36: Red Star Standard

On the way back, Lei Jun kept wondering what Chen Chen meant by telling him so much.

And that so-called alliance—what was he trying to express?

He shook his head, shaking off those unrealistic thoughts, and began to ponder the 863 program.

In fact, even without this program, Lei Jun had planned to launch a hundred-yuan phone with decent performance.

The reason was simple: the market had suffered from knock-off phones for too long.

Of course, that was just the official rhetoric. Things like cutting off the survival space for knock-offs or driving progress across the entire industry chain.

Those were all empty words.

The real reason was only one: China's current income and consumption levels were not enough to support a mid-range market of tens or hundreds of millions. If ordinary people wanted to buy a smartphone, they still had to look at the price.

After all, such was the state of affairs in China; the economy was in a stage of preparing to take off, which meant it hadn't actually taken flight yet.

Only cheap hundred-yuan phones could achieve large-scale shipments, thereby seizing the market and capturing users.

As for once you had the users, well, then you could do whatever you wanted.

Lei Jun had already thought of the name for the hundred-yuan series: Redmi.

It meant 'Red Rice'.

We're a manufacturer with a 'red' background now too!

After returning to the company, Lei Jun immediately convened an executive meeting.

Lin Bing, Hong Feng, and the others looked at Lei Jun's serious expression, curiosity flashing in their eyes.

With the development of Xiaomi over the past year or so, it had been a long time since Lei Jun had shown such an expression.

"President Lei, did the talks with Red Star not go well today?"

Dr. Zou asked cautiously. He was responsible for hardware development and had the deepest understanding of this new type-c interface.

"Red Star agreed to authorize us to use the type-c interface, and for free."

"Free?"

"When did Red Star become so easy to talk to?"

Several co-founders were very curious.

"Are there no other strings attached?"

"None. It's completely free. Chen Chen plans to establish a Type-C Interface Alliance. Any manufacturer that joins this alliance can use the interface with a free license."

They were all amazed; Red Star's ambition was not small at all.

As the saying goes: third-rate companies make products, second-rate companies make brands, and first-rate manufacturers make standards.

This little Type-C alliance plan of Red Star's showed their ambition to set the standards.

"By joining this alliance and using the type-c interface, our chargers must be compatible with their charging protocol in the future. I believe mutual compatibility is beneficial for us domestic Chinese manufacturers, so I decided to be the first to join."

The group thought about it and felt Lei Jun was right; perhaps this standard interface and charging protocol could be pushed to the rest of the world by Chinese manufacturers together.

After a pause, Lei Jun continued:

"Since the first sale of the red star 2, our mi 2 hasn't been too affected. However, I always feel Chen Chen is carrying out a grand plan. Therefore, I've decided that our mi 2 will be open for purchase once a week, and after one month, we will move to in-stock sales."

"I'm worried that if we keep doing hunger marketing, users will really choose Red Star."

"President Lei, I admit Red Star's phones are indeed well-made, but they don't have stock right now either. Should we reconsider? In my original plan, the mi 2 wasn't supposed to be fully open for purchase until December."

Li Wanqiang, who was in charge of marketing, stared at Lei Jun and spoke his mind.

In truth, Li Wanqiang was too focused on marketing and thus ignored the production capacities of the two different manufacturers. With Xiaomi's current capacity, just as Lei Jun said, they could basically complete the production ramp-up within a month and be ready for open purchase at any time.

But Red Star was different. Red Star had decades of cooperation with several foundries. Currently, BYD, Foxconn, and Red Star were all major clients for them. If they wanted to explode production, they could do it at any time. Their production ramp-up stage was very short; it wouldn't even take a month from release to the end of the ramp-up.

If Red Star finished its production ramp-up and started open sales while Xiaomi was still doing hunger marketing, users who couldn't get a Xiaomi would definitely switch to Red Star.

After all, the user profiles of the two companies overlapped.

While Xiaomi was still worried about Red Star stealing their users and online market share—no, it should be total market share, not just online.

Because right now, Xiaomi had no offline presence at all.

Offline, there were only Scalpers selling at marked-up prices.

More than 20 distributors across the country were Red Star's only remaining offline channels. Back when Old Man Chen was around, Red Star didn't have its own exclusive stores either; they mostly cooperated with offline store distributors and carrier outlets.

During the year of chaos, Red Star's products were weak. Furthermore, the two machines Chen Chen launched after taking charge were both online cost-effective models. Distributors didn't have enough profit margins, so naturally, they wouldn't pay you any mind.

Fortunately, the Kunpeng mobile phone this time was positioned as a high-end flagship. With a relatively higher price, it left enough profit for the offline channels.

The 20-odd remaining distributors were not large local distributors, but Chen Chen was already very satisfied with this result.

This time, Chen Chen allocated 200,000 red star 2 units and 100,000 Kunpeng mobile phones specifically for offline. If you did the math, it was only a few thousand units per distributor.

Although these distributors were not large provincial-level agents, they had many small distributors under them and were fully capable of absorbing this stock.

For a high-end model like the Kunpeng mobile phone, although it could sell in the offline market, it would definitely not be the most popular model. A single store wouldn't stock too many; three or four units would be the limit.

With a total of 300,000 units of red star 2 and Kunpeng mobile phones, these distributors didn't have much to complain about; their only concern was the price.

Cost-effective models didn't make money; they were just for attracting customer traffic. These distributors knew that.

"What price can President Chen give us for the red star 2?"

Looking at the impatient distributors, Chen Chen didn't keep them in suspense and directly stated the supply price for the red star 2.

"1840."

Hearing this price, the distributors frowned. Red Star wouldn't allow them to mark up the price, so the profit per machine was less than 200, which was simply too low.

"What about the Kunpeng mobile phone? Its starting price is over 3,000; it can't possibly have such a high cost price, right?"

Chen Chen looked at the way these distributors were staring intently at him, knowing they definitely thought the red star 2 had no profit margin.

For a 2,000 yuan phone, a profit of less than 10% was too low for offline sales.