Stronger by Paying Salaries and I Have 1 Billion Employees

Dusk fell over Yanjing in February, heavy and dim, with a piercingly cold wind.

In the ground-floor lobby of Xiaomi Headquarters, Lei Yijun, Lin Bing, Li Wanqiang, and other executives frequently peered outside.

Unlike Chen Yansen’s last visit, this time nearly all of Xiaomi’s top executives had turned out, waiting downstairs to welcome him.

In the short span of a year, Chen Yansen had transformed from a leader in shopping-guide e-commerce to a top contender among internet smartphone brands.

His importance in Lei Yijun’s mind had instantly multiplied.

Staring at the unmelted snow pellets by the side of the street, Lei Yijun found himself lost in thought. He had originally envisioned the Xiaomi Mobile Phone’s sales performance after launch to be just like the Orange Mobile Phone’s.

But now, the Orange Mobile Phone was far ahead, while Xiaomi couldn’t even beat the likes of OPPO, Meizu, and Coolpad.

The total sales figure of two million units seemed impressive, but with the launch of the Orange D1 and Orange C2, the Xiaomi Mobile Phone’s sales were growing increasingly sluggish.

According to forecasts from the Market Department, the potential sales ceiling for the first-generation Xiaomi phone was around three million units.

In simple terms, before the major phone manufacturers held their autumn new product launches, Xiaomi could sell another one million units at most.

For this reason, Lei Yijun had been forced to accelerate the launch schedule for their new products.

”President Lei, President Chen is here,” Li Wanqiang reminded him quietly.

Snapping back to reality, Lei Yijun looked where Li Wanqiang was pointing. Sure enough, he saw Chen Yansen striding toward them, followed by Gao Weilin, the CFO of Senlian Capital, and Song Yuncheng, Pinbei’s Director of Major Accounts.

He quickly composed himself and walked up with a smile. ”My apologies, President Chen. I really couldn’t get away last night. Tonight will be on me.”

”You’re too kind, President Lei. Please don’t make such a big scene next time, or I might not dare to come back.”

Chen Yansen said teasingly, while nodding to Lin Bing, Li Wanqiang, and the others in greeting.

”President Chen is Xiaomi’s honored guest. I wouldn’t dare to be remiss.”

Lei Yijun said with a wide smile.

The swelling on his right cheek had gone down a bit since yesterday, but it was still visibly red and puffy.

Chen Yansen noticed it the moment he saw him. ’How amusing,’ he thought, but didn’t let it show on his face.

After a few pleasantries, the group took the elevator to Lei Yijun’s office.

Chen Yansen sat down and asked, ”When do you plan to launch the Xiaomi M2?”

On the first workday after the New Year, the Xiaomi Market Department had released concept art for the M2. But other than its 5-megapixel front camera and 12-megapixel rear camera, no other information was revealed.

Lei Yijun looked at Chen Yansen, who appeared perfectly composed, and sighed. ”The product design for the Xiaomi M2 isn’t finalized yet. To be honest, I hadn’t planned on launching a new product so soon.”

The implication was clear: Orange Technology had forced his hand.

”Launching it early is a good thing,” Chen Yansen said with a smile, having naturally caught the subtext in Lei Yijun’s words. ”Smartphones are the future. One more product means one more piece of the market.”

Seeing that Chen Yansen was taking his time getting to the point, Lei Yijun decided to be direct. ”The partnership you mentioned yesterday, President Chen—are you referring to the memory cleaning algorithm in the Aurora OS 1.3 system?”

”We can discuss licensing that patent,” Chen Yansen said frankly. ”However, my primary reason for seeing you today, President Lei, is to win the manufacturing contract for the Xiaomi Mobile Phone.”

Once Shencheng Factory No. 3 and Luzhou Factory No. 4 began production, their capacity would far exceed the Orange Mobile Phone’s current sales volume.

To ensure stable income for the workers and high utilization of the production lines, taking on contract manufacturing orders was the best option.

Lei Yijun was stunned. He had considered many possibilities, but he had never expected Chen Yansen to ask for Xiaomi’s manufacturing contract.

