Chapter 46

From the third day of the Western Electronics Expo, a large number of visitors began to flood in. Unlike the electronics professionals who focused on the latest technological advancements, they were more interested in chasing after the fun things.

The MC68000, manufactured using 3.5-micron HMOS technology, is one of the fastest commercial CPUs on the market! Oh, I don't understand all these technical terms. Are you saying Motorola's technology is good? Alright, I agree, but what does this have to do with me? I might as well go play some games!

This was the true sentiment of most visitors, not just a few electronics enthusiasts. The video game area finally became the most popular spot. Among them, the Oriental Electronics booth was particularly bustling, with a large crowd surrounding it so tightly that it was difficult to even turn around.

Oriental Electronics began negotiations with various arcade distributors from the first day of the expo. Oriental Electronics offered a price of $1,200 per unit for the Hong Kong Block and $1,800 for the Tank Battle.

The price of the Hong Kong Block was acceptable, but the high price of the Tank Battle scared off a lot of people.

However, for the major distributors, the quality of the games was more important than the price. So, although the negotiations with the major dealers got stuck on the price issue on the first day, they didn't completely break down. Li Xuan believed that as long as he remained firm, these distributors would eventually back down.

After all, they were full of internal conflicts. Once one of them gave in, the others would have to follow. Li Xuan was in a strong position, with good games in hand, he didn't worry about finding buyers.

But things began to change subtly from yesterday afternoon. A few distributors who usually didn't get along suddenly became consistent in their approach, starting to jointly pressure Oriental Electronics with a very strong attitude.

"Tony, see that? That's the charm of games!" Li Xuan stood to the side, smiling and pointing at the dense crowd in front of his company's booth.

"Alright, I admit these two games are damn good, but who knows how long they'll be popular? The prices you set are just too high! The owners of those mom-and-pop stores won't take such a high risk!" Cousins shook his head and said.

"How long will they be popular? Space Invaders was popular for over a year. How long do you think our two games, which are far better, will be popular? Besides, as long as these two arcade machines are a hit for two or three months, the owners who buy them will recoup their costs, and the rest will be profit. In my view, this is more profitable than robbing a bank, with no risk at all!" Li Xuan countered.

"Tony, you're the first to come and negotiate with me, and I've always treated you as a friend! We Orientals are always sincere with our friends. I can offer you a $100 discount on the original price!" Li Xuan changed his attitude and suddenly adopted a low profile toward Cousins.

"Vincent, the price difference isn't just $100. Tank Battle at $1,300 per unit, and the motherboard at $1,000, is the highest price I can accept!" Tony Cousins said calmly with a smile.

Li Xuan looked at the bearded white man in front of him, his expression gradually turning cold, and a smirk appeared at the corner of his mouth. "Do you know what price the president of Sega, Nakayama, offered me last night? $1,500 per unit for the Tank Battle, and $1,200 for the motherboard! Should I accept their offer? After all, Sega's sales network covers the entire United States and Canada!"

Tony Cousins' smile froze. "How could they do that?"

"I think the alliance you formed with White and Davis wasn't your own idea, right? I heard you and the others have always been at odds!" Li Xuan said coldly.

"Shit!" Cousins cursed inwardly. He had always had a poor relationship with the pot-bellied White and the Texan Davis. But yesterday, when he met David Rosen at the Sega booth, a casual remark from Rosen reminded him. If all the major distributors fight among themselves, the other side will benefit. If they unite, they can easily deal with a new small company.

Cousins suddenly understood. In the face of money, personal grudges were nothing. He quickly formed an alliance with White and Davis, who had similar thoughts, deciding to pressure Oriental Electronics to lower the factory price.

In his view, Li Xuan's private meeting with him indicated that the other side was ready to back down. Before Cousins could even feel triumphant, Li Xuan told him a more shocking piece of news: the fierce giant Sega was also eyeing Oriental Electronics' new games.

Cousins' market was mainly in California, Nevada, Oregon, and Idaho, with Utah and Arizona still requiring intense competition with Davis. In contrast, Sega had a well-established sales network throughout the United States and Canada, which he couldn't match.

Cousins finally realized he had been played for a fool, and David Rosen was a snake.

Two years ago, with Space Invaders, he had secured the North American distribution rights from Tai Dong before anyone else could react. At the time, they, the distributors, could only watch the booming market with envy. Later, under pressure from Tai Dong, Sega agreed to let them participate as secondary distributors.

But the Jewish David Rosen strictly controlled the shipping prices at all levels, keeping the lion's share of the profits for himself, while the others only made a small profit.

If he lost this fat piece of meat again, he would regret it for the rest of his life. Thinking of this, Cousins broke out in a cold sweat.

"Vincent, you're right, we are friends! We Italians treat our friends like brothers! I've always said that the Hong Kong Block and Tank Battle are definitely great games!

But at your factory price, plus shipping, taxes, and the profits for me and my downstream distributors, the Tank Battle would cost at least $3,000 per unit, and the Hong Kong Block $2,500 per unit. At such high prices, the owners of those small stores would shoot me with a rifle!

The only way to get those mom-and-pop store owners to accept this price is through installment payments. Your requirement for full payment upfront is really too much. A 30% down payment, allowing us to quickly spread the arcade machines across the United States, would be better.

Once those small business owners see the potential of your company's two arcade machines, it will be easier to sell them. The remaining 70% of the payment, I will pay within three months of delivery!"

Cousins no longer demanded a price reduction from Li Xuan but refused to accept the full payment condition in the contract.

"50% down payment, the remaining 50% to be paid within one month of delivery!"

Li Xuan also made a concession. He had previously gathered information on the U.S. arcade market, and the full payment was indeed a significant financial burden for distributors like Cousins.

Most of the arcade machines they distributed required a 50% down payment, and only some less promising machines required a 30% down payment. Of course, for the most popular machines, distributors would pay the full amount in advance to secure the supply.

At the price Oriental Electronics offered, the Tank Battle was $1,800 per unit, and 50% was $900. Li Xuan had calculated the cost, and the actual manufacturing cost of the Tank Battle was only $600. The $900 down payment would be enough for the factory to recover all costs and support Oriental Electronics in expanding production.

Once the Tank Battle and Hong Kong Block arcade machines became a hit in the U.S. market, the 50% down payment clause would be a non-issue. The distributors would compete to pay the full amount in advance to secure orders, and Li Xuan was confident about this.

"Alright, deal!" Cousins smiled satisfactorily. "What about the $100 discount you mentioned earlier?"

"Since I said it, I won't take it back! But the contracts for the whole unit and the arcade version will be signed separately. The whole unit contract will still be signed at $1,800 for the Tank Battle and $1,200 for the Hong Kong Block. The discount you should receive will be transferred to the other arcade version procurement contract!" Li Xuan said calmly.

PS: A deep bow to Kryon for the generous donation! Heading home, I'm about to leave for the train station. Wishing all readers and their families a happy Year of the Sheep! Hehe, I won't ask for red envelopes, but please leave your recommendations!

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