I See through Everything

Chaowei Brand: 64 yuan per kilogram.

Sea Tyrant Brand: 10 yuan per kilogram (for wholesale orders of 300 bags or more).

Huihe Brand: 35.2 yuan per kilogram.

Xi Brand: 37.92 yuan per kilogram.

Matou Brand: 100 yuan per kilogram.

Lin Ji: 11.8 yuan per kilogram.

Shengwei: 23.75 yuan per kilogram.

Yixuan: 32.84 yuan per kilogram.

Pinghai: 17 yuan per kilogram.

The cheapest brand among them was Sea Tyrant, at 10 yuan per kilogram.

As for how they achieved such a low price, anyone in the business knew the answer.

For instance, they used low-quality surimi and added more fillers like starch, cassava flour, and soy protein.

Generally, the wholesale price of low-quality domestic freshwater surimi, such as that made from silver carp, was around 6 to 10 yuan per kilogram.

For some surimi products that competed mainly on price—those with a high content of starch and other fillers—the wholesale price could be as low as 4 to 6 yuan per kilogram.

In terms of origin, the factory wholesale price for some low-quality freshwater surimi from places like the Beibu Gulf was 14,000 to 15,000 yuan per ton, which works out to about 14 to 15 yuan per kilogram.

Meanwhile, low-quality Basa Fish surimi imported from the An Nan Region, used as a raw material for products like fish tofu, had a wholesale price of around 28 to 37 yuan per kilogram.

Li Xinhua said with a hint of resignation, "Our company’s premium Egyptian Catfish surimi is of a relatively high quality. But in the current market, the situation of bad products driving out good ones is severe. I believe we have to develop a low-cost product. This is what General Manager Lin is thinking as well."

Jiang Miao was not one to ignore good advice. He made a decision on the spot. "Then we’ll use starch and soy protein as fillers to lower the fish content in the surimi. Old Li, have the aquatic products R&D office start researching a high-starch version."

"Will do."

Since Hailufeng Company had once again lowered its procurement cost for Egyptian Catfish, the current cost for the company’s premium Egyptian Catfish was about 3 yuan per kilogram. The cost of high-grade surimi with 90% fish content was in turn pushed down to 4.8 yuan per kilogram.

By adding fillers like starch, if the fish content of the surimi was reduced to 45%, the cost could be compressed to about 3 yuan per kilogram.

This was the fundamental reason why many brands could sell their "golden fish balls" for as low as 10 yuan per kilogram.

Typically, the surimi content of fish balls is between 70% and 85%.

But the type of surimi used was crucial.

High-grade surimi with 80-90% fish content.

Low-cost surimi with 40-50% fish content.

The cost difference between the two was night and day.

This was also why Guotai’s golden fish balls previously had a wholesale price of 50 yuan per kilogram. They used surimi with 90% fish content and had to ensure the overall fish content of the final product was no less than 80%. Their costs couldn’t possibly be low.

Of course, cheap fish balls were never going to taste very good.

These cheap fish balls were generally purchased by snack stalls, malatang shops, and hot pot restaurants for commercial use.

As for Guotai Company’s request, Jiang Miao also felt it was acceptable. "Regarding Guotai, we can agree to let them produce low-fish-content fish balls, but they must maintain the same price as us."

"Understood." Li Xinhua nodded.

In any case, for any new product using their Egyptian Catfish, Guotai had to pay 70% of the gross profit to Hailufeng Company. Jiang Miao naturally had no objections, as long as their price matched that of Hailufeng Company’s own cheap fish balls.

Based on the current cost of Egyptian Catfish surimi, the production cost for cheap fish balls was incredibly low, only about 4.5 yuan per kilogram.

If they engaged in a price war and pushed the wholesale price down to 10 yuan per kilogram, they would still have a gross profit of 5.5 yuan. Even after Guotai paid Hailufeng Company 70% of that gross profit, they would still be left with a profit of 1.65 yuan per kilogram.

For the agricultural and sideline product food processing industry, a gross profit margin of 16.5% was actually quite high.

The gross profit margin for many companies in this sector had even fallen below 10%.

As for Hailufeng Company, the gross profit margin on their cheap fish balls could reach 55%. This was comparable to the margins for carbonated beverages or certain popular braised duck brands.

Both Jiang Miao and Li Xinhua knew full well that Hailufeng Company’s cheap fish balls would definitely taste better than other brands’ cheap offerings.

The reason was simple.

The fishy smell of other brands’ cheap fish balls was unavoidable, as they were made from ordinary, low-cost surimi.

The "cheap" surimi used by Hailufeng Company, however, was only cheap in name. Its quality was actually comparable to the Basa Fish surimi imported from the An Nan Region. It had only a faint fishy smell, with none of the distinct muddy taste common in other products.

In a competitive scenario like this, the other brands of cheap fish balls would be quickly suppressed.

The premise of "bad products driving out good" is that the good products aren’t sold at a low price on a massive scale. If the superior product is priced similarly to the inferior one, the situation will reverse.

After all, when prices are comparable, both individual consumers and commercial businesses tend to choose the better product.

Of course, due to inertia, many restaurants would still continue to purchase the other brands’ cheap fish balls.

After receiving Jiang Miao’s approval, the fish ball factory quickly began experiments.

To be precise, they directly used some old recipes from the Guotai Food Factory, which Lin Jili had proactively provided to Hailufeng Company free of charge.

Since they had the recipes, only minor adjustments were needed, despite the slight differences between Egyptian Catfish surimi and other types.

The aquatic products R&D office tested ten different versions. In the end, Li Xinhua selected the one with the best cost-effectiveness to be the mass-produced version.