He instinctively furrowed his brow, his expression troubled.

The Xiaomi Mobile Phone was currently manufactured by Innolux. Like Foxconn, it was an electronics manufacturer from Taiwan. Both its production yield and contract price were within Lei Yijun’s acceptable range.

According to data from the fourth quarter of last year, Xiaomi’s factory return-for-repair rate was only 1.5%, which demonstrated Innolux’s stable production quality and excellent product delivery capabilities.

But handing over Xiaomi’s manufacturing contract to a competitor? Even if Lei Yijun were a gambling man, he wouldn’t dare take that risk.

What if the Orange Phone Factory decided to stab them in the back at a critical moment? Xiaomi’s losses would be enormous.

At this thought, Lei Yijun shook his head.

”President Chen, it’s not that I don’t trust you, but our contract manufacturing price isn’t very high. Including the fees for SMT, testing, assembly, and packaging, it’s only 32 yuan per unit. After deducting equipment depreciation and labor costs, the profit is only 4 to 5 yuan per phone.”

His message was clear: given the Xiaomi Mobile Phone’s sales volume, even if the Orange Phone Factory took the entire contract, they would only make a little over 20 million yuan a year.

To refuse Chen Yansen, Lei Yijun had even gone so far as to reveal Innolux’s pricing structure.

”I don’t mind,” Chen Yansen said flatly.

’But *I* mind!’

Lei Yijun gave a wry, speechless laugh. He desperately wanted to shout, ’We’re competitors!’

Handing over the manufacturing process for the Xiaomi Mobile Phone to the Orange Factory was tantamount to standing naked before a rival company.

If that happened, Xiaomi’s core industrial and hardware designs would be completely exposed.

”President Chen, this partnership is not up for discussion,” Lei Yijun said in a firm tone.

”If you’re willing to agree, President Lei, I can license a more effective memory-cleaning algorithm patent to Xiaomi. It will help alleviate the stuttering and overheating problems with the Xiaomi Mobile Phone.”

Chen Yansen laid his bargaining chip on the table with a smile.

A flicker of embarrassment crossed Lei Yijun’s face. He knew Chen Yansen was speaking the truth, and the truth often hurts the most.

To be frank, he had been drooling over the Aurora OS’s memory cleaning algorithm for a long time.

He had tested both the Orange C2 and Orange D1 phones. The Orange D1, in particular, which was equipped with a MediaTek MT6573 processor and 512MB of RAM, still performed slightly better than the Xiaomi Mobile Phone. After six hours of heavy use, it also experienced issues with heating up and system stutter, but it handled it better.

This was despite the fact that, in terms of both processor and memory configuration, the Xiaomi phone easily smoked the Orange D1.

This demonstrated that the Aurora OS system’s management of hardware resources, memory, and battery life was far superior to Xiaomi’s MIUI system.

”President Chen, while we may get along personally, I really can’t agree when it comes to my company’s core interests. It’s like we both sell steamed buns. You’re asking me to hand over my secret recipe for the filling, let you handle all the production, and have me just be in charge of sales. How is that reasonable?”

Lei Yijun replied with a wry smile, fighting the temptation.

’What ”secret recipe” does Xiaomi even have?’

Chen Yansen was momentarily stunned and couldn’t help but scoff inwardly.

’Perhaps in a decade or so, Xiaomi will own some patents in 5G, Wi-Fi, Bluetooth, NFC, camera hardware design, image signal processing, and camera algorithms.’

’But this is 2012. Xiaomi is just getting started. What do they possibly have that’s worth my coveting?’

”In that case, let’s just forget it,” Chen Yansen said with a carefree smile. After all, he still had other options like Meizu, OPPO, Coolpad, and Newman.

Seeing this, Lei Yijun breathed a sigh of relief and quickly changed the subject. ”It looks like Nokia’s era is coming to an end. Last year, their domestic smartphone shipments still ranked second, but this January they’ve already fallen to seventh.”

”Every era has its king. The next might be Apple, perhaps Huawei, and of course, it could even be Xiaomi.”

