Tech startup: I really do make mobile phones!

Chapter 235 The Chain of Interests
General Manager's Office, 16th Floor, Building B, Yuancheng Building.

The afternoon sun streamed through the huge floor-to-ceiling windows, casting a bright halo on the light-colored wooden desk, with dust particles slowly floating in the beams of light.

Chen Mo was reviewing a document when he heard slightly hurried but restrained footsteps outside the door.

"President Chen!" Shi Xin, the finance manager, said with a hint of barely perceptible excitement.

He held a thick stack of financial statements, stood opposite the desk, and only carefully unfolded the statements after receiving a signal from Chen Mo.

"Mr. Chen, good news!"

Shi Xin's fingertips tightened slightly as he precisely flipped to the "Financial Income" page, his tone carrying the ease of having completed a difficult task.

"Last year, we used the idle funds freed up from the production capacity swap of Orange 2 to short-sell US stocks and gold through Morgan Stanley. The final settlement showed a net profit of 4.2 million US dollars!"

This number stood out remarkably clearly in the quiet office.

Shi Xin continued his report, speaking a little faster.

"As per your previous plan, the principal of US$1.2 million has been safely converted back to the domestic account, replenishing the group's cash flow."

The remaining $3 million is still being handled by Morgan Stanley, which is currently pushing forward with three overseas acquisitions.

Due diligence on SEG Micro in North America, and the Italian brands Giovanni Valentina and Mary Jane Valentina, is nearing completion and progressing smoothly.

He then skillfully turned to the fund allocation table.

"Mr. Chen, the company currently has approximately 21 billion yuan in special funds that can be directly used for the production capacity of Orange 3 and Nietzsche 3."

At the same time, we strictly adhere to financial security principles, reserving 14 billion yuan as operational safeguards to ensure smooth daily operations such as supply chain procurement and channel maintenance, without any mishaps.

Chen Mo's gaze swept across the report, line by line of numbers, his fingertips tapping rhythmically on the table.

A moment later, he raised his eyes and looked at Shi Xin, whose face was slightly flushed from reporting his excellent results, and spoke in a calm tone.

"The general direction of fund allocation is correct! But..."

"Shi Xin!"

He emphasized slightly: "Especially at times like these, the details of the finances need to be sorted out."

You must personally monitor the health of the fund pool's cash flow!
What I want to see is dynamic, flowing capital, not stagnant water!

Chen Mo leaned forward slightly, his gaze sharp.

"Now is the critical period for the expansion of production capacity before the launch of Orange 3. The most likely problem is that too much capital will be tied up."
Either the slow progress in factory and equipment construction is accumulated, or it becomes a large inventory of raw materials in the warehouse, or it is occupied by distributors in the form of deposits.

We must ensure that money is actively circulating, avoiding both idle and wasteful spending, and also guarding against the risk of cash flow disruptions at critical moments.

Orange has encountered that kind of risk many times before.

Although these risks were all caused by Chen Mo's sudden investments, he hoped that the finance department would anticipate these risks and properly manage the cash pool!
"Don't worry, Mr. Chen!"

Shi Xin immediately straightened his back, his tone resolute, as if he were making a solemn pledge.

"The finance department has set a 15% working capital reserve warning line for the company's cash pool."

Whether it's the capacity investment for the supply chain team or the allocation of funds to the channel team, we will strictly adhere to this red line for dynamic control and early warning.

I assure you, I will absolutely not allow the company to fall into any form of financial crisis!

Chen Mo nodded slightly, his fingertips tracing the smooth edge of the table, his gaze less scrutinizing and more expectant.

"Shi Xin, you are the first finance manager to be promoted from the company's logistics department. You have followed President Gong all the way from the early days of the company to where you are now. You should know better than anyone else."

We are no longer the makeshift team that needed to cobble things together to increase production capacity.

Chen Mo paused, his voice calm yet powerful.

"Now is the most critical period for us to transform from a small factory to a standardized large factory."

