The ancient capital of Jinling, the head office of Jiankang home appliance store.

On the square in front of the store, dozens of huge balloons fluttered high, and long banners hung under the balloons, on which congratulatory words such as "Warmly celebrate the successful convening of the first Jinling International Machine Tool Equipment Expo". Pedestrians passing by in front of the store looked sideways, all of them sighed, talking about who had such a big face, and was able to borrow a place like Jiankang Home Appliance Store to hold an exhibition, you know, this is not an ordinary thing.

Prior to this, Jiankang Home Appliance Store had only hosted an exhibition in the field of non-home appliances, which was 7 years ago, when the China-Africa Economic and Trade Cooperation Forum was held here, and attracted the chief designer to congratulate him. That exhibition promoted the export of Chinese goods to African countries, and broke the blockade of China by Western countries such as Europe and the United States during the special period.

Since then, there have been many units eyeing this blessed land, hoping to use the venue here to hold their own exhibitions, but all these requests have been rejected by President An Yan. Jiankang Home Appliances has a lot of money, and it doesn't care about the rent of those exhibitions at all. And the more this is the case, the more people feel that this venue is of great significance, and that the fact that an exhibition can be held here is a great news point in itself.

The exhibition halls on the first and second floors are all allocated to machine tool manufacturers in Chinese mainland, and foreign exhibitors are arranged in the venues on the third and fourth floors. Originally, those foreign manufacturers were disdainful to participate in this exhibition, but when they heard that there were merchants from nearly 100 countries around the world who came to visit and order, they didn't care about any more reservedness, and ran to the organizers of the exhibition to register and ask for participation. They did not raise any objections to the arrangement of them on the third and fourth floors, and the organizers said that this was originally only an exhibition for Chinese manufacturers, and it was already a big face for foreign manufacturers to participate.

In front of a booth on the west side of the third floor, Eiji Tanaka and Eizo Matsushita stood with gloomy faces as they watched the endless stream of visitors, with mixed feelings.

Like other foreign manufacturers, Xihu did not take this exhibition to heart at first. There are three or four well-known large-scale machine tool exhibitions in the world, and there are countless less well-known exhibitions. This is the first time that China has held this kind of international machine tool exhibition, in the eyes of the West Hu company, this is a non-flow exhibition, it is estimated that in the end it is China's machine tool manufacturers and machine tool customers to entertain themselves, the so-called international word, at best, is to find a few poor brothers in the third world to make up the number.

Who knows, things have developed completely beyond Sihu's expectations. First, General Motors announced that it would send an official delegation to visit, and hinted that it would purchase a considerable amount of equipment at the exhibition. Then, the American Ford Motor Company also spoke, saying that it would pay attention to the products on display at this exhibition. Next, one after another large Western enterprises have expressed their positions, claiming to be "interested" in China's machine tool equipment. As for those developing countries in Asia, Africa and Latin America, they announced in China as early as possible that they would organize enterprises to go to China for equipment procurement.

It is not unreasonable for GM, Ford and other companies to be so popular, aside from the factor of high quality and low price of Chinese machine tools, there is a more important factor, that is, they are seeking to enter the Chinese market, and they all hope to be able to obtain the goodwill of the Chinese government through the purchase of Chinese machine tools. You must know that on the invitation letter issued by the organizer of the exhibition, there are more than a dozen Chinese ministries and commissions, which are very important for foreign companies that intend to enter the Chinese market. ..., after learning about this situation, Xihu Company can no longer remain calm. With so many important customers gone, if I can't show a small face at the exhibition, others will probably wonder if they still exist. On the occasion of the exhibition, it is more than a sense of existence. If you attend an exhibition, others may not notice you. But if you don't attend the show, the media will have to question you at length the next day, wondering if you're in financial trouble, or simply asserting that your business is running out of time.

Before the deadline for exhibitor registration, Sihu registered its name. The organizing committee did not seem to discriminate against Xihu and arranged a relatively good booth for it. However, after getting the exhibitor card, Xihu Company is facing a headache, that is, how to price the products exhibited.

