164: Chapter 164 New Fruit Purchase Agreement

Two or three minutes later, Shen Fei replied, "Good. I leave the Africa market to you; I trust you."

Mr. Adebayo looked at that line of text, feeling very excited.

This was his boss's trust in him, and he absolutely could not let that trust down.

...

April 30th, Beijing, China Unicom Headquarters.

In the conference room, the China Unicom team remained unyielding, even though they were facing Apple's global vice president and four top-tier negotiation experts.

This was the two sides' third negotiation; the previous two had broken down.

The first time, Apple demanded that China Unicom underwrite 6 million units at a unit price of 3999. Having learned from the previous failure, China Unicom decisively refused.

The second time, Apple lowered the price to 3899 and the underwriting quantity to 4 million units, but China Unicom still shook their heads.

Today was the third time, and also the last. The advantage was on their side this time.

Apple's global vice president's tone finally softened significantly. "Friends from China Unicom, considering the results of our previous two negotiations, before coming here this time, we reported on the issues from the first two rounds. After deliberation by the board of directors, we have brought a new proposal. This way, your side won't have to worry about inventory backlog or financial losses, and thus won't have to bear the corresponding responsibilities."

He opened the contract.

"This time, we have upgraded it to a consignment contract. China Unicom does not need to purchase the stock; you only need to provide the channels. For every unit sold, China Unicom will take a 15% commission. Settlement will be monthly."

Manager Li Teng of the China Unicom Marketing Department didn't react immediately and subconsciously looked at the people around him.

He hadn't expected Apple to surrender so quickly and with such sincerity.

This proposal could be called zero-risk; it was practically handing over money. It seemed their expectations for the China market were indeed very high.

"15%?"

"Yes." Apple's vice president answered affirmatively. "We have also set the retail price for the iphone 4 at 4999 yuan."

"For every unit sold, China Unicom can get at least 750 yuan, and for higher memory versions, it could even reach 1000 yuan."

Manager Li Teng and the others looked at each other. This proposal was much safer than underwriting.

If they didn't sell, China Unicom wouldn't lose anything; if they did sell, they would get a commission. The sincerity was indeed there.

"What about contract phones? China Unicom's contract phone business has always had good sales."

The vice president said, "Our sales contract is essentially a contract, so of course it can continue to be implemented.

However, the subsidy funds must be borne by China Unicom itself; we will not bear the responsibility for sales.

No matter how your side sells it or at what price you sell it, we will collect 75% of the funds based on the starting price of the corresponding memory."

Halfway through the negotiations, the China Unicom team went out for a short meeting.

Manager Li Teng of the Marketing Department reported to Wang Jianzhou, "Mr. Wang, Apple is really anxious this time."

"It might be the Transsion S2, the MateS, and the upcoming Mate2 that have made them feel immense pressure. They are afraid of the iphone 4 being surpassed. We could say we owe them a favor," another vice president said.

But Manager Li Teng confidently said, "Owe a favor for what? It's clearly because the previous generation iphone 3gs caused us huge losses, and the first two negotiations didn't make any progress, so they got nervous.

This is all our credit; what does it have to do with Transsion?" "Right!"

That vice president ignored their claim to credit; he was considering the price.

A 15% commission was indeed much safer compared to the previous generation's 3999 underwriting price, but the profit was also significantly less.

"Old Li, what do you think?" Wang Jianzhou asked.

Li Jian frowned slightly and finally said, "I'm considering whether we should ask for more. A 15% ratio is still too little; I feel we could push it to 20%.

Judging from Manager Li Teng's account, they should compromise in order to open up the China market as soon as possible.

We have three years of exclusivity; if we drag this out, Apple will only lose more."

Wang Jianzhou nodded; this was indeed a good plan...

"We can try. But I think we shouldn't go too far. Apple is Apple after all; the brand is there. The failure of the previous generation was mainly due to the WiFi issue.

This generation should sell much better. You know the current situation of our country."

Li Jian nodded. This sounded harsh, but it was reality.

Just like how the Transsion S2 can only sell for 3999 domestically; if it were released under the Motorola brand, selling it for 4999 or over 5000 would not be a problem at all. This is the importance of branding.

"Hmm, you in the Marketing Department work hard. I have prepared a victory banquet for you, hoping to get good news," Wang Jianzhou said.

At this moment, he was also a bit hesitant in his heart.

Whether to bet on the Chuan Yin Group like the other two companies, or to continue holding onto the Apple brand, playing both sides—he couldn't clearly explain his own heart.

But he had to make this choice and not regret it; regardless of success or failure, he had already begun to act.

...

Returning to the conference room, the Marketing Department director spoke up.

"Respected Vice President, we feel that a 15% commission is too little. This amount of money is simply not enough for us to recover the costs of the previous generation.

Moreover, by promoting you as our main product, we will be affected to a certain extent."

Apple's vice president frowned slightly; these people were too greedy.

But he remembered the notice issued by Cook: an agreement must be reached by the end of April, and there wasn't much time left.

"How much do you want?"

"25%."

The vice president shook his head.

"Impossible. Apple's channel commissions globally do not exceed 20%."

The Marketing Department manager smiled: "Mr. Vice President, that's in Europe and America."

Carriers can sell mobile phones, but other convenience stores can sell them too.

But in China, the situation is different. Besides us, you can only find other agents, and the profits they would want would be even more than this. They are even greedier."

He hesitated for a moment, but still threw some shade at the other party.

"You know well how the iphone 3gs sold in China.

No WiFi, inaccurate navigation, difficult-to-use input method. Customers said they regretted buying it; the return rate was not a small number."

He stared at the other person: "Although the iphone 4 has been improved, it's still unknown whether users will buy it.

We at China Unicom have to bear the promotion costs, after-sales costs, and channel costs. 23% is our bottom line."

Apple's vice president opened his mouth but didn't know how to speak; he knew that everything the other party said was fact.

And the problems didn't stop there; the biggest problem the other party didn't mention was the signal issue.

This was the biggest drawback that most users discovered after using it for a period of time.

It was even more severe than the issue of not being able to use WiFi; users would often lose connection directly after arriving in underground garages or places with high foot traffic.

A series of complex problems resulted in the iphone 3gs having a poor reputation in China, and its sales were merely a fraction of Huawei honor play. Now, the popularity of Transsion was making matters worse.

As far as he knew, China Unicom should still have quite a bit of iphone 3gs inventory on hand.

"I need to consult headquarters; it will take about two hours," he said.

One hour later, Apple's vice president returned to the conference room.

What followed was another half-hour of negotiation. On the final plan, both sides took a step back.

The commission was set at 19%. For every unit sold, Apple would receive a minimum commission of 949 yuan, and China Unicom had to provide very cost-effective plans, as well as corresponding mobile phone purchase subsidies.

The benefits had to be better than Transsion's, and the plans for the Chuan Yin Group had to be modified to a certain extent.

After signing the contract, both sides shook hands happily.

After the contract was signed, both companies announced the news on their official websites simultaneously.

The news was "instantly" captured by digital bloggers.

A screenshot immediately appeared on a certain tech forum: "Apple has renewed its contract with China Unicom again, but this time China Unicom has learned its lesson and didn't sign a direct consignment contract.

This time, they shouldn't lose money, right? [Dog Head]"