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Phoenix Technologies Flower is from Las Vegas
Since returning to the Cool Party in February 2018, Jiang Chao has made drastic reforms. First of all, he has closed down his business in China, retained only the core R&D team, and will carry out some R&D business in India and Taipei. He also restructured the U.S. team, which is now managed by Alcatel and Samsung USA and accounts for 90% of Cool's sales.
Jiang Chao believes that price competition and top-level solidification in China's domestic market have made it difficult for cool factions and other small manufacturers to survive, compared with mature markets in the United States. "No profit, no way to support the team." Jiang Chao said that after Lexin took over the Cool School, he had been in the United States since his retirement, and slowly found that the mature market and the mature user group in the United States, if properly operated, would have a great opportunity to participate in the competition.
"We can hardly survive at home. We will not consider it for a few years. We will stick to rooting in the United States." Jiang Chao revealed that Cool not only realizes the localization of the team in the United States, but also intends to let American funds in, and the total ownership ratio of the management team is more than 51% to achieve absolute control, to become a truly American company, but also to avoid other risks.
In 2018, not only Cool, Hammers, Meizu, Jinli and Lexus mobile phones have also experienced difficulties due to various factors. According to his "old man in the mobile phone industry", this situation is inevitable. At present, the majority of China's mobile phone market share is in control of.HUAWEIOPPO, vivo and millet, as well as Apple's involvement, Lenovo and other major manufacturers also have mobile phone business, and companies with mobile phone business as the main body will be more and more difficult to survive.
"The difficulties of 2018 are inevitable." Jiang Chao said that although mobile phones are still a high threshold industry, the lack of obvious innovation, coupled with price war, will lead to more and more difficulties in the future, which is also an important reason for the Cools to completely abandon the Chinese market.
Speaking of hammers and millet, including vivo, Cool has a lot to do with them. In 2018, Cool factions sued Millet and vivo in court, arguing that they had infringed the intellectual property rights of Cool factions. "We still have more than 10,000 patents on hand." Jiang Chao said that although Lexin often suffered huge losses when it took over Cool, Cool still had some technology accumulation.
In addition, the Cool Hammer incident is also one of the victims. There are still 4.5 million yuan outstanding between the Cool Hammer and the Cool Hammer, but the Hammer has been in a precarious situation - shortage of funds, poor product sales, supplier debt collection, no funds to take over. Cool parties also sued the hammer in court, demanding that the hammer pay back its arrears. Jiang Chao also disclosed that "Luo Yonghao's arrears to the Cools are joint and several personal responsibilities, and the Cools have plans to hold him accountable."
The following is a factual record of the dialogue (with a slight deletion on the basis of unchanged original intention):
Phoenix Network Science and Technology: What are the main manifestations of Cool Piece in CES this year? What is the current business situation in the United States?
Jiang Chao: This time, CES is still our focus. Our entire American team, including CEO Casey and management, has come to CES. Although we are not in the main venue, we have never been in the main venue, so we rented two larger rooms in the hotel to show our products and technology.
Second, when I came back to be CEO for more than a year, Cool basically made a fundamental transition. Let's start with our products, although we still focus on smartphones. Now we are building a family-centric product portfolio, including smartphones, MBB, children's watches, smart desktops and other home application solutions. The product variety is more diversified, and the profit margin is much better than that of pure mobile phone in vicious competition.
The second change is that our market is almost quitting China and India, basically focusing on the United States, where 90% of sales are in the United States, with some in North America and Europe. Our American teams, such as Casey and his underlying executive team, are basically Alcatel's former executives. Samsung has three vice presidents of American companies coming to our company. So at present, we are a pure native American-dominated executive team.
The third change is that the Cools are also rapidly localizing in the United States. Cool people now have about 70 employees in the United States, but they are mostly locals, and the management team has been localized in the United States. In terms of equity, we are also looking for American funds, so that their American team and American funds can control 51% of the shares in the future and absolutely control the Cool America. Our third step is going in this direction. Because in this way, at least we won't be under pressure in the United States like ZTE, Huawei, or even TCL, because after all, we are a local company in the United States.
