Leicester, a sales representative of the old American engineering machinery company, stood in his exhibition area with a gloomy face. On this day, there were dozens of customers who came to the exhibition area to ask about electric wheel dump trucks, but so far he has not achieved a sales intention. Except for some customers who feel that the performance of the product cannot meet their requirements in some aspects, the rest of the customers who account for about 70% of them raised a question to him:

Why are your dump trucks so expensive?

expensive?

Leicester initially felt that this problem was incomprehensible. Electric wheel dump trucks are the main product of Haifei Company, and the pricing has not changed much for more than 20 years. For example, the 185-ton dump truck they brought this time was US$2.1 million, which is only 5% higher than three years ago. You should know that the inflation rate in the past three years is more than 5%, right?

There are not many manufacturers in the world that can produce dump trucks, and even fewer ones produce electric wheel dump trucks. Haifei is the leader in this industry, and its product pricing has also directly affected the pricing of other similar manufacturers. For example, the 180-ton electric wheel dump truck produced by German Pumai Company is priced at US$1.98 million, which is not much different from Haifei Company's pricing. Almost all of this type of dump truck with a large load capacity are used in open-pit mines, with a very stable customer base and everyone is very familiar with the price of the product.

In the past, customers also complained about the problem of the product being too expensive, but it was just a bargaining strategy, not really giving up buying because of the high price. But this time, Leicester could feel that the customer’s complaints were real, and the price he quoted did discourage the customer.

"What price do you think is acceptable?"

After hearing several customers express their opinions that the price is too expensive, Lester finally couldn't help but pull a customer he was familiar with to inquire.

"I think it should be around $600,000, which is more appropriate," the client said stammeringly.

"600,000!" Leicester suddenly exploded, although as a salesperson, his temper has always been very good.

"Rosen, what are you kidding? Where have you seen a dump truck worth 600,000 yuan each?" Lester shouted to the other party angrily.

"It's in this showroom." The client named Rosen replied seriously.

"$600,000 per unit?"

“To be precise, it’s $480,000 per unit.”

"I know, it's a 25-ton dump truck made by the Japanese, right?" Lester said disdainfully. The Japanese like to make something small and exquisite, just like the walkman and cars they make. Americans have always liked to do big things. Compared with the 25-ton dump truck, the 185-ton dump truck is not only much larger in size, but also much more technically difficult. How can the prices of the two be compared?

Rosen shook his head and said, "No, it's the 175-ton dump truck brought by the Chinese. Although the load capacity is 10 tons less than your car, their price is only $480,000."

"So it's Chinese!" Sparks burst out in Lester's eyes. He finally knew who was unable to get along with him.

More than ten years ago, Haifei Company received an order from China, which was 40 150-ton electric wheel dump trucks purchased by the Chinese government for an open-pit mine. Unlike other buyers, the Chinese government proposed that this purchase needs to be linked to technology transfer. While Haifei Company sold these dump trucks to China, it needed to transfer the manufacturing technology of the dump trucks to a Chinese company called Luoqiu Metallurgical Machinery Factory.

When he heard the Chinese demand at first, Haifei Company was naturally unwilling to agree. But the Chinese government insisted that if Haifei Company was unwilling to transfer technology, China would rather choose to produce these dump trucks by itself. Haifei Company sent technicians to China for inspection and found that the company named Luoye had indeed built an electric wheel dump truck with a load of 120 tons, and it has been finalized through industrial experiments. Although the car was full of flaws from design to process and was completely different from Haifei Company's technology, Haifei Company still smelled some dangerous smell from it, that is, China has the ability to improve its own technology. If they really handed over the order of 40 cars to Luoye to complete, Luoye might be able to accumulate experience in the process of manufacturing these products and achieve technological breakthroughs.

At this time, the United States was in an economic crisis, and Haifei Company urgently needed to get this order to alleviate its financial difficulties. Therefore, the senior management of Haifei Company decided to accept China's request with reservations and transfer some dump truck technology to China, and keep the most core technologies in hand as a weight to continue trading with China in the future.

During that cooperation, China directly imported 20 dump trucks from Haifei Company, and the other 20 were jointly manufactured by Haifei Company and Luoye, and in the process, it provided technical training, patent authorization and other support to China.