The foundation of all standardization is that the financial system must first be 'formalized'.

You need to take the lead in establishing a sound framework for financial regulations, from small employee travel expense reimbursement procedures to approval authority for funds worth hundreds of millions, all of which must have clear, explicit, and enforceable standards.

Having a process, even if it's a bit cumbersome, is always better than everyone messing around.

In critical moments, this system is our armor against risks, and we must not let it fail us.

Shi Xin's heart skipped a beat, followed by an even stronger sense of urgency and responsibility.

He knew that his professional skills might not be top-notch, and that he was able to sit in this position largely because of the opportunities brought about by the company's explosive growth, as well as the trust he had built up with President Gong through his hard work and dedication.

He quickly bowed slightly, his tone full of assurance.

"Mr. Chen, I understand!"
This year, I will definitely establish and implement the company's financial rules and procedures thoroughly.

From fund approval to account verification, from budget management to cost control, I will closely monitor every step, leaving no room for loopholes and ensuring that I do not hinder the company's transformation!

Chen Mo looked at the seriousness and determination in his eyes, a faint smile appeared on his face, and he raised his hand to signal him to leave the report.

"Okay, then let's do it your way."

I receive a detailed report every week detailing the progress of subsequent overseas acquisitions and the flow of large sums of money.

If you encounter any problems that you cannot resolve, feel free to come to me anytime.

"Yes, Mr. Chen!" Shi Xin responded, carefully tidying up the report and placing it neatly in the designated corner of his desk before quietly leaving the office.

As soon as the door closed, Shi Xin took a deep breath and began to plan in his mind how to convey President Chen's requirements and expectations to the emergency finance department meeting that was to be held that afternoon, and to take immediate action.

Inside his office, Chen Mo opened the final draft of Orange Technology's annual financial report from last year.

My eyes fell on the revenue summary column:

Total revenue was 82.8 billion yuan.

The majority of the revenue came from the core business – 76.28 billion yuan in sales revenue from 990 million Orange 2 mobile phones.

Secondly, it contributed 4.8 million yuan to the R&D, OEM, and private label production of the holding brand Nietzsche 2.

Then, they used the idle funds in the capital pool for stable wealth management, which yielded a return of 1.52 million yuan.

The last part is the licensing of patents, which earned 0.2 million yuan in licensing fees.

The main sources of revenue are the fees paid by BTD to obtain compatibility with the "Gas Lithium SuperCharge" protocol, as well as some other utility patents in the field of smartphones.

Chen Mo's gaze lingered on the "patent licensing fee" for a moment.

He knew that many of the technical standards set by Orange were currently circulating mainly within its own "Orange ecosystem" and a few close partners, and had not yet become national or international standards recognized by the industry.

However, Chen Mo has enough confidence in the strength of Orange's technical team, and the existing partners are basically industry giants with great potential in the future.

It's only a matter of time before the orange standard is widely adopted.

With an annual revenue of 82.8 billion, it is indeed not remarkable compared to those listed giants with revenues in the hundreds of billions.

However, among the so-called "four small manufacturers" of smartphones in China (Orange, McAvoy, Green, and Blue), it has already secured a stable second place.

Chen Mo knew the reason very well: differences in market positioning.

The Orange 2 focuses on extreme cost-effectiveness and targets the lower-tier market, priced at 799 yuan; while the Wheat 1 is positioned in the mid-range market, priced at 1999 yuan.

The revenue Lei Jun earns from selling one Wheat 1 phone is almost equivalent to the revenue from selling two and a half Orange 2 phones. This revenue gap is directly determined by product strategy.

However, Chen Mo was not disappointed.

Starting next year, Orange Technology will be able to extract approximately 30% of the patent revenue from all its sister companies within the "Orange Group," including Yuancheng New Energy, Orange Micro Motor, and Orange Home Smart, according to an internal agreement.

At that time, the two companies, Yuancheng and Chengke, alone will be able to contribute huge amounts of technology revenue to Orange Technology, and it will only be a matter of time before they catch up with or even surpass wheat's revenue.