Chen Yansen shrugged and said nonchalantly.

”Hasn’t Orange Technology ever thought of becoming that king?” Lei Yijun paused for a second, then asked with a smile.

”Orange Technology’s goal is to cultivate more kings—trend-setting brands like Nokia.”

Chen Yansen replied calmly, barely looking up.

Lei Yijun gave an awkward laugh. ’This kid... why does he sound so much like Ma Liyun?’ he thought.

Chen Yansen’s words reminded him of last year’s Internet Openness Conference, where Ah Li’s Ma Liyun had declared on the spot, ”Ah Li’s mission is to cultivate more Jingdongs.”

Lin Bing and Li Wanqiang looked at each other, having understood Chen Yansen’s meaning.

’Orange Technology doesn’t see Xiaomi as a competitor!’

’Talk about condescending!’

Sure, the Orange Mobile Phone sold over ten million units last year, but Xiaomi sold two million!

To put it bluntly, it’s not like the Orange Mobile Phone had an overwhelming advantage!

Sensing the tense atmosphere, Lei Yijun deliberately glanced at his watch. It was exactly five-thirty. He quickly said, ”President Chen, let’s go get something to eat.”

”I can’t. I have another meeting tonight. Perhaps next time.”

Chen Yansen stood up, preparing to leave.

Lei Yijun’s expression stiffened. He forced a smile, suppressed his anger, and politely saw Chen Yansen out of the building.

Only after the car drove away did Lei Yijun’s face fall. He turned and walked back into the building.

”Ah Li, what are your thoughts?” Back in the office, Lei Yijun turned to Li Wanqiang and asked with a frown.

”President Lei, I think we should agree,” Li Wanqiang said diplomatically. ”It’s a little embarrassing to admit, but on both the hardware and software levels, Orange Technology’s tech is far superior to Xiaomi’s. Because of that, I don’t think Chen Yansen has any ulterior motives.”

”A businessman who’s really that pure?” Lei Yijun retorted, clearly unconvinced.

”The Orange Phone Factory in Shencheng City pays its line workers a base salary of 2,640 yuan and pays overtime strictly according to labor laws,” Li Wanqiang explained with a smile. ”The workers’ average monthly income can reach over 7,000 yuan. He’s a young man; it’s easy for him to be idealistic.”

”Someone that idealistic could never have earned tens of billions in wealth,” Lei Yijun scoffed.

He had started in the software industry before entering the mobile phone business; he knew better than anyone what the bosses of China’s electronics factories were really like.

”Although I can’t figure out why Chen Yansen doesn’t just hand over production to a contract manufacturer, from what I know, Orange’s Factory No. 3 is about to begin production. His desire to win Xiaomi’s manufacturing contract is logical in that context.”

”So, I agree with Ah Li’s assessment. We can choose to trust Chen Yansen and Orange Technology.”

Lin Bing, who had been silent the whole time, suddenly interjected.

Lei Yijun looked up and studied both of their expressions. After they both gave him an affirmative nod, he couldn’t help but start thinking seriously.

He knew what both Lin Bing and Li Wanqiang had left unsaid: if Xiaomi refused, there was no guarantee Chen Yansen wouldn’t just turn around and partner with 360, Meizu, and OPPO. In that zero-sum scenario, the Xiaomi Mobile Phone’s sales would inevitably be impacted.

After all, just cramming a phone with high-end components required little technical skill. Xiaomi’s biggest advantage at the moment was the MIUI system.

If Chen Yansen was telling the truth—that he didn’t care about software patents and was willing to license the Aurora OS operating system, its memory-cleaning algorithm, and its battery management technology to other phone manufacturers...

...then Xiaomi’s situation would become even more difficult.

Lei Yijun fell into deep thought. He wasn’t the kind of manager who couldn’t take advice, and the persuasion from Lin Bing and Li Wanqiang had caused his resolve to waver.

「Meanwhile.」

After leaving Xiaomi Headquarters, Chen Yansen immediately dialed an unfamiliar number. ”Six-thirty, Jingzhao Prefect. You don’t want to be played for a fool, do you?”