Chapter 286 A Strategic Surrender
By the end of September, Yuanxin's profit structure had undergone a significant shift. VCDs were still the main source of revenue, but the Mobile Communications Division was rapidly catching up. On top of that, the YX architecture CPU, boosted by the soaring popularity of the PlayStation, had gained widespread recognition and was now even generating profits through its collaboration with Sony — albeit modest ones.
At the beginning of the year, Yuanxin had practically thrown everything into subsidizing base station construction for the mobile carrier, all under the philosophy of "making friends, not money." The Mobile Division's turnover had gone up, but revenue remained unimpressive. However, as domestic base station construction entered a plateau phase and overseas markets remained untapped, cash had slowly started to flow back. The mobile company couldn't very well get away with stiffing them. Now, the real profits depended on mobile phones.
The upcoming National Day holiday was a critical test — for Zhang Ke's retail chain, for Yuanxin's mobile phones, and for Duan Yongping himself. Lately, Duan had been meeting with Zhang Ke almost every other day, discussing how to leverage the holiday season for a successful sales push.
"We can't afford to rush the phone sales right now," Su Yuanshan said calmly, in stark contrast to Chen Jing's concern. "I trust Old Duan. And I trust my uncle — actually, we have no choice but to trust them."
"As for money... well, next year our investment spending won't be as intense, so we should be fine. Worst case, once the EDA division goes public, we'll just sell a few shares."
Chen Jing gave him an exasperated look, then burst out laughing. "Sell the family silver to make ends meet — I suppose that's a strategy."
Su Yuanshan nodded, smiling. "Sure. And it's not like we're short on valuable projects to sell off."
Just then, Chen Jing's phone rang. She walked over to her desk, sat on the edge, and took the call. After a few quick words, she switched to speakerphone and nodded at Su Yuanshan. He stood and walked over to join her.
On the other end was Duan Yongping.
"President Chen, President Shan, I have an idea."
Su Yuanshan glanced at Chen Jing, who gave him a look to let him handle it.
"You've got the floor," she said.
"I've had several discussions with President Zhang from the mall and spent a long time going over plans with President Wan from marketing," Duan began. "We think this National Day promotion is a golden opportunity for the vidoo phone."
"According to our intel, two other major malls will also be running promotions — and don't forget, this year's National Day holiday is a full five days."
Su Yuanshan and Chen Jing exchanged another look. Su Yuanshan nodded. "Right. A longer holiday means more travel and more consumer activity."
China had started piloting the five-and-a-half-day workweek two years ago, and this year was experimenting with alternating long and short workweeks — all part of aligning with international standards. Su Yuanshan also knew that true weekends were just around the corner.
"Exactly," Duan said. "A long holiday also means a long promotional window, which gives our competitors plenty of time to adjust their strategies in response to Zhang's."
Su Yuanshan raised his eyebrows. "And then?"
"Then we don't limit vidoo sales to just Zhang's stores," Duan said with a chuckle. "If the others are offering incentives, we're happy to cooperate — let them fight it out while we reap the benefits."
Su Yuanshan was briefly stunned. He wanted to say "you're overthinking it," but he immediately realized this wasn't the future — not yet a time when channels and retail endpoints ruled the market.
In the future, unless you were a top-tier brand, manufacturers would be exploited by retail giants. They'd suffer from long payment cycles and delayed settlements — that's why companies like JD.com kept bleeding money yet saw their stock prices soar. Retailers lived comfortably; manufacturers, not so much. They'd be left holding months of unpaid stock — and then in turn, they'd squeeze their own suppliers.
Though triangular debt did exist in this era, retail chains still weren't dominant enough to bully suppliers. Especially not Yuanxin — which, in China, was still the dominant party.
"So, the others don't object to working with us?" Su Yuanshan asked.
He focused mostly on strategic direction, not the day-to-day sales mechanics.
"What objections could they have? As long as our pricing and policies are attractive, they won't walk away from profits. Besides, vidoo phones are now a high-end brand. If they opt out, it just makes them look low-class."
Su Yuanshan: "..."
Duan paused briefly before continuing, "So to fully capitalize on the National Day sales push, I plan to get ahead of the curve and launch our next-gen model early."
Su Yuanshan was caught off guard. Launch early?
He knew that three vidoo2 prototypes were in development — one candy bar style, one slider, and one clamshell. Based on complexity, they were scheduled for phased release in late October, December, and Chinese New Year. That timeline had been carefully balanced against design and manufacturing capabilities.
"You can already mass-produce?"
Chen Jing, sensing the critical issue, shot a look at Su Yuanshan and jumped in.
She knew Su Yuanshan had just returned from the SEZ — no one understood the factories better than he did. And she was certain they weren't ready to produce the vidoo2 yet.
"No, but we can produce engineering models by next week," Duan replied calmly. "At that point, we'll do what the Western companies do — host a launch event, unveil the vidoo2 engineering model, announce a release date... And at the same time, declare a price drop for the current vidoo."
Su Yuanshan and Chen Jing looked at each other again. This time, surprise flickered in their eyes — and then, slowly, they both began to smile.
Duan Yongping was brilliant.
Because of Su Yuanshan's stubborn insistence on positioning the vidoo phone at a high-end price point — competing with international brands — Yuanxin had been unwilling to cut prices, even when sales were slow. Everyone at Yuanxin had begrudgingly accepted this stubbornness.
But there was a loophole: Once a next-generation model launched, it became acceptable to drop the price of the older model.
That tactic? Su Yuanshan had learned it from the future.
Maintaining a premium price helped preserve profit margins and brand perception — and even supported resale value, provided the product quality was high.
Duan's plan gave them a perfect excuse to lower the price.
"If we drop the price, then we can sell all 100,000 units.
And our brand and revenue stay intact," Duan said with a satisfied chuckle over the phone.
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