Chapter 149: To Each What They Need

Having arranged for the twenty accompanying staff members to remain at the guesthouse to continue organizing the aerodynamic test data, Yang Hui and Chief Designer Yu set off for the Changhong Factory. The purpose of this visit was to negotiate the distribution of interests between the two parties.

Since the discussion involved the allocation of benefits, there was no need for the technical section chief to be present; consequently, the negotiation team was significantly streamlined.

Through Chief Designer Yu’s introductions, Yang Hui had long known that the "Color TV King" Ni Runfeng would be involved in these talks. Considering that Director Hu of the Changhong Factory was an elderly man like Chief Designer Yu, Yang Hui had reason to believe that the negotiation over the distribution of interests would primarily unfold between himself and Ni Runfeng.

As Yang Hui had anticipated, shortly after the negotiations began, the core of the discussion shifted to a head-to-head between him and Ni Runfeng. With each step of the negotiation, Yang Hui could clearly feel the mounting pressure.

Although Ni Runfeng had not yet ascended to the top leadership position, his seasoned negotiation skills forced Yang Hui to muster his utmost focus to keep pace.

In his previous life, this had not been Yang Hui’s profession, and in this life, he was essentially learning on the job. Were it not for his broader experience and a few business deals he had already navigated in this lifetime, he would surely have been led around by the nose by Ni Runfeng.

Throughout the talks, the opposing side repeatedly emphasized that the radar was a military product, that the original old factory was still the one producing it, and that the old factory had nothing available to offer as a bargaining chip for benefits.

In reality, the Changhong Factory was not a complete transformation of the old Factory 0780. Shortly after Factory 0780 began producing television sets, the radar and television businesses were split; the new Changhong Factory became a joint venture between the original Factory 0780 and the Fucheng Municipal Government.

Therefore, when it came to negotiating compensation for radar interests, one naturally could not target the Changhong Factory. The Changhong Factory was undoubtedly a prized asset for both sides, so how could the 0011 Base possibly expect to wedge itself in?

Whether or not they could wedge themselves in was beside the point; bringing it up was a convenient way to shift the topic. "We are well aware of all that. Military products are strictly regulated by the state, and we have no designs on Factory 0780. We feel that the civilian products of the Changhong Factory are a more reliable proposition."

This was impossible. Under no circumstances would the Changhong Factory be put on the table for a deal. This unrealistic notion had to be struck down to steer the negotiations back to a normal track.

Ni Runfeng was the first to stand in opposition. "The Changhong Factory is absolutely not for trade. We have a contract with the Fucheng Municipal Government, with each side holding a fifty-percent share. If we were to relinquish any portion of our share, the Fucheng Municipal Government would take control of the Changhong Factory. There is absolutely no basis for such a discussion."

Ni Runfeng spoke with such conviction that it did not seem like an act; one had to admit his performance was spot on.

However, when faced with an unreliable teammate, there was nothing to be done. Yang Hui clearly observed the surprised expressions on the faces of the other Changhong Factory leaders. It appeared that the shareholdings were not as Ni Runfeng had just described.

Although Yang Hui spotted the deception, he had no intention of exposing it. He had never planned on acquiring shares in the Changhong Factory anyway; the factory had not yet undergone shareholding reform, and there was no need to pursue it.

Having successfully shifted the topic, it was now Yang Hui’s turn to play his card and make a demand. He put on a troubled expression, taking a long moment to "devise" a solution.

"If that is the case, we can certainly understand. Let’s try a different proposal. How are you planning to arrange the production of electronic components for the new radar?"

The production arrangement for electronic components was something the Changhong Factory had not truly considered. Under normal circumstances, once Factory 0780 finished the research and development, the technology would be handed over to the Changhong Factory for production, further diluting the municipal government's share.

But now that Yang Hui brought up the production of new electronic components, it required careful deliberation regarding the intentions of the 0011 Base.

As soon as Yang Hui asked the question, Ni Runfeng grasped the implication. "Oh, does Comrade Yang mean you want to make something of the production of these electronic components? If you have an idea, feel free to speak plainly."

