Different from the mobile Internet era in later generations, the public now has no concept of consumer electronics and does not have a clear definition.
The same is true for Cao Yongluo. He asked: "What is consumer electronics?
Is it mobile phones, game consoles, etc.? "
Zhou Xin nodded: "That's roughly it. To put it simply, everything involved in the chip industry chain belongs to consumer electronics.
I plan to use my personal reputation to endorse this brand and create a consumer electronics brand that is influential enough to enjoy a high premium. "
Cao Yongluo, who has been well-informed since childhood, naturally knows that this is difficult. How many Chinese companies want to build brands, but it is very difficult to even establish brand recognition domestically, let alone establish visibility on a global scale.
“This is very challenging, too difficult, really too difficult. It’s not like the higher-ups have never thought about strengthening our domestic brands. There are many practical difficulties in this process.
When it was still called the Ministry of Mechanical and Electronics Industry, we did research to build a consumer electronics brand.
The first is the technological gap. The technological gap between us and foreign countries is too big, and it is difficult to produce high-quality products. In other words, the yield rate is insufficient and costs cannot be controlled.
Secondly, it is difficult for Chinese consumer electronics companies to gain visibility and reputation in the international market, let alone if you want to be a consumer electronics brand with a high premium. "Cao Yongluo is very sincere.
Zhou Xin smiled. He knew very well that the power of one person was small. The entire semiconductor industry chain ultimately needed products to support subsequent R&D and technology iterations.
"I also know that it is very difficult. Overseas consumers have very low recognition of domestic consumer electronics brands.
But the consumer electronics brand I founded will not be considered by overseas consumers as a Chinese company.
I am highly bound to the image of Silicon Valley. When consumers talk about this brand, they will think of me, NewPay, Quora, and Riot, which are all Silicon Valley companies.
Users will not associate them with China.
Just like when users use Yahoo, will they associate Yang Zhiyuan with Wanwan?
And to build a consumer electronics brand with a high premium, I will not put all the industrial chains in China. If Chinese state-owned enterprises can do it, then I will give Chinese enterprises the opportunity to do this part.
If the yield rate does not meet the requirements, they will continue to do it even if they lose money.
What I need is a brand that will push back on the iterative upgrades of China's electronic technology.
Even if China joins the WTO later, these foreign consumer electronics brands will mainly be based in manufacturing bases in China, and they are manufacturing bases with relatively low technical content.
At the same time, product research and development will definitely be gradually moved to China. However, these research and development results belong to foreign consumer electronics giants. They will not let Chinese companies be responsible for research and development. They will be responsible for OEM production.
The only people who can do this are Chinese. "
To put it simply, for example, Samsung is the most downstream of the consumer electronics industry chain, consisting of a series of components including chips, screens, radio frequencies, antennas, batteries, memory, etc.
For the components with high profits, Samsung will choose to make them by itself. For the components with medium profits, it will be made by Korean companies. Only the Chinese companies will make the low-profit components.
Profit also means technical content.
Later, China wanted to upgrade its industry. What was the purpose of industrial upgrading? Just go to the link with high profit.
This is something that industrialized countries need to develop to a certain stage before they can think about it. Foreign consumer electronics giants have no chance of doing this kind of thing to Chinese companies.
Chinese enterprises neither have this technology nor this opportunity.
Only high-premium brands can support the continuous iteration of technology throughout the supply chain.
If you often read research reports, whenever you read a research report on the mobile phone supply chain, you will be very impressed by the part about key companies.
Until 2019, Huaguo's brand awareness has been fully recognized internationally. However, in the mobile phone industry chain, Huaguo companies are concentrated in the fields of casings, mechanical components, PCBs, displays, chip packaging and mobile phone assembly.
These are all links with very low profit margins.
This is still the case twenty years later, let alone in 1999.
Cao Yongluo was very calm and did not get excited by Zhou Xin's words. The more he interacted with him, the more he realized how difficult this road was: "Zhou Xin, you may have a net worth of billions of dollars now, but you want to build a world-class business." consumer electronics brands are still not enough.
Not to mention that you also want to support the domestic industrial chain in this way.
We also know that we need a high premium to have enough profit margin to promote technological progress and continue to enjoy high premiums.
But the practical factors are here and it just can’t be done.
There are too many Chinese companies. If any technology is broken by China, the price of related products will drop significantly. They will not think about selling at high prices, but only want to seize the foreign trade market at low prices.
We currently don’t respect patents enough, which means that after a technological breakthrough, other companies will rush in. The companies that achieve the technological breakthrough first will not be able to fully enjoy the technological dividends, let alone high premiums to feed back R&D.
You should know that China has been negotiating to join the WTO. After joining the WTO negotiations, we need to pay patent fees to foreign companies.
Take the DVD industry as an example. China is a major DVD producer. We export a large number of DVDs to the world. Now we don’t have to pay patent fees to foreign companies. However, after joining the WTO, we have to pay a patent fee of US$9 for each DVD.
But if the technology belongs to a local Chinese company, then this technology does not need to pay patent fees, and it is almost impossible for domestic companies to collect patent fees.
Of course, on the bright side, we will pay attention to patent protection sooner or later, but we are currently facing practical factors.
It is extremely difficult for Yanjing's R&D institutions to recover patent fees from export companies in Guangdong Province.
This is really difficult. Getting Chinese companies to focus on research and development is now even more difficult than building a consumer electronics brand.
In fact, after what you just said, I think your idea is indeed feasible. Starting from some small areas, there is a chance to make it happen.
But if you want to use this to cultivate Chinese companies to shift their focus to technology, it will be difficult. "
What Cao Yongluo is talking about is reality. In fact, many things at the moment are systemic problems, not isolated problems in a certain field.
In fact, Zhou Xin knew some of the issues mentioned by Cao Yongluo, and some did not.
But for him, it is impossible not to do it just because it is difficult.
If you don’t do it because of the difficulty, wouldn’t it be better to just lie down and become an Internet tycoon in Silicon Valley?
“I don’t care which company can eventually provide me with the products I want, I only mention my needs.
If Chinese companies can meet our needs, then I will give Chinese companies a chance. In other words, Chinese companies think that as long as we give them time, they can meet our needs.
Then when they meet their needs, I will let them join this industry chain. "
