Chapter 620 - 443: A Billion? The Heavens Won’t Reward Diligence! If the Direction Is Wrong, All Effort Is Wasted

"The conveyor belts, gears, and bearings are severely worn."

"The welding torch’s wire feed conduit is clogged."

"The stamping equipment has lost its precision, too."

"No variable-frequency drive modules?"

"Not even a real-time energy efficiency monitoring system?"

Chen Yansen kept up a running commentary as he walked and observed, leaving Qin Shangzhi speechless.

Qi Siyang stood to the side, keeping his eyes down and his mouth shut. He had considered saying something to smooth things over, but then he had a second thought. ’I don’t understand the technology at all. If I try to chime in, I’ll probably just make things worse.’ So, he decided to feign ignorance and said nothing.

"President Chen, this production line may be a bit old, but its main advantage is... it was cheap," Qin Shangzhi explained, forcing the words out.

After all, it was a second-hand production line they had purchased in 1999, almost a relic from the turn of the millennium. It had churned out tens of millions of air conditioners for Xinke. Even if it hadn’t won any awards, it had certainly put in the work.

"President Qin, are you sure the air conditioners made on this line can meet energy efficiency standards?" Chen Yansen retorted.

Before he came, he’d wondered how Xinke could have fallen into such a miserable state, selling only five to six hundred thousand units a year.

After arriving, he’d lost all interest in acquiring Xinke. Instead, he found himself wanting to meet their head of distribution.

’Anyone who can sell junk like this must be a top-tier sales genius!’

"Our air conditioners are priced low, too. There will always be a market and customers for Xinke," Qin Shangzhi said, forcing a smile.

He never imagined Chen Yansen would be so knowledgeable about shearing machines, CNC punch presses, press brakes, tube expanders, and welding equipment. He could even rationally and methodically point out every single issue with the assembly process for the compressors and refrigeration systems.

’This guy isn’t a sucker; he’s clearly an industry titan!’

"President Chen, that’s why Xinke’s prices are so low," Qin Shangzhi said quietly after a moment of hesitation.

Chen Yansen couldn’t help but chuckle. ’So, Xinke’s biggest selling point is just its price.’

Qin Shangzhi pointed to the final assembly line in the distance, his voice tinged with a mix of pride and nostalgia. "Imported from Germany. Cost us thirty million back in the day."

Chen Yansen stepped closer to inspect it, his fingers lightly grazing the greasy edge of the machine. He then asked, "The conveyor belt runs at 0.8 meters per minute, and the cycle time is 45 seconds. What’s the actual output for a single eight-hour shift?"

"A little over four hundred," Qin Shangzhi replied honestly, not daring to fudge the numbers.

Based on a 45-second cycle time, the theoretical output should be 80 units per hour. For a single eight-hour shift, that comes to a theoretical capacity of 640 units.

But the actual output was only around four hundred. The production line clearly suffered from efficiency losses, most likely due to aging equipment, long changeover times, and improper operator procedures.

Just then, Gao Weilin chimed in at the perfect moment, "Last year, the repair rate for a Xinke Air Conditioner was 18.7%. The industry average is 6%."

Chen Yansen shook his head. "Xinke has no proprietary compressor technology, your motors are imported, and even your control systems are purchased from outside suppliers. To put it bluntly, you’re just a glorified assembly plant."

Fine beads of sweat broke out on Qin Shangzhi’s forehead.

A dead silence fell over the factory floor, with only the hum of the old machinery reverberating in the air.

Seeing the tense atmosphere, Qi Siyang quickly tried to change the subject. "President Chen, shall we head to the conference room for now?"

"No rush. I want to see the rest of the production workshops first," Chen Yansen said, waving him off.

’He had come to Changzhou to get business done, not to sit around drinking tea and making small talk.’

Qi Siyang gave a helpless, dry laugh and shot Qin Shangzhi a look, as if to say, ’Lao Qin, what have you been doing for the past few decades? You can’t even handle a kid like this?’

Qin Shangzhi forced a wry smile. Mustering his resolve, he led Chen Yansen into the audio-visual equipment production workshop.

The workshop wasn’t large. Its main products were DVD players, LCD TVs under 32 inches, home theater systems, and soundbars.

"People in China still buy DVDs?" Chen Yansen asked, curious.

He wasn’t being sarcastic; he was just genuinely surprised.

"We mainly target the Southeast Asian and African markets. Sales are actually pretty decent—we sell over a hundred thousand units a year," Qin Shangzhi said with a shrug.

’In his opinion, since Chen Yansen was an expert, there was no way he would buy this pile of scrap metal from Xinke.’

With his expectations gone, his mood stabilized considerably. He decided to just treat it as an opportunity to make a new acquaintance and accompanied Chen Yansen on a tour of the nearly 300,000-square-meter factory complex.

As the sayings go, a starved camel is still bigger than a horse, and a rotten ship is still worth its weight in nails.

Xinke’s factories, equipment, brand, and patents, all added up, were worth at least over a billion, conservatively speaking.

Putting everything else aside, if Qin Shangzhi dared to follow the playbook of companies like Antarctic People, Beijirong, or Philips and just license out the brand name, he could easily make a gross profit of five hundred million a year with no problem.

It was, after all, a twenty-year-old brand. Some consumers would always be willing to buy a product just for the Xinke name.

If that happened, the market would surely be flooded with a ton of Xinke-branded underwear, hand warmers, windbreakers, cell phones, toilets, and rice cookers, creating a vast brand-licensing universe.

But doing so would be tantamount to drinking poison to quench a thirst.

Once the brand’s credibility was completely exhausted, that would be the day it truly died.

Of course, if they managed it well, it wasn’t impossible for them to become the next Antarctic People.

As Chen Yansen continued his tour, he noticed that many of the factory workers were in their forties. He asked deliberately, "What percentage of Xinke’s frontline workers are over the age of thirty-five?"

"47.2%." Qin Shangzhi had given up all pretense and laid the facts bare.

"Why not let them go? Replace them with a younger batch, people who will work overtime with more gusto?" Chen Yansen pressed.

The smile vanished from Qin Shangzhi’s face. In a somber voice, he said, "They are the veterans who built Xinke. They’ve worked here for over a decade."