In the future, we still want to do a good job in the U.S. business, and our market share is also rising. Especially after ZTE and Huawei's exit, there are basically only Cool and Alcatel smartphones in the U.S. now, and Alcatel executives are basically Cool, so I think we should still have a lot of opportunities in the market. Meeting.
Phoenix Technology: What is the current situation in China?
Jiang Chao: We still have a part of R&D in China. In Shenzhen and Nanjing of China, there are Shenzhen Research Institute and Nanjing Research Institute. There are about 450 R&D teams. In addition, we have a team of 50 or 60 people in the United States in Silicon Valley, mainly studying AI. I just mentioned the gateway of the home, including the technology of the intelligent network.
Now in China, we want to do a good job in cost control. After all, the cost of R&D in China is rising gradually. So we are outsourcing some R&D to India and Taipei. At the same time, we are planning to build research institutes in India and Taipei. So in the future, we will develop more in India and Taipei. India must be low-cost, and now it seems that the cost of research in Taipei is lower than that in mainland China.
The supply chain depends on the negotiations between China and the United States. If the United States continues to raise taxes, the whole supply chain will definitely move to India. We are ready, Indian factories and OEMs are ready. On the contrary, we may stay in China for a while in the short run, but eventually we will move the industrial chain to India, Southeast Asia and South Asian countries, because in the long run, its cost and various factors of production are far lower than China's.
Phoenix Technologies: From the withdrawal of Lexin to now, what impact does the fluctuation of this incident have on your R&D and patents?
Jiang Chao: It should be said that we are still recovering quickly. At present, our entire team believes that innovation in smartphones is not enough. Whether from small screens to large screens, including water drop screens and various screens, this is just a concept, not a fundamental change in technology. In the current situation of technological stagnation, there are still great restrictions on the survival and development of the Cool Sect. Of course, we are also doing cutting-edge technology, including 5G technology, we are fully invested, including artificial intelligence technology, we are also investing a lot of capacity and funds to do. So far, we have more than 10,000 patents. Now we have sued millet and vivo. We have been holding these companies responsible for infringing our patents.
Phoenix Network Technology: But Smart Home, Millet, Huawei, Lenovo and other manufacturers are also doing, and even OPPO, vivo are involved.
Jiang Chao: First of all, our road is different from that of other manufacturers. We still integrate software and hardware. At the same time, through network optimization and network security, we can achieve closed software and hardware integration system. At present, many manufacturers want to make fast money and fight price war. As a result, no one can make money. So I think in the future, we will focus on the U.S. market, because the U.S. market has consumer power, users are the most receptive to new technologies; third, he is the most in place to protect patents.
Phoenix Technologies: Apart from the lawsuit against millet, Cool Pioneers still have a debt on hammer. How do you plan to deal with it? Besides, do you think the hammer thing is inevitable?
Jiang Chao: I think if a company like Hammer can make mobile phones, it is already a sad thing for the industry. It is not a mobile phone company at all, no matter from the technical ability or the company's reserve. So this is also a reflection of the current situation of Chinese companies, we can see what kind of fire, everyone laid on, the results are all dead, and then everyone withdraws, which consumes a lot of social resources. I think it's a mistake for hammers to make mobile phones from the beginning. It's like us who have been in College for so many years and have been immersed in this industry for 20 years. There are also a lot of Ph.D. and Master's degrees. These people can make mobile phones. A university teacher can make a mobile phone. How is the world going? No way.
Secondly, with regard to the arrears, we believe that the hammer should bear his moral spirit. If you owe money to others, you should pay it back in any way you can. The hammer doesn't coordinate. We'll tell you anyway. And I can tell you about it unilaterally. The owner of the hammer, Luo Yonghao, guaranteed the debt personally. Now we are adding his joint and several liability as an individual. It doesn't matter if his company goes bankrupt. If he doesn't pay the money personally, he will eventually become an old man.
Phoenix Technology: From your experience, do you think the mobile phone industry is still a high threshold industry? Or is it already an uncompetitive industry, the top-level structure has been set, and major changes will hardly occur?
