Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 116 Being Petty and Meticulous (Seeking monthly votes and recommendations to continue reading)
Chen Bingwen said with a smile, "Mr. Wang, Manager Li, let me explain the cost structure in detail, and you two will understand."

First, there's the cost of raw materials.

Taurine, B vitamins, and specific amino acid groups are all made from high-purity pharmaceutical-grade raw materials from BASF in Germany. This part accounts for the majority of the cost and is a fixed expense, with no room for error.

Secondly, there's the production process.

You have also visited the production line, the 100,000-level sterile cleanroom, the imported spray drying tower, and the temperature and humidity constant storage. These fixed investments are allocated to each bag of powder, accounting for about 20%.

Finally, the costs of quality control, R&D, and management account for approximately 25%.

All things considered, the price of HK$0.6 is the most realistic price we can offer while ensuring the highest quality.

This does not include the potential revenue we might lose in other markets by prioritizing your orders.

“Based on these real costs and our sincerity in long-term cooperation,” Chen Bingwen finally gave his quote, “I can set the price at HK$0.5 per bag.”

A brief silence fell over the office when the number was announced.

Li Guowei's smile faded slightly. He picked up his teacup, gently poked at the floating leaves with the lid, and didn't immediately respond.

Wang Jianjun remained calm and quietly sipped his tea.

After a moment, Li Guowei put down his teacup and said, "Mr. Chen, to be honest, the price of HK$0.5 is still beyond our initial expectations."

As you know, the situation on the mainland is different from that in Hong Kong; every penny of foreign exchange must be used wisely.

"This is a very large order, totaling one million Hong Kong dollars. That's no small sum."

He paused briefly, observing Chen Bingwen's reaction, and continued, "We highly value Chen's products; otherwise, we wouldn't have come back with such sincerity."

The size of this order justifies the most favorable bulk price.

I believe Mr. Chen understands that stable, large-scale planned orders are far more valuable than scattered market orders.

Therefore, this scale advantage should be reflected in the price.

Chen Bingwen listened attentively with a faint smile on his face.

Li Guowei's words were indeed well-chosen and entirely within the bounds of business logic.

Large-scale orders can indeed reduce marginal management costs, but the fixed costs of core raw materials will not be reduced as a result.

He's trying to use "economies of scale" to lower the price.

Chen Bingwen did not immediately refute, but nodded in agreement: "Manager Li is absolutely right. The production stability and planning brought about by large-scale orders are indeed intangible value."

I must admit that.

Then, he slightly changed the subject:

"However, we also need to look at it objectively."

Otherwise, the initial offer wouldn't have been HK$0.6, but rather higher.

He glanced at the two men and said calmly, "However, Manager Li, Mr. Wang, we must see the rigid part of the cost."

Just like a building, the cost of the foundation and main structure is fixed. It is not possible to proportionally reduce the cost of cement and steel bars for each floor just because the building is taller.

The core raw materials have extremely high requirements for purity, activity, and stability, and no substitute can guarantee the same effect.

BASF's prices are international standards, and discounts are extremely limited even with large purchase volumes. This is a fixed expense, and there's no way to save a single penny.

On the other hand, two million bags of orders means that our production line needs to operate at full capacity for more than 15 consecutive days!
Moreover, in order to secure this order, we must suspend the production of other products, which actually increases the opportunity cost.

"

Chen Bingwen explained the costs item by item to Li Guowei and Wang Jianjun.

"Therefore, Manager Li, the cost reduction brought about by the 'economies of scale' you mentioned, all things considered, the price of HK$0.5 is the most sincere price we can offer after fully taking into account the limited optimization brought about by large-scale orders."

Its price is significantly lower than our normal market price, precisely to express the importance we place on this special order and our expectation for long-term cooperation.

Silence fell in the office once again.

The smile on Li Guowei's face vanished completely, and his brows furrowed slightly.

Chen Bingwen's data breakdown logic is clear and well-organized, especially his thorough analysis of the limitations of "scale effect," which greatly exceeded his expectations.

He realized that trying to lower prices by simply saying "large scale should mean lower prices" wouldn't work with Chen Bingwen.

Wang Jianjun put down his teacup and, for the first time, took the initiative to speak on the issue of price: "Mr. Chen, your analysis is very professional."

Quality and reliability are always our top priorities.

but,"

He then changed the subject, saying, "An order for two million bags is a huge amount. We really need to see more sincerity from them. The price of HK$0.5 is still too high."

Chen Bingwen met Wang Jianjun's gaze, his mind racing with calculations.

The bottom line cost of Jinba instant powder is HK$0.28 per bag, and there is a gross profit margin of HK$0.22 per bag.

Two million bags would yield a gross profit of HK$44.

However, Wang Jianjun's attitude suggests that it will be difficult for the 0.5 Hong Kong dollar to pass.

