“What do you mean Chinese?”

In a small meeting room of the Shuangluo Company in Birmingham, England, several high-nosed Westerners were facing a fax paper, and the expression on their faces was somewhat doubtful and somewhat stingy.

"The Chinese are firmly asking us to reduce the price of the compressor to less than 80 million US dollars, claiming that beyond this price will lose the opportunity to bid, can we take this as their ultimatum?"

The talk came from Albert, the sales director of Himans, who came to Birmingham at the invitation of Shuangluo to discuss the export of long-distance natural gas compressors to China.The fax paper on the table is a letter sent by the Chinese Development and Planning Commission to Shuangluo Company, and a letter with similar content has been received by Himanz.The content of the letter to several companies by the China Development and Planning Commission is consistent, that is, euphemistically point out that the quotations of these companies are seriously inconsistent with the market price, and hope that they re-quote according to the market price level, that is, the price of each compressor does not exceed 80 million US dollars, otherwise the Chinese side will consider obtaining the compressor from other sources with great regret.

Schleier, also invited to come to the company's sales director, said disdain: "This is their old routine, hoping to use this threat method to force us to give in."In fact, they are eager to implement their West-East gas transmission project, if the current order of the compressor is not completed, then their West-East gas transmission project will not be able to start.Our intelligence officers have received from some sources the attitude of China's senior management on this matter, this project is a project that is a must-have project at the top, and it is impossible for officials of the China Development Planning Commission to be tough on this issue."

"We already knew that."Maxwell, sales director at the host company, said: "If I am not mistaken, the three of us should maintain the same caliber, that is, the price is absolutely more than 140 million US dollars each, and we will not accept lower offers."They have made threats verbally more than once in the past, but for the first time, they have written this threat directly on paper.I sense that this time their threats seemed tougher than ever.”

What does it mean to write on paper?Does that mean they can’t complain?”Schleier said, “I think they just want to scare us in this way, whether it’s verbal or paper threats, and ultimately they can be reversed, and we’ve seen a lot of that in the past.”

Albert shook his head and said, “Mr. Schleier, I don’t think I can be too optimistic.The Chinese have always been very cautious, and they will not leave a handle on others.They put such a requirement on paper, which means that the cost of their remorse will be high.You know, these people are officials, and even if we don’t hold these handles to hold them, they should be worried about the pickiness of their colleagues.The verbal threat is, after all, unsubstantiated, and such official letters are to be deposited into the archives.”

“But I don’t understand what they’re going to do if we really bite and don’t cut prices?”

“Isn’t it written on the fax, and they will seek other ways to get the compressor.”Albert said.

“Other ways?Is there any other way in this world?”Schleier said with a sneer, "The Japanese have also done natural gas compressors, but their land area is too small to transport natural gas over long distances, so their compressors are facing short-range transmission and do not meet the requirements of the Chinese."The Russians have made similar products, but can the quality of the Russian people be trusted by the Chinese?”

Maxwell hesitated, “What if they really turn to Russia to buy?”

“Then there is fun.”Schleier laughed, “We’ll wait to see if their gas pipelines are rusting there, the Russian equipment is bad for at least half a year, and the Russians have not produced such products since the collapse of the Soviet Union.

"Maybe it really is."Albert accepted Schleier's judgment, and they were all working in the industry, and the situation in the industry was very clear.Himantz also has long-term cooperation with China, and Albert knows that although the Chinese people care about the price when purchasing equipment, they care more about the quality, and Russian products are probably difficult to enter the Chinese eyes.

“So what is our strategy?”Albert asked instead.

Schleier said: "I think we should still stick to the original offer and not bend to the threat of the Chinese."The lesson of our past is to pressure each other and let the Chinese take profits.The three of us who can produce this kind of product in the world, as long as the three of us form a price alliance, the Chinese have nothing to do.”