Previously, the price war between Xihu and its Chinese counterparts had been in full swing. Chinese manufacturers launched three rounds of price offensives in succession, reducing the price of each product by an average of 15%. The price of Chinese products is already low, and after three rounds of price cuts, it is even more staggeringly low, and if Xihu Company does not follow the price reduction, then there is no chance of competition at all. In order to maintain its market share, Xihu had no choice but to sell with tears and reduce the price by 15%, barely stabilizing its position. Now to participate in such a machine tool exhibition, will Chinese manufacturers set off a new round of price reductions at the exhibition?

"We must be prepared for further price cuts from Chinese manufacturers." Before leaving Japan, Matsushita said to Chairman Osawa Hiko, "Chairman, please give me a license to reduce the average price by another 5% at the exhibition." ”

"Panasonic-kun, our current price has already caused the company to face serious losses. If the price of the product is reduced by another 5%, I find it hard to imagine that the company will be able to support it. Osawa replied.

"I know." Matsushita Eizo bowed to Osawa and said, "However, if we can keep a part of the market after the price reduction, we will be able to recover at least some fixed costs." If we don't cut prices, we will lose most of our market, and the company will be in a state of stagnation, and the situation will only become more difficult. ”

The cost of an enterprise is divided into fixed costs and variable costs, and fixed costs refer to those costs that must be spent regardless of whether they are producing or not, such as the depreciation of the plant, the basic salary of workers, etc.; Variable costs are costs associated with production, such as raw materials, power, piece-rate wages for workers, and so on.

The loss of the enterprise refers to the fact that the sales revenue cannot offset the cost, which is converted to each product, that is, the sales price of the product is lower than the cost price. But in this case, it is not that no production is the best option. If the selling price of the product is higher than the variable cost, then each product sold, although it cannot make up for all the costs, can at least offset some fixed costs, which can reduce the loss of the enterprise.

This is the case with Sihu at the moment, as a large company, its fixed costs are very large, and these costs need to be spread over each product. After the price war with Chinese companies in the previous period, the price of Xihu's products has been so low that it is impossible to allocate all the fixed costs, which is reflected in the books, that is, the company has suffered a large loss. But if sales come to a complete standstill, the situation can only get worse, because it means that there is no place to allocate the fixed costs that could have been amortized.

Of course, Osawa knew about these situations, and he was silent for a long time, and said to Matsushita Eizo: "Okay, Matsushita-kun, I can give you this authorization. However, the price reduction can only be limited to 5%, which is our final bottom line. ”

Matsushita Eizo came to China with such a mandate. After the exhibition began, he arranged for several employees of the Chinese branch to go to the booths of various Chinese companies to inquire about prices, and the news was that Chinese companies were ready to engage in preferential activities at the exhibition, and Matsushita Eizo knew that it was a euphemism for price reduction. As for the extent of the price reduction, all companies are secretive, and they will not reveal it if they don't see real customers. ..., "Matsushita-kun, the chairman gave you the permission to reduce the price by 5%, do you think this permission is enough for this exhibition?" Eiji Tanaka asked.

Matsushita Eizo smiled bitterly and said, "Director Tanaka, you can also see that the Chinese came prepared this time, and they put on such a big formation, obviously intending to give us a head-on blow." The 5% price reduction may not be able to stop the Chinese attack at all. ”

"Are these Chinese crazy? When the price of the product drops to this extent, do you still have a profit at all? Could it be that their purpose is to drag us to death, and in order to achieve this goal, they would rather die with us? Tanaka said in surprise.

Matsushita Eizo shook his head: "No, they are gambling, betting on whether they can drag us to death." If they can drag us to death, their market share will expand significantly, and then they will be able to generate profits by virtue of scale effect. ”

"So, how much room do you think they have to cut their prices?" Eiji Tanaka asked.

Matsushita Eizo said: "I estimate that they will be able to reduce prices by at least 10% or more." ”

"We can't afford a 10% drop, and if we cut our products by 10%, I'm afraid the company will go bankrupt in less than a year," Tanaka said. ”

"If we don't cut the price by 10%, we won't be able to sustain it for even a year." Matsushita Yongsan answered.

"In that case, why are we here for this show?" "This is a doomed ending, are we here just to see how the company went bankrupt?" ”

"Maybe there's a silver lining." Matsushita Yongsandao, he pointed forward with his hand, and said: "Look, isn't that the purchasing manager of Hall Company in the United States, Bowes, some time ago, the sales department reported that Hall Company is planning to purchase a batch of welding robots, I think, Bowis should be here for this, this is a big order." You see, he's coming to us. ”

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