Chapter 53: Flesh or Poison?

The Silver Weasel mouse sold quite well in the domestic market, facing virtually no competition. However, computers remained a luxury item at home, affordable only to a minority of average families.

Currently, the largest buyers of computers in the country were government units in Yanjing and various provincial and municipal departments. These departments accounted for the bulk of purchases. Major domestic computer manufacturers like Lenovo and Great Wall mainly served these institutional clients, including hospitals and large corporations.

For ordinary families, computers costing tens of thousands were still out of reach. Even if Silver Weasel dominated the entire domestic mouse market, it would only sell tens or hundreds of thousands of units annually. Foreign computer brands such as IBM, Compaq, and Apple, even if their machines were sold domestically, were reluctant to collaborate with Silver Weasel.

Li Dongling hoped Silver Weasel could break into foreign markets. Worldwide computer sales were estimated to exceed 37 million units this year, while domestic sales—both domestic and foreign brands combined—were less than half a million. The major market was overseas.

Even if Silver Weasel didn’t compete directly with Logitech abroad, capturing even a small piece of the foreign market would mean mouse sales far surpassing domestic figures.

Hu Zixian shook his head. “So far, no overseas computer distributors or agents have contacted us!”

“To enter foreign markets, we need overseas agents and must invest heavily in advertising. Given our current situation, this would be quite risky.”

Hu Zixian’s viewpoint reflected that of typical domestic companies nowadays—cautious and conservative. First, develop the domestic market; if that no longer yields profit or becomes saturated, then seek opportunities abroad.

Rushing into overseas markets recklessly could cripple Dongling High-Tech if losses occurred. Given Silver Weasel’s solid reputation at home, why take such risks?

Li Dongling glanced around at Yao Luoying, Chen Tao, Gao Peng, Li Dongshan, and others. Except for Yao Luoying, who seemed to have something to say, the rest clearly agreed with Hu Zixian.

“Whether it’s Silver Weasel mice or the digital cordless phone we’re developing, all future products from Dongling High-Tech must expand beyond national borders,” Li Dongling declared. While the domestic market must not be abandoned, for the next decade or so, income and consumption levels at home won’t match those overseas.

Of course, you can harvest profits anywhere, but harvesting the local market’s ‘chives’ would never be as lucrative as harvesting foreign ones. It’s not that domestic consumers can’t be tapped, but foreign markets offer better cost-effectiveness.

Hearing Li Dongling’s words, Hu Zixian and the others were taken aback. Most domestic companies were fixated on their “one-acre plots,” and few would openly proclaim ambitions to reap foreign profits.

“How’s the digital cordless phone coming along?” Li Dongling asked Chen Tao, head of the technical department.

Chen Tao replied quickly, “It’s under development. We’ve hit some technical snags and need to conduct performance testing, which will take time. But we expect to start trial production by July at the latest.”

Li Dongling gave Chen Tao a look. The pace wasn’t fast—this was already March 1994, and promising completion by July was optimistic at best. R&D is unpredictable; a minor issue could delay progress by weeks or even months.

“Hasten the development. The tech department can hire more researchers and procure necessary experimental equipment.”

“Also, I plan to have Dongling High-Tech partner with Pingyang University and Hanxi Transportation University to jointly establish a laboratory, with an initial investment of no less than 15 million RMB. Going forward, at least 5% of annual profits will be allocated to R&D.”

Li Dongling told Chen Tao this, and Hu Zixian, Yao Luoying, Chen Tao, Li Dongshan, Gao Peng, and others were genuinely stunned.

Currently, Dongling High-Tech’s accounts showed a healthy cash flow, thanks to settlement compensation from Microsoft and prior satellite dish sales. Yet Li Dongling was nearly dedicating one-seventh of that cash to establish this lab, not to mention committing at least 5% of future profits annually to research.

Such an approach was startling in the domestic context, where tech firms often sought maximum profits by importing all components, reluctant to invest in R&D, viewing it as wasteful. Li Dongling was going against the trend.

Investing heavily in R&D today wouldn’t earn applause; it might even invite ridicule—especially since this year, two top executives of the country’s most famous domestic computer brand were embroiled in internal conflict over whether to invest in chip development.

If even the country’s leading tech companies were divided, Li Dongling’s decision was undeniably bold.

Dongling High-Tech was not a state-owned enterprise; there were no shareholder disputes. Li Dongling had absolute control, so his decisions wouldn’t be contested internally.

Establishing a formal, top-tier lab for new technology development was essential. If Dongling High-Tech wanted to compete with overseas tech giants, it needed its own technologies; otherwise, it would always be at others’ mercy, vulnerable to being choked off unexpectedly.

