Li Mingde reported the good news to Feng Yu. Toyota's sales in the US and Europe had recovered, and they had taken measures. But they are still affected, especially this year's profits will be lower than expected.
But Feng Yu felt things are not so simple.
Feng Yu is not worried about Toyota's retaliation. Feng Yu is not worried about Toyota going up against any other companies in the world. But if those automobile manufacturers join forces, it will be serious for Bing City Machinery Manufacturing Group.
Feng Yu's worries are not unreasonable. Li Mingde called him the next day to tell him a piece of bad news.
Toyota and FAW had entered into a joint venture and licensed two more models to FAW. At the same time, FAW paid Toyota a sum of money.
But FAW is also cunning. They insist on not extending the duration of the cooperation. That means these two models can only bring profits for Toyota for more than 10 years. After more than 10 years, this joint venture will become a wholly owned subsidiary of FAW.
This condition is disadvantageous to Toyota. This is equivalent to them selling their vehicle technologies to the joint venture to help FAW improve their technologies. Although Toyota will get some profits from the cars produced in the future, the profits are too little compared to their joint venture factories in the US and Europe.
When Toyota and FAW worked together, they had planned to use this joint venture to increase their brand awareness and capture the Hua Xia market.
After that, they will export to Hua Xia to get more profits. It will be better if they can increase the shares of this joint venture in the future. If not, they will enter into joint ventures with other automobile manufacturers.
But at this time, Hua Xia's higher-ups stopped the joint venture. Hua Xia will not have any more foreign joint ventures in the next few years.
This is the result of Feng Yu's efforts. He had told the higher-ups about the disadvantages of joint ventures. If a new joint venture factory appears every few years, what's the point of all the negotiations? Once the contract expired, a new joint venture factory would appear. Wouldn't the market be flooded with all kinds of foreign brand joint venture cars?
If Feng Yu really wanted to form a joint venture, it should be the other party providing the technology, and Feng Yu will develop a new car model and retain his own brand. If they still use foreign brands, then in 20 years, even if the joint venture ends, their own brands will not be well known, and they will be in trouble again.
When the higher-ups heard this, they felt that what Feng Yu said made sense. However, they still needed to study the specifics. Therefore, the matter of the foreign joint venture car company was temporarily suspended. They would wait for them to study it thoroughly before deciding whether or not to reopen it.
In any case, Feng Yu had achieved his goal. This would greatly inhibit the invasion of foreign brands, although they had already invaded.
Feng Yu had also thought that the major automobile manufacturers will get instructions from the higher-ups to develop and promote their own brands. The higher-ups had also hinted that if the quality of the cars was up to standard, they could purchase some official vehicles as support for these automobile manufacturers.
The commoners always had the mentality that if an official rode in a car, it would definitely be a good car! It was just like the domestically produced Hongqi, Jeep, etc., and the joint venture Santana. All these cars were used by the commoners as official vehicles, and they were treated as good cars.
This way, after purchasing official vehicles, it will form a psychological impression, and it will also promote these national brands.
The higher-ups had put in a lot of effort, but they had failed to stop Toyota from doing this. According to the contract, Toyota must continue to provide new car models to the joint venture company. But the original plan was to wait for two years, and it was brought forward.
To FAW, it was obvious that it was easier to produce joint venture cars, and the technologies were more mature, and they need less funds. The funds needed to independently develop a car was not a small amount, especially after the crash experiment.
But this was not the end. Hua Xia's other joint venture companies also got the authorization to produce new car models. In the past, these cars could only be imported.
These car models had a certain reputation in Hua Xia. Although the selling price will be lowered after the domestic production, it will not drop by a lot. But many people should know that the selling price of imported cars is about three times the CIF price. After the joint venture companies, there will not be high tariffs, but the selling price will still be high, and the profits will increase.
Hua Xia and the other automobile manufacturers have two options. One is to produce these joint venture cars, and the profits will be higher. But the joint venture companies still have to share about a third of the profits with the joint venture companies. The other option is to develop their own brand of cars. At the same time, they will need to invest a lot of funds and give up the high profits from the joint venture cars.
The profits will not be a small amount. Many cars' profits can even reach 100%.
Those joint venture automobile manufacturers now have new car models, and it includes mid-range and low-end cars. When Li Mingde knew about this, he felt troubled.
He could not ask those automobile manufacturers to give up on producing joint venture cars. After all, the major shareholder is the state-owned company, and the money they make belongs to the country. If the higher-ups keep giving suggestions and even point out the shortcomings of the joint venture cars, the higher-ups will not like it.
What's wrong? Your private joint venture companies can make money, but our state-owned joint venture companies can't? Didn't you all say that your technologies are good? What's there to be afraid of?
Furthermore, those automobile manufacturers had improved their technologies after getting the authorization for new car models.
The higher-ups replied that they can use the profits from selling joint venture cars to develop their own brand of cars. If not, where will the R&D funds come from?
Feng Yu knew about this and got a headache. In Feng Yu's previous life, Hua Xia was like this. If it weren't for the rise of Li Dafu and the rest of the automobile manufacturers, Hua Xia would not have its own automobile brand.
Although there are still Hongqi cars, no one approves of it. The technology is outdated, the exterior is not beautiful, the interior is ordinary, and the performance is average. Although it is cheap, not many people buy it. This is because not many people know how to repair this car.
Cars will inevitably get damaged. Even if the car is not damaged, it still needs to be maintained. The after-sales service is very important. Songjiang Motors' 4S shops are not only good, but there are also many private repair shops. There are also many repair shops for Volkswagen, Toyota, Honda, Ford, etc.
But the repair shops for Shanghai Motors and Hongqi Motors are rare. Even some small bakeries have more repair shops than Songjiang Motors.
This is a vicious cycle, and their own brands will gradually decline. In Feng Yu's previous life, Hongqi introduced a concept car worth 5 million RMB to showcase its new technologies. But Hongqi cars are not selling well. FAW's most profitable and best-selling cars are still Toyota and Volkswagen.
"General Manager Feng, should we announce the true cost of those joint venture cars and force them to lower their prices?" Let them be forced to lower their prices? "Li Mingde thought of a drastic and ruthless move.
Feng Yu shook his head. This is too mean, and it will hurt the interests of those automobile manufacturers and the state. Songjiang Motors will become the target of public criticism.
Feng Yu must think of other ways.
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