In late July, Ge Lü Shi Company printed 1,000 copies of a beautifully crafted user manual for their Ge Lü Shi speakers. The manual detailed 32 different wiring configurations for the dual-component speakers in English, French, German, and Chinese. It also included a test report from the Mikhailgen Electroacoustics Technical Center in Berlin and provided the names and addresses of Ge Lü Shi's European general distributor and national distributors in the UK, France, and Germany.
Soon after, the Ge Lü Shi speakers were placed on the shelves of the Beijing Ge Lü Shi Company's audio store, priced at 11,600 yuan. The demonstration equipment for these speakers was still the front and rear power amplifiers from Guangzhou Slek Company and the Selinda Signature Edition CD player. Given that most products in the store were audio racks, the setup of one audio system and a few pairs of speakers seemed somewhat out of place.
By mid-August, the authoritative bi-monthly magazine in the domestic audio industry, "Era Audio," published an article by Mr. Zhou Zhitao titled "A Record of the Berlin Five-Nation Expert Evaluation of Ten Speaker Models." This article also featured excerpts from reviews of the speaker evaluation event by several authoritative audio magazines in Germany, France, the UK, Japan, Hong Kong, and Taiwan. Given that most of the evaluated speakers were from world-renowned companies, the presence of the Ge Lü Shi speakers among them made it appear as a world-class product in print.
At this time, Ge Lü Shi Company approached Lesheng Company with an intention to sign a one-year contract for the monthly purchase of 100 sets of Lesheng flagship speaker kits.
Lesheng Audio Manufacturing Co., Ltd. is headquartered on the ninth floor of the Babylon Building in Shenzhen, a commercial office building with over 20 floors. The ninth floor is split by the elevator lobby: the eastern half belongs to Lesheng Company, while the western half houses a real estate company. Aside from the occasional passerby, the entire office floor is quite quiet.
Lesheng Company, founded by Lin Yufeng, grew from a small audio shop in Shantou to acquiring a street loudspeaker factory. Lin Yufeng owns 60% of the shares, while two audio engineers and two senior managers each hold 10%, having invested through their technical and managerial expertise. The company relocated from Shantou to the Shenzhen Industrial Zone in 1993. Lin Yufeng adopted a structure separating capital shares and profit shares, holding 60% of the equity but only receiving dividends equivalent to 20% of the profit shares. The remaining 40% of profits are distributed to middle management, enhancing the company's cohesion and enabling it to become a well-known Hi-Fi audio enterprise within a decade. Lesheng has dealers in 36 large and medium cities and direct sales stores in Beijing, Shanghai, Chengdu, Wuhan, Guangzhou, and Nanjing. Lesheng speakers, known for their unique audio philosophy, advanced technology, and reliable service, have challenged the dominance of European and American brands.
Room 9018 on the ninth floor is Lin Yufeng's office. Despite the scorching sun outside, the spacious office was cool and comfortable, accentuated by a few lush potted plants in the corners. Lin Yufeng, in his 40s, of medium build with calm and sharp eyes, and slight wrinkles at the corners of his eyes and forehead, was sitting at his desk reviewing company documents.
At this moment, Zhao Qing, the general manager of Lesheng Company, walked in with some materials in hand and said, "Chairman, there's a situation in Beijing that I need to report to you."
Lin Yufeng put down the document and asked, "What is it?"
Zhao Qing placed the materials in front of Lin Yufeng and said, "A company in Beijing wants to order flagship kits, just the speakers and crossovers, without binding posts, junction boxes, or damping boards. They need 100 sets per month for a year. A company ordering 1,200 sets in a year is significant. Zhiwei was unsure, so he sent the information to us. I also reviewed it and am uncertain, so I came to get your opinion."
Lin Yufeng briefly browsed the Ge Lü Shi speaker user manual and the article "A Record of the Berlin Five-Nation Expert Evaluation of Ten Speaker Models" from "Era Audio" and smiled, saying, "It's amazing that such old tactics are still in use. This company is quite active. What's their background?"
Zhao Qing replied, "Ge Lü Shi Company opened in March this year, initially only selling audio racks. The general manager, Ye Xiaoming, was previously Lesheng's agent in the ancient city. This company drew attention because Ye drives a BMW 730 with Beijing plates, which seemed out of place for a small shop owner. Zhiwei found out through connections that the car is privately owned by Han Chufeng, the president of Zhengtian Group, and Ge Lü Shi Company's warehouse is rented in Zhengtian Building's underground parking lot. The car was reportedly given to a friend named Ding Yuanying by Han Chufeng in July 1996, who lives in the ancient city."