Jiang Chao: I think the mobile phone is still a high threshold, because it needs all kinds of people who know software, hardware and operating system, and you need to know all kinds of relations between operators. So it is still a high threshold industry, but the key is now, because the low-cost operation of Chinese companies makes no profit for everyone. Including themselves, there is no profit, so the harder it is for everyone to live. In such a difficult environment, if you still want to innovate, but this time is just when you meet the bottleneck of innovation, the only thing left is to turn the big screen into small screen, and water drop screen, pierce this side, which is not called innovation in our industry. But we are still waiting for the next innovation, we believe that he must have innovation in the mobile phone industry, we must wait patiently.
We are also waiting for the next breakout point. But we still think that the next breakout point is in the family. With the cooperation of multiple terminals on the home, taking advantage of 5G's advantages of high bandwidth, low latency and fast speed, multiple terminals can use a platform at the same time in the home. We think this is a fundamental direction. In the future, mobile phones may not exist, because the screen is everywhere.
Phoenix Technologies: If 5G is popularized, do you think there will be opportunities for Cool Piece in the Chinese market, especially in the switching demand of cities below the third line?
Jiang Chao: We still won't make low-end mobile phones. We don't want to see such a popular market. We believe that we are pursuing a certain profit margin. We don't say that R&D is under pressure for sales, because if there is no profit, there will be no money to support R&D. So we should not focus on this market in the future. However, we believe that there is still an opportunity in developing countries, but it may be five years from now.
Phoenix Technologies: In 2018, a lot of things happened in the mobile phone industry. From the withdrawal of Cool Sector from Lexin to the disappearance, the plight of Hammers and Meizu, the bankruptcy of Jinli, do you think this is an inevitable situation?
Jiang Chao: I think it's a necessity. Even I think that some manufacturers are very strong now, but they can't represent anything because Nokia is also very strong, and it will soon fall down. So I think that any company, it must still be combined with their own reality, that is to say, like our cool, we are not compared with others. We still say to make my own products well, which is our goal. I don't care if I can sell things like millet, OPPO and vivo.
Phoenix Technologies: In your opinion, what will 2018 do for the whole Chinese mobile phone industry?
Jiang Chao: I think China's mobile phone industry will still be very difficult in 2018. I don't think you can get out of this dilemma. There is only one case of this dilemma, that is, if two of the current four big players die, there will be a possibility of dawn. If you have four families fighting hard here, no one else in the industry will enter. Because it's buried with you. Two of the four families will be destroyed.
The advantages of the four major players (Huawei, millet, OPPO, vivo) lie in the fact that, for example, the mobile phone with 3000 yuan has dropped to more than 1000 yuan. At this time, the manufacturer of the mobile phone with 1000 yuan will surely not survive, so we will not consider this market.
Phoenix Technologies: For mature markets like the United States, do Chinese users still have inadequate perception of technology and products, which is also the cause of the price war?
Jiang Chao: We have done some research and found that Chinese products can hardly be sold in the domestic market, because the demand of users has not risen to the level of developed countries, so I still said that just now. It is estimated that it will take another five to ten years. A normal industry should have a gross profit of 20% to 30%, if this gross profit, you may take 15% to 20% to support R&D, which is a virtuous circle. If your manufacturer has gross profit, then I can make technology.DevelopmentNew technologies are constantly emerging. But now the average gross profit of mobile phones in China is less than 10%. Even I believe that the words like Xiaomi are true, that is, 5% gross profit. It feels very high.
Phoenix Network Science and Technology: Talk about your retirement, is the current development strategy the result of thinking at that time?
Jiang Chao: Basically, I was happy to come in and slowly quit. Then I stayed mainly in the United States. I have a complete understanding of American culture, technology and their product concept. In the Chinese market, we lost more than 7 billion yuan in two years, whether under Lexin or later Liu Jiangfeng. The reason we concluded later is that the vicious competition in the market is caused by the immaturity of the market, so this also prompted me to start planning to abandon the Chinese market completely and then transfer it to the American market. I also want to understand, because I have been in Cool for almost 20 years, Cool should still do technology, can not be transformed into a sales company, nor can we compete with millet and glory in sales, so we still honestly do our own technology, honestly stay in the developed market of the United States, to have enough profits to support the team.