Albert and Maxwell looked at each other, and Maxwell tentatively asked, “Mr. Schleier, I don’t think we should give the Chinese a step, such as a slight drop of about 5 percent, to show our sincerity.”You know, the Chinese people are very concerned about face, and I think Chinese officials may also be unable to explain to their superiors, so they will put pressure on us with such a tough attitude.If we insist on not making any regresses, they may really drag us down because of their face, and it will be against us.”

Since the family knows their own affairs, China is eager to buy equipment from companies such as Shuangluo, and these companies are not eager to sell equipment.Any product has a technology cycle, Shuangluo and other companies' existing long-range natural gas compressor technology, has reached the verge of elimination, they urgently need a fund to start the next generation of technology research and development, so that this technology can be in line with the current world technology trend.Wool in the sheep, to develop the next generation of technology, the funds can only come from the previous generation of technology.If they can't get a new order, then they have to withdraw funds from the sales of other products to carry out the research and development of this product, which also means that the investment in the development of the previous generation of products can not be recovered, which is not conducive to the company to maintain lasting competitiveness.

If it were more than a decade ago, several companies would not have cared about the Chinese attitude, because Europe and the Americas were building natural gas networks, and local demand was enough to provide them with enough sources of profit.At present, the construction of natural gas networks in Europe and the United States has been completed, the construction of the next generation network is still far away, and the natural gas compressor market can be said to be in the time of the blue and yellow.At this time, China suddenly launched a large natural gas network construction, which is tantamount to sending a lifesaver to several companies, and they hope to get enough profits from China's orders to support the development of the next generation of technology.

In order to avoid mutual bidding leading to dilute profits, the three companies unanimously chose to conspire.They agreed with each other, according to the same price standards and Chinese quotations, and finally no matter which of the homemarks, part of the business will be subcontracted to the other two foundries.At the same time, the three companies also decided to set up a joint research and development agency to jointly develop the next generation of natural gas compressor technology, and the final results were shared by the three, so that the three companies can maintain the absolute technical advantages of the market.

The idea is very beautiful, but also through the China Development and Planning Commission this pass, only the price of the three newspapers has been recognized by the China Development and Planning Commission, there are white flowers of silver to the account, the next thing can be done.If the Commission does not accept this price and the transaction cannot be reached, then the best idea is just a bubble.

When the price was agreed, Albert proposed that the price level of 140 million yuan was too high, far beyond a reasonable price, and it is likely to cause dissatisfaction in China.However, Schleier believes that the current construction of the international natural gas network has stopped, and the price of long-range natural gas compressors does not exist a reference system.It is true that the price of this compressor can be found a few years ago, and the change in price level and changes in manufacturing costs can also be calculated, and China can indeed make an expectation of product prices.But expectations are not the same as the fact, as long as several companies are certain that some factors have led to the price of products, what can the Chinese side say?

In fact, even the price of 80 million per unit is far more than the real cost, and after compensating for the sunk cost in the early period, several companies are still profitable even if they ship at a price of 40 million each.The Chinese side can accept the price of 80 million yuan, and it can also accept the price of 140 million yuan, because only the three companies in the world can supply, and what is the way to sell the price higher?

Schleier can say this because he knows that China's top management has made a decision, and West-East Gas Transmission project is impossible to cancel.A large project with an investment of tens of billions of dollars will stop because the price of a compressor is 60 million more?Obviously impossible.Since the other party must purchase, why not ask for a price?

Maxwell and Albert eventually accepted Schleier's advice and conspired with Tongyong to raise prices.The Chinese side was very shocked by the price they reported, and once showed anger, but the three companies can see that behind the anger of the Chinese side is a helplessness, as long as they bite their teeth and do not relax, the Chinese side can only compromise.

Just as the victory was on the way, the Chinese side sent them such an ultimatum, which pushed the price back to the level of 80 million and claimed that this was the upper limit that it could accept.If the three companies disagree, China can only consider other procurement methods.McSwin, they had not worried about the so-called other ways, because they thought it didn’t exist.However, if it is too stiff with the Chinese side, the other party will not come to Taiwan, resulting in the suspension of procurement, and several companies can not carry it.

This is called hitting the wolf, and both are afraid.