This was because ROF’s computer-installation business had a similar pricing strategy as those other brands. Based on Boss Pei’s guidance, the original prices had already accounted for ROF’s brand premium and the value of their after-sales services. They were not to be adjusted frequently
If they wanted to increase the prices, they had to upgrade the hardware; if they wanted to reduce the prices, they had to run promotional events but not too many.
The main aim of this strategy was to get rid of customers’ worries and create the impression that ROF was a good-hearted and reliable brand with products that retained their value well.
The rising RAM prices would have caused the entire system to become more expensive. People might take ROF for an unscrupulous merchant; that would be bad for its reputation.
Thus, an increase in RAM prices would have been bad news to Zhang Yuan. If their costs increased but they kept their selling price the same, they would have generated much less profit.
Yet, the situation was different.
Zhang Yuan had already ordered a batch of hardware. He had placed more orders for RAM sticks especially because he had considered the standard of four RAM sticks for each high-end system worth over ten thousand yuan. Thus, he had hoarded a huge load of them!
To customers, that meant that the price-quality ratio of ROF’s high-end system units would go through the roof. Buying ROF’s system units would cost less than buying individual parts to assemble their own!
At the same time—even if Zhang Yuan sold the systems at their original prices, ROF would still be able to generate huge profits.
Of course, he could also consider increasing prices.
However, that was not aligned with the Tengda spirit. It would also not help to increase ROF’s market share.
Thus, after some consideration, Zhang Yuan decided to sell the current stock at their original prices!
Since RAM would be more expensive, Zhang Yuan also decided to make adjustments to the next batch of hardware. He would upgrade some parts and increase the selling prices based on the new costs.
Of course, those problems would only have to be resolved later. That was because they had already ordered a lot of hardware this time.
At that thought, Zhang Yuan could barely sit still.
He immediately called his employees, instructing them to design a new batch of posters to be displayed at the entrance of the Fish-Catching Internet Cafe branches. At the same time, he instructed them to update the publicity page on their online shop as well.
The contents of the advertisement would be simple. There would be no discounts or sales, but the prices would not increase either!
January 1st of 2011, Saturday…
The New Year’s Day holiday would last from January 1st to January 3rd. Pei Qian happily gave himself a break to rest.
The thought of Li Yada, Lin Wan, and the others returning from the United States on the 4th made Pei Qian’s head hurt.
Has one week passed so quickly?
Ai, time flies when you’re having fun.
Pei Qian strolled out of his house, towards Fish-Catching Internet Cafe’s Handong University branch to sit around, have some coffee, play some games, and relax.
However, when he reached the entrance of the internet cafe, he realized that something was amiss.
Why were there so many people?!
There was a long line at the entrance of the internet cafe, which extended all the way to the roadside!
Of course, the line was a far cry from those seen at sales buildings or train stations. It looked like there were only ten-odd people in line.
However, that scene was extremely rare at Fish-Catching Internet Cafe!
That was because Fish-Catching Internet Cafe was huge. Although there weren’t many computer stations in Fish-Catching Internet Cafe 1.0, those who wanted to wait for a seat could do so in the coffee area, the mini cinema, or the book area. There was no need to line up by the road.
Furthermore, the traffic at the internet cafe should have stabilized by now. There shouldn’t have been so many people visiting the internet cafe even though it was New Year’s Day.
Pei Qian tried to look in and became acutely aware that the problem was much more serious than he had imagined!
The coffee area in Fish-Catching Internet Cafe was not full, and neither was the internet area.
The long line only began at the counter. A pathway had even been set aside for customers to walk in and out as they pleased.
The few people at the front of the line were only filling up forms at the counter. They turned and left after paying money. None of them headed to the internet area!
The more Pei Qian saw, the more confused he became. What was happening? At that moment, a waiter tried to maintain order by shouting, “Don’t be anxious, everyone! Line up in an orderly manner! You can also place your order online! The URL is located on the poster outside the entrance!”
Pei Qian glanced at the poster, feeling more perplexed than before. The URL of ROF Computer-Installation’s online store was written on the poster. The configurations of the three different types of system units were also there.
However, those were the original prices. Neither the configurations nor the prices had changed. Why had those people rushed down so early in the morning to fill up forms and purchase ROF’s system units?
Pei Qian had a bad feeling about this. It seemed like there had been developments that he was unaware of!
Once again, the waiter shouted. “I’ll remind everyone once more that ROF provides repair services at your doorstep. We can also deliver upgraded hardware to your doorstep. The respective fees are already written on the flyers. “However, please take note of the disclaimer on the flyers. If you want to upgrade a part, you must keep the original part. Do not sell or transfer it, or you would not be able to enjoy this after-sales service…”
Pei Qian was even more confused now. Why did the waiter have to remind them of this specifically?
Feeling very suspicious, he entered Fish-Catching Internet Cafe and spotted Zhang Yuan, who was sipping his coffee with a proud look on his face.
