A century-old wealthy family that rose from Shanghai

The Christmas festivities have barely faded, yet the headlines of Chinese and foreign media outlets such as The New York Times and Oriental Daily News have been firmly dominated by "Ping Pong Arcade".

The report repeatedly mentioned the scene of "arcade machines being filled with coins the next day". This "epoch-making entertainment device" launched by Hong Kong Midea Electronics not only ignited the enthusiasm of consumers around the world, but also caused a huge uproar in the electronics industry. When people discovered that this "disruptive invention" came from a Hong Kong company, the American and Japanese industries, which have always been proud of their electronic technology, immediately felt sour.

The US electronics industry is rife with skepticism that "a Chinese person could be the first to venture into the video game industry." Several companies eyeing the market are even secretly preparing to sue Midea for "patent infringement."

Unbeknownst to many, the Yangtze River Industrial Group behind Midea had already assembled a top-tier global legal team, seasoned with years of experience in patent rights protection in various markets. They were well-prepared for this potential patent war. After all, in 1970, before the advent of the "TV console game console," the core technology patents of arcade games, as the first consumer electronic game device, should have been granted on a "first-come, first-served" basis.

Back in the United States, Ralph Henry Bell, the "father of video game consoles," was struck dumb when he saw the news about arcade machines. He had dedicated years to developing video game technology and had already created a prototype of a "Video Game and Training Device," but due to protracted processes, he hadn't yet submitted a patent application. Now, with Midea's arcade machines suddenly appearing, if a Hong Kong company preemptively registered a similar core patent, all his years of hard work would be in vain.

“William, come to my office immediately!” Bell dialed the lawyer’s number with trembling hands, his voice filled with anxiety.

After hanging up the phone, he paced back and forth in frustration, muttering to himself, "Damn it! How could Chinese people possibly surpass Americans in electronics? They were just one of the inventors of penicillin; they shouldn't even have a chance in cutting-edge fields like video games!"

His biggest worry was that Midea had already filed a patent application for "video game technology." With only a month or two left before his planned patent filing date, this short window could very well turn him from a "game pioneer" into a "follower." Bell was extremely anxious and could only hope that his lawyers could find a way to protect his technological achievements.

Just as Bell was feeling anxious, Lin Botao, the head of arcade game R&D at Midea, arrived in the United States and met with Keithwick, the American legal representative of Yangtze River Industrial Group.

The two men took two arcade machines and headed straight to the U.S. Patent Office—their goal was clear: not only to apply for patents for the arcade machines, but also to secure patent exemptions for "video game-related technologies."

Initially, the patent examiner looked down on the applicant, who was from Hong Kong, saying, "The core patents for video game devices should belong to American laboratories. Your product may just be a 'copycat'."

These words thoroughly enraged Lin Botao, who immediately turned on the arcade machine and invited the reviewers to "experience it for themselves."

The crisp sound of coins being inserted rang out, and the "ping-pong ball" bouncing on the screen instantly drew everyone's attention in the office. Within fifteen minutes, inspectors from the entire floor had poured in, lining up to try out this novel game.

Seeing his colleagues engrossed in the game, the presiding examiner finally abandoned his arrogance and changed his tune, saying, "We can consider applying for a patent for the arcade game, but the general term 'video game console' cannot be approved—American laboratories already have similar technology reserves, and we can only discuss the scope of the patent based on the specific product 'arcade game'."

Lin Botao was prepared. After discussing it in hushed tones with Keswick, Keswick solemnly proposed: "We agree to apply for a patent only for 'arcade machines,' but we need to add a clause: Currently, no patents for 'video games and training devices' have been approved in the United States, while our arcade machines have already applied the relevant technology. If similar patent applications are approved in the future, Midea Electric Appliances should enjoy patent exemption rights."

After a moment's hesitation, the presiding examiner finally relented: "The terms need to be submitted to the Patent Office Board for discussion, but your arcade game is indeed original, and the basic process for patent application can be initiated."

This battle at the patent office, which seemed to be a "concession" by Midea, actually laid the groundwork for future developments. Through the actual demonstration of the arcade machine, they broke the prejudice of the United States against "Chinese electronic technology" and won the crucial space for negotiating "patent exemption rights", gaining an advantage in this covert battle.

