"General Manager Feng, as you expected, we are being sued."
Liu Chuanzhi was still smiling when Lenovo was being sued. He does not seem worried at all.
This was because Feng Yu had reminded Liu Chuanzhi earlier that the introduction of this cheap laptop will bring the price of laptops below 500 USD. Those manufacturers will be unhappy, and they might sue Lenovo for unfair competition, dumping, etc.
This time, Feng Yu was right again. Those manufacturers were going to sue Lenovo for these two charges.
Dumping and unfair competition were based on Lenovo selling their products at a lower than cost price. In fact, Lenovo's production cost was less than 400 USD.
That's why Lenovo can ignore these two charges. They only need to use the evidence of the production cost to quash these charges.
As for why Lenovo did not use the evidence now, it was because they wanted to let this incident continue. This was also a form of publicity for Lenovo. At the same time, other companies will not enter the low-cost laptop market so early. Lenovo will have sufficient time to occupy this market.
"I know. Oh, can you make sure we are selling our products at a higher price than cost in all regions? "
"No. But in some regions, our profits might be lower than 10 USD due to the high cost of taxes, transportation, marketing, etc. But we will not be selling at a loss." Liu Chuanzhi replied.
"That's good. As for the legal issues, let the professionals handle it. Laptops shouldn't have been sold at such an expensive price. This should not be a luxury item. It should be the same as common household appliances. "
"In the past, mobile phones were selling for 20,000 to 30,000 RMB in China. Even if you have the money, you might not be able to buy it. Pagers were also selling for a few thousand at the start. "
"But now? The pager had become a thing of the past and had been eliminated. Mobile phones were selling for a few thousand RMB, and Wind and rain mobile phones were selling for 399 RMB. It had become a product that most people could afford. "
"I don't dare to say that in the countryside, but in the city, almost every family has a mobile phone. Some families have a mobile phone and some people even have more than one mobile phone. These mobile phones sell better than some household appliances."
"As for computers, desktop computers go from tens of thousands to ten thousand, then to five or six thousand, and even below five thousand. The price keeps dropping, but the performance keeps increasing. Our Lenovo Group is one of the pioneers in lowering our prices. "
When Liu Chuanzhi heard this, he smiled and echoed, "Isn't that right? Every time we reduce the price, it causes the market to follow suit. Every time we lower the price, our sales volume will continue to increase, and so will our profits. "
Every price reduction was carefully calculated. They couldn't just increase their sales but decrease their profits. What was the point of lowering their prices? Was it self-mutilation?
Just like this cheap laptop. Many of these consumers were unwilling to buy a laptop that was priced at seven to eight thousand yuan. Some of them were even unwilling to pay five to six thousand yuan.
But when they realized a laptop was only selling for around three thousand RMB, they were tempted. These people were like new consumers, and they did not overlap with the original market.
That's why Lenovo Group can increase their sales and profits at the same time. They did not lower their prices blindly.
Now, Lenovo Group's laptops were sold for more than ten thousand RMB, seven to eight thousand RMB, five to six thousand RMB, etc., targeting different consumer groups.
Prices had become a weapon in Lenovo Group's hands. A weapon to push out their competitors. We can lower our prices for the same specifications, and other competitors will have to lower their prices.
But Lenovo Group's production cost is lower, and their profits will not drop by much. The rest of the manufacturers, especially those that do not have high production capacity and cannot lower their cost, will be slowly pushed out of the market.
For example, in the North American market, Sony, Panasonic, and Toshiba's laptop sales had been declining. After Lenovo Group lowered their prices, Hui Pu, Dell, and other companies followed suit. IBM and Apple continued to focus on the high-end market, but they also introduced lower-priced laptops. But these Japanese manufacturers were severely affected.
There were also some manufacturers that were not strong enough and directly withdrew from the North American market. They were the kind of companies that bought spare parts and belonged to the lowest tier of companies. However, these companies were not good in terms of price and service, and they were destined to be eliminated by the market.
Hua Xia's best example of using prices to push out competitors was Grans. The world's largest microwave oven manufacturer and market leader. At the same time, their air conditioner business is also doing the same thing.
35% of the microwave oven market belongs to Grans. Other than North America and Central Asia, Grans is the market leader in other regions. Grans is also the one who set the prices for all kinds of microwave ovens.
They had pushed the price of microwave ovens from a few thousand RMB to a few hundred RMB now. At the same time, the world's largest microwave oven manufacturing factory was also owned by Grans. They also produced microwave ovens on behalf of many other microwave oven companies. Due to their huge output, the cost of producing microwave ovens was lower than many brands' own production costs. This way, they were able to capture the lifeline of other companies.
Now, Grans is also doing the same for their air conditioners.
Wind & Rain Electronics had developed many related technologies in the past, and they had used these technologies to exchange for Grans shares. But Grans has the final say, and Taihua Holdings is only a minority shareholder.
Many overseas companies had learned from Grans's model, but no one succeeded in imitating it. Lenovo Group's PC business is similar to Grans's model. They had also used price as a weapon to dominate the Hua Xia market and enter the global market.
From Hua Xia's market leader to Asia, East Europe, Africa, etc. Now, North America, South America, Western Europe, etc., are their main targets.
Liu Chuanzhi had said during the company's meeting that whatever Grans can do, Lenovo can also do it better.
Lenovo Group had also done the same. When their scale reaches a certain level, they will use price as a weapon to push out other companies with half of their production.
After a few times, they managed to get rid of some of the smaller companies.
Every time they set the prices, they will do it after careful consideration. They want prices to be the strongest barrier in the industry. They had done it before, and they can do it again this time!
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