“What’s happening?” Beads of perspiration formed on Pei Qian’s forehead.
Zhang Yuan smiled subtly. “Boss Pei, MSC’s factory caught fire, and RAM prices are soaring!”
“Huh?” Pei Qian’s face was a mask of bewilderment. At that moment, he could not understand the story behind what was happening Zhang Yuan said, “RAM sticks used to cost over two hundred yuan. Now, they’re selling for over three hundred yuan!
“The prices would probably only continue to increase in the near future!
“Our high-end system units contain four RAM sticks each. Now, each one of those is worth a hundred yuan more. In addition to the slight increase in hard disk prices, each system unit’s hardware alone is now worth over five hundred yuan more than before!
“Now, apart from computer-installation novices, even computer-installation professionals would find our system units incredibly worth their prices!
“Thanks to the hard work that you put into making a name for ROF earlier, our computers are now selling wildly!
“Don’t worry, Boss Pei. I have kept your words in mind this entire time. I didn’t increase the system units’ prices like the other unscrupulous merchants did!
“I only released news that the prices of ROF’s system units would remain the same yesterday. Yet, today, many people came from all over Jingzhou to order computers. We also managed to sell tens of system units through our online shop alone! “I think we should be able to sell over a thousand system units during the New Year’s Day holiday period, and this is a conservative estimate!”
Pei Qian’s face immediately drained of all color. He instinctively tried to think of a solution to this problem, but he could not think of anything.
Should he increase the selling prices?
He could not do that. He had already said before that he wanted to keep the pric
es stable. Wouldn’t he be slapping himself in the face if he asked Zhang Yuan to increase the prices now? What’s more, even if they increased prices now, people would still purchase ROF’s system units. Then, ROF would be generating more profit for each system unit sold!
Should he lower the selling prices, then?
That would make matters even worse. Crowds were already rushing to buy the system units. If they lowered the prices further, they might earn less profit. However, ROF’s reputation would only improve. Then, Pei Qian would be in a greater fix in the future.
Pei Qian began to feel light-headed. At that moment, he realized that he could not come up with a good strategy; this problem was unresolvable!
Yet, Zhang Yuan looked overjoyed. “At the end of the day, this was a blessing in disguise!
“Boss Pei, you told me to rent more warehouses and store more stocks before. Now, they’re all going to prove useful!
“If we did not have enough stocks prepared, we might have sold out in a single day. Then, we would have had to purchase the hardware at the increased prices, and our profits would have been greatly reduced!
“What’s more, a problem suddenly arose with the hardware yesterday, and we either refunded them or sent them for repair. I was worried that the rest of the hardware would malfunction as well, and so I ordered a new batch in advance. I even bought more RAM sticks in particular.
“From the looks of the current situation, the RAM sticks we have purchased would probably last us for a long time. Our next goal would be for ROF to dominate the desktop market in Jingzhou!
“We can already start pulling in customers who assemble their own computers or purchase branded system units!”
Pei Qian sat down in the coffee area, feeling breathless.
That’s not right. Did something go wrong somewhere…?
Pei Qian began to doubt his life.
It was only January 1st. 2011 had just begun! He would never have thought that the first blow of the new year would have been dealt so soon!
[1] This is a major shopping festival in China, held on June 18th.
Chapter 375 - Whoever Earned Money Should Spend It
Zhang Yuan continued to bootlick Pei Qian without resting. However, Pei Qian sipped his coffee, not listening to a single word.
He could not understand where he had gone
wrong.
He had brought Tang Yishu to the warehouse, and he had seen instant effects. The computers had started to malfunction, and the assembly process had been hindered.
Yet… how did the RAM factory catch fire? The halo effect could not have spread overseas, right?
No matter how hard Pei Qian thought, he could not figure it out.
Strictly speaking, none of this mattered that much. However, they were very troublesome for Boss Pei. It looked like Boss Pei had to be careful about using his killing machine.
He could slip up and end up hurting himself!
In any case, what had been done had been done. More importantly, he had to think about how to spend the money from now on.
Should they continue to hoard stocks? That seemed impracticable.
ROF was already very well-known at the moment. After promising that prices wouldn’t rise during the New Year’s Day, it would likely become even more reputable and popular.
Experience had already shown that many customers were willing to pay a certain brand premium for ROF’s system units.
In other words-even if prices of their system units remained stagnant, ROF’s sales volume would not decrease. Furthermore, since they could maintain their original profit margins, the company was bound to generate profits.
If ROF hoarded even more stocks now and other parts became more expensive later on, wouldn’t Boss Pei be shooting himself in the foot?
It did not seem smart to hoard stocks now!
Boss Pei had learned an expensive lesson. What if he invested this sum of money in other businesses?
However, on second thought, Pei Qian rejected this idea.
Pei Qian preferred to stick to one general principle: whoever caused the problem should solve it; whoever earned money should spend it.
After some self-reflection, he realized that he had to keep fighting fires helplessly in the past because he had not stuck to this principle.
