Chapter 75 of 100

Chapter 75

15 min read3,828 words

"Here is the information collected by our legal department. There are three small factories in Hong Kong that are counterfeiting two of our company's arcade games. Two of them have reined in their activities after receiving our legal notice and have stopped their piracy.

The remaining one, however, continues to act as it pleases! We will seek police assistance in the near future to shut down this counterfeit factory!"

At the company's regular management meeting, Manager Chang Feng of the legal department reported on his department's recent achievements in combating piracy.

Li Xuan picked up a stack of photos that Chang Feng had placed on the table. These were direct evidence of the other party's illegal infringement on Oriental Electronics' interests, taken by a specialized detective agency hired by the company. One of the clearer photos showed the factory owner signing for a batch of game circuit boards.

After analysis by Oriental Electronics' technicians, this batch of game circuit boards was not new, but rather second-hand arcade boards that had been repaired. Li Xuan himself started his career in piracy and was exceptionally strict about controlling the outflow of game circuit boards.

After the sale of arcade machines, the game circuit boards have a six-month warranty period. During this period, if a circuit board is damaged, it can be replaced with a new one for free, provided that the damaged old board is returned.

As an ambitious company, Oriental Electronics would not repair the returned damaged game boards and resell them as new. Instead, they would destroy them directly. However, since the company was newly established and its management system was not yet perfect, it provided an opportunity for some people to collude inside and outside the company and secretly tamper with the system. They did not destroy the circuit boards as required by the company but instead secretly replaced the damaged parts and sold them at a high price to outside counterfeit factories.

"Two moles within the company have been identified, and a report has been filed with the Sha Tin Police Station. After collecting sufficient evidence, the police have already applied to the court for the arrest of the two individuals, and a trial date will be set. Our department's relevant colleagues will track the progress of this case and will also file corresponding civil claims!" Chang Feng said.

As soon as Chang Feng finished, Du Wenqiang, who was responsible for research and development, immediately took over with great indignation: "I just reviewed the relevant records, and in the past month, the number of motherboard warranty applications from Heji Company has significantly increased. At first, I really thought there was a flaw in our motherboard design, so I had someone carefully analyze the reasons for the damage to this batch of motherboards.

Our people found a variety of issues, some due to inadequate heat dissipation causing a chip to fail, others due to welding errors causing partial circuit breaks, but they were all minor issues. When we developed the first-generation arcade boards, we rushed to meet the deadline, and some circuit designs were indeed not perfect.

The hardware development department has already started working on improvements and upgrades. The enhanced second-generation game motherboard will be finalized and put into production by the end of the month, so I wasn't too concerned about the issues with the old motherboards. Now it seems that the high failure rate of the motherboards wasn't real, but rather someone was taking advantage of the company's after-sales warranty policy to deliberately falsify the records!"

Li Xuan frowned; the culprit was clear. All the motherboards returned for replacement came from Heji Company, and he really wanted to curse them for their persistent bad behavior!

"I think the deeper issue is our insufficient production capacity! In March, the company's arcade production reached 15,000 units, with 10,000 units of Tank Battle and 5,000 units of Hong Kong Blocks. Without further expansion, this is almost the limit of our production capacity!"

The company's CEO, Han Peng, glanced at Li Xuan and continued: "However, the company has already received orders for 113,000 units from the North American market. Last month, European agents also began to contact us, and so far, we have signed contracts for 16,000 units with agents in the UK, France, Italy, and other countries, with more to come in the next few months.

The arcade machines we produce will be prioritized for the European and American markets. Although Heji Company has repeatedly requested us to increase their supply, we still only provide them with 500 arcade machines per month.

According to our company policy, after-sales maintenance for sold products has the highest priority. Since Heji Company cannot get whole machine supplies from us and is unwilling to let the opportunity to make money slip away, they have resorted to taking risks and targeting the game circuit boards."

Li Xuan nodded in agreement. Han Peng had hit the nail on the head, identifying the root cause of the company's issues: insufficient production capacity.

"After the last expansion of the arcade factory, it has just gotten back on track. I do not recommend immediate further expansion; at least a one to two-month buffer period is needed!" Vice President He Guoyuan, responsible for operations, shook his head and directly rejected the proposal to hire more people.

"In that case, we can only outsource and find an OEM factory!" Han Peng said firmly.

"Actually, assembling arcade machines is not a highly technical process, and finding a qualified OEM factory in Hong Kong is not difficult!" He Guoyuan continued, "So I do not recommend that the company continue to expand the arcade production department. This part of the business can be outsourced.

Our current focus for expansion should be on the motherboard factory under construction. The motherboard is the core component of an arcade machine. Although we can choose to cooperate with companies like Epson, it is still necessary to retain our own motherboard factory!"

"Brother Peng, please arrange a meeting with Mr. Shao Yongqiang, the owner of Heji Company, in the next few days. We can overlook past issues, but there is only one chance to make a mistake. I hope he does not mistake our friendship for weakness!"

Li Xuan nodded at Han Peng and said, "Heji Company has its own arcade factory. From now on, we will only provide them with arcade boards, and they can assemble the machines themselves.

Initially, I offered Heji Company a lower price to squeeze the profit margins of counterfeit factories. I apologize, but this discount is no longer available! In the future, the price of the motherboards supplied to Heji Company will be the same as those supplied to Cousins and others!"

Oriental Electronics' arcade machines are like the emperor's daughter; they are not worried about finding a home. You can take them or leave them!

"Finally, regarding the supplier bidding conference at the end of this month, our administrative department has already received bids from dozens of companies, including local Hong Kong, Taiwan, Singapore, South Korea, and Japan!" Vice President Wang Ying, responsible for administrative affairs, said, "Hitachi and NEC from Japan have even sent special letters to inquire why CRT monitors were not included in this bidding!"

The supply of CRT monitors has already been determined to be with a local Hong Kong company, Lu's Electronics. Lu Qintian knew that Lu's company did not have the capability to compete with Japanese companies. To secure this large order, he directly proposed that Oriental Electronics take a stake in Lu's company.

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