Next, his attention turned to the operating costs section—totaling approximately 38 billion yuan for the year.

Supply chain costs account for the largest share, amounting to 18.81 billion yuan, mainly used for purchasing various core components and raw materials needed for Orange 2 and Nietzsche 2.

Channel development costs followed closely behind, reaching 11.4 billion yuan.

Of this, RMB 3.42 million was spent on developing direct sales channels (accounting for approximately 20.2% of shipments), especially in the western market.

The flagship store in Lancheng alone has received an investment of approximately 1.3 million yuan, with the remaining funds used to build a network of directly operated stores in six western provinces.

Third-party channels (accounting for approximately 79.8% of shipments) included partnerships with Huabei Qiang's three-tier distribution network, Nietzsche's own distribution system, major online e-commerce platforms, and various offline chain appliance stores, totaling RMB 7.98 million in channel fees and maintenance costs.

The company's total operating costs, including administration, R&D, and logistics, amounted to 7.79 million yuan.

Chen Mo paid special attention to the percentage of salary – 9.2%.

This means that the company paid out approximately 7116 million yuan in salaries last year, which translates to an average monthly expenditure of about 1.1 yuan per employee (including the company's share of social insurance and housing fund contributions).

After deducting social insurance and housing fund contributions, the average monthly salary for ordinary employees is around 6000 yuan, which is slightly higher than the current average of 5000 yuan in Shenzhen.

In the smartphone industry, personnel costs typically account for 7% to 12% of operating capital, placing Orange Technology in a moderate position.

According to the final calculation, Orange Technology's net profit reached 48.8 billion yuan last year.

A key factor is that the company is currently still in the tax-free period of the investment promotion program of Takihwa, and is not required to pay corporate income tax.

Chen Mo let out a soft breath, thinking that starting next year, the Orange Group's companies will gradually end their tax exemption period, and at that time, nearly 40% of these substantial profits will need to be handed over to the state.

A sense of helplessness flashed through his mind, but he quickly felt relieved.
This is also a social responsibility that Orange must shoulder in order to become a successful enterprise.

Meanwhile, the atmosphere was completely different in a luxurious conference room at a five-star hotel in Shenzhen.

Mr. Fu, Senior Vice President of the Strategic Investment Committee of Zhongshi Chemical Group, sat upright, listening to the evaluation report of the "nanofluid coolant" submitted by Orange Creation Materials by the technical expert team.

The technical expert pointed to the complex PowerPoint charts and explained them clearly and logically.

"President Fu, distinguished leaders, the performance of the nanofluid coolant provided by Orange Innovation is revolutionary."

Cooling performance:

It can achieve an extreme temperature drop of 28°C within 5 seconds, far exceeding the current known commercial products (such as the ROG liquid cooling system's record of 9°C in 9 seconds).

Its core mechanism utilizes the theoretical 'negative heat capacity effect,' which means that it absorbs more heat when the temperature rises, thus achieving instantaneous and powerful cooling.

Under pressurized conditions, the fluid diffusion velocity reaches 15 cm/s and the thermal conductivity reaches 0.25 W/(m·K), which is 12 times that of the traditional excellent coolant sulfur hexafluoride.

Power consumption revolution:
Employing innovative piezoelectric micropump drive technology, it consumes extremely low energy, only 0.5W.

At the same time, the combination of spin-lattice decoupling technology reduces energy dissipation during the transfer process by 99.9%.

Cost advantage:

The cooling medium is produced through biosynthetic self-assembly technology, with graphene derivatives and specific peptide chains as the main raw materials. The overall production cost is expected to be only one-tenth that of sulfur hexafluoride.

The expert then elaborated on the technical implementation path and challenges, especially the high-end technical challenges involving cryogenic storage (-253°C) of superfluids and supercritical bodies.

