This year’s Lunar New Year falls on January 31st. Chen Qing and her daughter did not return to North America until the end of February. They were not lazy, but were busy working on several projects, the most important of which was the newly established BBK. However, in the process, Chen Qing also discovered a big business opportunity. It is mainly inspired by the BBK team's research and analysis of the VCD product.
I have to talk about the origin of VCD here.
The founder of China's Anhui Wanyan Group attended a technology expo in 1992 and was inspired by the video decoding chip products displayed by the American video decoding chip manufacturer Scoop, and came up with the idea of developing VCD.
Wanyan Group was subsequently established.
In September 1993, after burning a huge investment of 140 million yuan, Wanyan Group successfully completed the first VCD product and launched it on the market in 1994. This was supposed to be China's first player product with independent intellectual property rights. However, due to various reasons, a series of VCD core patents have been registered by major overseas manufacturers, and the complete machine patent has become an open technical standard because it missed the opportunity to apply.
This has to be said to be a great regret.
For downstream manufacturers in the industry chain, losing patents means losing the right to speak, and they can only be at the mercy of others in terms of component procurement and other aspects.
Midtown Manhattan, Rockefeller Center.
In Simon's office at the headquarters of Westeros Company, Chen Qing was introducing his ideas: "I have contacted Scoop Company, but could not obtain specific information. However, through the help of Miss C from Silicon Valley, I It has been roughly confirmed that the current production cost of the latest video decoding chip developed by Scobo based on the MP4 video format launched by Westeros Company will not exceed US$10. However, the price of Scobo sold to downstream manufacturers, Even Wanyan Group, which cooperates closely, sells a single piece for US$80, with gross profit as high as 700%. For other core components such as laser reading heads and system control chips, the gross profit of each manufacturer is also several times the production cost. In comparison, Wanyan Group’s current VCD product, which sells for US$500, only costs more than US$350 to manufacture, and its gross profit margin is only 40%. Therefore, if China’s VCD industry can really explode as we predict , I think controlling upstream component manufacturing companies is the best investment, so that we can even dominate the entire VCD industry in China and maximize profits."
After hearing what Chen Qing said, Simon nodded slightly and did not speak immediately. Instead, he looked at Lin Su, who was sitting on the sofa opposite with his head lowered and his eyebrows lowered, seeming to be very focused on flipping through the documents on his lap.
Sensing that the surrounding area had become quiet, Lin Su raised her head and met Simon's gaze, her eyes flickering slightly and soon turning into confusion.
Simon looked at the woman's delicate and pretty face and suddenly asked: "Do you feel like you are in the enemy's camp and working for a tiger?"
Lin Su's eyes flickered again, not denying, but not confirming either.
Simon changed to a more relaxed posture and leaned on the sofa in the reception area, and continued to speak in Chinese: "This is actually normal. It means that you have a correct outlook on life after living under the red flag for so many years. However, you must also remember, You don’t owe others anything, nor do you owe your own country anything. But I heard that when you went back this time, you donated most of the salary you received for a year in advance to Project Hope, which is a very good project. So, you have done It has to be good enough. Now, you are mine, and all you have to do is remain absolutely loyal to me."
Lin Su finally spoke: "I'm not yours, I'm just working for you."
Simon had no intention of arguing with the woman, and instead said: "Chen Qing's idea is very good. Regarding this matter, we only need to do it from purely commercial considerations. Everyone is within the rules, and there is nothing to criticize. place. Moreover, I have always believed that the sympathy and compassion of others can never make a person truly strong. Only constant blows and setbacks can do this. The same is true when it comes to a country. I believe that after this incident , China will definitely reflect on it and draw lessons from it. This is an inevitable setback that many countries will encounter in the development process."
Lin Su paused and wanted to refute, but in the end he just nodded slightly.
Simon smiled and said: "However, I still remember Hegel once said that the only lesson history teaches mankind is that mankind never learns lessons. Therefore, I believe that this kind of thing will happen a second time, a third time, Even the fourth time.”
Lin Su had just calmed down a bit. When she heard what Simon said, she suddenly realized that a certain guy was teasing her again, so she could only glare at him ineffectively.