Lin Yufeng remarked, "Han Chufeng is a notable figure in the business world. That's quite a background."
Zhao Qing continued, "Ye Xiaoming used to run Yafeng Audiophile Audio Shop in the ancient city, which later went out of business. Without a qualified agent in the ancient city, that line was put on hold. Ye was quite familiar with Zhiwei during his time as an agent, often visiting Beijing. Zhiwei learned that Ye has no direct relationship with Ding Yuanying or Han Chufeng. Ge Lü Shi Company is a limited company with three audiophile partners and a female investor as the major shareholder. All four shareholders are from the ancient city, and the production base is also there. Ding Yuanying's girlfriend is friends with the female investor. Ding helps the female investor because of his girlfriend, serving as a behind-the-scenes advisor."
Lin Yufeng thought for a moment and muttered, "Ding Yuanying? I haven't heard of him."
Zhao Qing explained, "Ding Yuanying is Han Chufeng's classmate from Berlin University and has been working in Berlin. He worked at a Beijing securities company for two years and is said to be an audiophile with a system worth over 400,000 yuan. Ge Lü Shi Company has no direct interests with Ding or Han, and such a small company can't hold their expectations. However, given their names are associated, Zhiwei remains cautious, worrying that large quantities of kits might impact our market."
Lin Yufeng asked, "How many kits has Ge Lü Shi Company already purchased?"
Zhao Qing answered, "Zhiwei found out that Ye Xiaoming exchanged two pairs of Lesheng flagships for six sets of kits when clearing stock, and bought 30 sets in January, totaling 36 sets, enough for 18 pairs of Ge Lü Shi speakers. They sent 10 pairs to Europe, so they should have 8 pairs left. These speakers have been on display in their store since April, priced at 11,600 yuan. Their European price is 30,000. This dual-component design is quite bold, not afraid of being laughed at by experts."
Lin Yufeng looked at the price of Ge Lü Shi speakers in the "Era Audio" magazine and said, "Slek Company wouldn't laugh at the dual-component design; even amplifier manufacturers would support it to sell more units."
Zhao Qing said, "From my perspective, 100 sets a month isn't a huge volume and shouldn't affect us. They're using our units, which is an endorsement of our flagship, and we control the supply, so we can cut them off if needed."
Lin Yufeng thought for a long time and said, "Agree to it, but not 100 sets a month. Offer them 1,000 sets once a year. Make the price attractive enough for them to find it better than monthly purchases, pushing them toward 1,000 sets. If they want to play with monthly orders, we won't discuss it. If they genuinely want it, they can buy at retail price."
Zhao Qing paused, then said, "You mean their speakers won't sell?"
Lin Yufeng nodded, "Chinese speakers without a strong brand can't easily penetrate the European market, and there's no large-scale market for high-end speakers domestically. They'll soon realize the market isn't as they imagined. If we talk about 100 sets monthly, the actual execution might only be the first 100 sets. With 100 sets spread over 12 months, only 8 sets a month, what's the point of discussing price and special requirements? Give them 1,000 sets, then wait for the returns. It's a one-time deal, but if they want us to clean up, it won't be at the original price."
Zhao Qing understood and laughed, "Without binding posts and damping boards as they requested, these kits are unsellable as retail, forcing them to return. We profit twice from this deal."
Lin Yufeng said, "Notify the marketing department to strategize. Buy six pairs of Ge Lü Shi speakers, set the price high, get more manuals, and several copies of this issue of 'Era Audio.' Write promotional content based on the facts and our needs, and display a set in direct sales stores in six key cities, using Ge Lü Shi as a prop to showcase Lesheng's brand. Tell Zhiwei to make this deal happen. If you want someone to put on a show for you, you need to dress them up. If you don't supply them, they'll find someone else, so don't push this brand showcase to others."
Zhao Qing said, "Great! No matter how much foreign knowledge Ding Yuanying has, without core technology and solid business practices, relying on speculative tricks won't get them far. At best, it's a show, ultimately making clothes for others."
Lin Yufeng tapped the "Era Audio" magazine and said, "Mr. Ding really believed in it!"