Magic Industry Empire - Volume 1 Chapter 33
The significance of investing in research
There was an old phrase that said ideals were rich and reality was bone bare.
Xu Yi thought that since he was familiar with his previous world’s industrial history, he could steal resources beforehand. He would buy eight-ten or even more Magic Crystal Mines so that even if the price of Magic Crystals increase in the future, he wouldn’t need to worry about not having enough Magic Crystals just with these mines.
Who would have thought that he would be suddenly hit by the cruelty of reality.
The fact was…..he didn’t have money!
“Sir chairman, there is only around three hundred and sixty one gold coins floating in company. According to my research, the cheapest Magic Crystal Mine in Banta is still costs around three thousand gold coins.” Sebas stated the brutal reality to Xu Yi without any expressions, not caring about how ugly Xu Yi’s face looked right now.
“At least three thousand gold coins?” Xu Yi calmly considered this, “Then based on what you’ve said, it would be at least a month before we considered this again?”
“Sir chairman, we cannot do that.” Sebas shook his head, “Although if everything with the company proceeds smoothly, we will gain a net revenue of over five thousand in a month, sir chairman, a qualified company needs to at least keep some floating capital for ourselves. Otherwise if something happens, it will cause a serious crisis to the company. Other than that, if I may be bold, sir chairman’s investment spending is too much. Just the investment in research is a third of the company’s revenue, this is not how a healthy company spends their money.”
“Oh?” Xu Yi looked at Sebas and said with a smile, “Is this idea from you or from the Lord Viscount?”
Sebas was actually someone recommended by Viscount Leslie.
According to what Viscount Leslie said, although based on his contract with Xu Yi, he didn’t have any decision making power in the company, he did have the right to make suggestions and know everything. So he sent someone to the company, who would act as his representative.
Heinz was very worried about this matter, saying that Viscount Leslie was placing a chess piece inside the company. Even if Viscount Leslie was obedient now, he could affect the decisions of the company through this chess piece and could even gradually control the company.
Xu Yi’s reaction was different from Heinz’s.
Since Viscount Leslie already has a 30% share in the Frestech Chamber of Commerce, it was a very reasonable request for him to send in a representative. They had no reason to reject him at all.
Not to mention that they needed many things from Viscount Leslie. If they started rejecting Viscount Leslie’s reasonable requests from the beginning, then the cooperation agreement they reached before would be nonexistent.
As for Heinz’s worry that Viscount Leslie would control the Frestech Chamber of Commerce through Sebas, Xu Yi gave a snort of contempt.
Viscount Leslie was a viscount of the kingdom, he was a true noble. He was the highest existence in Banta City other than the City Lord and even because of the backing behind him, his status wasn’t that different from Banta City’s City Lord.
Relatively speaking, even if their Frestech Chamber of Commerce earned quite a bit from these Magic Fans, just based on the power of their company, they weren’t that powerful in Banta City. As for their other aspects, there wasn’t anything powerful about them at all.
For a powerful noble like Viscount Leslie, if he really wanted the Frestech Chamber of Commerce, he didn’t need to do anything this troublesome. He had a hundred different ways that were much more direct and simple to swallow the Frestech Chamber of Commerce.
So, Xu Yi happily accepted Sebas. When he found out that Sebas had been the financial manager of a company in the past, he gave all of the Frestech Chamber of Commerce’s finances to him to manage.
The facts proved that Sebas really was an incredible talent. In just two short days, a detailed financial account for the Frestech Chamber of Commerce had been prepared. It was properly organized, not like the random bunch of data Xu Yi and Heinz had before.
Heinz was very worried about Sebas handling all of the company’s finances, but Xu Yi was overjoyed. He felt that Viscount Leslie had done a great thing, sending him such an incredible talent.
Of course, there were some times where Xu Yi had misgivings about Viscount Leslie behind Sebas, so he asked this question.
Hearing Xu Yi’s question, Sebas gave a bow, “It’s this subordinate’s idea, it is unrelated to the Lord Viscount.”
Xu Yi said with a nod, “It’s fine, it doesn’t matter whose opinion it is. Sebas, you think that an investment of a third in research is too much? I think it’s too little. This is because the company’s income isn’t high right now, so while a third does sound like a lot, added up it’s only around a thousand gold coins. This research fund is low in my opinion. As the company gains more and more and income, I will continue to invest large amounts into the company’s research fund. Perhaps it’ll be even more than you imagined.”
