ebonymovies Chapter 16 Expansion
Chapter 16 Expansion
At the management meeting the following morning, Su Chen presented Zhou Ming, Zhang Lei, Meng Xiaosui, and Li Wei with three weeks' worth of sales data and his expansion plan.
"We sold 248 units in three weeks, our inventory is almost gone, and orders are still rising." Su Chen's tone was calm, but everyone present could feel the weight of his words. "Right now, production capacity is the biggest bottleneck. Our daily production capacity is only 25 units, which cannot meet market demand."
"Therefore, the expansion plan will be implemented in two phases."
"The first step, in the short term, is to recruit skilled assembly workers, expand the production team from the current 30-plus to 60, and have all three assembly lines operate on three shifts, with a target daily production capacity of 50 units."
Zhang Lei asked, "Where do skilled workers come from?"
"Dig," Su Chen said succinctly. "There are plenty of electronics contract manufacturers around Shenzhen. We offer salaries 15% higher than our competitors, plus full social insurance and housing fund benefits, and free training—conditions that are simply unavailable in small factories in Shenzhen."
Zhou Ming added quietly from the side, "I've contacted several recruitment channels and two human resources companies in the past two days. I expect to recruit twenty to thirty skilled workers within two weeks."
"Okay." Su Chen nodded. "The second step, the mid-term: add two new assembly lines on the third floor, along with an inspection area and a packaging area, to expand production capacity to over one hundred units per day."
"Two new assembly lines?" Li Wei adjusted his glasses. "President Su, assembly line equipment isn't cheap. A standard drone assembly line, including debugging and testing equipment, costs at least 1.5 million. Two lines would be 3 million. Add to that the renovation of the third floor, the training costs for new workers… the total investment might be over 4 million."
Four million.
Everyone present knew that the company couldn't come up with that much money right now.
The total sales revenue from the Flyer F2 standard and work versions is indeed good, but after deducting operating costs, mortgage interest payments, and previous return compensation, the available cash on hand is only about 1.2 million.
"Equipment purchases don't require a one-time payment," Su Chen said. "We pay a 30% deposit first, which is 900,000 yuan. The balance is paid after the equipment arrives, is installed, and debugged. There's a six- to eight-week grace period. As long as sales continue to grow, the balance payment won't be a problem."
Li Wei scribbled rapidly in his notebook, his brows furrowed slightly: "The 900,000 yuan deposit, plus renovations and new employee training, will result in a short-term cash outflow of approximately 1.2 million yuan—that's almost all the available funds we have in our accounts right now."
"I know," Su Chen said calmly, "but this money has to be spent."
He stood up, walked to the whiteboard, and drew a simple timeline with a marker.
"It's mid-June now. The equipment purchase deposit is 900,000, and the decoration work is underway simultaneously. The new production line is expected to be operational by early August. There are six to eight weeks in between. The remaining payment for the equipment is about 2.1 million, and with the training of new workers and initial salary expenses, the total cost will be about 2.5 million."
"Where did this 2.5 million come from?" He turned to the four people present. "From sales revenue."
He wrote a few numbers on the whiteboard.
"The current weekly sales trend for the F2 work version is 32, 79, and 137 units. At this rate, a conservative estimate for total sales over the next six weeks is between 1,200 and 1,500 units. Adding the stable shipments of the standard F2 through distribution channels, the total revenue over six weeks is projected to be between 3.5 million and 4 million."
"After deducting raw material purchases, daily operating expenses, and field sales team costs, the cash available for the final payment on equipment within six weeks is approximately between two million and two and a half million."
"Just enough." Su Chen drew a line under the number. "Of course, that's assuming sales don't drop."
Meng Xiaosui immediately replied, "It won't drop. The number of inquiries from each of our field sales teams is still increasing daily, and many of our customers are repeat customers bringing in new clients. The word-of-mouth effect is just beginning. If we can expand our field sales team from eight to fifteen teams, covering more provinces, breaking the 1,000-unit monthly sales mark is entirely possible."
"I've already planned to expand the ground sales team," Su Chen nodded. "Before the new production line goes into operation, we'll first establish a sales network. Once production capacity catches up, we can create a positive cycle of 'sales driving production capacity, and production capacity supporting sales.'"
Zhang Lei had been listening quietly when he suddenly interjected, "President Su, I have no objection to the new production line, but there's something I'd like to mention beforehand."
"explain."