After that, China ordered several batches of dump trucks from Haifei Company, and each time part of them was handed over to Luoye for production. Haifei Company initially provided Luoye with several key components, which accounted for 30% to 40% of the total cost of dump trucks. Later, the number of parts that needed to be purchased during Luoye's dump truck manufacturing process gradually decreased, from 30% to less than 10%. Even Chengdu is no longer necessary because Luoye has been able to produce roughly similar substitutes.

Realizing that the Chinese have mastered the production technology of 150-ton electric wheel dump trucks, they will then put aside themselves and manufacture such high-value-added equipment by themselves, Haifei Company decided to recite a tight curse for Luo Ye on intellectual property rights. Luo Ye used the drawings provided by Haifei Company. Even if it was produced by itself, he would need to apply for a manufacturing license from Haifei Company and pay an authorization fee. The authorization fee was insignificant compared with the profits of the whole vehicle and even the interests of key components. When he found that Luo Ye was able to produce 150-ton dump trucks by himself, Haifei Company immediately announced that it would terminate its cooperation with Luo Ye and no longer issue a manufacturing license to Luo Ye.

Of course, Haifei Company did not say anything. The condition it issued to Luoye was that if it wanted to continue to obtain a manufacturing license, the authorization fee for each car would increase to US$200,000, which almost took away all of Luoye's profits.

According to Haifei Company's idea, facing this condition, China either obediently paid the authorization fee, which was equivalent to working for Haifei Company for free, or chose to buy Haifei Company's products directly. Perhaps the price could be cheaper than Luo Ye's own manufacturing.

Unexpectedly, China's choice was to get rid of Haifei Company and start a new job. Luo Ye abandoned the drawings of the 150-ton dump truck obtained from Haifei Company and developed a 175-ton dump truck by himself. Among them, it cleverly bypassed Haifei Company's patents and made it a dump truck with Luo Ye with all its independent intellectual property rights.

How difficult is it to develop a new dump truck by China? Leicester once learned from colleagues in the company's technical department. Because Haifei Company controlled some key technologies and did not transfer them to Luoye, if Luoye wants to develop his own dump truck, he must first overcome these key technologies, and then propose new technologies that are different from Haifei Company's existing patents to bypass patent barriers.

Haifei Company originally thought that Luo Ye did not have such ability. In fact, one of its purpose of transferring technology to Luo Ye was to make Luo Ye accustomed to "taking a wise man", thus wasting its own R&D capabilities. Haifei Company did not expect that Luo Ye did not give up its own R&D just because he obtained the transfer technology. It just saved time to explore in the dark and shortened the technical gap with Haifei Company.

In just two or three years, Luo Ye took out his 175-ton dump truck product and completed industrial experiments. The open-pit mine where Luo Ye was doing industrial experiments happened to have a batch of dump trucks purchased from Haifei Company, so some technicians from Haifei Company often went to repair and maintain. These technicians saw Luo Ye's new products in the mine and made an evaluation based on the observed situation. They believed that Luo Ye's new product has reliable performance and no technical level has a generation difference with Haifei Company. At best, it is a slight difference in fuel consumption, fault-free working time, noise, etc.

After the industrial experiment of the 175-ton dump truck in Luoye completed its industrial experiment, China no longer purchased the dump trucks of Haifei, which made Haifei lose a market. However, Haifei was not alone in hanging on this tree. There are a large number of open-pit mines in South America, Australia, Africa and other places. These open-pit mines are traditional customers of Haifei, and the annual orders are enough to maintain the survival of Haifei.

What Leicester never expected was that after the Chinese realized the import replacement, they could not wait to enter the international market. They brought their own 175-ton dump truck and set a low price of only $480,000, which was clearly a price of $480,000 to disrupt the situation. For Haifei's dump truck, it was just enough. If we consider the sales cost, after-sales service cost, management cost, etc., this price was completely lost. Leicester does not believe that the cost of Chinese artificial dump trucks can be much lower than that of Haifei. quoting such a low price is simply a loss of money. What is the picture?

"Old friend, believe me, Chinese products are simply unreliable. Maybe the day after you buy them back, they will all break down." Lester said to Rosen.
Chapter completed!