I See through Everything

When sales volume increases significantly, overall gross profit increases as well.

The same principle applied to the source manufacturer.

Jiang Miao explained to Lin Jili, "If you want to use Egyptian Catfish as your raw material, in addition to the procurement cost, one ton of the catfish needs to be raised for about another 28 days. This will require approximately 300 kilograms of our specially formulated feed, which costs 6,000 yuan per ton."

"Factoring in other costs, the production cost for each kilogram of Egyptian Catfish fish balls and fish tofu comes out to about 8.5 yuan. This is the cost for our Yandun Mountain Fish Ball Factory. The wholesale price is 30 yuan per kilogram, giving us a gross profit of 21.5 yuan."

Lin Jili had long suspected that Hailufeng Company’s fish ball production costs were low, but he never imagined they would be *this* low.

Lin Ruifeng, however, spoke up. "General Manager Jiang, what kind of licensing fee did you have in mind?"

"If you’re truly sincere about this partnership, let’s say 15 yuan per kilogram."

"Done," Lin Ruifeng blurted out.

Even though Hailufeng Company was taking 15 yuan of the gross profit, his own company could still make 6.5 yuan.

As long as they could ramp up production capacity—forget selling hundreds of thousands of tons—even selling just 10,000 tons of fish balls would bring in a gross profit of 65 million yuan.

Meanwhile, the hard-pressed Guotai Company’s total net profit last year was only just over 80 million yuan.

Hailufeng Company might be taking the lion’s share of the profit, but they were the ones who held the core technology.

The fact that they could even get a taste was a kindness from Jiang Miao.

No wonder Lin Ruifeng had agreed in a heartbeat.

Jiang Miao just smiled and shook his head. "Not so fast. I have other conditions. As a company licensed by us, you will be required to align with us on the sale of related products, such as the wholesale price for fish balls and the procurement price for Egyptian Catfish."

Snapping back to reality, Lin Jili nodded. "No problem. We will fully cooperate with your company."

"Additionally, you’ll need to inform us of the volume of Egyptian Catfish you plan to procure each quarter one quarter in advance. This will allow us to issue targeted farming licenses to the surrounding regions in a controlled manner and prevent the farmers from all rushing in blindly."

"I understand your concerns, General Manager Jiang."

"When the time comes, you can procure the Egyptian Catfish directly from the farmers based on the quota you declared for the previous quarter. This will also improve your production efficiency."

Lin Jili understood this point perfectly.

If the entire cultivation cycle were to take place at their own farming base, Guotai’s 2,500-mu facility in Meilong Town could only handle four cycles per year, producing roughly 150,000 tons of Egyptian Catfish annually.

However, if they switched to procuring market-ready Egyptian Catfish and only had to raise them in their flow-through ponds for 28 days, that would mean 12 cycles a year. Their production capacity would soar to 450,000 tons.

Of course, they wouldn’t expand on such a massive scale right from the start.

Even if the farmers could produce that much, the fish ball production lines of Guotai Company and Hailufeng Company couldn’t handle such an enormous output.

Jiang Miao added, "As for the scraps and byproducts from your company’s fish ball production, our company will purchase all of it at a price of 1 yuan per kilogram."

"Agreed." Lin Jili knew Hailufeng Company was buying these byproducts to make fish meal, fish oil, and animal feed. Since Guotai Company had no related industries, their only option was to sell them to Hailufeng.

Li Zixuan, who had been standing to the side, had already listed out the conditions. He handed the list to Jiang Miao. "Boss, please take a look and see if there’s anything you’d like to add."

Jiang Miao glanced at the list. "Add one thing. Change ’fish balls and fish tofu’ to ’value-added products made from Egyptian Catfish’."

With the impending surge in Egyptian Catfish production, the two product categories of fish balls and fish tofu alone would likely not be enough to absorb all the capacity.

Therefore, they would definitely need to develop other value-added products, like fish floss, fish-based ham sausages, fish patties, and various types of hot pot balls.

Li Zixuan quickly added the line to the list.

Jiang Miao turned to Lin Jili and Lin Ruifeng. "If neither of you has any objections, we can start working out the finer details based on these terms."

"Agreed, but I’d like to add a supplementary clause," Lin Ruifeng interjected.

"Let’s hear it."

"Right now, the value-added products both our companies make are fish balls and fish tofu. However, other value-added products have yet to be developed. If we do develop new products, their costs and sales prices are currently unknown. Therefore, I propose a supplementary clause: 70% of the gross profit from any new products will go to Hailufeng Company. What do you think, General Manager Jiang?"

"Hmm..." Jiang Miao fell silent for a moment, then nodded. "Agreed."

"It’s a pleasure doing business with you," Lin Jili said with a smile, extending his hand.

The two men shook hands.

"A pleasure."

Intending to give his son more experience, Lin Jili suggested, "Let’s have Ruifeng and General Manager Jiang’s team discuss the specific details of the contract. I’ll just sign it when it’s ready."

"No problem." Jiang Miao didn’t much care for managing the minor details of the company himself anyway.

After all, discussing contract details was a job for Jiang Haibo and the legal department.

The parties chatted for another half hour.

Then, Lin Jili and his son took their leave.

Following Jiang Miao’s instructions, Li Zixuan handed the matter over to General Manager Jiang Haibo, giving him the contact information for Lin Jili and his son.

Jiang Miao checked the time. It was already 1:20 PM. He washed his face and stretched his body a little.

Suddenly, there was a knock on the door. It was Jiang Haibo.

"Haibo, what’s up? Is it about the partnership with Guotai?"

"No." Jiang Haibo handed him a file while explaining, "It’s about KFC. The company wants to partner with us to purchase our White Truffles in bulk."

Jiang Miao flipped through the file and shook his head. "The price is too low. It cheapens the brand. There’s no reason to partner with them."

"That was my thinking as well." Jiang Haibo knew exactly how high the profit margins on White Truffles were.

KFC was only willing to offer a procurement price of 500 yuan per kilogram. While the purchase volume was significant, it offered no real benefit to Hailufeng Company.

After all, selling White Truffles at 500 yuan per kilogram was practically suicide. What good was high sales volume if it not only increased costs but also caused the high-end White Truffle market to crash?

As a high-end condiment, White Truffle had to maintain its specific value proposition.

If a Western fast-food chain like KFC started using White Truffles in large quantities, it would give people the impression that they were cheap.

’Jiang Miao would have to be crazy to partner with a fast-food giant like that.’

Besides, those fast-food giants were known for leveraging their massive distribution channels to constantly squeeze their upstream suppliers. The suppliers of raw materials like chicken and potatoes, for instance, barely made any money.

Just as Jiang Miao was rejecting the partnership with KFC, his phone rang.