2003: Starting with Foreign Trade

Chapter 53 Expanding Production Capacity
Zhang Haiping was very happy after learning the purpose of Tan Jincheng's visit, as it meant another new order was coming in.

At the same time, there are some worries.

According to the lunar calendar, today is the 29th day of the 11th month, and tomorrow will be the 12th month.

The garment industry is filled with a large number of migrant workers. In small factories like Zhang Haiping's, apart from the owner and his family, everyone else is from out of town.

Every year around mid-December, these employees begin to return to their hometowns one after another.

Zhang Haiping, who has dealt with these employees for many years, knows that it is almost impossible to stop them from returning to their hometowns; at most, he can only ask them to go back a few days later.

But no matter what, if there are still five or six employees working in the factory around the 20th of the twelfth lunar month, which is around the 31st of this month, we should be thankful.

This is a problem faced by all small factories in the textile industry. The situation is even more serious in the factories in Huzhou. Some factories had almost all gone out of business by the beginning of the twelfth lunar month.

Migrant workers receive no social security benefits or year-end bonuses. Some more conscientious employers might give them some travel expenses, but only after they agree to return to work after the New Year.

Therefore, there is no stability involved. If you don't agree, I'll just leave. I'll find another factory to work for next year. Anyway, everyone's wages are about the same, so it doesn't matter where I go.

This order isn't large, but we'll need to hire a few temporary workers.

Temporary workers are not difficult to recruit. Some factories have limited orders, and due to the special nature of the year-end, they will give people holidays early. Some people who do not want to go home so early will work as temporary workers for a few days.

However, the wages for temporary workers at this time are different from usual, and are at least 30% higher.

"Boss Tan, you've really put me in a difficult position. It's almost Chinese New Year, why are you still taking orders?" Zhang Haiping shook his head and smiled wryly.

Tan Jincheng looked at Zhang Haiping and smiled, "There's still a month until the New Year; besides, foreigners don't celebrate the New Year. If I don't accept your invitations tomorrow, neither will you."

Having run a clothing business for several months, how could Tan Jincheng not know these things? But what does it have to do with him?

Tan Jincheng deliberately accepted this order. The actual construction period was much longer than he had told Zhang Haiping. Tan Jincheng wanted to use this order to test Zhang Haiping's attitude.

If you still follow the previous rules, then we can continue our cooperation next year, expand our scale, and even open a new factory. It's not out of the question that Jinpeng Trading could invest in us.

But if you're unwilling to pay the extra cost of temporary workers and don't want to take this order, then find someone else tomorrow and partner with a medium-sized contract manufacturer.

"Hey, foreigners don't celebrate the New Year, but we do. Workers need to go home, so there's a significant loss of workers at this time of year, and we have to pay extra to hire temporary workers."

"Mr. Zhang, you need to think about it differently. Think about it, you still have so many orders during the Chinese New Year. When your employees see how busy their boss is, they will definitely choose your company first next year, right?"

"That's true, but the end of the year is also a time when money is tight. I still need to pay the fabric supplier. Mr. Tan, do you think you could raise the price for this order?"

"Haha, Mr. Zhang, you must be joking. Raising the price is definitely not an option."

After a pause, Tan Jincheng continued, "However, I understand the difficulties you mentioned. How about this, I can give you a 50% prepayment for this order, what do you think?"

Zhang Haiping was extremely conflicted. He understood that the dynamics of their collaboration had shifted, with Tan Jincheng now clearly in a position of power, and his talk of raising the price was merely a test.

However, business is always negotiated; how will you know if you don't try?

"How about we add two cents to each garment, as a New Year's Eve dinner for these mechanics, Mr. Tan?" "No way, there's no such rule. The price is what we agree on."

Why should I treat your employees to New Year's Eve dinner? Small factory owners are stingy with their employees and unwilling to spend any money on them.

Seeing that Tan Jincheng had no room for negotiation, Zhang Haiping had no choice but to give up. Fortunately, the prepayment was raised to 50%, which was still good.

"Could the advance payment be increased by another 10%? That way I'll have more money on hand and be able to hire a few more temporary workers," Zhang Haiping tentatively suggested.

Tan Jincheng looked at Zhang Haiping speechlessly, and Zhang Haiping also gave an awkward smile. This request was indeed a bit outrageous.

However, business people are thick-skinned, and once they've said it, they naturally won't take it back.

"Alright, alright, 60% is fine. We've been working together for months, there's no point in arguing about this. Just finish on time."

Tan Jincheng smiled wryly, "Just agree to this old man's request, otherwise we won't be able to negotiate anything further."

As for paying an extra 10% prepayment, it's not exactly breaking the rules. There aren't many rules when doing business with small factory owners; you can choose not to pay a single penny in advance or pay the full amount upfront.

But raising prices is definitely not an option.

This deal has a good profit margin. Even if we pay Zhang Haiping in full and James then backs out, Jinpeng Trading won't lose much.

Moreover, there are Taobao shops where you can gradually sell your products. Since Alipay was launched, the business of Taobao shops has been getting better and better every day.

In addition to the upgrade of the store itself, it also benefits from Lao Matou's promotional efforts for the entire website. Recently, Taobao's promotion has been surging, reaching an ever-growing audience.

Products that are bypassed by other customers are not necessarily unsellable. If another customer takes a liking to them, they can still be sold. If the order volume is not large, the overall risk is actually very small.

"Haha, Mr. Tan is so straightforward. It's so comfortable doing business with young people like you, so efficient and decisive," Zhang Haiping said with a happy laugh.

To be honest, he only mentioned it tentatively, but he didn't expect Tan Jincheng to actually agree. This was naturally a good thing, as an extra 10% prepayment would greatly reduce his pressure during the Chinese New Year.

"Mr. Zhang, you need to change your mindset. You don't want to be a small business owner your whole life, do you?"

"What does Boss Tan mean by that?"

"Now that there are more orders, you could try to expand production capacity a bit. You should also share some of the profits from the orders you've outsourced these past two months, right?"

"Another point is that you are exploiting your workers too much. The workers have no sense of belonging. You have to replace a batch of new employees every year, which leads to inconsistent quality, and this also has a significant impact."

What Tan Jincheng said are actually common problems in small factories across the country. Most of these small business owners don't have much experience; they started a factory with a lot of drive and just happened to catch the wave of the times.

Those that were losing money have naturally been eliminated, and most of those that remain are unambitious. Ten or even twenty years later, the scale of the factories remains the same, and the way they treat workers is still the same as it was many years ago, without any change.

The reason they were able to make money was largely due to the benefits bestowed upon them by the times.

(End of this chapter)