2003: Starting with Foreign Trade

Chapter 188: Cost Reduction and Efficiency Improvement
Saturday, September 2005, 11.

The two rooms on the first floor of the Flashpoint office building were used by Tan Jincheng for several Taobao stores he previously owned. One of them was an office, and the other was set up as a photography studio.

Including Jinshang Clothing, which has already been transferred, there are a total of four Taobao stores, with a total of four customer service staff working in shifts day and night.

There are also two employees responsible for distributing packages, making a total of six employees.

These six employees also manage four Taobao stores. The current manager is Gu Qingqing, who comes to Beicang when she has free time, and manages them online when she doesn't.

In Tan Jincheng's words, these four stores were for her to practice, get acquainted with the internet, and see what the online shopping ecosystem was really like; whether she made money or not was not important.

Several months later, the photography studio was reopened.

"Hehe, we're shooting winter clothes, time to make money again," Qin Siyu chuckled.

Actually, it's a bit late to shoot winter clothes now, but we can catch up by rushing the work. In addition, next year's spring clothes will also be shot this time, and the shooting period will last for several days.

Due to time constraints, the two models were photographed together; it was still Qin Siyu and Zhao Xianbo.

Gu Qingqing stood aside and watched; this was her first time taking on an organization task for filming.

Just then, there was a knock on the studio door, and it was Zhang Xuhui who came in.

"Sister Gu, would you like to rest in our boss's office upstairs at noon? If so, I'll give you the key," Zhang Xuhui asked Gu Qingqing as she opened the door.

Zhang Xuhui was unaware that Gu Qingqing used to rest in Tan Jincheng's office at noon. It was only when he ran into Sun Yuming today that Sun Yuming reminded him.

What to call her was a problem. Calling her "boss lady" wasn't quite appropriate, and other titles felt a bit unfamiliar. After thinking it over, Zhang Xuhui could only bite the bullet and call the woman in front of him "Sister Gu."

"Since your boss isn't here, I won't go. I'll just rest in the office here for lunch," Gu Qingqing replied with a smile.

Tan Jincheng was away on a business trip and hadn't returned yet. She knew this in advance and was somewhat disappointed, as it had been 10 days since they last met.

Although they live in the same city, they rarely see each other, making it almost like a long-distance relationship. They cherish every meeting they have.

Fortunately, Tan Jincheng will be able to return tomorrow.

It wasn't that I rushed back specifically, but this round of business trips has already ended. Just like last time, this supply chain journey that started in Huzhou involves visiting quite a few places, including manufacturers of core components such as motors, controllers, chassis, and tires.

Even if the cost of each component is reduced by one or two yuan, it would be good. This time, Tan Jincheng's goal is to reduce the overall component cost by 5% to 10%.

For example, the original purchase price for 4 sets of 48V batteries was 300 yuan per unit. Naturally, the annual purchase price for 20 to 50 sets cannot remain the same. With orders worth hundreds of millions of yuan a year, how can we manage without some discounts?

Even a 5% reduction overall is good; that's still several million. It's definitely profit saved, and that's how cost reduction and efficiency improvement come about.

Batteries are the biggest cost component, with total procurement costs for the entire year of 2006 ranging from 1.6 million to 4 million yuan, averaging over 1300 million yuan per month. Therefore, they are also a key area of ​​focus for Tan Jincheng's current efforts.

When Zhang Yunhua arrived at Boneng on the first day, it was almost the end of the workday. After chatting for a while, although Zhang Yunhua was eager to get to the point, Tan Jincheng brushed it off by saying it was too late.

Although Zhang Yunhua has complete authority, he is, after all, just a professional manager with a 5% stake. Negotiations without the company owner's presence are meaningless for large orders.

In addition, I also gave the two of them some time to discuss things, and took the opportunity to express my own attitude.

Dinner was naturally arranged, and when it was time for dinner, the rather mysterious boss of Boneng, in Tan Jincheng's opinion, also appeared. These days, it is still relatively rare for private enterprises to completely relinquish the management rights of a company to professional managers.

Drinking culture is an essential part of business, but since Tan Jincheng came alone this time, he was quite restrained. Although Jin Chuanling and Zhang Yunhua really wanted to get him drunk and settle things on the spot, Tan Jincheng still managed to escape.

Even when he was drunk and made promises that were not good for him, Tan Jincheng would not admit them. Can words spoken at the dinner table be counted?
Since there was no formal contract signed or stamped, it doesn't count.

However, since there was already a foundation of cooperation, this time they came with a cooperative attitude. Although Jin Chuanling felt that this kid didn't drink very well, he still spoke very well. Let's just assume that he's a young man who's not used to drinking culture.

The atmosphere between the two sides was relatively harmonious. After the first round ended, a second round was inevitable. After a whole night, Tan Jincheng was also dizzy.

Having retained his last shred of consciousness and refused any special services, Tan Jincheng returned to the hotel and fell asleep immediately.

When Tan Jincheng woke up the next day, he sat on the bed and rubbed his head, which still ached a little.