"The F2 working version is selling well now, primarily because of the flight quality advantages brought by the flight control firmware. But this advantage won't last forever—if our sales really pick up, competitors will eventually notice and try to catch up. Although they won't catch up in the short term, in the long run, we need to continuously iterate and improve."
Su Chen glanced at him, his eyes filled with admiration.
"You're right." He walked back to his seat, took a notebook from his drawer, and opened it. "So while expanding production, research and development can't stop. The F2's flight control firmware is version 1.0, and I'm already planning version 2.0—adding smarter automatic return-to-home logic, low battery protection, and a one-click surround aerial photography function. These functions don't require hardware replacement; they can be implemented purely through software upgrades."
"Can existing users upgrade for free?" Zhang Lei asked.
"Yes," Su Chen said, "that's the biggest difference between us and those no-name manufacturers who sell and then abandon us. Free firmware upgrades turn our existing users into our best salespeople."
Zhang Lei nodded vigorously.
Su Chen glanced around at the four people present—Zhou Ming, Zhang Lei, Meng Xiaosui, and Li Wei.
These four people constitute the entire core management team of Hongyuan Intelligent.
A month ago, this company was struggling to survive, with only a few hundred thousand yuan in cash in its accounts, its distribution channels had collapsed, and its product reputation was ruined.
A month later, the F2 standard version fixed the distribution channels, and the F2 work version opened up a brand new lower-tier market, and the company went from a near-death state to a period of rapid growth.
But Su Chen knew very well that this was just the beginning.
A shake-up in the drone industry is already underway. DJI's price war is expected to fully unfold in the second half of this year, resulting in a bloodbath in the low-to-mid-end consumer market. The only reason Hongyuan survived is that he chose a path that DJI disapproved of.
But "looking down on" doesn't mean "never looking down on". When the scale of the lower-tier market reaches a certain level, DJI will eventually take notice.
By then, Hongyuan will need sufficient size and technological accumulation to withstand the impact.
Therefore, every minute and every dollar should not be wasted.
"Okay, that concludes today's meeting." Su Chen stood up. "Zhou Ming will be in charge of recruitment and the third-floor renovation; Li Wei will be responsible for the payment process and cash flow management for equipment procurement; Meng Xiaosui will be in charge of expanding the ground sales team; and Zhang Lei will be responsible for the technical integration of the new production line and the development of F2 firmware 2.0."
"We have a management meeting every Friday afternoon to review progress. Feel free to contact me anytime if you have any questions."
The four people got up and left the meeting room.
Su Chen sat down alone and looked at the timeline on the whiteboard.
Six to eight weeks.
If all goes well, when the new production line goes into operation in August, Hongyuan Intelligent's monthly production capacity will jump from 750 units to more than 3,000 units.
With the expanded ground sales network and the growing word-of-mouth effect, it is not impossible for monthly sales to exceed two thousand units.
Monthly sales of 2,000 units, with a monthly gross profit of 1.8 million.
After deducting all operating costs, the monthly net profit can reach 800,000 to 1 million.
This number may not seem like much in the drone industry, but for Hongyuan Intelligent, which was on the verge of collapse just a month ago, it represents a complete transformation.
Moreover, Su Chen's ambitions don't stop there.
His past life memories told him that the Chinese agricultural drone market would experience its first boom in the second half of 2016 and into 2017. DJI would launch the MG-1P agricultural drone at the end of this year, priced at over 40,000 yuan. However, there were almost no truly usable agricultural drones on the market that were priced within farmers' affordability.
This is yet another huge, overlooked blue ocean.
Su Chen had already studied the technical solutions of the DJI MG-1 in the virtual disassembly lab—although the technical approaches of agricultural drones and consumer drones differ greatly, the two core modules of flight control and navigation are interconnected. Hongyuan's technological advantages accumulated in the flight control field can be fully transferred to the agricultural drone sector.
But that's a matter for the next step.
The most important thing right now is to expand production and solidify the market foundation of the F2 workpiece.
Su Chen stood up and walked towards the technical department.
Zhang Lei should already be waiting for him there—they need to discuss the specific functional plans for F2 firmware version 2.0, as well as the technical standards for the new production line.
From a dying small factory with only 1.2 million yuan in cash and 52 employees a month ago, to a rapidly growing company with two product lines, eight ground sales teams, and a reputation spreading across five provinces in South China, Hongyuan Intelligent is climbing out of the abyss at a speed that no one expected.
Su Chen knew that this was just the beginning.