Sebas hesitated for a moment before saying with knit brows, “Sir chairman, I don’t understand why you would do something like this. The sales volume of the Magic Fans is very good right now and the prospects are also very good, so you don’t need to invest that much money into research. Although I also agree that in order to seize the market, it is necessary to continue developing the Magic Fan, do we need to be in such a rush? Other than that, sir chairman, a lot of money you invested into research…...doesn’t seem to be related to the Magic Fan, right?”
Xu Yi revealed a faint smile as he thought that Sebas has finally asked the real question in his heart, which should also be Viscount Leslie’s question.
This question really wasn’t easy for Xu Yi to answer, since based on the facts, more than half of what he invested into research wasn’t related to research on the Magic Fan.
For example, with Master Lanus’ dwarf tribe, he invested five hundred gold coins a month. At the same time, after receiving so many dwarven craftsmen, Xu Yi invested another two hundred gold coins into them, which also kept increasing.
Other than that, there was only Still in his newly built magic research lab, but he had already invested over a hundred gold coins.
This added up to a giant amount of close to a thousand, which on the surface indeed seemed like it wasn’t related to the Magic Fan.
Moreover, the results from this research wouldn’t be seen for a long time. Even if Xu Yi wanted to explain that this research was closely related to the establishment of an industrial system in the future, no one on the continent would be able to understand what he meant.
“Sebas, let me ask you something. Do you think our company’s Magic Fans are selling well?” Xu Yi thought about it and asked this question back.
“That true locally.” Sebas had clearly already researched this matter and replied without any hesitation, “Compared to the expensive large scale Frost Array, the Magic Fan that only costs two gold coins should be widely accepted by the families that can’t install large scale Frost Arrays and suffer during the summer. Not to mention the consumption of the Magic Fan is low, it would cost less than ten silver coins a month to use it, which is affordable for the families who buy it. So for these families, while the Magic Fan’s effects are less than the large scale Frost Array, it does satisfy their needs. So after seeing the Magic Fan being released, these family will buy it without any hesitation, therefore there are large sales for the Magic Fan.”
“That’s right.” Xu Yi nodded in praise, “Then let me ask you something else. Are the Magic Fans hard to make?”
“They shouldn’t be hard.” Sebas shook his head, “The Magic Fan hasn’t been out for long and there are already replicas, but since they are inferior to our company’s products, they haven’t had a large impact on us. Moreover, sir chairman used a brilliant method at the time and helped the company smoothly pass through that crisis.”
After saying this, a look of admiration appeared in Sebas’ eyes as he looked at Xu Yi.
Xu Yi had proposed the idea of the “brand” during this fake product event, which filled Sebas’ heart with admiration.
Before being sent here by Viscount Leslie, Sebas had done some research on the Frestech Chamber of Commerce. He was surprised to find that after the fake product event, the sales of the Frestech Magic Fans actually didn’t drop. Moreover, when many people wanted to buy a Magic Fan, they first thing they asked was if it was from the Frestech Brand. If it wasn’t, they directly said they wouldn’t buy it. This caused those small workshops making fake Magic Fans give up this idea.
Although there were some fellows that wanted to carve the Frestech Brand on their Magic Fans, but Xu Yi took out the exclusive sales clause. This meant that the Frestech Magic Fan was only sold in a single shop in Banta City and everything else was a fake product.
This completely cut off the livelihood of living off counterfeit products, creating a monopoly inside and outside Banta City for the Frestech Magic Fans.
“Since they aren’t hard to make, that means it is very hard for us to stop people from making Magic Fans.”
After he said this, a helpless look appeared on Xu Yi’s face. This world didn’t have any patent protection laws, so even if he invented the Magic Fan, he didn’t have the corresponding protective measures. This meant that if others wanted to make it, it was no effort for them at all.
“Although there is no problem for us in Banta City, in other cities, no one knows about the Frestech Brand. So in those places, we have no advantages at all. You should know that less than a hundred kilometers away in Saltan City, there is already another Magic Fan factory and they have similarly good sales numbers in Saltan City.”