"Damn it, I still can't go out alone next time. It's too dangerous. If I drink too much and something happens, it'll be a real problem." I was being a bit rash. Things are different now. When I go out, I'm dealing with deals worth tens or hundreds of millions. It's not safe to go out alone. It seems I need to change my mindset.

After washing up and having a quick breakfast, Tan Jincheng drove to Boneng Environmental Protection Appliances.

This time, Zhang Yunhua and Jin Chuanling were both present.

"Mr. Jin, Mr. Zhang, you guys were really unfair last night. Several of you got me drunk. Next time I come, I'll definitely bring a few more to get revenge."

"Haha, Mr. Tan, you're not right. How can you call it 'pouring wine'? It's more like 'a thousand cups are not enough when drinking with a bosom friend'."

"Forget it, it's a good thing I slipped up yesterday, otherwise I would have done something to betray my girlfriend. I absolutely can't let it happen again next time."

Jin Chuanling laughed and apologized while secretly complaining, "This kid is so slippery. I was originally planning to arrange some activities for him so that I would have more confidence in negotiating the price today, but he managed to slip away."

It looks like today's negotiations are going to be a bit tricky; we'll probably have to lower the price to meet his demands.

After a brief exchange of pleasantries, the two sides began formal negotiations. The main point of contention between them revolved around the 48V lead-acid battery, which would be used in two different car models. Because the purchase volume was relatively large, every penny of the battery affected the profits of both parties.

After a morning of debate, the two sides reached an agreement on a scheme where the discount for 60V was larger and the discount for 48V was smaller. The purchase price of 60V was reduced from 500 yuan per set to 460 yuan per set, a reduction of 8.69%.

而48V的则从之前的300元每套下调至285元，下调5.26%，两组电池的采购价格从之前的800元降至745元，下调幅度7.38%。

Tan Jincheng is quite satisfied with this reduction. In terms of battery procurement alone, FlashTech has reduced its procurement costs by at least 1100 million yuan in a year.

This is real cash saved up.

Of course, such a significant price reduction wouldn't come without any benefits; Tan Jincheng isn't the kind of protagonist in a wish-fulfillment novel who commands respect from all sides with a single command.

FlashTech will sign a five-year exclusive supply agreement for lead-acid batteries with Boneng Environmental Power. For the next five years, all batteries produced by FlashTech will be supplied by Boneng.

If Boneng's batteries need to be advertised, they may use the Flash and Windspeed brands free of charge. The specific use scenarios shall be negotiated by both parties in accordance with the authorization agreement. If it affects the brand image, FlashTech has the right to refuse unreasonably.

Another change is the payment period, which has been extended from 30 days to 45 days. This was negotiated by Tan Jincheng. With monthly purchase orders exceeding 1000 million yuan, this is no small sum. The extra half-month turnover period is beneficial for FlashTech.

There was no other way; the terms offered by Tan Jincheng were too good to pass up—a five-year exclusive supply agreement, which was extremely tempting for a battery manufacturer that was currently only of medium size.

It's important to know that the purchase of 20 sets is only the minimum purchase volume for FlashTech next year! After their production base goes into operation, the purchase volume will increase year by year. This is a large order totaling at least 7 million yuan over five years.

With this order, Boneng Environmental Power will transform from a medium-sized enterprise into a large enterprise, and will be able to invest more funds in research and development.

"Thank you, Mr. Tan, for your support of Boneng. Although the price reduction was quite aggressive, it was all voluntary on both sides, so I won't be pretentious about it. In short, I welcome Mr. Tan to visit Huzhou often in the future, and I will definitely do my best to entertain you."

During the negotiations, the two sides engaged in heated debate, but when the deal was finally finalized, Jin Chuanling was quite straightforward.

"Definitely, definitely. We also welcome Mr. Jin and Mr. Zhang to visit our Beicang next year. I'll be happy to extend my hospitality to them then," Tan Jincheng said with a smile, extending his hand.

"Alright, then it's settled. I'll be going now. Leave the rest to Lao Zhang. He can discuss the specific contract details with you." Jin Chuanling extended his large hand.

This person is quite straightforward; they really don't interfere with the business at all, and if they say they won't interfere, they just won't.

Of course, it's also possible that other industries might be involved in this situation.

"Okay, Mr. Jin, please go ahead with your business. Call me when you arrive at Beicang."

The details of the contract will be handled by the legal departments of both parties. There will be very detailed clauses on how to resolve issues such as battery quality. Tan Jincheng does not need to worry about this for the time being; he only needs to agree on the price.

Therefore, there was not much to discuss with Zhang Yunhua. After chatting for another half hour, the two notified the legal department to make some modifications to the contract details from the previous one. After both parties verified that there were no errors, the contract could be officially signed.

In the afternoon, after finishing his trip to Huzhou, Tan Jincheng headed to his next destination. With the battery deal settled, things became much easier.

Having learned a lesson from his trip to Huzhou, Tan Jincheng resolutely refused to participate in the second round of negotiations after dinner. It was better to be safe while he was out of town; it would be truly embarrassing if someone found something to use against him and reported him to the authorities.

(End of this chapter)