"What do you mean by Chinese?"

In a small reception room of Shuangluo Company in Birmingham, England, several high-nosed Westerners looked at a fax piece of paper, with some doubts and a little apprehension on their faces.

"The Chinese insist that we reduce the price of the compressor below $80 million, claiming that if we exceed this price, we will lose the opportunity to bid, can we take this as their ultimatum?"

The speaker was Albert, the sales director from Seamans, who had come to Birmingham at the invitation of Shuangluo to discuss the export of long-haul gas compressors to China. The fax paper on the table is a letter sent by the China Development and Planning Commission to the Shuangluo Company, and a letter with similar content has already been received by Himandz. The content of the letter sent by the China Development and Planning Commission to several companies is the same, that is, it euphemistically points out that the quotations of these companies are seriously inconsistent with the market price, and hopes that they will re-quote according to the market price level, that is, the price of each compressor does not exceed 80 million US dollars, otherwise the Chinese side will very regretfully consider obtaining compressors from other sources.

Schleier, the sales director of Tongyong in the United States, who was also invited, said disdainfully: "This is their old routine, hoping to use this threatening method to force us to make concessions." In fact, they are in a hurry to implement their West-to-East Gas Transmission Project, and if they do not complete the compressor order now, then their West-East Gas Transmission Project will not be able to start. Our intelligence personnel have obtained from some sources the attitude of the Chinese top leadership on this matter, and this project is a high-level project that must be achieved, and it is impossible for officials of the Chinese Development and Planning Commission to be tough on this issue. ”

"We've known that for a long time. "If I'm not mistaken, the three of us should have maintained the same calibre, that is, the price should definitely be more than $140 million per unit, and no lower offers will be accepted." They have made verbal threats more than once in the past, but this is the first time they have written such threats directly on paper. I sensed that this time their threat seemed tougher than ever. ”

"What does it mean on paper? Does it mean they can't go back?" Mr. Schleier said, "I think they're just trying to scare us in this way, and whether it's a verbal threat or a paper threat, it's ultimately renegivable, and we've seen that a lot in the past." ”

Albert shook his head and said, "Mr. Schleier, I don't think I can be too optimistic. The Chinese have always been very cautious in doing things, and they will not leave a handle on others. They put such a request on paper, which means that the cost of their reversal will be high. You know, these people are officials, and even if we don't use these levers to blackmail them, they should be worried about being picked by their colleagues. After all, there is no evidence of verbal threats, and such official letters are to be stored in the archives. ”

"But I can't understand what they're going to do if we really bite the bullet and don't cut the price," said Maxwin.

"Isn't it written on the fax that they will seek to get the compressor from other sources. Albert said.

"Is there any other way in this world?" Schleier said with a sneer, "The Japanese have also made natural gas compressors, but their land area is too small to transport natural gas over long distances, so their compressors are all for short-range transportation, which does not meet the requirements of the Chinese." The Russians have made similar products, but can the Chinese trust the quality of the products of the Russians?"

Maxwin hesitated and said, "What if they do turn to Russia for purchases?"

"Then have fun. Schleier laughed, "Let's wait and see their gas pipelines rust there, the Russians' equipment is broken for at least half a year, and since the collapse of the Soviet Union, the Russians have not produced such products again, it turns out that whether those factories still exist is a suspense." ”

"Maybe that's true. Albert accepted Schleier's judgment that they are all people in this industry, and everyone in the industry is very clear about the situation. Seamanz also has long-term cooperation with China, and Albert knows that although the Chinese care about the price when purchasing equipment, they care more about the quality, and Russian products may be difficult to enter the eyes of the Chinese.

"So what's our strategy?" Albert asked instead.

