125: Chapter 125 Supply Chain Negotiation: The Dragon-Slaying Saber

"If we pour 280 billion into this, and 3G rates drop from several dozen yuan per month to around 20 yuan, how many more people do you think will be able to afford it?"

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"That 100 million is still a conservative estimate."

No one refuted him.

Shen Fei looked at the people present.

"Last year, just relying on the Huawei Mate series and the honor play series in the domestic market, we captured 9.5 million in sales volume.

Transsion's total overseas sales volume was 32 million units, with 7.4 million units being Smartphones. Next year, our goal is a cumulative global shipment volume of 70 million units.

Does everyone have confidence?"

"Yes!"

Although the target number was huge, 2009 was only a preparatory year; 2010 would be the year of fruition, so achieving this sales volume was absolutely no problem.

After everyone discussed it, Shen Fei began assigning tasks.

"Finalizing next year's procurement plan is the last task before the new year. Liu Fang, you're under a bit of pressure.

If you handle it well, your bonuses at the annual meeting will be substantial."

Liu Fang stood up, revealing a sharp gaze.

Ever since she suffered a loss regarding batteries, she immediately changed her working style. She would slash the price of every component, so she earned a new nickname in the industry: Liu the Blade.

"According to the sales plan you assigned, Boss, the total procurement budget for mobile phone components this year is approximately 15 billion.

Screens and cameras account for about 40% of that."

Shen Fei looked at her: "What you need to do is cut another 10% off this 40% cost."

Liu Fang did not hesitate: "Understood."

How to cut it was the question.

Liu Fang walked to the projector and pulled up a table:

"Last year, our scattered procurement added up to tens of millions in orders. Although the price was adjusted downwards later on, the overall price was just the industry average; we didn't receive any special treatment."

"This year is different.

The goal of 70 million Smartphones means we need to purchase at least 100 million cameras and 70 million screens.

We can design chips ourselves, but since production capacity or specific models won't be up to speed in the short term, we still need to purchase a large batch. This volume is enough to make suppliers voluntarily lower their prices."

Shen Fei nodded: "So, what is your first stop?"

"Japan, Sony.

After finishing the negotiation, I'll drop by Sharp to kill two birds with one stone..."

... January 20th, Tokyo, Sony Headquarters.

Under the arrangements of Sony's reception staff, Liu Fang arrived at Sony Headquarters 20 minutes early.

Through the car window, she could see the huge logo on the technology building, as well as the enthusiastic reception staff in front of the door.

After all, they had communicated beforehand; this year's procurement budget was based on a total sales volume of 70 million units.

Although Transsion liked to cooperate with partners they knew well, everything still depended on price... After all, it wasn't as if Liu Fang had never changed suppliers before.

After getting out of the car, the person receiving her was the same Japanese section chief from last year, surnamed Tanaka, in his 40s. He held his chin slightly high, but this time, there wasn't the slightest hint of arrogance to be seen.

"Liu-san, we meet again." Tanaka Hideaki reached out his hand, his grip very light, fearing he might offend this major client.

Liu Fang shook his hand, feeling a bit surprised.

It wasn't her first time at Sony. Last year, in order to purchase camera modules, she had come three times. From initially not even being allowed into the conference room and having to humbly beg for goods, to later negotiating prices in the conference room...

However, the initiative was different this time; they didn't have the slightest chance and could only agree to her demands.

"Section Chief Tanaka, sorry to trouble you this time."

Tanaka led her to a conference room, which was a bit larger and much more luxurious than the last one.

The coffee on the table had also been changed to freshly ground coffee... The level of importance attached to her had clearly increased.

"Liu-san, please wait a moment.

I am not in charge today. This negotiation will be personally conducted with you by Mr. Kumagai, Senior Vice President of Sony Group and Minister of Core Device Development.

Including but not limited to price, delivery cycle, product specifications... everything can be discussed. You are Sony's most important guest today."

Liu Fang nodded. A change of personnel was just right; she didn't like the look of that guy anyway...

A guy who looked down on people.

In less than 5 minutes, Kumagai Osamu arrived at the conference room.

"Sorry to have kept you waiting, Liu-san.

I will definitely apologize to you later."

Facing his invitation to shake hands, Liu Fang did not stand up. She took a document out of her bag and handed it over.

Transsion 2010 Camera Procurement Plan.

Kumagai Osamu took it, opened the first page, and the expression on his face changed from initial politeness to surprise, and very quickly, to regret.

He shouldn't have gone to receive Lei Jun first because of personal connections; now, the initiative was completely lost.

15 million units of 5-megapixel; 25 million units of 8-megapixel; 40 million units of 2-megapixel; 60 million units of 1-megapixel.

Below that were 30 million units of 0.5-megapixel lenses.

A total of 170 million units.

"So many?" Kumagai Osamu's eyes were filled with shock. This massive order was enough to make them their biggest client this year. Inadvertently, his voice grew much louder.

Liu Fang nodded.

"170 million units, with a total amount of approximately 400 million USD."

Kumagai Osamu forced a smile. With so many sensors, normally it would be at least 650 million USD, equivalent to about 4 billion yuan. And this was before they had even started?

She had directly slashed off 1/3.

Liu the Blade truly lived up to her reputation.

Kumagai Osamu closed the document, opened it again, and read it once more. He looked up, his attitude clearly having changed.

Dami Company could not be deeply engaged with; he couldn't let a small matter ruin a big one.

He took the initiative to place the coffee cup handed over by a staff member on the side in front of Liu Fang: "Liu-san, please drink."

... The formal negotiation started at 2 PM and lasted until 7 PM.

Kumagai Osamu initially tried to maintain Sony's dignity.

"Liu-san, Sony's camera modules are the best in the world. Our prices have always been very stable: 12 USD for a 5-megapixel lens module, 22 USD for an 8-megapixel one.

These are normal industry levels."

Liu Fang didn't speak; she took another document out of her bag.

"This is the price quote Samsung gave a certain client in China last year."

Kumagai Osamu took it and glanced at it; his expression changed slightly: "We cannot comment on Samsung's prices.

I can only say that you get what you pay for; cheap prices will eventually result in losses in terms of adaptation."

"Then I'll switch to another one." Liu Fang took out another one. "This is the price quote OmniVision gave Huawei.

6.5 USD for 5-megapixel, and that's not even their super-major client price."

Kumagai Osamu fell silent...

But Liu Fang was truly outrageous; she had slashed the 5-megapixel lens to 4.5 USD and the 8-megapixel one to 8 USD... it was more than a halving.

This price was very close to their cost line.

"Mr. Kumagai," Liu Fang's voice didn't have any sense of urgency, "Sony's technology is indeed good, but good technology needs a good price. Last year, we bought your 5-megapixel lenses for 13 USD each, which was 8.3% more expensive than the average price, but I accepted it because our volume was small at the time and we weren't qualified to negotiate prices."

She leaned back.

"This year is different. A volume of 170 million units—yes, for any company, this is a massive order. Can Sony handle it?"