that he wanted to spend a few days in the area and visit the local scenic spots, she also thought about letting her child go hiking or something with him.

So they flew over with their child.

After Lin Yaxian brought the child over, Xu Shenxue had almost finished inspecting the work in Ancheng. He was just checking on the factory's production situation and didn't do anything too detailed. It was just a formality to show that he valued the factory.

After finishing his work, Xu Shenxue took Lin Yaxian and their three children out for a trip.

Although they are supposed to be a family, Xu Shenxue is always followed by a large group of people wherever he goes... He can't refuse, the security department won't allow it.

Let alone the security department, even the locals in Ancheng wouldn't dare let Xu Shenxue wander around without security. If something were to happen, it would be a huge problem.

Xu Shenxue's personal security situation is no secret in high-level circles... There are many people around the world who want him dead, and most importantly, his opponents really have the guts and the ability to carry it out!
If they get the chance, they won't hesitate for a second and will fire a burst of bullets at Xu Shenxue!

While Xu Shenxue's death wouldn't necessarily cause the collapse of his entire business empire, centered around the Zhiyun Group, it would certainly lead to turmoil, and the future development of the company would be uncertain.

After all, everyone is well aware of Xu Shenxue's importance in these companies!
Although he is not a scientist, his strategic vision for future technologies and his outstanding ability to lead enterprises have been proven.

Zhuyun Group is a testament to his abilities... at least that's what outsiders think.

A close look at Xu Shenxue's past achievements reveals his importance, from smartphones to semiconductors, then to artificial intelligence, electric vehicles, virtual devices, robots, and even commercial aerospace.

He has almost caught every wave of technological advancement and then risen to prominence!

Many people even believe that these technological waves were driven by Xu Shenxue!
A typical example is artificial intelligence, and its two core businesses are virtual devices and intelligent robots, which are based on artificial intelligence technology.

Before Xu Shenxue, hardly anyone played with this stuff, and even if they did, it was just a small-scale affair with little impact.

However, once Xu Shenxue started working with artificial intelligence, he quickly mastered the technology.

They've even created intelligent robots and virtual devices, which are considered cutting-edge technologies at the moment!
Why is it that only Xu Shenxue's technical team can make this kind of cutting-edge product, while other companies' technical teams cannot?

Companies like Google, Apple, Facebook, and Microsoft have plenty of money and talent, so why can't they do it?
Zhiyun Group's robots have been released for two or three years and have been updated several times, but other companies still haven't been able to come up with any competing products... It's not that they don't make robots, but they are all unintelligent!
Zhiyun's robots are intelligent robots, very smart, with mobility comparable to humans. They can move freely in complex terrain, walking, running, and jumping.

It runs incredibly fast!

However, the robots made by companies like Google are just stupid robots. They can't even run, let alone walk at a normal pace. They'll fall over if the road is slightly uneven, which infuriates their management...

Countless dollars were spent, and this is the piece of junk they produced?

why?
In the past two years, many people have been discussing these issues: Is the talent problem caused by education? Is it a problem with the corporate R&D culture?
Or is it that not enough money has been spent?
Well, in many people's view, the reasons mentioned above are all...

When it comes to talent, what does China have the most of? Engineers! The total number of engineers trained in China each year is more than all other countries combined, and the new generation of engineers are all very skilled.

Zhuyun Group can select the top talents from a massive pool of engineers. Zhuyun Group's talent pool makes other companies drool... Of course, they can only drool. Even if they gave such a large number of top talents to them for free, they couldn't afford to support them.

Corporate culture... Zhiyun is technology research and development oriented, with a relaxed research environment where various research projects can be undertaken freely, and in principle, there is no upper limit on funding.

If you're good enough, Zhiyun Group is willing to allocate tens of billions of yuan in R&D funds for you to experiment with!
Research and development personnel are well-paid. Not only are their daily salaries high, but some scientists who lead teams can also receive large bonuses for making significant technological breakthroughs.

This has made many R&D personnel from other companies envious and jealous, especially those from Japanese companies.

Both of you painstakingly developed a major technological achievement that could be commercialized and bring huge profits to the company. But look at your own bonus of tens of thousands of yen, and then look at the millions or even tens of millions of yen that Zhiyun scientists receive, and some even receive project dividends of hundreds of millions of yen... It's enough to make you cry!

A company that prioritizes research and development is the dream company of countless scientists and engineers!

Can other companies do it?

No way!
If they really do that, they'll go bankrupt first!
This involves money again!

Everyone in Africa knows that Zhuyun Group is rich!

For example, in the robotics project, before Zhiyun Group officially launched its intelligent robots to the market, it had already invested tens of billions of dollars in research and development... Apart from companies like Zhiyun Group, no other company would invest tens of billions of dollars without seeing obvious technological possibilities.

Leaving aside the previous tens of billions of dollars in R&D investment, even the current annual R&D investment is still several billion dollars!
The R&D investment of Zhiyun Group alone in the field of robotics actually exceeds the total R&D investment of all companies in the world in the field of robotics!

We can't compete with people, we can't compete with company culture, and we certainly can't compete with money.

This is really frustrating!

However, the most important person is Xu Shenxue... He's a real oddity in the global business world!
On the surface, he doesn't seem particularly special, but he's able to lead his team to develop one cutting-edge technology after another.

These days, there are quite a few experts and scholars who have conducted special research on Xu Shenxue, trying to figure out why he was able to achieve such great success.

A comprehensive study was conducted on Xu Shenxue's background, education, interpersonal skills, personality, business management style, and so on... and then the study turned out to be completely useless!

He's... very ordinary, nothing particularly special. If I had to say what's special about him, it would be that he's a bit idealistic.

Would you even be willing to spend so much money on space exploration if you weren't so idealistic? Developing interstellar spacecraft in this day and age... it's almost insanely idealistic.

But there are plenty of idealists out there, and Xu Shenxue is no exception. This idealism cannot be the reason for his enormous success.

Because a group of experts and scholars simply couldn't come up with anything useful.

In the end, one can only confidently say that Xu Shenxue's tremendous success, and the Zhiyun Group's tremendous success, are due to Xu Shenxue's very unique personal charisma...

As a result, top talents are willing to work around Xu Shenxue, and Xu Shenxue can better improve the research efficiency and quality of scientists. A good environment and atmosphere can better inspire scientists' inspiration.

It's almost starting to veer towards metaphysics!
The real reason is simple, and they will never know it: Xu Shenxue has a research department!

He's cheating!

(End of this chapter)