Moreover, judging from the relationship between Wang Jianjun and Li Guowei, the final pricing power should lie with Wang Jianjun.

Therefore, he needs to make appropriate concessions in order to close this deal.

Chen Bingwen did not speak immediately, but picked up his teacup and, in the brief moment of drinking water, weighed the pros and cons of the order.

On the positive side, even if the unit price of Jinba instant powder drops to HK$0.45, the gross profit per bag is still HK$0.17. Two million bags would generate a gross profit of HK$340,000, which is enough to cover the cost expenditure.

Moreover, the instant powder production line at Fuyuan plant is operating at full capacity, which can greatly improve equipment utilization and employee proficiency.

Although I refuted Li Guowei's claims earlier, under extreme production conditions, fixed cost amortization and unit energy consumption can indeed be reduced to their theoretical minimum.

Most importantly, successfully securing such a large-scale and demanding order will serve as the most solid proof for Chen Kee's future expansion into the mainland market.

The background represented by Wang Jianjun has a much stronger endorsement effect than that of ordinary customers.

This relationship and Chen Ji's "reliable" reputation are of immeasurable value, paving the way for all future business in mainland China. Its strategic value far exceeds the profit of this deal itself.

More importantly, a thought flashed through Chen Bingwen's mind.

Hainan's coconuts and mangoes are of superior quality and very competitively priced.

Chen Ji's bottled sugar water business has a huge demand for these two ingredients, but previously, due to poor information flow and limited procurement channels, it mainly relied on imports from Thailand, which was costly and carried high transportation risks.

If we can seize this opportunity to open up procurement channels for high-quality fruits from Hainan, we can not only significantly reduce the cost of raw materials for syrup, but also establish a more stable and controllable supply chain.

This is a highly valuable business opportunity in itself, even more so than the strategic significance of an instant powder order.

In the blink of an eye, the advantages and disadvantages became clear.

Compared to the strategic value of this deal, the drawbacks are negligible!
This is not just a business deal, but a crucial opportunity for Chen Kee's leap forward.

Profits can be lower, but relationships and trust must be built, and supply chain optimization is imperative.

Having made up his mind, Chen Bingwen smiled slightly: "Mr. Wang, Manager Li, I understand your difficulties."

To facilitate this collaboration and to express our utmost sincerity in fulfilling this trust, I am willing to make the final and largest concession on the price.

"HKD 0.45 per bag!"

"This is my final bottom line!"

Li Guowei and Wang Jianjun exchanged a glance.

They both saw interest in each other's eyes.

At HK$0.45, compared to the initial HK$0.6, the price has dropped by a full HK$0.15, resulting in a total discount of HK$30, demonstrating considerable sincerity.

After a moment's hesitation, Li Guowei, as the purchasing manager, tried to make a final effort: "President Chen, we have indeed seen your sincerity."

HK$0.45, this price is indeed a significant discount compared to the original price. However…

He paused for a moment, as if considering his words, "How about HK$0.43?"

This price reflects both the advantages of large-scale procurement and...

Before he could finish speaking, Chen Bingwen shook his head firmly and interrupted Li Guowei, saying, "Manager Li, if I may be frank, HK$0.45 is our bottom line."

This price is based on our rigorous cost accounting and our sincerity in long-term cooperation.

However, he changed the subject, looking at Wang Jianjun and Li Guowei, "I do have a mutually beneficial suggestion that might be worth discussing."

Li Guowei and Wang Jianjun both looked at him with a hint of inquiry.

Chen Bingwen continued:
"As you two know, in addition to producing Jinba energy drinks, Chenji's main bottled sugar water business has a huge demand for tropical fruit raw materials such as coconuts and mangoes."

As far as I know, Hainan produces high-quality coconuts and mangoes.

We are very optimistic about the quality and potential of Hainan fruits and intend to establish a long-term, stable raw material procurement base in Hainan.

If China Resources can provide some convenience or information support in organizing the supply of goods, it will be a win-win situation.

Of course, all procurement will follow market rules and be priced according to quality.

Upon hearing Chen Bingwen's words, Li Guowei was taken aback and wanted to say something, but Wang Jianjun gently raised his hand and decisively stopped him.

He hesitated for a moment, then spoke:

"Mr. Chen, we have seen your sincerity and difficulties."

HKD 0.45 is acceptable.

I can help you source the fruit ingredients you mentioned.

However, I have one condition: this batch of instant powder must be delivered strictly according to the quality standards you promised, and the delivery time cannot be delayed by even one day.

Can it be done? "

A huge weight was lifted from Chen Bingwen's heart. He stood up and nodded solemnly: "Mr. Wang, rest assured, there will be absolutely no compromise on quality."

We will assign our most elite production and quality control teams to work in shifts around the clock to ensure that orders are completed on time and to the required quality.

"A word is settled!"

