"Oh, General Manager Feng, there is one more thing I want to ask. Why are you so sure those companies will not withdraw their investments and will accept compensation? "Committee Member Bao asked curiously.
Feng Yu gave a simple explanation. "Because of the market. The easiest way to judge whether a company is profitable or not is to look at the number of products sold, which is also the number of sales. "
"Other factors are also important, like the cost, etc. But ultimately, the company's profits depend on its product sales. This product can be a tangible product, like a car. It can also be an invisible product, like a design concept, etc. All of these have to be sold to be exchanged for money. "
"The profits are not only dependent on the product's sales, but also the profit margin. For example, Wind and Rain Mobile is selling a 399 RMB mobile phone, and its sales are very high. Its monthly sales are equivalent to its previous model's annual sales. But the profit margin is very low, and the overall profits are not high. "
"The factors that determine a product's sales are price, quality, reputation, distribution channels, etc. Among these factors, price is the least important. The product's quality, reputation, and distribution channels are more important. Among these factors, quality is the least important. "
"The reputation we are talking about is easy to understand. It is how many people know about the brand, and how many people think this brand is trustworthy. The distribution channels mainly reflect the market. "
"We always talk about the market economy, and this shows the importance of the market. The market, to put it bluntly, was a place for trading. But now, the companies always calculate market share data. The market share is the proportion of a product's sales compared to other products in the market. "
"We will notice that those companies with a high market share have high profits. When they have the highest market share, their brand's reputation will increase, and with more profits, they will be able to promote their products and improve the quality of their products. This will form a virtuous cycle. "
"In the end, the market share is still the product's sales. But a market can be saturated. For example, this city only has a population of 300,000. If you ship 500,000 bicycles, even if the price is lowered to below the cost, it will still be difficult to sell them all. This is because very few people will buy two bicycles. Moreover, many families have cars and don't need bicycles at all. Some families choose public transportation instead of bicycles. "
"What if most of the 500,000 bicycles can't be sold? Therefore, they needed to develop new markets, such as neighboring cities or other surrounding areas. After many years of development, a brand will inevitably touch the edge of market saturation. It can't be said that the market is completely saturated, there will always be replacement and so on, but the growth of sales can no longer keep up with the increase in production, so we have to open up new markets. "
"Many people have the impression that Africa is a poor region. But Mercedes-Benz, Volkswagen and other top automobile manufacturers are focusing on the African market. That's because it's an almost empty market. Once they occupy it, they'll be able to reap a steady stream of profits when the African economy develops in the future. "
"For example, when this mobile phone first entered the Hua Xia market, although Hua Xia's economic situation was not too good and there were very few rich people, there were still some who had become rich. Through them, people started to notice mobile phones. At that time, it should be called Big Brother. When others have money, they will also want to buy a mobile phone, and most likely, they will buy the same mobile phone as them. "
Feng Yu had heard a joke in his previous life. There was a coal boss who came to Beijing and bought a Jaguar sports car. But a few days later, he bought a Mercedes-Benz. Why? It's because no one knows about Jaguars, and Mercedes-Benz is considered a luxury car. This is how brands dominate the market.
"Ericsson, Motorola, and the rest, which had occupied the Chinese market in the beginning, had made high profits from this. They are doing well at that time. They were doing very well at that time. After our Wind and Rain mobile phones and Aiwa mobile phones appeared, their sales dropped, and their profits dropped. Now, Ericsson had to work with Sony to maintain their mobile phone business. "
"Furthermore, why do those Japanese companies, which we had chased out of the Hua Xia market, want to enter the Hua Xia market again? It's because our market is bigger and has more advantages than Africa. Our economy is developing fast, and our spending power will increase. The market's potential will increase. In the past, we can only sell a few mobile phones a year. Now, our monthly sales are much higher than before. "
"The company that owns a higher proportion of the market will get the most benefits and profits when the market explodes. The increase in market share will not only increase the company's cash income, but it will also increase the intangible assets, like brand value, etc. For example, a listed company. Even if the company's income is not high, but it has the highest market share, and the share prices will shoot up. This is because investors believe that the company that controls the market will make more money. "
"More than a decade ago, Japan's economy collapsed, and they start to develop our Hua Xia market. During that period, our relationship with Japan had improved, and they are willing to invest in us, help us upgrade our technologies, and even provide us with assistance. But at the same time, we have to facilitate their imports."
"At that time, most of our electrical appliances and machinery are Japanese products, and people still think that Japanese products are the best. If it weren't for our domestic companies developing and snatching back the market share, our market will be filled with Japanese products, and our domestic companies' development will be affected. The longer we wait, the harder it will be for us to develop. "
"They are after our market, and it is because of our Hua Xia market that Japan's economy had stabilized. This also showed the rest of the countries how high the Chinese market is and how much potential it has. Entering our Hua Xia market might not make money, but if they don't enter, they will never make money. "
"No company will give up on a market like China. Look at how many people we have and how fast our economy has been growing over the years. You can see how much potential we have."
"That's why if they do not want to give up on our market, they will not withdraw their investments. Why would any normal company give up on our market? Even if they had changed from a wholly-owned company to a joint venture, they still have the sales channels to enter the Hua Xia market. "
"That's why we should be more decisive when we negotiate with foreign companies. This is because we control one of the best markets in the world!"
Committee Member Bao's eyes brighten up when he heard what Feng Yu said. He had made up his mind.
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