Chapter 38

Before Christmas, all the exams for the first semester at the Chinese University of Hong Kong were completed, and the school began its holiday. Although Hong Kong students do not have winter break, they can take a continuous half-month off during the Christmas and New Year holidays. The second semester at the Chinese University of Hong Kong will not resume until January 6th.

Li Xuan, however, became even busier. The new factory had completed its recruitment, and various matters needed his approval as the boss. When Keji Company closed, several veteran employees, encouraged by him, joined Dongfang Electronics and became trainers for the new workers, providing them with basic skills training.

The new arcade assembly workshop opened by Dongfang Electronics was much larger than the original Keji factory. Li Xuan recruited over a hundred people at once, and according to his plan, the factory should produce more than 4,000 arcade machines per month after it stabilizes.

In fact, this was far from the scale he desired. Based on the sales of Space Invaders, which sold over a hundred thousand units a year, Dongfang Electronics would need to expand by two to three times. He didn't believe that the classic games Tank Battle and Hong Kong Blocks would be less popular than Space Invaders.

However, Li Xuan didn't dare to expand the factory so quickly because of the lack of funds. Renting the factory space, purchasing production equipment, and other expenses were like water flowing out. Additionally, a large amount of money was needed for raw materials and to reserve salaries for over a hundred employees.

Previously, Keji Company was a stable cash cow, bringing Li Xuan nearly one million in net income each month. Now that Keji Company had closed, the arcade factory in Kwun Tong was taken over by Shao Yongqiang. The new factory was renamed Heji Electronics, and any profits would have nothing to do with Li Xuan.

Shao Yongqiang paid three million in cash as the factory transfer fee. Li Ke kept five hundred thousand for himself, and the rest was transferred to his brother's account. Adding the dividends from Keji Company in the previous months, Li Xuan earned over five million in just a few months.

From summer to now, in just half a year, Li Xuan had earned his first five million. Combined with his age of eighteen, if the media knew, it would be enough to write a vivid entrepreneurial story, taking the front page of Hong Kong newspapers and becoming the best example of a young Hong Kong entrepreneur.

But Li Xuan was under immense pressure. Earning money quickly also meant spending it quickly. Since the establishment of Dongfang Electronics, he had already invested nearly two million Hong Kong dollars. Although there was still over three million in cash in the account, after deducting the costs for raw materials, reserved employee salaries, and other expenses, the actual available funds were not much.

Fortunately, the cost of game console motherboards ordered from Epson could be offset by game licensing fees. During the contract negotiations, the Japanese representative proposed a one million US dollar lump sum to buy out the rights to the two games, which Li Xuan rejected outright.

His proposal was that Epson pay five hundred US dollars in game licensing fees for each arcade machine produced, and not a cent less. Epson found the price too high and refused to accept it, and Li Xuan was unwilling to budge, leading to a deadlock over the licensing fees for several days.

Later, Seiko Epson sent a board member, Kensei Hattori, to Hong Kong to negotiate with Li Xuan. But Li Xuan was firm, stating that if Epson could not accept the terms, they might as well part ways. In Li Xuan's view, licensing the game production rights for the Japanese market was already a significant sacrifice. One million US dollars to buy out the rights to two games was out of the question. In the end, Epson gave in but requested the exclusive rights to the Japanese market, meaning that the two arcade games produced by Dongfang Electronics could not be sold in Japan.

Li Xuan agreed, as his focus was still on developing the U.S. market. However, before that, he could not overlook the local Hong Kong market. After all, even a small market is still a market and should not be wasted.

Li Xuan entrusted the sales task for game arcades to Li Ke. After all, most game arcades in Hong Kong were under the control of the Wah Lok Tong. However, he warned his brother that business was not about gang activities; it was about making money, and even if an enemy came to negotiate, he must still smile and be polite. No matter which gang-affiliated game arcade owner came to discuss business, they must be made to feel welcome.

Besides game arcades, Li Xuan also had his eye on Hong Kong's cinemas. Hong Kong cinema, starting with Bruce Lee, swept through Southeast Asia. The 1976 film "Half a Loaf of Eight Ounces" by the Hui brothers broke the local box office record with over 8.5 million Hong Kong dollars, causing a sensation in the Hong Kong film industry and ushering in the golden era of Hong Kong cinema.

The thriving Hong Kong film industry also made this small territory one of the most densely populated areas with cinemas in the world. Besides the two major cinema chains, Shaw and Golden Harvest, there were several smaller chains and numerous independent cinemas.

The waiting areas of cinemas were actually the best places to place arcade machines. Most people who enjoy movies are young, and so are those who enjoy arcade games. During the boring wait for their movie to start, if there were arcade machines nearby to pass the time, spending five Hong Kong dollars for a few minutes of entertainment would be a win-win situation.

Cinemas would not need to increase staff or space and could earn additional income on top of ticket sales, popcorn, and drinks. This was a mutually beneficial arrangement.

Li Xuan's idea was good, but the actual implementation was not as smooth. He first approached the two largest cinema chains in Hong Kong, Golden Harvest and Shaw, but was turned away without even a chance to discuss.

So, Li Xuan shifted his focus to smaller cinema chains and changed his approach from negotiating with chain managers to directly contacting individual cinema managers.

Compared to chain managers who focus on scheduling, cinema managers were more aware of the importance of additional revenue sources to the overall profitability of the cinema.

"Manager Li, if you haven't played our electronic games, no matter how much I talk, you won't have a clear understanding and might even think I'm exaggerating.

How about this: our company will provide one Hong Kong Blocks and one Tank Battle game machine for free, to be installed in the cinema's waiting area. We will let the actual benefits speak for themselves. If these two game machines can earn enough money for the cinema to your satisfaction, we can sit down and discuss the purchase terms!"

Li Xuan smiled as he said this to Manager Li of the Lisheng Cinema. Lisheng Cinema was the flagship of the Lisheng chain, located in a prime area with a large space and four screens for simultaneous movie showings, making it one of the highest-attendance cinemas in the Lisheng chain.

Manager Li did not answer immediately but pondered for a moment, weighing the pros and cons. If the game machines were as profitable as the young man claimed, it would undoubtedly open a new revenue stream for the cinema, earning him points with his boss. If the game machines were not good, he could simply have the young man remove them after a few days, with no loss to himself. Since this was a risk-free deal, Manager Li nodded without hesitation, agreeing to the terms.

Finally, a smile appeared on Li Xuan's face.

PS: I need a recommendation in the morning. I bow to you, don't hide your votes!

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