"A word is settled!"

Seeing that the two had reached an agreement, Li Guowei breathed a sigh of relief and extended his hand to shake hands with Chen Bingwen: "Great! Thank you for your straightforwardness, Mr. Chen!"

That's settled then!
We'll finalize the contract details right away, and arrange the advance payment as soon as possible!

HK$0.45, two million bags, total price HK$900,000.

Key terms finalized.

The atmosphere became much more relaxed during the subsequent detailed discussions.

After Wang Jianjun and Li Guowei left.

Chen Bingwen sat at his desk, staring blankly at the newly signed agreement.

Two million bags in one month.

This is not an ordinary business order; it is a tough battle that must be won.

With that in mind, he pressed the internal phone and asked his secretary to call a meeting for the management team who were at home.

A short while later, Gao Zhenhai, Fang Wenshan, Zhou Zhiyuan, and Wan Yingying, the deputy manager of the marketing department, quickly entered Chen Bingwen's office.

"Sit down," Chen Bingwen gestured for everyone to sit.

He then went straight to the point, saying, "I just finalized an order for Jinba instant powder with Manager Li from China Resources. It's two million bags in total, at HK$0.45 per bag, with a delivery period of one month."

The office fell silent instantly.

HKD 0.45?

Two million bags?

A month?

These numbers struck like a heavy hammer, leaving everyone speechless for a moment.

They are all core members and know all too well the cost of Jinba instant powder.

This price is practically teetering on the edge of cost; even if there is a profit, it will be extremely meager.

However, Chen Bingwen did not give them time to process the shock.

“I know there’s almost no profit margin on this order.”

He confirmed, "But with this order, we can now purchase fruit ingredients for desserts from mainland China, in addition to Thailand."

Therefore, this order must be completed!

Quality guaranteed!

Guaranteed quantity!

on time!

This is not a discussion, it's a death order!

After saying that, Chen Bingwen began calling out names one by one: "Ah Hai!"

Gao Zhenhai jolted awake and looked up abruptly: "Brother Wen!"

"Fuyuan Factory will begin operating 24/7 in three shifts starting at 3 PM today!"
The machines keep running even when people stop!
You will personally be stationed at the factory and keep a close eye on the production line!
Tell me, is it possible to do this?

Gao Zhenhai replied without hesitation: "Yes! We have enough raw materials, and the production line will never stop!"

"Good!" Chen Bingwen turned his gaze to Fang Wenshan, "Director Fang!"

“Chen Sheng!” Fang Wenshan responded immediately.

"Immediately calculate the demand for two million bags of raw materials and packaging materials, as well as the additional labor, energy consumption, and equipment wear and tear from three shifts!"
Go talk to the suppliers yourself. Tell them you need the goods urgently. The price can be based on market rates, but anyone who dares to delay or use inferior goods will be permanently excluded from all future Chen's orders!

"Understood! I'll go and make the arrangements right away!" Fang Wenshan grabbed his notebook and started taking notes.

“Professor Zhou!” Chen Bingwen looked at Zhou Zhiyuan.

“Chen Sheng.” Zhou Zhiyuan’s expression was extremely serious.

Quality control! You are the last line of defense!

The greater the pressure, the less room there is for compromise on quality!
The standards for raw material inspection upon arrival at the factory, sampling on the production line every two hours, and full inspection of finished products before they leave the factory should all be upgraded by one level!
You and your team are to stay at the Fuyuan factory!

My requirement is that all goods delivered must be 100% top-quality!

"Don't worry, Mr. Chen! There will be absolutely no problem with the quality! I'll personally oversee it!" Zhou Zhiyuan nodded emphatically.

"Yingying!"

"Here! Mr. Chen!" Wan Yingying replied immediately.

"To address the manpower shortage at the Fuyuan factory, which operates on a three-shift system, we are prioritizing the transfer of skilled workers from other factories and departments to provide support!"

Logistical support is in place, with meals and late-night snacks all provided to the highest standards!
In addition, procurement personnel were instructed to immediately form a special task force to liaise with Manager Li's team at China Resources and initiate the procurement of raw materials such as Hainan coconut milk and mangoes.

This is the additional business value brought by this collaboration, and we must seize it!

"Yes! I'll take care of it right away!" Wan Yingying quickly took notes.

As commands were issued, Chen Ji's massive machine was instantly injected with ferocious power.

Chen Bingwen's gaze swept over everyone.

"Everyone understands their mission?"

"Understood!" they all replied in unison.

"Then get on it!" Chen Bingwen waved his hand. "I want to see the lights of Fuyuan Factory burning for thirty days straight, starting now!"
The meeting is over! "

The group immediately stood up and, without any hesitation, went about their respective tasks.

Having accepted this business deal, at this moment, for Chen Bingwen...

We must go all out and fight this battle brilliantly!
(End of this chapter)