Losing Money to Become a Tycoon: Starting with Games
Chapter 374: The First Stab of 2011
December 31st.
Early in the morning, Zhang Yuan arrived at the Handong University branch of Moyu Internet Café. He ordered a cup of coffee and, while sipping it leisurely, browsed Tieba to see if those goofy netizens had posted anything interesting lately.
Yesterday, he had already arranged for his staff to return or send in all the faulty components for repair. He had also used all the remaining funds on the books to purchase components with higher failure rates, especially RAM.
Stockpiling like this involved a certain amount of risk, but what Zhang Yuan cared about more was the reputation of the ROF brand.
When the brand was first established, President Pei had poured in so much money to run the 1024 Digital Festival, and that was what finally built up ROF's reputation.
If that hard-earned reputation were ruined because of quality issues with assembled PCs, wouldn't all of President Pei's efforts go to waste?
So the quality had to be guaranteed!
They had to strive to ensure that every assembled computer left the line without faults, provide customers with the best after-sales service, and keep sufficient stock on hand so that customers in Jingzhou could place an order at any time and still get same-day home delivery.
After taking care of all that, Zhang Yuan could finally relax a bit.
Tomorrow would be New Year's Day in 2011. With the three-day New Year holiday, he should be able to get some proper rest.
Zhang Yuan slowly sipped his coffee and scrolled through Tieba.
Suddenly, one post caught his attention:
"MSC's factory caught fire again???"
"Damn it! RAM prices are going up again, right?"
"Scalpers!"
"Shit, looks like prices have already gone up!"
"I was planning to wait for some New Year promotions on shopping sites before building my PC! Now I've taken a massive loss!!!"
"It's over. The scalpers have already caught wind of it!"
"What's even going on? How come there's a fire every few days? Feels like they've been burning nonstop from last year's Double Eleven all the way to this year's 618!"
"Was there really a fire? Those who know, know. Most likely the manufacturers set it themselves."
"Yeah, these manufacturers take turns 'catching fire.' And it's not just fires, there are floods, power outages… Honestly, why not just say outright that you're cutting production to raise prices?!"
"This fire seems pretty serious. Wafer production capacity has been badly affected. It's probably not just RAM, flash memory is going to go up too…"
Reading the netizens' discussion, Zhang Yuan was first confused, then overcome with a sense of unexpected delight.
He hurriedly opened a shopping site to check the price of the RAM he had purchased earlier—it had already gone up by more than thirty yuan!
And this was probably just the beginning. Over the next week, it would likely keep rising…
Zhang Yuan had been hanging around Tieba for years and was very familiar with these kinds of "routines." Basically, every time RAM prices hit a low point, some factory would suddenly catch fire or lose power. Then the news would report that the manufacturer had suffered losses of over a billion yuan, and all the profiteers would catch wind of it and start frantically hoarding and speculating on RAM…
That said, no one ever knew when such "accidents" would happen.
If you did know in advance and stocked up on RAM, you could definitely make a killing.
This news should have been bad news for Zhang Yuan.
That was because ROF's pricing strategy for assembled PCs was similar to that of big-brand prebuilt machines. Following President Pei's guidelines, the initial pricing had already taken brand premium and after-sales service into account, and prices weren't supposed to be adjusted frequently.
If they wanted to raise prices, they'd have to update the configurations; if they wanted to run discount promotions, they couldn't do it too often either.
This strategy was mainly meant to eliminate customers' worries and give consumers the impression that "this brand is conscientious, reliable, and holds its value."
If RAM prices went up and the price of complete PCs went up along with them, it would feel a bit like price-gouging and wouldn't be good for ROF's brand image.
So originally, rising RAM prices would definitely have been bad news for Zhang Yuan. With procurement costs increasing while the retail price of complete PCs stayed the same, profit margins would be severely squeezed.
But now, things are different.
Earlier, Zhang Yuan had already stocked up on a batch of components—especially RAM. For those high-end models costing over ten thousand yuan, which used four sticks of RAM per machine, he had hoarded a huge amount!
As a result, for consumers, these high-end models now offered insane value for money, they are much cheaper than building a PC themselves!
And for Zhang Yuan, continuing to sell this current inventory at the original prices would still bring in very healthy profits.
Of course, he could also consider raising prices.
But raising prices clearly went against Tengda Group's spirit and wasn't conducive to further market expansion.
So after some thought, Zhang Yuan decided that this batch of inventory would continue to be sold at the previous prices!
Taking into account the rise in RAM prices and other factors, the configurations of the next batch of PCs could be adjusted—higher specs, higher prices, and new pricing based on the new cost structure.
Of course, that was something to consider later.
Because this round of stockpiling was… really massive.
Thinking of this, Zhang Yuan couldn't sit still anymore.
He immediately called his subordinates and told them to design a batch of brand-new posters to be displayed at the entrances of all Moyu Internet Cafés. At the same time, the promotional pages on the online store were to be updated as well.
The promotional message was simple: no discounts, no promotions, but absolutely no price increases either!
…
2011, January 1st, Saturday.
The three-day New Year's holiday ran from the 1st to the 3rd. Pei Qian was happy to give himself a break and rest properly.
When he thought about how Li Yada and Lin Wan would be coming back from the U.S. on the 4th, Pei Qian felt a headache coming on.
How had a whole week passed so quickly?
Sigh, happy times are always short-lived.