After leaving the patent office, Keswick remarked to Lin Botao, "The arrogance of the American industry has actually given us an opportunity. As long as we secure the arcade patent and hold onto the 'exemption right,' we can maintain the initiative even if others file patents later."

Lin Botao nodded and added, "We don't want to start a patent war; we just want to avoid the potential risks of buying patents for ourselves."

After all, it's their territory, and they did indeed develop their arcade products on the shoulders of the giant 'America,' so we shouldn't go too far.

Meanwhile, Bell was still discussing countermeasures with his lawyers, unaware that Midea had already made a breakthrough at the patent office.

This patent war surrounding arcade games, seemingly a contest between two companies, actually kicked off a global "patent competition" in the video game industry. Through this struggle, Cheung Kong Industrial Group not only secured a foothold for Midea Electric Appliances but also, for the first time, gave Hong Kong companies a voice in "patent rules" within the global electronics industry.

As the patent application process progressed, the US media began to re-examine this Hong Kong-based company.

The New York Times followed up with a report stating, "Midea's arcade machines not only changed the way we have entertainment, but also showed the world that the innovative power of the electronics industry is no longer limited to Europe, America, and Japan."

This ongoing patent war has made it clear to the global industry that in the upcoming "video game era," patents will become the core weapon for corporate competition, and Hong Kong's Cheung Kong Industrial Group has taken the lead in grasping this "key."

In Tokyo at the end of 1970, at the headquarters of Nippon Art Corporation, President Yoko Tsukasa looked at the mountain of orders and a satisfied smile appeared on her lips.

Since the launch of the "Laser Gun Laser Shooting System" in August, the product has sparked a nationwide "shooting craze" in Japan in just five months. Orders have poured into the company like snowflakes, not only allowing the two-year-old Yidianbo to gain a foothold, but also making it a "phenomenal new star" in the Japanese entertainment industry.

"President, it's time for the meeting!" the female assistant reminded softly. Si Yezi straightened her suit collar, instantly exuding a capable and powerful aura. From a plan for the Chen family to personally leading a technology company with unlimited potential, she had long since shed her initial naivety and become a capable leader.

Of course, Si Yezi knew where this confidence came from. If she didn't have her own man to support her, she would have immediately backed down; and besides, her son had grown up, which was also a source of hope.

Pushing open the conference room door, Si Yezi immediately spotted Chen Wenying sitting in the corner—this member of the Chen family, a freshman in college, was there at the behest of his father, Chen Guangliang, to experience the company's management culture.

Upon seeing Si Yezi enter, everyone stood up to greet her respectfully. Even Chen Wenying stood up, his eyes filled with protectiveness towards his biological mother.

"Let's begin the meeting."

Si Yezi took her seat and got straight to the point.

Vice President Hideo Kojima reported first: "Currently, our 21 self-operated laser shooting ranges are packed with long queues every day; orders for equipment from all over Japan have exceeded 1200 sets, and we have achieved great success. I suggest that we start overseas expansion next year (1971) and launch this product into the global market!"

The Japanese have this mindset: to compete for global markets and make money from all over the world. That's why they've been able to completely dominate American manufacturing in recent years.

It is important to know that after World War II, the United States used global raw materials to produce products and then sold them to the world, monopolizing the market for nearly 20 years. It accounted for more than 35% of the total exports of the world and its industrial output accounted for an average of 50% of the world's total output.

Japan, which has always admired strength, naturally targeted that direction as well. Electronic Arts' laser gun shooting system went from being deployed to monopolizing the domestic market in just five months—a speed that left everyone present deeply excited.

But Si Yezi didn't make a decision immediately. Instead, she turned her attention to the project manager, Mikami Shinji: "Overseas expansion can be put on the agenda, but the premise is—can the hardware stability withstand the test?"

Shinji Mikami immediately stood up, his tone resolute: "President, rest assured! The laser shooting system has been iterated to its third version, covering three major gameplay modes: 'Pigeon Shooting,' 'Duck Shooting,' and 'Cowboy Duel.' The hardware has undergone thousands of tests, completely eliminating potential malfunctions, and its technical level has reached world-class standards!"

Upon hearing this, Si Yezi took the lead in clapping, and enthusiastic applause immediately filled the conference room.