Simon praised: "You are also very beautiful when you are angry. You are a beautiful woman. You are truly the darling of God."
Lin Su simply lowered his head again.
Simon didn't mind either, but he added: "Actually, just like going back to donate this time, I think this is a very appreciated thing. So, keep it up. Also, work hard for me so that you can If you get more, you can have more capital to give back to your motherland."
Lin Su still lowered his head and waited for a moment to make sure that the guy was not teasing her this time, and then said softly: "Thank you."
Attention turned to Chen Qing again: "Okay, let's continue with the two villains. I have already seen the plan you submitted. I strongly agree with the acquisition of Scoop. However, establishing a core component industry chain that dominates the VCD market Forget it. China is currently unable to produce these core components. This is true. However, for European, American and Japanese electronics manufacturers, the development of VCD core components is not difficult. It is impossible for us to achieve a monopoly. .”
Chen Qing shook her head and said: "Time, boss, this is our biggest advantage. Just like the video decoding chip, Scoop has developed a very mature MP4 format video decoding chip. Because of the lack of attention to VCD products, other manufacturers have Not much energy has been invested in this field. Even if it is an electronics industry giant like Sony, it will take at least a year to catch up with Scobo. In this year, Scobo will not stop moving forward. , there will definitely be more advanced products launched.”
"But you seem to have overlooked one thing," Simon continued: "The DVD standard has already taken shape. After all, VCD is just a substitute product developed based on CD. One has a fixed capacity of 4.7G and the other only has 700M. This is what VCD can do no matter how hard it works. Something that cannot be surpassed, because it is a product that is more than one generation apart. So, Chen, I have to remind you, and you also need to remind Duan and others that VCD is just a way to make quick money for us, five years at most. You must consider transformation, otherwise you will only be replaced by DVD, or even completely eliminated."
"I know this, boss," Chen Qing said without looking shocked at all: "In my opinion, DVD will indeed replace VCD, but it will take a long time for various manufacturers to promote DVD due to content reasons. During this time, we can accumulate enough technology to take a share of the even bigger DVD industry in the future."
"Big, how big do you think it is?"
"At least it won't be much worse than a video recorder, because DVD has a clear cost advantage in comparison. Although the core patents are already controlled by manufacturers such as Sony, it does not mean that there is no opportunity for us."
Simon looked at Chen Qing for a moment: "I have to say, your idea is very good."
Chen Qing asked expectantly: "Boss agrees?"
Simon shook his head: "Unfortunately, I still disagree."
"Why?"
"Do you use the Internet often now?"
"Yes."
Simon said: "If you go back and study it carefully, you will find that some download websites for pirated music and movies have begun to appear on the Internet now. Chen, this is the trend. Whether it is genuine or pirated, it will only be in the future." It may be the world of the Internet. The globalization and popularization of the Internet will completely destroy the traditional player industry. If there was no Internet, I would definitely approve your plan and invest heavily. Now, this is impossible."
"Boss, you just said that the capacity of a DVD disc is 4.7G. The picture quality experience of a movie with this size is absolutely unmatched by the current Internet."
"It can't be compared at this stage. In five years, it will probably be almost the same."
"But... the West is not China. Copyright protection is very strict. The survival of DVD should be easy. Over in China, the Internet has just started, and DVD has at least ten years to survive."
"You obviously haven't seen through the openness of the Internet. Neither the East nor the West can stop this. Getting something for nothing is a kind of human nature, and no one can stop it." When Simon said this, he stopped Chen Qing from continuing to argue with him. , but said: "In short, this is the thing. In my opinion, whether it is VCD or DVD, they will only be eliminated by the Internet. What's more, many of the core patents of the two have been controlled by Sony, Hitachi, Philips and other manufacturers, and we have spent a lot of money on them." If you invest a huge amount of money, you will eventually miss out on the most lucrative profit, and it is difficult to determine when this part of the profit will completely disappear, so this is just making quick money."
When Simon said this, Chen Qing understood that there was no room for change, so she had to say: "What does the boss mean, that we only acquire one Scoop?"