Pei Qian strolled out, planning to go to the Handong University branch of Moyu Internet Café to sit for a bit—have a coffee, play some games, and properly unwind.
But just as he reached the entrance of the internet café, he suddenly sensed that something was off.
Why were there so many people?!
A long line had formed outside the café, stretching all the way to the roadside!
Of course, it wasn't comparable to the massive queues at real estate offices or train stations. It looked like only a dozen or so people were lined up.
Still, this kind of scene was extremely rare at Moyu Internet Café!
After all, the café itself was very spacious. Although the number of computer seats at Moyu Internet Café wasn't huge, people waiting for a spot could relax in the coffee area, movie-viewing area, or reading area. There was no need to queue all the way out onto the street.
Moreover, under normal circumstances, the flow of regular customers should have been fairly stable. Even though today was a New Year's holiday, it shouldn't have attracted this many people just to come and use the computers, right?
Pei Qian looked inside more closely and quickly realized that the situation was even stranger than he had thought.
The coffee area inside Moyu Internet Café wasn't full, and there were even empty seats in the computer area.
And this long line was only from the counter to outside the door. They had even deliberately left space so that other customers could enter and exit freely.
The people at the very front of the line were simply filling out a form at the counter, paying, and then turning around to leave. They weren't going in to use the computers at all!
The more Pei Qian watched, the more confused he became. What on earth was going on?
At that moment, a server was maintaining order while calling out loudly, "Everyone, please don't rush. You can also place your orders on our online store, it's just as valid! The online store address is on the posters outside!"
Pei Qian glanced at the posters outside and felt a bit puzzled.
They did indeed show the ROF PC assembly online store address, along with configuration lists for different price ranges.
But the problem was, these were just the regular prices!
The configurations hadn't changed, and the prices hadn't changed either.
So why were all these people lining up early in the morning just to fill out forms and buy ROF desktops?
Pei Qian had a bad feeling about this. There was probably something going on behind the scenes that he didn't know about, and it didn't feel like good news at all.
The server raised his voice again: "Once again, please note that ROF desktops come with door-to-door warranty service, as well as on-site configuration upgrade services. The pricing standards are all listed on the flyers."
"But please pay special attention to the special clause on the flyer. If you want to upgrade your PC configuration, you must keep the original components. Do not resell those parts, or you will no longer be able to enjoy our after-sales service…"
Pei Qian felt even more puzzled. Why did this need to be emphasized in particular?
Filled with suspicion, he walked into Moyu Internet Café and happened to see Zhang Yuan sitting there, sipping coffee with pride written all over his face.
"What's going on here?" Pei Qian asked, completely confused.
Zhang Yuan smiled. "President Pei, MSC's factory caught fire, and RAM prices have gone up!"
"Huh?" Pei Qian was instantly dumbfounded. For a moment, he couldn't quite process the implications of this news.
Zhang Yuan continued, "RAM that used to cost just over two hundred yuan has now risen to over three hundred yuan!"
"And it'll probably keep going up!"
"Our high-end desktops were already equipped with four sticks of RAM. Now that each stick has gone up by over a hundred yuan, plus some fluctuation in hard drive prices, the raw component cost of each machine has increased by at least five hundred yuan!"
"As a result, not only do our complete PCs look incredibly cost-effective to newbies who can't build their own PCs, even people who know how to assemble PCs themselves think we're an amazing deal!"
"On top of that, thanks to the ROF brand advantage you worked so hard to build earlier, our PCs are selling like crazy!"
"Don't worry, President Pei. I always remember your instructions, I absolutely won't raise prices like those profiteers!"
"After I put out the news yesterday that ROF's complete PCs would keep their prices unchanged, tons of people rushed over from all around Jingzhou to place orders today. We've also already sold dozens of units on the online store!"
"Conservatively speaking, selling a thousand units over the New Year's holiday won't be a problem at all!"
Pei Qian's face instantly went pale. He instinctively tried to think of countermeasures, but no matter how hard he tried, nothing came to mind.
Raise prices?
No way. He had just emphasized price stability before, raising prices now would be slapping himself in the face. Besides, even if they raised prices now, people would still buy them. The profit per PC would only get higher!
Lower prices?
Even worse. Everyone was already buying like crazy. Lowering prices would reduce profit per unit, sure, but ROF's reputation would grow even bigger. What would he do about that in the long run?
Pei Qian felt dizzy. He realized that he was completely out of options. This situation was fundamentally unsolvable!
Zhang Yuan looked relieved. "In the end, this really is a blessing in disguise!"
"President Pei, you had us rent warehouses and stock up in bulk earlier, and now it's finally paying off!"
"If we hadn't stocked up enough, we might have sold out in a single day today. Then when we went to restock components, prices would've skyrocketed, and our profits would've been slashed!"
"And just yesterday, there happened to be a batch of faulty hardware, which we've now all returned or sent for repair. I was worried the remaining components might also run into issues, so I preemptively bought another batch—especially RAM. I bought a lot of it."
"With the current situation, our RAM inventory alone can support us for quite a long time. Our next goal is to let the ROF desktop brand completely dominate Jingzhou's desktop PC market!"
"We can now start poaching customers from DIY builds and big-name prebuilt brands!"
Pei Qian sank into a chair in the café area, feeling a bit lightheaded.
'Something's not right… something must have gone wrong somewhere…'
Pei Qian began to question his entire life.
Today was January 1st, the very start of 2011!
He never would've imagined that the first heavy blow of the new year would arrive this fast.
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