I See through Everything

Jiang Miao saw the two of them and smiled, extending a hand. "General Manager Lin, a pleasure."

"General Manager Jiang, I hope we’re not intruding." Lin Jili shook his hand, then turned to his son. "This is my son, Ruifeng. He’s been working with me lately as my assistant."

"A pleasure, Assistant Lin."

Lin Shuya, who had originally been eating here, disliked business talk and had moved to another private room to have her meal.

Li Zixuan poured tea for the two visitors.

Jiang Miao quickly finished his meal as well.

Only then did he notice Lin Ruifeng had brought a large pile of things with him. He smiled and shook his head. "General Manager Lin, your visit is more than enough. You really shouldn’t have."

"General Manager Jiang, you misunderstand. These are just some local specialties," Lin Jili explained.

Lin Ruifeng then picked up a large bag of dried daylily buds and a package of amla to introduce them. "General Manager Jiang, these are daylily buds, a specialty from Hai Feng Huangqiang. A friend of my father’s gave them to us, and since we were planning to visit you, we couldn’t possibly come empty-handed."

Jiang Miao smiled but said nothing. Through his appraisal panel, he could see an incredibly valuable stalk of wild ginseng mixed in. ’Though to be honest, it’s not that valuable to me.’

’After all, when it comes to the nourishing effects of things like ginseng, I can achieve even better results with other, cheaper foods and herbs. I have no need for it.’

’Still, they went to the trouble of bringing it. I can’t just refuse it outright. I’ll just play it by ear.’

Jiang Miao smiled and asked, "So, General Manager Lin, what brings you here today?"

Lin Jili took a sip of tea and quickly stated the purpose of his visit. "Since you’ve asked, General Manager Jiang, I won’t beat around the bush. The main reason for my visit is to see if there’s any possibility of a partnership."

"Oh? What sort of partnership did you have in mind?" Jiang Miao was curious about their intentions.

Lin Jili got straight to the point. "I heard your company has the technology to remove the muddy taste from Egyptian Catfish. I was wondering if you would be willing to license it to our company. We’re open to negotiating the licensing fee."

’So that’s the partnership they’re after?’ Jiang Miao mused for a moment, mentally weighing the pros and cons of licensing the technology.

In essence, the core of the technology for eliminating the muddy taste of the Egyptian Catfish lay in the feed formula. Hailufeng Company had already patented a dozen or so related formulas.

Therefore, licensing the technology was really about licensing the feed formula. ’But as far as I know,’ he thought, ’Guotai Company doesn’t own a feed mill. This kind of partnership wouldn’t work.’

Seeing Jiang Miao lost in thought, both Lin Jili and his son grew anxious.

"General Manager Lin, to be frank, the partnership you’re proposing isn’t very feasible. You don’t have a feed mill, and our technology is based on a special feed formula combined with cultivation in flow-through ponds."

"Is that so?" Lin Jili was crestfallen.

But Lin Ruifeng, standing to one side, saw this as an even better opportunity. He quickly proposed, "General Manager Jiang, do you sell your feed?"

"You’re asking to buy the feed, Assistant Lin? This patented feed is normally for our internal use only. However, if the price is right, we would certainly be willing to sell it."

Upon hearing this, the father and son, Lin Jili and Lin Ruifeng, exchanged a subtle glance.

Lin Jili immediately made a decision. "General Manager Jiang, we raise Egyptian Catfish as a substitute for tilapia in our fish balls and fish tofu. If your company is willing to sell us this patented feed, I am prepared to offer a 20% royalty on the sale price of every ton of fish balls and fish tofu produced."

"That’s too low." Jiang Miao knew exactly how large the profit margins were.

’He should know that the core customers for Egyptian Catfish products are commercial buyers like hot pot restaurants, malatang shops, and snack stalls.’

’This customer base only cares about one thing: a low price. As long as the taste and texture are passable, they’ll buy in a continuous stream.’

’Guotai’s wholesale price for fish balls and fish tofu is 50 yuan per kilogram. They use fish like tilapia and Spanish mackerel as their raw materials. Factoring in other expenses, their total cost per kilogram is around 35 yuan.’

’That seems like a gross profit of 15 yuan.’

’But Guotai’s production volume for fish balls and fish tofu is too low; their core product is frozen tilapia fillets.’

’Sometimes, you also have to factor in the economy of scale. The larger the production volume, the lower the overall cost.’

’A wholesale price of 50 yuan per kilogram will cause downstream restaurants to reduce their order sizes and will also dampen consumer demand.’

’Take the common street snack of curry fish balls, for example. A 10-yuan serving is less than 100 grams.’

’According to the "4-6 rule" in the restaurant industry, if a product’s gross margin doesn’t reach 40%, it’s highly unlikely to be profitable.’

’After all, a 40% gross margin doesn’t even account for labor costs.’

’Many of these food stalls are mom-and-pop operations or small family workshops. If their dishes don’t have a 40% gross margin, they might as well go work on a factory assembly line.’

’A 10-yuan serving of curry fish balls has 80 to 90 grams of fish balls, so the ingredient cost is 4 to 4.5 yuan. The curry sauce, ketchup, and other seasonings add another 0.5 yuan. Utilities and equipment depreciation are about 0.5 yuan. The disposable container is 0.5 yuan. That brings the total cost to between 5.5 and 6 yuan, yielding a gross margin of 40% to 45%.’

’But if the wholesale price of the fish balls dropped to 35 yuan per kilogram, the cost for 80 to 90 grams would only be 2.8 to 3.15 yuan.’

’That creates room to drop the selling price by two yuan.’

’And why lower the price?’

’The answer, of course, is to drive volume through lower prices.’

’If the serving size stays the same but the price drops to 8 yuan, sales would almost certainly increase significantly, yet the gross margin on each serving of curry fish balls wouldn’t drop.’