State Cotton Mill No. 2!
When Li Yi, Zhang Ziqiang, Li Yeqiao, and the others arrived, Jiang Longcheng was in the middle of a meeting at the factory office. After receiving a report from his secretary, he immediately had the deputy factory director take over the meeting, while he himself stepped out of the conference room accompanied by the head of the finance department.
Upon seeing Li Yi, Jiang Longcheng immediately smiled and said, “Brother-in-law, you’ve arrived just in time. If you’d been any later, the factory’s profits would have been remitted to the State-owned Assets Department. Once that happens, it won’t be easy for you to get the money back from them!”
Li Yi smiled and replied, “Don’t worry. Even if the money goes to the State-owned Assets Department, they’ll still have to give us what’s ours!”
Although Jiang Longcheng’s concern was well-founded, Li Yi was confident that, given his current status, no one would dare to embezzle his funds.
Not to mention that everything was clearly laid out in writing between him and the Second National Cotton Mill; if the State-owned Assets Department dared to embezzle his money, it would be unjustifiable in terms of reason, morality, and the law.
More importantly, he was currently a prized asset in the eyes of the bigwigs at the top. He had brought back over a billion US dollars for the country on several consecutive occasions—and hadn’t taken a single penny in commission.
If they were to anger him over this and he were to walk away, the consequences would be too severe even for Wang Tianrong of the State-owned Assets Supervision and Administration Commission to bear.
“You’d better take it right away, so we don’t have to haggle with them later!”
“Alright!”
Accompanied by Jiang Longcheng and Xue Jianzhong, the group then proceeded to the Finance Department of State Cotton Mill No. 2.
Upon arriving at the finance department, Xue Jianzhong immediately instructed the staff to retrieve the factory’s financial statements and year-end performance reports for the past year and place them in front of Li Yi.
Li Yi didn’t look at them himself; instead, he pushed the entire stack over to Li Yeqiao, who was standing nearby.
As Li Yi’s chief accountant, Li Yeqiao immediately took the documents and began reviewing them.
While Li Yeqiao was reviewing the documents, Jiang Longcheng looked at Li Yi and said, “Brother-in-law, there’s something I’d like to hear your thoughts on!”
“What is it?”
“Quite a few colleagues have suggested lowering the prices of the factory’s clothing, and I’m not quite sure what to do about it,” Jiang Longcheng said.
“Lower the prices? Who suggested it, and why?” Li Yi asked, furrowing his brow.
“Brother-in-law, it’s not just one or two people suggesting a price cut—a large number of our colleagues share this view. As for whether we’re willing to do it, the main issue is that we’re feeling the pressure right now!”
Li Yi furrowed his brow and asked, “Is anyone just following the crowd?”
“Yeah!”
Jiang Longcheng continued, “In the second half of this year, quite a few textile mills have started copying us. They’re copying our clothing styles and opening their own specialty stores just like we do!”
“Among them, Beijing National Cotton Mill No. 1 and Shanghai Textile Factory have been particularly successful. They’ve opened quite a few direct-sales stores in multiple locations, mimicking our model, and our sales have taken a bit of a hit.”
“How significant is the impact?”
Jiang Longcheng replied immediately, “It’s not that significant. Mainly because we have a large number of specialty stores, with a sales reach covering almost all major and medium-sized cities nationwide, while those textile mills are limited to Beijing, Shanghai, and Tianjin. So the overall impact is limited!”
“But we’ve noticed that in any city where National Cotton Mill No. 1 or Shanghai Textile Factory has a store, our specialty stores’ sales growth slows down—or even drops slightly!”
“Are you planning to engage in a price war with them?” Li Yi asked, frowning.
“It’s not exactly a price war, but we’ve noticed that those factories really are selling their products cheaper! For the same Dacron shirt, we’re selling it for 12 yuan, but they’re selling it for only 8 yuan—a full third cheaper than us.”
Jiang Longcheng continued, “After comparing prices across several stores, many ordinary people simply choose the cheaper option. So quite a few people at the factory are considering whether we should lower our prices as well…”
“We can’t lower our prices!” Li Yi said firmly.
“Brother-in-law, can we really get by without lowering our prices? After all, our prices are so much higher than theirs for the same product. If I were in their shoes, I’d buy from someone else too!” Jiang Longcheng said.
Li Yi glanced at him and said, “Are you sure our products are the same as theirs?”
“Well, same cotton fabric, same style—that means they’re the same product, right?”
“Third Brother, don’t forget—our clothes are made by Feixue Apparel. Just the Feixue brand alone justifies a higher price than the competition!” Li Yi said.
“Well…”
Li Yi knew Jiang Longcheng didn’t understand much about business, so he might not grasp the concept of brand premium.
So, Li Yi paused to gather his thoughts, then said, “Third Brother, do you know how much a color TV sells for in the country these days?”
“I actually do know that. A few days ago, that kid Jianhua bought a Goldstar color TV for 1,800 yuan. Why are you suddenly asking about this? Are you planning to…”
“Don’t get any ideas—that’s not what I mean!”
Li Yi continued, “Then do you know how much an imported color TV costs?”
“I’m not really sure about that. You know our old man isn’t too fond of foreign goods, so we don’t pay much attention to those foreign gadgets!” Jiang Longcheng replied.
Li Yi immediately replied, “I know. A Panasonic color TV made in Taiwan can fetch as much as 3,500 yuan here in China. Even on the black market in Guangdong Province, smuggled goods go for around 2,800 yuan!”
“That expensive?”
“Yeah, but you know what? The production line for the Goldstar color TVs you mentioned also comes from Japan. Aside from a slight difference in the casing, there’s no real difference between them and Panasonic TVs.”
Then, changing the subject, Li Yi continued, “According to your logic, aren’t they essentially the same product? So why can others sell theirs for 3,500 yuan, while our domestically produced ones can only fetch 1,800?”
“Well…”
Before Jiang Longcheng could formulate a response, Li Yi continued, “It’s because it’s a Panasonic product. Most countries in the world recognize this company, and their brand has the power to command a premium!”
“Our Feixue Apparel has already made a name for itself nationwide and gained public recognition. As long as we ensure our designs consistently align with mainstream tastes and lead fashion trends, and we maintain top-notch quality, we don’t need to worry about prices being too high and nobody buying them!”
Li Yi actually had very high expectations for State Cotton Mill No. 2.
As one of the earliest factories in the country to transition into ready-to-wear apparel, State Cotton Mill No. 2 has already taken the lead among all textile mills. Coupled with the fact that they have now opened over a hundred specialty stores across the country, if they can stay the course, they are very likely to become a true giant in the domestic apparel industry in the future.
As for pricing, it’s undeniable that Feixue Apparel’s prices are indeed a bit higher, but they’re not exorbitant—far from reaching the level of luxury goods.
Moreover, every industry in every country needs a high-end brand, and Li Yi hopes Feixue Apparel will become the leading brand in China’s apparel industry.
“What about the First National Cotton Mill and the Shanghai Textile Factory…”
“Don’t worry about them. We just need to focus on doing our own thing. They won’t pose a threat to us anytime soon!” Li Yi said.
“Alright, I know what to do…”
Just then, Li Yeqiao, who was standing nearby, suddenly spoke up: “The numbers don’t add up!”
Hearing this, everyone in the room froze!
Li Yi and Jiang Longcheng also stopped talking and turned to look over.
PS: There’s one more chapter before midnight!