Li Dongling felt that even 5% of profits for R&D was insufficient. Globally, major companies in pharmaceuticals and tech typically invest 15% or more, sometimes up to 25%, relying on sheer financial muscle to push innovation.

Dongling High-Tech had not reached that level yet. Allocating 5% of profits annually to research was already a significant feat. In the future, with stable revenues, Li Dongling planned to increase investment.

As the saying goes, you can’t become rich overnight; a thousand-mile journey begins with a single step. Dongling High-Tech’s move toward R&D was far better than merely assembling machines from imported parts.

“One more thing,” Hu Zixian said, “Should Dongling High-Tech establish its own manufacturing facility or acquire a production company? This could boost mouse output capacity and enable in-house production of digital cordless phones.”

Building or acquiring a factory required substantial upfront investment but would drastically reduce costs in the long run, eliminating reliance on subcontractors and keeping profits in-house.

Li Dongling considered this, then said, “Have finance calculate the cost of building a factory. Also, see if there are any suitable production companies available for acquisition.”

After Hu Zixian and Chen Tao finished their reports, Li Dongling lightly tapped the table. “I have two announcements.”

“First, there will be some management adjustments at Dongling High-Tech soon, with new senior executives joining.”

This was expected. Dongling High-Tech had operated somewhat informally, with people like Yao Luoying, Hu Zixian, and Gao Peng juggling multiple roles. Personnel changes were natural.

“Second,” Li Dongling stood and smiled, “Thank you all for your hard work lately. The logistics department will purchase some TVs, air conditioners, and pagers as prizes. Additionally, all staff will receive an extra month’s salary as a bonus; department heads and above will get a 10,000 RMB bonus. Year-end bonuses will also be paid.”

This last statement was almost directed at Hu Zixian. When Hu first joined, he had asked for a 50,000 RMB annual salary, which seemed generous. Yet nobody expected Dongling High-Tech to advance this far on a two-year contract that was practically a bargain.

Li Dongling wouldn’t be harsh with Hu Zixian. Without his support during Li’s absences, the company might have faced chaos. Though salaries were modest, bonuses and year-end rewards would compensate.

Hu Zixian smiled, as did Yao Luoying and the others. What mattered wasn’t the size of the bonuses but the fact that Li Dongling wasn’t a miserly boss. Even after earning millions, he was willing to share generously with his team.

As they left the office, Yao Luoying suddenly told Li Dongling, “Chairman Li, Vice Mayor Yao, who oversees Pingyang’s commerce and industry, will visit our company this afternoon.”

Hu Zixian glanced at Yao Luoying but thought little of it. Yao Zhengru and other Pingyang city officials had frequently inspected Dongling High-Tech recently.

This was mainly to prevent Dongling High-Tech from being poached or relocated. For a city like Pingyang, having a company that earned foreign exchange was precious. They guarded it closely, wary that a provincial capital or another city might lure the company away. The officials’ frequent visits made sense in this context.

Moments later, when Yao Luoying announced to the staff that everyone would receive an extra month’s salary as a bonus this month—including interns—cheers erupted throughout the office building.

That afternoon, Yao Zhengru arrived at Dongling High-Tech traveling lightly, accompanied only by a secretary.

“Boss Li, you are truly young and promising. The new generation is surpassing the old, achieving what we once dared not dream,” Yao Zhengru said, shaking Li Dongling’s hand.

“Mayor Yao, you flatter me,” Li replied.

This wasn’t Yao Zhengru’s first visit to Dongling High-Tech. Except for the digital cordless phone lab, he had toured all other areas before. This time, he went straight to Li’s office.

Seeing Yao’s intent for a private conversation, others left the room.

“Lately, Luoying, I hope you haven’t caused trouble for Dongling High-Tech,” Yao Zhengru said, sitting down.

Li Dongling was slightly surprised but not too taken aback. He quickly guessed the relationship between Yao Zhengru and Yao Luoying.

“Mayor Yao, you’re joking. Dongling High-Tech wouldn’t be where it is without Assistant Yao.”

Yao Zhengru glanced at Li, then said plainly, “The city government wants Dongling High-Tech to stay in Pingyang. Whether it’s tax, loans, land use, or other matters, the city will provide the greatest support.”

To keep Dongling High-Tech, the Pingyang municipal government was even willing to forgo taxes for several years.

“Dongling High-Tech’s headquarters will not leave Pingyang,” Li Dongling affirmed. As for other branches or labs, their locations were flexible.

Yao Zhengru understood the implication but nodded in agreement. Even if it was just the headquarters by name, keeping it in Pingyang was beneficial to the city government.

“I have one more thing to mention,” Yao Zhengru continued. “Tomorrow, Mayor Luo will meet with you personally. He may bring up the matter of the West City Wireless Factory No. 1.”

Li Dongling looked at Yao Zhengru, puzzled by the cryptic remark.