2003: Starting with Foreign Trade

Chapter 54 Annual Revenue Forecast
Located in the northeastern corner of Ningbo City, Beicang District is roughly the size of a certain Southeast Asian country. It is famous for Beicang Port, and relying on its high-quality port resources, Beicang District's manufacturing industry has developed rapidly.

The industrial chain is very complete. All aspects of a product, from sample to design, production and delivery, can be completed within the region, which is dotted with factories of all sizes.

Textiles and garments, plastic presses, molds, stationery, and port logistics are all advantageous industries in Beicang District.

Over the past few months, Tan Jincheng has gotten to know some business owners of all sizes and visited factories in different industries. Some of them are in the clothing and textile industry, which is his current main business, while others are in the machinery processing and mold manufacturing industry, which is mainly based on auto parts, as introduced by Cheng Yongjun.

Through observation, it was found that factory workers, especially assembly line workers, are generally paid below the average wage level. If they want to earn more money, there is no other way but to work endless overtime.

Larger factories will provide meals and accommodation as a benefit to attract workers, but the food and accommodation conditions are very basic, or even very poor.

Smaller factories, which cannot provide meals and accommodation, will attract workers by paying slightly higher wages.

Take Zhang Haiping's garment factory as an example. They calculate wages based on piecework, which means the more you get off work, the more you earn. As a result, the workers generally work very long hours, starting at 7:30 in the morning and finishing as early as 9:00 in the evening.

When they are busy, they may work until 10 p.m. and they don't get much rest at noon. The low-rise bungalows and illegally built rental houses near the factory are their homes.

The extremely long working hours did not bring them much income; their monthly income was always below 5000 yuan.

Zhang Xupeng found out all of this; the piece-rate system seems to mean that the longer you work, the higher your income, but that's not actually the case. When you exceed a certain quantity, the boss will find a way to lower the price.

Young people in later generations often mention involution, but little do they know that involution exists in every era.

If workers are exploited too much, their job stability will naturally be low. In Zhang Haiping's garment factory, those who have worked for more than two years are considered veteran employees, and they basically work for a year and then move to another place.

If the workforce is unstable, the quality will also be unstable, making it more difficult to expand the scale.

This is also why Tan Jincheng suggested that Zhang Haiping improve employee benefits. He didn't expect a huge increase, but at least a slight improvement in humaneness. He also suggested that, when there are sufficient orders, the unit price of the clothes should not be deliberately lowered.

If Zhang Haiping wants to secure large export orders, his current operating model is definitely not viable. Fortunately, the foreign trade industry has only been booming for a few years, and everyone is not operating according to regulations, which foreigners generally accept.

In the future, when competition is fierce, various factory audits and qualifications will be required, and worker treatment will also be a test point. If you don't pass, you will be directly rejected.

“I know all that Mr. Tan is saying, but increasing production capacity and improving workers’ wages are not easy; they all require money.”

"Investment is definitely necessary. There's no industry that doesn't require investment. In addition, competition will definitely become more and more intense in the future, so quality must be stable. If the defect rate is too high, you will also suffer losses."

“I understand what Boss Tan is saying, I’ll think about it; but it’s definitely not going to happen this year, and any expansion will have to wait until after the new year.”

"I understand. For things like machines, you could consider some second-hand machines, which would reduce the investment significantly. As for labor, I still suggest you improve the compensation. You should at least provide lunch, which would improve the morale of the employees. Also, you could give them some travel expenses to go home, and a few hundred yuan bonus when they come back the following year."

There's no shortage of workers anywhere now, so it's easy to recruit them. But that won't be the case in the future. When labor is scarce, a factory's reputation will become extremely important.

In his previous life, Tan Jincheng had heard a human resources manager from a factory say that when their factory went to recruit workers, they didn't dare to give their own factory name, but only their address to lure people over.

Because of its bad reputation, the factory is now notorious throughout the region. Workers with even a little knowledge of the factory will refuse to hire anyone who mentions its name, making it incredibly difficult to recruit people.

Tan Jincheng also didn't want his contract manufacturers and suppliers to have this kind of reputation in the future. The two chatted for a while longer. After all, Tan Jincheng had done business in his previous life. Although he had never managed such small factories, he had seen and heard of quite a few, and he also knew some of the more advanced management experience from his previous life.

After some persuasion, Zhang Haiping, who already had plans to expand production capacity, was also tempted.

Seeing this, Tan Jincheng decided to reassure Zhang Haiping: "Mr. Zhang, I can't guarantee anything else next year, but I can guarantee 40 orders per month, and 500 million orders for the whole year."

For the past three months, Tan Jincheng has focused his energy on maintaining clients. He has contacted each of the business cards he collected at the Canton Fair. Currently, in addition to James, who placed the first order and has become a stable partner, there are three other clients with long-term cooperation intentions.

The four potential long-term partners are from the United States and Northern Europe, regions known for their high profit margins and low risk.

There's another client I'm in talks with. If we can close the deal, they could become a long-term, stable customer base. Tan Jincheng has no shortage of nationalistic sentiments, but he doesn't feel any psychological burden about earning money from Xiao Rizi (a popular online platform for making money).

With four or five stable customers, we will make another push at the Canton Fair in March to further expand our stable customer base and strive to achieve an export volume of 200 million US dollars for the whole year, aiming for 500 million US dollars.

This target is not aggressive for Jinpeng Trading's current momentum; on the contrary, it is somewhat conservative. James once said that if Tan's production capacity can keep up, he can place orders worth $10 every month.

In an era of rapid growth across the entire industry, it is common for a company that has already established itself to achieve annual revenue growth of over 100%.

The annual reports of A-share listed companies often show revenue growth of 100% to 300%, which basically occurred during the industry's boom period. If others can do it, Jinpeng Trading can do it too.

Just as James painted a rosy picture for Tan Jincheng, Tan Jincheng similarly painted a rosy picture for Zhang Haiping.

A single customer's annual order guarantee of nearly 500 million yuan is an irresistible temptation, even if it's just a verbal promise.

"No problem, I'll start preparing right after the New Year and make sure I don't miss Boss Tan's order."

"Okay, that's all for today. I'll head back now."

"It's Sunday today, and there's nothing much going on. Mr. Tan, why don't you have dinner before you leave? I'll make some arrangements tonight and invite a few friends over."

It's not even three o'clock yet, what's the point of having dinner? But this old guy's attitude is getting better every day; he hasn't called me Xiao Tan lately.

"Next time, I'll treat you. I have some things to do today."

"Alright then, let's get together again next time. I will seriously consider what Boss Tan said, you can rest assured about that."

“I trust Mr. Zhang. Besides, we might have a better way to cooperate, such as jointly opening a new factory. Mr. Zhang can consider it.”

Completely transferring the risk seems unrealistic. These small business owners are very shrewd. They sign agreements with suppliers by investing in their products and independently open a new factory, which makes the supply system safer and more stable.

The words left behind by Tan Jincheng made Zhang Haiping ponder deeply, and at the same time opened up some new ideas for him.

(End of this chapter)