Chapter 30

There are significant differences in the business management styles between American and Japanese companies.

American companies tend to focus more on specialization, concentrating on their core business. For example, Intel, even though its microprocessors dominate the global market, has never considered extending its business downstream to develop its own computer products.

However, Japanese companies have a completely different approach. They focus more on the systematic nature of the industrial chain, building a complete industrial structure and technological barrier. They then optimize and integrate the entire industrial chain to reduce product costs to the minimum, thereby gaining a price advantage in fierce competition.

Of course, there are also American companies that are comprehensive and all-encompassing, such as RCA, whose full name is Radio Corporation of America. This famous company started with radio broadcasting and receivers in the early 1920s and later pioneered the development of the first television.

The current RCA company includes the manufacturing of televisions, radios, and other consumer electronics, RCA Records in the music industry, NBC, one of the three major public broadcasting companies in the United States, semiconductor business, aerospace business, and even the production of blankets, which are unrelated to its core business.

However, its core business of television manufacturing has been gradually forced into a corner by Japanese companies since the 1960s. Of course, compared to other American television factories that have long gone bankrupt, it can at least barely survive.

The main reason for this is that American workers will never be as hardworking and dedicated as their Japanese counterparts, treating the factory as their second home. Powerful unions can use strikes and votes to make factory owners yield time and again, continuously raising wage levels, which in turn continuously increases production costs and reduces the market competitiveness of American products.

This is why American companies have had to divest non-core businesses they consider to have low profit margins and focus all their efforts on their core business, defending against Japanese companies' price competition through technological leadership.

Seiko Epson and other large Japanese companies have a consistent business philosophy. Their core product is printing equipment, and the processing core of printing equipment requires CPU control, so they built their own wafer factory. Of course, the reasons supporting Epson's decision to build the factory, besides the consideration of reducing the cost of printer components, also include the management's optimistic view of the future development of the semiconductor industry.

However, the competition in the Japanese chip market, especially in the memory market, is very intense. Intel, unable to withstand the price war in memory products from Japanese semiconductor companies, will transform into a microprocessor manufacturer in a few years.

Epson, a newcomer in this field, has no foundation, and the current situation of its wafer factory is understandably difficult. When Li Xuan contacted the Japanese company, the reason for negotiation was to purchase a batch of MOS6502 processors produced by Epson and to request a personal visit to Japan for inspection.

Surprisingly, his small company, which had been established for only a little over a month, quickly received a response from Seiko Epson. The other party warmly welcomed him to visit Japan and arranged for a dedicated person to accompany him throughout the trip.

Li Xuan judged from the Japanese company's attitude that the new wafer factory of Epson must have a very low actual production rate. If their production schedule was full, they would not have paid any attention to his small company, which had not yet established any business reputation.

"Master Xuan, haven't we already achieved our goal this time, leaving only the signing of the contract!" On the way back to the hotel, Du Wenqiang said with a grin.

In the past month, as the newly appointed head of the software development department, he had not dared to relax for a moment, feeling even more pressure than Li Xuan. He urged his subordinates to work overtime every day, causing everyone in the software department to complain. As a result, the game that Li Xuan originally planned to develop in three months was completed in just one month.

"Whether we can sign the contract is still uncertain, but at least we have shown enough potential to attract their attention!" Li Xuan did not want to make promises he couldn't keep.

"Master Xuan, aren't you afraid that Epson will kick us out after seeing our game ideas and produce game consoles themselves!" Liang Ning, who had shown remarkable composure since joining the company, was a complete contrast to his demeanor during the interview, making Li Xuan feel like he had found a gem.

"We have applied for patents, and besides, Epson is not a game company. Entering a completely unfamiliar new field with the risk of legal action would require a significant profit motive to make such a choice.

Moreover, by the time they recruit people and develop similar follow-up games, we will have already found other partners. So unless their president has been kicked by a donkey, he won't make such a choice!

On the contrary, if it were a game giant like Sega, I would truly be worried! Even if we produce a game console, before it becomes a hit, they can just make a phone call to the distributors and block us.

Moreover, their market capabilities far surpass those of our new company with no foundation. If they steal our ideas, they can produce similar games in no time.

What use would it be to sue them in court then? The meat would already be in their mouths, and even if we win the lawsuit, the compensation would be at most a bit of broth. Besides, such lawsuits often drag on for a long time, and I might go bankrupt before the case is even over!"

Li Xuan explained a bit. Patents are not a panacea; they just add an extra layer of insurance. Otherwise, there wouldn't be so many Space Invaders clones on the market.

This kind of thing exists in almost every industry. Large companies openly infringe on your intellectual property, and what can you do? As long as the profits outweigh the litigation costs, they are not afraid of you suing them. A trial can drag on for a year or two, and even if they lose, they can appeal, dragging it out for another year or two. In the end, the victim will be the first to give in. Li Xuan had heard many such stories in Silicon Valley in his previous life.

The value of Hong Kong Blocks and Tank Battle in the eyes of Epson and Sega is completely different. What is not worth the risk for Epson, Sega might see its true value. This is why Li Xuan is unwilling to contact game giants before his game console is produced.

"What I'm afraid of now is that the decision-makers at Epson will underestimate the value of these two games. If they think that our Hong Kong Blocks and Tank Battle will only sell a few thousand units, do you think they will bother to customize a game motherboard for us? The profit from this might not even cover the cost of adjusting their production line!"

Before coming to Japan, Li Xuan had already planned to give up some of the profits. Compared to the Japanese market, the much larger American market is the key to the rapid rise of Oriental Electronics.

He sighed and continued, "I'm not really afraid of them being greedy. If the price is right, I can even authorize them to produce these two games in the Japanese market!"

In fact, Seiko Epson has very mature conditions for manufacturing arcade machines. They already have a production line for printer motherboards, which can be slightly adjusted to produce arcade machine motherboards.

With Li Xuan responsible for providing game content and solving the key issue of the arcade machine motherboard, producing their own arcade machines would be a natural progression for Seiko Epson. This aligns with the Japanese companies' strategy of extending their business up and down the industrial chain.

If he can turn Epson into an ally, Oriental Electronics will instantly have the strength to challenge game giants like Sega, Taito, and Namco. To gain a foothold in the electronic game console market, developing good games is a prerequisite, but being able to ramp up production at critical moments is also crucial after establishing market channels.

The arcade market is ultimately determined by the players' choices. As long as your game is fun enough and players are willing to keep inserting coins, arcade distributors will wave their money to place orders.

Li Xuan has absolute confidence in the quality of the games developed by his company. At least the 1979 versions of Hong Kong Blocks and Tank Battle developed by Oriental Electronics are no worse than the versions he played in his previous life.

However, getting orders is one thing, and being able to produce them is another. If you are slow, other companies' follow-up games will quickly come out, and you will end up doing the work for others.

This is precisely the weakness of Oriental Electronics. The arcade industry is not yet a mature market, and components like cabinets, joysticks, and CRT displays can be easily purchased in large quantities on the market. The only challenge lies in the most technically demanding and critical part: the game console motherboard.

There are no specialized baseboard factories yet to support companies like Li Xuan. Li Xuan himself does not have the time or capital to build a dedicated arcade board factory, so the best approach now is to give up some of the profits and find an ally.

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