Many projects were not inherently problematic. Many of them had been incurring losses until they started collaborating with other projects. Then, problems started arising.
Thus, Pei Qian decided that Zhang Yuan should remain in charge of the revenue that ROF generated. He had to take charge of finding ways to spend the money.
Pei Qian considered this for a moment and said, “Don’t submit the profits generated by ROF to Tengda. You should think of ways to spend the money.”
Zhang Yuan was stunned. “Huh? Boss Pei, we’ve generated a lot of profit, but I shouldn’t submit any of it? Would that be appropriate?”
Pei Qian sniggered. “Of course! This is your hard-earned money. You should get to spend
it.”
Zhang Yuan quickly waved his hands. “No, no, no. Boss Pei, we earned this money thanks to your wise guidance.”
Pei Qian remained silent.
Look at him! Stop speaking if you don’t have anything good to say! Pei Qian was a magnanimous man who had no intention to go back and forth on this issue. “Tell me—where do you intend to spend this money?”
Zhang Yuan fell into deep thought.
He was now in charge of the Fish-Catching Internet Cafes and ROF. Of course, since Fish-Catching Take-Out had been derived from Fish-Catching Internet Cafe, Zhang Yuan was also considered in charge of that.
At the same time, all of those businesses were closely related to Upwind Logistics.
Lu Mingliang was in charge of Upwind Logistics. He was greatly favored by Pei Qian. In fact, until now, Upwind Logistics had been incurring losses. It could only continue operating because of Tengda Corporation’s financial support. This proved that Boss Pei had been right to trust Lu Mingliang all this time.
Of course, to Pei Qian, he was not offering financial support. Instead, he was detoxifying himself.
If not for Upwind Logistics, Boss Pei might have been poisoned to death by now.
After some thought, Zhang Yuan said, “Boss Pei, I think that ROF has obtained a stable foothold in Jingzhou. Our online store has also achieved some level of fame.
“At the moment, the Fish-Catching Internet Cafes are quite popular as well. In fact, it’s now the most popular high-end internet cafe brand in Jingzhou.
“I think we can continue to expand and bring Fish-Catching Internet Cafe to other cities!”
Pei Qian sighed inwardly. Indeed, this problem was not going to resolve itself.
Boss Li had asked the same question before. He had asked Pei Qian why the latter had not considered opening branches in other cities to generate more profit.
The reason for this was simple. Boss Pei did not want to generate more profit by opening branches in other cities!
However, he had to seriously consider it now. That was because he could not delay it any longer.
Fish-Catching Internet Cafe and ROF were now generating profits, and the sum was not small. How could Pei Qian avoid expanding?
It would not make sense.
Thus, he had to open more branches sooner or later. The questions were where and how.
Pei Qian pondered for a while and asked, “Where do you think we should open more Fish-Catching Internet Cafe branches?”
Zhang Yuan responded instantly. “I think we should open branches in the bigger, first-tier cities like Beijing, Shanghai, or Guangzhou!
“There are many young people in those cities, and the population is much denser. What’s more, people there earn higher incomes. High-end internet cafes would probably appeal to them more.
“It would be easier for us to fight for market share in those cities. We could even open related businesses, like Fish-Catching Take-Out, there at the same
time.”
Pei Qian was silent.
You’re making sense, and so I definitely cannot do that…
Pei Qian considered the problem for a moment. Then, he said, “I’m thinking the exact opposite. Lincheng is my next target.”
Zhang Yuan was stunned. “Lincheng?”
Lincheng City was the poorest city in Handong Province. The famous impoverished county, Daokou County, was located in Lincheng City.
How could they open Fish-Catching Internet Cafes in such a poor place? How many customers could they have?
Pei Qian continued speaking “What’s more, we won’t just open more Fish-Catching Internet Cafe branches.
“All businesses that are related to Fish-Catching Internet Cafe will move there, too!”
Pei Qian could not help but smile as he looked at Zhang Yuan’s confused expression.
Pei Qian was not eager to expand Fish-Catching Internet Cafe. Instead, he wanted to open more Upwind Courier stations.
However, Upwind Courier stations were littered around Jingzhou. If one opened a map, they would see a dense network of those stations. There was practically no area in the city that was not covered by an Upwind Courier station.
Pei Qian had to consider other cities if he wanted to open more such stations.
However, setting up Upwind Courier stations without opening Fish-Catching Internet Cafes would be too strange. Others would become suspicious.
If he wanted to expand to other cities, the businesses had to move together. Then, people would not grow suspicious.
What’s more, there was one huge benefit to opening Fish-Catching Internet Cafes compared to Upwind Courier stations: more initial costs were involved in the former. A lot of money would be needed to pay rent, conduct renovations, purchase computers, and the like.
Even if the internet cafe began generating profits later, it would take a longer time to recover the huge initial investment.
At the very least, the initial investment would not be recovered before the next settlement.
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