Forty to fifty million yuan in R&D investment might be a drop in the ocean for international giants, a mere fraction of their multibillion-yuan annual R&D budgets.
Under normal circumstances, developing a smartphone—even just assembly and initial R&D—would be a daunting task. And that's without factoring in costs for mass production, inventory, and marketing.
But Weiku Electronics had a critical advantage: much lower R&D costs. Exactly how much lower remained to be seen, but Xu Shenxue was confident in the system's ability to significantly reduce expenses.
When Xu called Xie Jianyong to discuss smartphones, it wasn't for input or debate. It was to assign tasks.
"When the R&D department recruits new staff," Xu began, "in addition to maintaining the feature phone projects, you'll recruit talent specifically for the smartphone project. Submit the recruitment requirements to HR immediately. Salaries can be slightly above market rates, and we need personnel in place as soon as possible."
Once Xie Jianyong left to handle his instructions, Xu called for Luo Yinian, the HR manager. Luo, a seasoned professional in his forties, had earned a reputation during Xu's father's tenure for his skill in recruitment and salary negotiations.
When Luo arrived, Xu didn't waste time.
"The R&D department will submit recruitment requirements soon. The HR department needs to expedite hiring. In addition to filling roles for the feature phone project, focus on building the smartphone team. Make sure the R&D department has the framework in place to begin preliminary work."
He paused before emphasizing, "Maintain close ties with human resources firms and keep an eye on senior technical personnel and project leaders in the smartphone industry. If there's an opportunity, offer them a high salary to join us."
"If 1.5 times their salary isn't enough, double it. Be bold with compensation offers. If you encounter expert-level talent and need guidance on salary and benefits, let me know. I'll talk to them personally."
Xu Shenxue knew that for a small company like Weiku Electronics, relying on promises of a bright future was laughable. The only way to attract top-tier talent was with money. Without significant investment, finding skilled professionals would be nearly impossible.
And time was not on Xu's side.
With the global success of the Fruit Phone, the smartphone market had captured the attention of manufacturers worldwide. Domestic giants like Meizu, Zhongxing, Huawei, and Lianxiang, along with countless international players, were already developing smartphones. While many were uncertain about the best technical or system routes, several had begun working on Android-based devices.
By next year, a flood of Android smartphones—including domestic ones—would hit the market.
Xu Shenxue knew his window of opportunity was small.
If Weiku could launch an Android smartphone priced at just over 2,000 yuan before domestic competitors, it would establish the brand, generate massive reputation, and capture a critical market window.
Capturing the Market Window
What made this window so valuable? At present, Android smartphones from Taiwan and foreign brands were all priced above 3,000 yuan. For the next year, consumers wouldn't find Android devices below this price point.
Xu's plan was clear: create an Android smartphone priced under 3,000 yuan. Consumers looking for affordable Android devices would have no choice but to buy Weiku's phones.
This was why Xu Shenxue targeted the mid-range price bracket of 2,000 yuan. The exact price would depend on R&D outcomes and market competition.
If conditions allowed, Weiku could even launch a low-end Android smartphone with a price tag just over 1,000 yuan to test market acceptance.
To achieve these ambitious goals, Weiku needed to act faster than domestic competitors, leveraging the strategic window period. Delays—pushing the launch to 2010 or 2011—would forfeit the opportunity to establish reputation and profits. By then, Weiku would be forced to compete with a saturated domestic smartphone market.
Balancing the Present and Future
After weeks of analysis, Xu decided Weiku Electronics would enter the smartphone market. Realistically, even with everything going smoothly, the project would take one to two years. Completing it before the following fall would be a success.
In the meantime, Weiku's feature phone operations had to remain stable. These low-end products supported the company's hundreds of employees and provided the profits needed to fund the smartphone project.
If the feature phone business could grow its monthly profit to three to five million yuan, it would provide a solid financial foundation for the new venture.
Smartphones represented the future, but feature phones were the foundation supporting that vision.
Evening Reflections
After finishing the day's work, Xu left the company around six in the evening. He climbed into a company-owned Mercedes-Benz S350 driven by a chauffeur. While the car was registered to Xu, it was technically a company asset.
Though Weiku was a family business—with Xu holding 95% of the shares, his mother 3%, and his sister 2%—private and company assets were strictly separated to avoid financial risk. Dividends were taxed appropriately, ensuring legal compliance.
This separation was critical. If the company ever faced bankruptcy, mingling private and company assets could turn limited liability into unlimited liability. Xu had no intention of losing everything and being forced into menial work to pay off debts.
In the back seat, eyes half-closed, Xu reviewed the company's situation in his mind. While the smartphone project was in its infancy, even preliminary preparations required hiring new staff.
As for the feature phone business, Xu's high-frequency sea-of-machines strategy still needed time to prove its effectiveness. Success was uncertain, and much effort would be required to boost sales and profitability.
The domestic Huaqiangnan market was vast but fiercely competitive. Securing channels wasn't guaranteed. Overseas markets, like India, were booming, with Huaqiangnan exporting hundreds of thousands of units monthly. Yet Weiku had no presence in these markets and lacked a clear entry point. Setting up branches abroad was costly and impractical.
Establishing offline channels, as other domestic brands had done, seemed feasible but required significant resources and time. Instead, Xu saw potential in e-commerce.
E-Commerce: A New Frontier
E-commerce allowed direct access to consumers, bypassing traditional middlemen. Although e-commerce platforms took a percentage, it was far less than the cut taken by offline channels.
This model offered a win-win scenario: lower prices for consumers, higher gross profit for manufacturers, and revenue for platforms.
The challenge was trust. Would consumers buy low-end feature phones from an unknown brand online? Would they worry about quality?
These questions lingered in Xu Shenxue's mind as the car glided toward home.
(End of Chapter)