In her view, technology and talent are the foundation of a company, and the results delivered by the Mikami Shinji team give her more peace of mind than impressive orders.

"Now that the hardware is not a problem, let's focus all our efforts on overseas promotion!"

As soon as she finished speaking, everyone's faces lit up with excitement—a startup that had created a "phenomenal product" in just two years and was now going global. Such a speed of development was enough to make the entire Japanese business community take notice.

Just as everyone was immersed in the anticipation of overseas expansion, Si Yezi made an even more shocking decision: "I will not take a single penny of the profit from this product. First, 10% of the profit will be distributed to the company's existing employees, with a focus on rewarding the R&D team and core management; second, the remaining 90% of the profit will be invested in the company's operations and new product development."

The conference room fell silent for a moment, then erupted in low gasps of surprise.

Everyone knows that Electronic Arts has invested heavily in the two years since its establishment, and is now finally reaping the rewards. However, Yoko Tsukasa has chosen to leave all the profits to the company and its employees—a bold move that is extremely rare even among the male elites in the Japanese business world, who are known for their "daring and enterprising" spirit.

Some people quietly recalled that a Rolls-Royce was always parked downstairs at the female president's office building, and she was accompanied by a personal assistant and bodyguards, so she was obviously not short of wealth. What she really valued was to build EA into a "great entertainment and game company".

Before everyone could recover from their shock, Si Yezi continued, "Midea Electric Appliances in Hong Kong has launched 'arcade games,' which marks the arrival of the era of video game entertainment. I have decided to establish a 'Video Game Machine Equipment' business unit, headed by Mikami Shinji, to recruit hardware and software technical talents and expand the R&D team."

Shinji Mikami suddenly looked up, his eyes filled with unbelievable surprise, and then nodded vigorously: "Please rest assured, President! I will definitely live up to your trust."

Looking at the excited expressions on everyone's faces, Si Yezi understood—the success of the laser shooting system was just the beginning. She wanted to leverage the technology and capital accumulated from this product to build experience and a solid foundation for the upcoming "video game wave," so that EA would not only become the "king of shooting games" in Japan, but also occupy a place in the global electronic entertainment industry.

Sitting in the corner, Chen Wenying silently wrote down the contents of the meeting in her notebook.

At that moment, he finally understood the profound meaning behind his father's decision to bring him to EA to "experience the business culture"—a true business leader must not only be able to seize market opportunities, but also have the vision to "share profits with others and focus on the future."

And Yoko Tsukasa is proving through her actions that the Chen family's business acumen has long been ingrained in the DNA of this Japanese startup.

After the meeting, the news spread among Electronic Arts employees. Yoko Tsukasa, the female founder, possessed remarkable foresight; only a few days after the birth of arcade games, she was able to react quickly and foresee the future of video games. Therefore, the employees were filled with admiration.

The atmosphere in the conference room at Nintendo's headquarters in Kyoto at the end of the year was heavy. The cold wind howled outside the window, just like the current situation of this century-old company. Since it was listed on the second board of the Osaka Stock Exchange in 1962 as a playing card manufacturer, its stock price once soared to 900 yen. President Hiroshi Yamauchi, who had ample funds at his disposal, expanded into new industries with the ambition of "breaking through traditional business". However, in just eight years, he dragged the company into a quagmire on the verge of collapse.

The influx of capital from the IPO greatly boosted Hiroshi Yamauchi's confidence. He first set his sights on the taxi industry, creating the "Oya Taxi" brand: investing heavily in purchasing high-end Nissan sedans, providing standardized training for drivers, and rapidly seizing the taxi market in Kyoto and Osaka with fares "below industry standards." For a time, "Oya Taxi" could be seen everywhere on the streets, seemingly enjoying unlimited success. However, because it infringed on the interests of its competitors, it faced strong resistance from the taxi union—protests, malicious blockades, and constant harassment of customers. Although Nintendo dominated the market, it struggled to make a profit and was ultimately forced to shut down its taxi business, losing all its initial investment.

