Over the next few days, negotiations unfolded.
The process was far from smooth.
The meeting room's atmosphere swung between tense standoffs and brief harmony when consensus was reached on minor details.
"Mr. Nakayama, about this unit price," Manager Li said, setting down the quote sheet, his finger tapping a figure.
"We've recalculated multiple times. At this price, our profit margin is… quite tight."
His deputy added, "Yes, raw material costs, labor, and expected equipment depreciation all factor in."
Nakayama maintained a smile, his tone firm yet polite.
"Manager Li, everyone, Sega prioritizes quality and long-term partnership."
"This price accounts for our strict yield requirements and future technical support for iterations."
"You get what you pay for—a universal truth. Plus, we're paying in yen, which is steadily appreciating, and I understand your country has many uses for yen these days."
Li, hearing Sega leverage the foreign exchange card, felt a pang of frustration—China's forex shortage was a sore point.
"And the delivery timeline?" another deputy, in charge of production, asked, brow furrowed.
"Your initial batch size is substantial. We'd need more time."
"The market moves fast. A day earlier means seizing the advantage," Nakayama countered. "We understand your pressure. Rushing isn't ideal, but we can explore phased deliveries, scaling up gradually."
On core terms—price, volume, timeline, quality control, and defect handling—both sides sparred relentlessly.
A single percentage point in pricing or a week's adjustment in delivery could spark half-day debates.
Li's team held their ground; Nakayama strategized meticulously.
As talks neared a broad agreement, Huake requested time to report to superiors and assess internally. Nakayama didn't idle.
During this break, accompanied by Ishida and aides arranged by Directors Terauchi and Hatayama, he swiftly inspected other Hong Kong electronics factories with decent scale and credentials.
At each stop, he observed closely, asked pointed questions, and exchanged brief remarks with Ishida and the team.
"This factory's equipment seems older than the last," Nakayama noted.
"Yes, and management feels a bit lax," Ishida replied.
Compared to Huake, these visits solidified Nakayama's resolve to partner with them while giving him a clearer picture of Hong Kong's electronics sector.
Meanwhile, he quietly executed a strategic move through the directors' factories.
They acquired a small electronics plant near the port, with its own property.
The factory's sign hung crooked, and a faint musty smell lingered inside.
Its owner, a haggard man in his forties with dark circles under his eyes, sighed incessantly.
Nakayama merely smiled, letting his team handle pricing.
The owner, a compulsive gambler desperate to clear debts, agreed to a surprisingly smooth deal with little haggling.
Though small and its equipment dated, the factory's infrastructure and location were solid.
Its downfall was its owner, who gambled away cash, owed months of wages, and mortgaged materials.
Its prime location by the docks made it ideal for logistics.
Nakayama envisioned it as a transit hub and outpost for Sega's Hong Kong outsourcing, handling receipt, initial quality checks, and basic processing.
With minor repairs and new inspection equipment, it could operate soon.
This was a calculated move.
It served as a "backup plan" to subtly pressure Huake during talks.
Post-agreement, it would enable flexible resource allocation for contingencies.
In the worst case, it ensured Sega a local production foothold, avoiding total reliance on others.
When Huake returned to the table after heated internal debates, the mood was noticeably lighter. Li even showed a faint smile.
But a new issue arose.
"Mr. Nakayama, after thorough calculations, meeting your order with our current capacity is… challenging," Li said, looking troubled. "We want to go all in, but scaling up isn't quick."
Nakayama, as if expecting this, turned to Ishida, exchanging quick words in Japanese.
Ishida nodded, smiling.
Nakayama addressed Li: "Manager Li, on capacity concerns, Sega can offer tangible help."
He paused, unveiling a proposal that energized Huake's team.
"Mr. Ishida suggests that Sega has two factories upgrading equipment, phasing out older lines. Though dated, they're well-maintained, reliable, and sufficient for this order's circuit boards."
"His idea is to transfer these lines to Huake, offset by order payments."
"Offset by payments?" Li's eyes lit up, exchanging a thrilled glance with his deputy.
Seeing Huake's enthusiasm, Ishida and Sega's team were puzzled.
Nakayama quietly explained in Japanese: "Huake is essentially a Chinese state-owned enterprise. Much of their hard-earned forex must be surrendered to the state, leaving little for their use."
"By offsetting equipment with future deliveries, it simplifies their accounting and bypasses forex approval hurdles."
"It's asset growth, capacity expansion, and no extra cash outlay. Why wouldn't they jump at it?"
"Brilliant!"
"Genius!"
Sega's team nodded in realization.
Ishida, impressed, glanced at Nakayama: "Nakayama-san, you're a China expert!"
This breakthrough smoothed negotiations.
Huake's enthusiasm surged, showing greater flexibility on non-core terms.
After another round of tough but productive talks, both sides drafted an initial contract for the electronic pet circuit boards and components, including the equipment offset deal.
A weighty letter of intent and draft contract lay at the center of the boardroom table.
Directors Terauchi and Hatayama exchanged smiles, subtly nodding to Hayao Nakayama, their eyes full of approval.
Hayao Nakayama's lips curved slightly, his restrained satisfaction evident.
Other directors, meanwhile, were stunned by the contract's projected first-batch volume for the electronic pets.