Chapter 69: The Surprising Intelligence of Many

Chen Xiao gulped and realized something even more chilling.

Could Li Delong's escape be connected to the failure of the slim and light VCD?

Was it possible that Li Delong knew that pursuing VCD production was going to be his downfall, yet he pursued it anyway?

As he contemplated, Chen Xiao's suspicion grew stronger.

He fetched a pen and paper and began to analyze the situation.

Point one: Delong's primary income stems from OEM VCD and DVD production, and it's only been involved in OEM CNC machine tool motherboards for the past six months. However, the sales of CNC machine tools aren't as numerous as VCDs and DVDs, resulting in the profits from OEM CNC machine tool motherboards plummeting after an initial surge.

In Xiaguo, various foundries, including Delong, have developed mature VCD manufacturing technologies and can produce VCDs at very low costs. Concurrently, the upstream VCD brand companies have been driving down foundry prices, leaving very little profit margin for foundry-produced VCDs.

What about OEM DVDs?

Given that DVD technology is more intricate than VCDs, and nearly every component involves royalties paid to Western companies, upstream DVD manufacturers have been aggressively cutting prices to manage costs. This has made OEM DVDs at Delong less profitable.

Point two: Li Delong miscalculated the VCD market a few years ago, and despite financial issues, expanded production capacity, even borrowing to build a factory. His goal was to turn Delong into the largest VCD and DVD foundry in Xiaguo. However, the VCD business didn't fare well, and the expanded capacity turned into a significant liability.

These points led Chen Xiao to conclude that Delong had been facing tough times recently, especially in the last year or two, even experiencing severe financial difficulties.

Chen Xiao surmised that Li Delong, being a seasoned businessman, might have foreseen the company's impending demise as early as last year. Perhaps he realized that continuing with VCD production would spell his doom! Despite significant debts and expansion, Delong couldn't halt operations. Therefore, Li Delong aimed to seize an opportunity to escape.

The notion of producing slim and light VCDs, based on Li Delong's industry experience, would have been fatal to him. However, he persevered, possibly hoping that Wang Xiang's role as general manager and legal representative would lend credibility to Delong's empty façade, which was the slim and light VCD gimmick. Li Delong might have also intended to capitalize on the reputation of being a manufacturer of CNC machine tool motherboards to secure additional loans.

Even the involvement of celebrities in advertising might have aimed to enhance Delong's image and credibility, thus facilitating further borrowing.

The loan funds were likely siphoned away by Li Delong, hardly used for actual thin and light VCD production. Given the maturity of Delong's slim and light VCD technology and its low production costs, the loan couldn't have been entirely consumed by production.

Most of the funds were likely pocketed by Li Delong.

Li Delong had effectively leveraged Chen Xiao's two technologies to execute his cunning plan.

Chen Xiao's anger surged as he realized the extent of Li Delong's manipulation.

As expected, the business magnates of the 1990s weren't ones to be trifled with.

They were far shrewder than Chen Xiao had imagined!

"F***!" Chen Xiao cursed.

Chen Xiao also recollected how easily Li Delong had agreed to the partnership, almost allowing Chen Xiao to become the general manager. He marveled at the old fox's cunning.

Commercial interests were inherently transactional.

After much analysis, Chen Xiao realized that Delong's bankruptcy had little impact on him.

However, he did have a sense of regret and discomfort.

Regrettably, Wang Xiang got embroiled in this matter.

From his interactions with Wang Xiang, Chen Xiao had observed that Wang Xiang was a technically savvy individual but lacked emotional intelligence.

Li Delong's scheme was well-crafted, and Wang Xiang, without suspecting anything, might not have detected it.

Chen Xiao had actually considered partnering with Wang Xiang, hoping to cooperate with him in the future. Unfortunately, to stabilize Delong's workforce, the Jiangzhou government had taken the initiative to guide Delong into bankruptcy and reorganization. The production of VCDs, DVDs, and CNC machine tool motherboards was handed over to Zhongjing Company!

"X!"

The Jiangzhou authorities were likely unaware of Chen Xiao's cooperation agreement with Delong regarding CNC machine tool motherboards. They also had no knowledge of the feud between Chen Xiao and Jiangcheng Machinery Factory.

Now, the CNC machine tool motherboard technology was in Zhongjing's hands, and Zhang Biao's company would handle production. Chen Xiao, the rightful owner of the technology, was the first to be excluded.

They could play their game, but they better not involve him!

Chen Xiao set down the paper and pen, took a deep breath, and began to contemplate his next steps.

Chen Qiang quickly dialed the factory using the landline and learned of the turmoil.

With the boss on the run and assets seized, the workers were in a state of panic.

Chen Xiao advised his father, "Dad, if the factory goes under, I won't work there. After all, I'm heading to college soon, so there's no need for you and Mom to support me financially."

For now, the timing wasn't right, but Chen Xiao still intended to convince his father to start a business. His small venture would require management, and he wanted his father to be involved.

Just as Chen Xiao was thinking about this, his phone buzzed (vibrated).

He had set it to vibrate to avoid explaining it to his parents, who might wonder why he had a cellphone.

Chen Xiao retreated to his room to answer the call.

It was Zhou Linghua on the line.

"Brother, have you heard the news?" Zhou Linghua sounded anxious.

Chen Xiao replied, "Got it, Li Delong has done a runner."

Zhou Linghua cursed, "Damn it, what an obscene amount of money he's taken! How did Delong end up like this!"

However, Zhou Linghua was more concerned about his own affairs. "What's going to happen with the CNC machine tool motherboards on my end? I still have orders for motherboards without a manufacturer!"

"Also, I heard the Jiangzhou government is taking charge, and Zhongjing will be producing the motherboards! What are we going to do?"

Linghua and Zhongjing were competitors, and they'd had a major falling out recently.

If Zhongjing got hold of the motherboard production, they would undoubtedly try to drive Linghua out of the market. With no other option, Linghua would have to seek out Zhongjing for production.

Chen Xiao reassured him, "This isn't a huge issue. My agreement with Delong was about technical cooperation, not a technology transfer. If Delong goes bankrupt, the technical agreement will terminate automatically."

"All Mr. Zhou needs to do is establish contacts in Jiangzhou and follow the proper procedures. If possible, the motherboards could still be produced by you or another manufacturer you designate."

Zhou Linghua breathed a sigh of relief, "That sounds promising! I'm glad I asked you, Brother Chen. Whenever I need information, I'll ask Wang Qin to reach out."

"No problem!"

Chen Xiao contemplated advising Zhou Linghua sometime soon that, prior to China's entry into the WTO, Western CNC machine tool companies had become aware of China's ambitions in the field. To maintain their CNC machine tool monopoly in China, Western companies had implemented two strategies.

Firstly, they tightly controlled related technologies, preventing Chinese companies and individuals from accessing them.

Secondly, they adopted a "toothpaste squeezing" tactic. When China independently developed specific types of machine tools over the course of a decade or more, the West introduced slightly advanced CNC machine tools into China at lower prices, instigating both price and technological warfare. This led to Chinese companies going out of business and allowed the West to maintain its monopoly.

Chen Xiao also recalled that, before his rebirth, this strategy had dealt a significant blow to Huawei.