Simon nodded: "I have read the information of this company. It was listed at the beginning of last year. The revenue in fiscal year 1994 was only 21 million US dollars. The market value was affected by the wave of new technology and is on the high side. It is currently 120 million. Even if it is a hostile acquisition, I think It can be won for less than US$200 million. This is a very cost-effective business. As the only supplier of VCD video decoding chips at this stage, when China's VCD industry explodes, US$200 million can be obtained and cashed out in about five years. , we may be able to recover 10 times the income, which is very cost-effective.”
Scoop was founded in 1988 as a peripheral company incubated by Texas Instruments. It is similar to small companies such as Intel that surrounded IBM a long time ago. It is mainly engaged in the research and development of video decoding chips, because VCD sales in China last year were only tens of thousands of units. , so no one realizes the potential of this company yet.
This is the opportunity for the Westeros system.
Interestingly, in addition to Texas Instruments as a shareholder, Scoop is also a key investment project of Sequoia Capital. Don Valentine, the founder of Sequoia Capital, currently serves as the chairman himself.
Given the venture capital nature of Sequoia Capital, if the Westeros System launches an acquisition, as long as the price is right, the other party will be happy to show up. Texas Instruments, as Nokia's most important baseband chip supplier, is out of the interest of safeguarding the relationship between the two parties. Considering the good cooperative relationship, we will not care too much about the transfer of such a small company that obviously has bubble elements.
Maybe some people will have the idea that the companies that the Westeros system likes should of course be in their hands. At worst, it will be a hostile takeover.
When Chen Qing heard what Simon said, she looked forward to it: "So, boss, can you leave this matter to me?"
Simon nodded: "If it is something else, it will definitely not work. If the entire player industry is laid out according to your suggestion, I will definitely not leave it to you. However, since it is only a small company like Scoop, it also concerns China's VCD The layout of the industry leaves nothing to be desired. This can be considered a test, Chen. Once China's VCD industry begins to explode, as the only supplier of video decoding chips at this stage, you will need to balance China's BBK and other VCD manufacturers. On the issue of supply allocation between us, if we do this well, we can control China's VCD industry to the greatest extent. If we don't do it well, we may drive other manufacturers to competitors."
Chen Qing nodded solemnly: "I understand, boss." She hesitated for a moment and asked, "Boss, can I and Lin still have a share this time?"
Simon smiled and nodded: "It's still 5% per person. Your position is with Apollo Management Company. Just launch this acquisition in the name of Apollo Management Company. However, you have to think clearly. According to the US$200 million, Based on the acquisition budget, each of you will owe me $10 million."
Chen Qing blinked, and her face became more charming: "Boss, if we lose money, we will compensate you."
Lin Su, who had been silent just now, glared at Chen Qing and finally said, "Don't count me out."
Chen Qing glared over not to be outdone: "If you don't want it, I'll take 10%."
Lin Su opened her mouth and looked at Simon again. Seeing the man's hateful expression of watching the fun, he still didn't refuse.
After talking about the matter, Simon closed the folder in his hand, relaxed his legs, and said with a smile: "Okay, that's it. You go back and prepare first. Well, I will have someone pick you up in the evening and let's eat together." dinner."
After dinner... yet.
An unnatural blush suddenly appeared on Lin Su's face. Does this damn guy have to be together every time
Chen Qing looked expectantly, but did not stand up. Instead, she asked: "Boss, do you really not think about China's official invitation to visit? Just treat it as another trip. It is April now, which happens to be It’s the real ‘apricot blossoms and spring rains in the south of the Yangtze River’ season.”
Simon shook his head and said, "Let's talk about it when we have time. I don't have time recently."
Today is April 2nd. Next, Simon will fly to Australia tomorrow and stay there for less than a week. Universal Studios Osaka will open on April 6th. In order to avoid causing the 'Westeros Effect' again, Simon will not I plan to go to Japan, but I still have to pay attention to this matter.
Also, April 7th is the first anniversary of the Rwanda genocide. Because of what happened last year, US officials have naturally taken most of the credit. This time Clinton will attend the first anniversary event, and Simon will also take the opportunity to go there. Travel to Africa.
Further back.
In short, there is no time at all in the short term.
Moreover, Simon's private itinerary last year has attracted too much attention since it was exposed. If he directly contacts Chinese officials, in his current capacity, he still needs to weigh many things.