Manufacturing them is easy, but the difficulty lies in transportation and storage conditions. New frozen storage tanks and ultra-low temperature cold chain special transport vehicles need to be developed!
Subsequently, the experts highlighted the application prospects of this coolant.

Extreme heat dissipation scenarios:

Its performance far surpasses existing solutions, such as in supercomputing centers, chip clusters (e.g., NIDI H100), and spacecraft thermal management (to cope with extreme temperature differences in space).

Mobile device revolution:

It can provide ultimate heat dissipation for high-end gaming phones and AR glasses, eliminating chip throttling and maintaining full performance. The biosynthetic working fluid is more environmentally friendly.

Industrial and medical fields:
It has the potential for disruptive applications in areas such as lasers, nuclear fusion devices (such as ITER), electric vehicle battery thermal management, and MRI medical equipment cooling.

Mr. Fu was deeply moved and asked directly, "How does it compare to the third-generation refrigerants (HFCs) monopolized by Bassef in Germany?"

The technical experts gave an affirmative answer.

"Mr. Fu, whether it's cooling efficiency (4 times that of HFCs) or power consumption (only 1/2 of it), it's a crushing performance advantage."

This can absolutely be defined as an ideal fourth-generation coolant!

Mr. Fu began to ponder, keenly realizing that this was more than just a business opportunity.

BASH's HFCs business is a major pillar of its business, generating approximately $12 billion in annual revenue, accounting for nearly 120% of its total revenue and monopolizing 92% of the global market.

Bashev was a pillar industry giant of Germany, therefore...
Um... etc., the chemical group.

An embarrassing fact is that 62% of the HFC coolant sold by BASH comes from BASH's joint venture with state-owned enterprises such as Sinopec Group.

In a sense, it is a petrochemical company that is selling domestically produced HFCs globally under the guise of Bashford.

After a moment's thought, President Fu smiled knowingly.

Ambidextrous fighting?

From another perspective, this is an excellent opportunity to be successful in both directions!
Thus began a subtle game of strategy.

Zhongshi Chemical, using Orange Creation's "super coolant" as its trump card, renegotiated with Bashev.

The final solution is:

The profit distribution of HFCs in China by the Chico Group has changed from the original 70% to 30% to 6 ...60% to 60
The remaining 1% will be reserved for Orange Technology, which provides the core technology, as a technology investment.

BASH's expert team was deeply shocked after verifying this fourth-generation coolant, which was almost a "dimensional reduction attack".

After high-level consultations and private exchanges with officials, Orange Technology successfully obtained a 10% share of dividend rights (without voting rights) in Juhua Group by virtue of this technology.

After discussions, the two chemical giants decided not to promote the fourth-generation coolant on a large scale for the time being, but to limit it to about 2% of the high-end specialty coolant market, in order to avoid having too much impact on their existing HFCs business.

In that final, decisive negotiation, Orange Technology wasn't even qualified to sit at the head table.

Chen Mo received an invitation to the signing ceremony of Zhongshihua, but he was too lazy to play the role of a supporting actor for the giant, so he only sent Lin Junfeng from the legal department to attend and go through the motions.

The joint performance of the world's first and second largest chemical giants has attracted the attention of global capital, while the inconspicuous "small fry" company in the agreement has also caught the attention of some interested parties.

Afterwards, Chen Mo checked the performance of Juhua Group last year: approximately 500 billion yuan in revenue and 120 billion yuan in profit.

He calculated that starting next year, Orange Technology would likely receive nearly 12 billion yuan in dividends.

He was quite satisfied with the result.

Chen Mo knew very well that if Orange Technology, unaware of its own limitations, rashly promoted the fourth-generation coolant independently, the first target to be destroyed would not be Bashford, far away in Germany, but the Juhua Group, with its deeply entrenched interests right in front of them.

Orange's current physical condition is not strong enough to withstand such a huge backlash.

Taking this opportunity to securely integrate into the giants' profit chain and get a share of the pie is the wisest and most ideal choice at present.

(End of this chapter)