Speak plainly? Yang Hui would do just that. In his mind, this was the most realistic plan.

"Very well, I will speak my mind. These new electronic components were developed by Factory 0780, so they are naturally under Factory 0780's purview. My suggestion is to make the production of these components independent, with both sides holding shares in this new factory."

Are electronic components profitable? Individual components can be profitable, and manufacturers engaged in large-scale production of components certainly fill their pockets.

In the 1980s, domestic electronic products were synonymous with high-end goods, and the components produced were naturally high-end as well. By the 1990s, when electronic products saw a massive boom, simply scaling up production and relying on thin margins with high volume would yield significant profits.

Electronic components may look simple, but they are far from it. One can see all kinds of electronic product manufacturers on the market, but they are merely assemblers; the real money lies with the core chip suppliers and the component suppliers who thrive on volume.

Component production relies heavily on accumulated experience. Without sufficient experience, entering the market rashly is a recipe for failure.

As domestic electronic products were currently high-end and components were mostly imported, now was the best time to build up technical expertise. Backed by the powerful research capabilities of the 0780 Radar Factory, it would be difficult not to prosper.

It was based on these considerations that Yang Hui chose to invest in the electronic component production plant.

At this time, Factory 0780 had not foreseen so much; the electronic components they developed were primarily intended to support the television sets at the Changhong Factory.

Separating the component production was not impossible. After Director Hu whispered a few words to the party secretary, he nodded, indicating his approval. Director Hu then spoke to Ni Runfeng, leaving him to negotiate the specifics.

Having understood the factory leadership's position, Ni Runfeng spoke accordingly: "It is not impossible for both sides to undertake this project, but our production equipment for these components will require funding."

Funding again. Although the base had a little money now, it was not exactly wealthy; any further expenditure had to be approached with extreme caution.

Yang Hui did not need to speak; Chief Designer Yu stepped in personally. "Our funds are currently tight as well. It is impossible to pull out more money to invest in a new project, so we had better think of another way."

Hearing Chief Designer Yu's words, Ni Runfeng realized that the Chief Designer had misunderstood. He hadn't intended to ask the 0011 Base for more capital. The funds introduced for the radar were already a massive sum; if the 0011 Base were to keep investing, Factory 0780 might as well hand over control of the new plant to the 0011 Base entirely.

The money Ni Runfeng referred to was not a request for the base to invest, but rather an issue of foreign exchange. Implementing domestic component production required foreign equipment, and importing such equipment required foreign currency.

Since the new plant would be separate from the Changhong Factory, it could no longer rely on the Changhong Factory’s channel through Fucheng to obtain foreign currency. Therefore, the 0011 Base would have to find a way.

"Our intention is not to ask you for more capital. We are concerned about the foreign exchange issue. We need foreign currency to import some of our production equipment, and Factory 0780 does not have any. We only have Renminbi, so we hope to exchange some foreign currency with your side."

Private foreign currency exchange was a method invented during times of severe shortages, where those in urgent need would pay high prices to exchange currency with entities that held foreign exchange quotas. Naturally, these transactions were kept secret.

However, if it were for the new plant, there would be no need for private back-channeling. Since the 0011 Base already held a share in the new plant, it could openly and legally procure equipment on the plant's behalf.

Reflecting on this, Yang Hui had to consider whether such an amount of foreign exchange was even available. Although the base had foreign exchange, the currency coming in from Saudi Arabia and Pakistan had certainly been sequestered by the state, with the base receiving only the Renminbi equivalent.

The only foreign exchange the base held was what remained from the sale of remote-controlled aircraft models. This money had originally been earmarked for upgrading the base’s various scientific research facilities, but with the new trainer aircraft project underway, those costs would naturally be covered by that project's budget.

Therefore, the foreign exchange earned from the aircraft models was still sitting untouched. Using it to import equipment was possible, but the base would take a loss. The exchange rate would still need to be negotiated; it certainly would not be at the official state-published rate.