Schleier said: "I think we should stick to the original offer and not give in to the threats of the Chinese." Our lesson in the past is to lower each other's prices and let the Chinese reap the benefits. The three of us who can produce this kind of product in the world are the three of us, and as long as the three of us form a price alliance, the Chinese will have nothing to do. ”

Albert and Maxwin exchanged glances, and Maxwin asked tentatively: "Mr. Schleyer, I think we should give the Chinese a step, such as a slight price drop of about 5%, to show our sincerity." You know, the Chinese care a lot about face, and I think Chinese officials may not be able to explain to their superiors, which is why they will use such a tough attitude to pressure us. If we insist on not making any regressions, they may really drag on with us for the sake of face, and it will be bad for us to drag it out. ”

Knowing that their own family affairs are in China's business, China is eager to purchase equipment from companies such as Shuangluo, and these companies are not in a hurry to sell equipment. Any product has a technology cycle, and the existing long-range natural gas compressor technology of several companies such as Shuangluo has reached the point of obsolescence, and they urgently need a fund to start the research and development of the next generation of technology, so that this technology can be consistent with the technological trend of today's world. The wool comes from the sheep, and to develop the next generation of technology, the only way to fund it is to come from the previous generation of technology. If they can't get new orders, they have to take money from the sales of other products to develop this product, which means that the investment in the development of the previous generation of products cannot be recovered, which is not conducive to the company's long-term competitiveness.

If you put it more than a decade ago, several companies would not have cared about the attitude of the Chinese, because at that time Europe and the Americas were building natural gas networks, and local demand was enough to provide them with enough sources of profits. At present, the construction of natural gas networks in Europe and the United States has been completed, and the construction of the next generation network is still far away. At this time, China suddenly launched a massive natural gas network, which was a lifeline for several companies hoping to make enough profit from Chinese orders to support the development of next-generation technologies.

In order to avoid diluting profits due to bidding against each other, the three companies invariably chose to collude. They agreed with each other that according to the same price standard and Chinese quotation, in the end, no matter which one wins the bid, they will subcontract part of the business to the other two OEMs. At the same time, the three companies have also decided to set up a joint R&D facility to jointly develop the next generation of natural gas compressor technology, and the final results will be shared by the three companies, so that the three companies can maintain their absolute technological advantage in the market.

The idea is very good, but it still has to go through the pass of the China Development and Planning Commission, and only when the prices of the three newspapers are approved by the China Development and Planning Commission, and the silver has been paid in vain, can the rest of the work be done. If the NDPC does not accept this price and the deal cannot be concluded, then no matter how good the idea is, it will only be a bubble.

When the price was agreed, Albert proposed that the price level of 140 million yuan was too high, far beyond the reasonable price, and was likely to cause displeasure on the Chinese side. However, Schleier believes that the construction of the international natural gas network has been stopped, and there is no reference system for the price of long-range natural gas compressors. It is true that the price of this compressor can be found a few years ago, and the changes in the price level and the cost of manufacturing can also be calculated, and the Chinese side can indeed make an expectation of the price of the product. But expectations do not equal facts, and as long as a few companies insist that certain factors have caused the price of their products to rise, what can China say?

In fact, even the price of 80 million per unit is far beyond the real cost, and after compensating for the sunk costs in the early stage, several companies are still profitable even if they ship at the price of 40 million per unit. The Chinese side can accept the price of 80 million, and it can also accept the price of 140 million, because there are only three companies in the world that can supply, and no matter how high the price is, what can you do?

The reason Schleier was able to say this was that he knew that the Chinese top management had already made a decision, and it was impossible to cancel the West-East Gas Transmission Project. Will a large project with an investment of tens of billions of dollars be stopped just because the price of a compressor is 60 million more? Since the other party must make purchases, why don't you ask for a price?

Maxwin and Albert eventually accepted Schleyer's advice and conspired with Tongyong to raise prices. The Chinese side was shocked by the price they quoted, and at one point expressed anger, but all three companies could see that behind the anger of the Chinese side was a kind of helplessness, as long as they gritted their teeth and did not let go, the Chinese side could only compromise.

Just when victory was in sight, the Chinese side sent them such an ultimatum-like letter, pushing the price back to the level of 80 million, and claiming that this was the upper limit that it could accept. If the three companies do not agree, the Chinese side can only consider other procurement avenues. Maxwin: They didn't worry about the so-called other way, because they didn't think it existed. However, if there is too much stalemate with the Chinese side, the other party will not be able to come to Taiwan, resulting in the suspension of procurement, and several companies will be unable to bear it.

This is called a hemp rod beating a wolf, and both ends are afraid.