"If we follow the mainland model, our pricing may indeed be a bit high. I know that the mainland is practicing a planned economy, and after calculating the cost of each product, the Planning Commission sets aside 10 to 20 percent of the gross profit margin for the enterprises to pay the wages of workers and workers and the necessary expenses for maintaining the operation of the enterprises.

The factory does not need to invest in R&D, because that is the work of the research institute. Enterprises also do not need to worry about raw material procurement and product sales, because at the annual ordering meeting organized by the government, there will naturally be upstream and downstream supporting enterprises, which will be connected with the enterprise according to the annual production tasks issued by the government!

This economic model seems to be able to make the greatest use of resources through the great division of labor in society! But it has a fatal certainty, that is, it suppresses the creation of the system! Take Professor Liu as an example, you previously reported to the Beijing University of Posts and Posts to apply for the research and development of the DS-2000 switch project.

BUPT does not have enough funds to support your project, so the school applied to the Ministry of Posts and Telecommunications, but although the Ministry of Posts and Telecommunications approved your project, it also did not have the funds. All the funds in the ministry come from the state's allocation, and each one has a specific use, and a project like yours can't be ranked at all!"

Li Xuan looked at Liu Junliang, who was deep in thought, and continued to talk eloquently: "And I think one of the very important reasons for this is that the price is too low, and many products, especially high-tech products, do not reflect their due value at all!

Let's take the DS-2000 digital programmer as an example, as I just said. Its final price will be slightly cheaper than the $500,000 price of similar foreign products, but it will not be much cheaper. Converting this price into RMB at the exchange rate stipulated by the state is about 1 million. And Professor Liu, you are the first developer of this project. You should have an idea of how much the DS-2000 will cost. If industrial production is carried out, its cost will not exceed 400,000 RMB!

Professor Liu, in your opinion, even if the cost of R&D and sales is amortized, its gross profit margin can be more than 100%, and I must feel that I am a vampire! But in good conscience, this price is actually not high, such as communication equipment and other high-tech industries. Products with a gross profit margin of 200% or even 300% are greatly improved!

The reason why I am qualified to set this high price is because I have invested a lot in the early stage. For example, the Oriental Research Institute has invested 5 million Hong Kong dollars in the research and development of your team, and another one or two million Hong Kong dollars will be invested in the later stage!

Besides. For this DS-2000 digital switch, we have purchased dozens of basic patents from the Bell Office of the United States and Nortel of Canada, and the investment is also as high as 5 million Hong Kong dollars.

In other words, the upfront investment of the Oriental Research Institute for the entire DS-2000 project is about 12 million Hong Kong dollars. Maybe you might say. At the high price we decided to set for the DS-2000. Selling just 10 switches is enough to pay for itself. And the capacity of the mainland market is far more than 10 units!

For example, if Professor Liu and your team fail in research and development, the 12 million Hong Kong dollars invested in the early stage of the Oriental Research Institute will be wasted. Naturally, it is impossible for us to recover this investment from you or BUPT!

To tell the truth, the state allocates hundreds of millions or even billions of funds to the Ministry of Posts and Telecommunications every year for the construction of communication networks. If the leaders of the ministry are courageous, the DS-2000 project will be converted into yuan, and only a few million dollars will be needed. A squeeze can definitely be arranged.

In the event that your project is successfully developed, the state can save much more foreign exchange than it invests every year. There is no need to buy a foreign digital program-controlled switchboard! You must know that the 10,000-door digital program-controlled telephone exchange purchased by Minnan Province from Japan not long ago cost $2.74 million in foreign exchange!

However, the leaders of the Ministry of Posts and Telecommunications do not have the courage to do so, because you may fail, and they cannot afford to lose for the sake of their official positions! But we at the Oriental Research Institute can, and there are dozens of projects within the Institute with an investment of more than one million dollars. In the first eight months of this year, the total investment in scientific research at the Institute of Oriental Studies has exceeded $250 million, and the loss of one or two million dollars will not hurt us at all.

And the reason why we are so confident is that we rely on the strong revenue capacity of other companies in the Eastern Group. For example, the ex-factory price of the arcade machines of the Oriental Game Company is about $1,500, but the actual cost is only about $600, and the gross profit margin is as high as 150 percent! It is precisely by relying on the windfall profits of these products that the entire Oriental Electronics Company can be supported to develop at a leap speed!

Li Xuan said a lot in one breath, just to explain the reason for the high price to the intellectuals in front of him, who were still bound by the planned economy. In fact, generally speaking, the profit margin of consumer goods will be relatively low, and most of the communication equipment such as digital switches, which are not consumer electronics, will not be opened for three years, and they will be open for three years!

What is consumer electronics? It's the kind of electronic product that you use for a year or two, or three or four years, and then you think you should replace. For example, in the future, the gross profit margin of domestic companies such as Lenovo and Huawei will not exceed 20%. And like Apple, the profit margin of the iPhone 6 is as high as 70%, which is a demon in the entire consumer electronics industry.

"It is precisely because of the high profitability of Dongfang Electronics Company that we can provide a superior salary for the technical talents who choose to join us! If Professor Liu, you are willing to accept the invitation of the Oriental Research Institute, we are willing to provide you with an annual salary of 20,000 foreign exchange coupons.

Of course, this salary level is not high compared to the salary of R&D personnel in Hong Kong, but we have to consider the salary level in the mainland! In fact, in the Oriental Research Institute, the salary of a team leader like you is not the main income.

If you are willing to join the Oriental Research Institute, we are willing to build a new real room for you in the mainland to support you to continue to develop 5,000 or even 10,000 digital program-controlled telephone exchanges. If your R&D results can successfully enter the international market, then just the sales dividend is enough to make you a millionaire in an instant!" Li Xuan said.

"Mr. Li, thank you for your fancy to me, I still need to think about this issue carefully!" Liu Junliang said with some embarrassment.

Li Xuan didn't have the slightest expression of dissatisfaction, waved his hand and said with a smile: "Of course, such a decision related to your future development must be carefully considered!" (To be continued......)