Following this, Nintendo set its sights on the fast food market, establishing the subsidiary "Sanjin Foods". Hiroshi Yamauchi collaborated with scholars from Waseda University to launch instant noodles, instant rice, and accompanying seasoning packets. He intended to open up the market with "technical backing", but he neglected the core demand of "taste" - the instant noodles had a hard texture and the instant rice had a bland taste. After the products were launched, they received a flood of negative reviews and were abandoned by consumers in just six months. "Sanjin Foods" was subsequently dissolved.

Afterward, Hiroshi Yamauchi did not stop trying, venturing into fields such as home appliances, toys, and office supplies: he launched a home candy maker, but it failed to attract customers due to its complicated operation and low yield; he developed a vacuum cleaner, but its performance was far inferior to giants like Panasonic and Toshiba; he produced photocopiers, but they were costly and had an alarmingly high failure rate; even building block products, which seemed to fit the "traditional toy gene," were squeezed out of the market by competitors due to their outdated designs. One cross-industry venture after another, one failure after another, by the end of 1970, Nintendo's financial statements were in dire straits—the funds accumulated at the time of its IPO were exhausted, there were no new profit growth points, and even the core playing card business was declining due to a lack of focus, leaving the company in a predicament of "robbing Peter to pay Paul."

Just as Nintendo was struggling with its failed cross-industry venture, Electronic Arts' "Laser Gun Laser Shooting System" sparked a nationwide craze within just five months—21 self-operated shooting ranges were packed to capacity, orders for the equipment across Japan exceeded 1200 sets, and its market share was approaching 100%.

Hiroshi Yamauchi had keenly sensed the potential of "electronic entertainment" when Nintendo's products were first launched, but because Nintendo was mired in the mess of finishing up its fast food and home appliance businesses at the time, it was simply unable to allocate funds and manpower to follow up on research and development.

When he finally had time to develop similar products to compete with Electronic Arts, he discovered that the market had already been firmly occupied by Electronic Arts: Electronic Arts' laser shooting system had been iterated to the third generation, covering a variety of gameplay such as "shooting pigeons," "shooting ducks," and "cowboy duels," and the hardware had undergone thousands of tests with zero failures. They had even begun to prepare for overseas expansion.

Nintendo struggled to even find a core technology team, let alone seize market share. It could only watch helplessly as the "electronic shooting game" boom was completely swallowed up by Electronic Arts, which was only two years old.

At the board meeting, Hiroshi Yamauchi, seeing his subordinates' dejected appearance, suppressed his anxiety and said firmly, "In the world of entertainment, there is only heaven or hell; there is no middle ground. The more difficult it is, the more we must not stop trying."

These words were both a pep talk for himself and an encouragement for his team—he knew that Nintendo had no way out, and if it could not find new profit sources as soon as possible, its century-old foundation might be destroyed.

But reality proved far harsher than imagined. In the meeting room, someone cautiously suggested, "President, we're currently facing a cash crunch; developing new projects is too risky..."

Hiroshi Yamauchi paused for a moment, then changed the subject: "I heard that a company in Hong Kong launched an 'arcade game' that's selling very well in the US and Hong Kong. The era of video game entertainment has arrived, and this may be our last chance."

He paused, his tone resolute and unwavering: "No matter how difficult it is, we must build a team and keep our eyes on the video game industry. Even if we start with imitation and OEM manufacturing, we must establish a foothold in this field."

The subordinates nodded in agreement, but could not hide the confusion in their eyes. Nintendo had neither the accumulation of electronic technology nor the relevant talent. Facing the strength of Electronic Arts and the impact of Hong Kong arcade games, it would be like "snatching food from a tiger's mouth" if it wanted to break through in the field of video games.

After the meeting, Hiroshi Yamauchi remained alone in the conference room, staring at the Nintendo sign outside the window, motionless for a long time. From playing cards to taxis, fast food, home appliances, and now to video games, he had always been trying to "break through," but had repeatedly hit a wall. At the end of 1970s, Nintendo was like a ship that had lost its way in the fog, with the unknown blue ocean of video games ahead and the crisis of sinking behind. All Hiroshi Yamauchi could do was to grit his teeth and desperately sail towards that glimmer of light called "electronic entertainment."

Little did he know that the 'laser gun laser shooting system' was supposed to be a 'key milestone' for Nintendo; now that Electronic Arts (EA) had developed it first, history might be changed. (End of Chapter)