1986 marked the eighth year of Chen Yang's rebirth and the sixth year since he founded Zhenhua Electrical Appliance Factory. This year, Zhenhua Electrical Appliances encountered its most formidable opponent in the domestic market to date.
Panasonic arrived with full force. Despite Chen Yang's years of technological development, he had to admit that the technology from the Land of the Rising Sun was indeed superior.
Panasonic no longer produced black and white televisions; they launched directly with color TVs. They also abandoned electric fans and went straight for air conditioners.
Compared to black and white televisions, color TVs were a complete game-changer. Witnessing the lifelike images on screen, black and white TVs were simply unwatchable. Comparing oneself to others leads to despair, and comparing goods leads to discarding the inferior.
The same applied to air conditioners. Although Panasonic's air conditioners were power-hungry, they were far more energy-efficient than those produced by Zhenhua. Crucially, they were also quieter, a fact that caused Chen Yang considerable distress.
Fortunately, after six years of development, Zhenhua had seized the market's first-mover advantage and successfully established its brand. Moreover, Chen Yang had built a robust offline sales channel through his connections with merchants from Wenzhou.
This was something Panasonic could not match. Even with substantial resource investment to expand its market in China, it still lagged behind Zhenhua. However, conversely, despite Chen Yang's years of preparation, talent accumulation, and technological research, there remained a significant technological gap when facing foreign brands like Panasonic.
They had decades of development ahead of us, possessing mature technological methods and research teams in both manufacturing and R&D.
In China, it was essentially starting from scratch. This is why, even in the twenty-first century after the reform and opening-up, many Chinese enterprises are still held back by foreign powers.
One reason is insufficient emphasis and a lack of significant investment in R&D. Another is that even when attempts were made, the gap was still too vast to catch up in a short period, leading many to become mere assemblers. After all, assembly could still generate profit, so why dedicate oneself to the thankless task of R&D?
However, Chen Yang was not one to easily concede defeat. If he couldn't outcompete the Land of the Rising Sun after being reborn, his rebirth would have been in vain.
Chen Yang's approach was simple: since Panasonic had superior technology, he instructed his technical staff to purchase Panasonic televisions, disassemble them, and meticulously study their components.
If they could replicate the technology, they would. If not, Chen Yang directly dispatched people to the Land of the Rising Sun and Europe to recruit engineers. Just as America could cultivate top talent through universities like Tsinghua and Peking, Chen Yang could directly poach their technical talent.
In capitalist countries, as long as the money was right, foreign technicians would readily agree that science knows no borders.
Technologically, the strategy was to first imitate and learn, then innovate. As for the market, Chen Yang was even more unscrupulous. He offered discounts, even selling at cost or at a loss, as long as it meant suppressing Panasonic.
A Panasonic 14-inch color television cost nearly two thousand yuan. Zhenhua's white-screen televisions of the same size were priced at only twelve hundred yuan, less than half of Panasonic's.
This price was essentially at cost. After deducting worker wages and a small commission to the Wenzhou merchants, Zhenhua made almost no profit.
Market competition is a zero-sum game. Chen Yang showed no mercy.
He knew that once these foreign brands captured the Chinese market, they would raise their prices.
Just like in the twenty-first century, before the rise of domestic automobiles, any joint-venture or imported car, with its flimsy steel body, would command hundreds of thousands of yuan.
If domestic cars hadn't aggressively lowered prices to the ten-thousand or even sub-ten-thousand yuan level to capture market share, those joint-venture brands would never have reduced their prices.
The fact that joint-venture cars, previously sold for two to three hundred thousand yuan, could still be sold profitably at over a hundred thousand yuan demonstrated the ruthlessness of these brands.
Most infuriatingly, during the years when domestic cars were not yet competitive, these joint-venture brands, while reaping substantial profits, actively engaged in cost-cutting and shoddy manufacturing.
Cars priced at over two hundred thousand yuan had their A-pillars snap during IIHS crash tests. It wouldn't be an exaggeration to say that even a minivan costing tens of thousands of yuan wouldn't have such poor structural integrity, highlighting the extent of their corner-cutting.
Of course, dishonest practices weren't limited to joint-venture brands; unscrupulous domestic merchants were equally greedy. Chen Yang didn't consider himself particularly noble. His fight with Panasonic was solely about market share.
However, he could at least guarantee that as long as he was around, Zhenhua would never resort to shoddy manufacturing to make money. He would only earn what he rightfully deserved.
Without securing a strong market position, it might be necessary to engage in price wars, which is why many companies eventually compromise their principles and produce inferior or counterfeit products. Without cost-saving measures like these, their factories would have collapsed under market competition.
Fortunately, Chen Yang's factory was established during the nascent stages of the market. The business environment he faced was far less intense than what modern manufacturers contend with.
As long as he weathered this wave from Panasonic and improved product quality, he could continue to be profitable. This was the advantage of the era.
Of course, for the television manufacturers caught in Chen Yang's price war, he could only offer a silent apology in his heart.
The tide of market economy development was such that the capable advanced and the weak retreated, with survival of the fittest paving the way for the future.
After nearly a year of a tug-of-war, Chen Yang hired thirteen engineers with high salaries from Germany and the Land of the Rising Sun, forming three teams, with them as the core, to research color televisions, air conditioners, and refrigerators respectively.
In the summer of 1987, Zhenhua refrigerators once again livened up the domestic home appliance market. In previous years, Tianjin, with the help of the Ministry of Light Industry, had imported equipment from a defunct French refrigerator factory, preparing for mass production of refrigerators.
This year, Tianjin's factory, having imported equipment from the French company Bauknecht to establish Kenai Refrigeration, launched with three hundred purchase vouchers, each priced at a steep 1,840 yuan. Yet, hundreds of people still couldn't get their hands on one.
This largest domestic refrigerator manufacturing base, with an anticipated annual output of forty thousand units, initially put considerable pressure on Chen Yang. However, unexpectedly, the factory managed to ruin its own reputation.
Despite spending a fortune on imported equipment, the internal management was a complete mess. The workers assembling critical components were all outsourced from radio factories, and some were even untrained farm laborers. This resulted in shockingly poor quality refrigerators, which would break down after a short period of use.
This created an opportunity for Zhenhua. Zhenhua's seven years of reputation spoke for themselves: warranty!
Therefore, even though Zhenhua refrigerators were launched later, their debut felt like a return to the 1970s when industrial coupons were used to buy radios. Many people, desperate for a refrigerator, would queue outside Zhenhua's appliance stores from midnight.