CH131 | VOC

I established Chunha Electronics in China with 50 billion won in capital, giving Kim Yong-tae a 5% stake.

The research team consisted of his original six members, including the team leader, and five additional researchers recruited from large corporations struggling in the economic downturn. The rest of the 150 employees were a mix of my existing Chinese staff and new hires.

“The labor costs are less than a quarter of what they were at my previous company, even though we have three times the number of employees and twice as many high-paid researchers,” Kim Yong-tae remarked.

I shrugged. “This is China. They’re churning out electronics with used and defective semiconductors. How can Korea compete in the low-end market?”

Even with cost-cutting measures, Korean companies couldn’t compete with China’s incredibly low labor costs.

One of the main reasons Korea had overtaken Japan as a manufacturing powerhouse was its cheap labor. And I believed it was only a matter of time before China overtook Korea.

Unlike Korea, which only had its workforce, China also had abundant natural resources and vast land. Its potential was far greater.

“I’ll take care of the materials, semiconductors, distribution, and sales. Just focus on your work.”

He suddenly smiled and said, “I was a bit surprised to hear that you also handle defective semiconductors, CEO Park.”

Ah, right.

He had gone bankrupt because of my defective semiconductors.

“Those are being distributed through the secondhand electronics components department store, against my will. There are so many traders, it’s impossible to control everything.”

He nodded, accepting my excuse. “I suppose the owner of a market doesn’t need to know what every vendor is selling.”

“Ex-exactly. Anyway, it won’t be difficult to supply you with defective chips since they’re being distributed through our department store. I understand you might not like them, but it’s the best option for now. Do you have any objections?”

He shook his head firmly. “No, I wouldn’t have, even in Korea, but after seeing how things work in China, there’s no point in being stubborn. Cost reduction is essential in the low-end market.”

“Exactly. You have to repay your 19 billion won debt. Nothing else matters.”

He then said, “Speaking of which, we’ve completed a prototype. Would you like to see it?”

“Already?!”

I was surprised that he had a prototype ready just a day after setting up the factory and hiring the employees.

He scratched his head. “It’s not exactly a prototype. It’s the same model we were producing at my previous company, with a different semiconductor. Since I brought my research team with me, and we had some leftover materials, it was just a matter of assembling it.”

I said, puzzled, “You replaced the semiconductor? You acquired defective chips?”

“Yes.”

“Where did you get them?”

“They were selling them at your department store.”

I had heard from Li Yang that defective chips were flooding the market, being bought and sold by everyone, but I was still surprised that Kim Yong-tae, a foreigner, had managed to acquire them without any help.

I couldn’t help but smile.

If the distribution of defective semiconductors continued like this, even the semiconductor companies, desperately trying to control the black market, would have to give up.

Throughout history, no one had ever been able to stop the formation of a new market driven by supply and demand.

“A prototype… Is it functional?”

He smiled wryly. “Of course. An ordinary consumer wouldn’t be able to tell the difference. And the production cost is about a quarter of what it was in Korea. It makes me feel foolish for trying to compete with them.”

I patted his shoulder. “It’s not too late. Anyway, let’s see the prototype.”

“Oh.”

It was similar in size to other mobile phones on the market, with a sleek blue design and smooth curves.

“Is this the model you were producing before?”

“Yes.”

I examined it closely. “The design is unique.”

Most mobile phones were black and boxy, emphasizing masculinity, but this prototype had a more youthful and feminine appeal.

“It’s designed for young people with limited budgets. Stylish design and a low price. That was my strategy.”

I nodded, looking at his proud expression. “I see.”

In a saturated market like the mobile phone industry, with new companies emerging constantly, it was essential to have a unique selling point.

And Kim Yong-tae’s prototype had it.

“But Mr. Kim, I don’t know much about electronics. What’s your special technology?”

“It’s the size.”

“The size?”

Seeing my confusion, he explained,

“Design and practicality are often at odds. From the brick-sized phones of the early days to the palm-sized phones of today, manufacturers have been striving for miniaturization. And it’s not just mobile phones, it’s the goal for all electronic devices. But curved designs inevitably increase production costs and make miniaturization more difficult. My technology allows for a smaller size without sacrificing design. It’s a balance between design and practicality.”

“Uh…” I tilted my head. “So you’re saying you can maintain the size while incorporating a stylish design?”

He said proudly, “Exactly.”

It sounded impressive, even to someone like me who didn’t know much about technology.

It was like having a junkyard that was both organized and efficient, a rare combination.

“Isn’t that impressive?”

“It is. For now.” He smiled wryly. “Technology is constantly evolving. I’m confident in my current technology, but I don’t know how long it’ll last. That’s one of the reasons I rushed into starting my own business. I wanted to establish myself while I still had a technological advantage and build a stable foundation for future research. Of course, it’s all over now.”

I said, trying to cheer him up, “Don’t worry. I think this product has potential.”

I wasn’t just being polite. I genuinely thought it was a good product.

The design was appealing to young people, and the combination of cheap labor costs in China and defective semiconductors would create a powerful synergy.

“I’ll take care of the business side. You just focus on the research and development. Oh, I shouldn’t be calling you Mr. Kim anymore.”

I shook his hand. “CEO Kim.”

He smiled. “Thank you. I’ll work hard, considering this my last chance.”

The factory started operating, and we began producing the phone, a slightly modified version of his previous company’s model, which we named “Edge Phone.”

Confident in its success, I ordered unlimited production and started shuttling between China and Korea, busy with marketing and distribution.

I mobilized our sales force to supply Edge Phone to retailers and even activated our overseas branches to explore international markets.

The market’s response was positive.

“We’re receiving a steady stream of orders.”

Unique design and a low price.

The Edge Phone, a combination of Kim Yong-tae’s technology, my funding and sales network, and China’s cheap labor, was a guaranteed success.

While other smartphones were priced at around 1 million won, the Edge Phone’s retail price was 390,000 won.

The profit margin was only 50,000 won per phone, but we could make up for it with volume.

Kim Yong-tae said excitedly, “My previous company sold at most 10,000 phones a month, but we’ve already sold 100,000! This is beyond my wildest dreams!”

“It’s the difference in sales power and funding. We have 200 sales representatives working in Korea alone. Before, you would have just reinvested all your profits into expanding production. When would you have time to grow? You have to strike while the iron is hot.”

Even with a great product, most companies with limited funding struggled to grow.

For example, let’s assume the profit margin for a mobile phone was 10%.

If you invested all your money and produced 10,000 phones, you could only produce 11,000 phones next time, a 10% increase.

You would grow steadily, but it would take a long time to become a major player.

Chunha Electronics, on the other hand, with its abundant funding, was already stockpiling inventory.

“At this rate, you’ll repay your 19 billion won debt in no time, CEO Kim.”

He nodded. “I’m realizing the power of funding.”

“The Edge Phone is doing well. Are you working on the next model?”

“Yes, my team and I are working day and night. Everyone is motivated by the Edge Phone’s success, and our research efficiency has improved.”

“Don’t overwork yourselves. Take care of your health.”

As we were chatting and laughing, my phone rang.

I excused myself and answered the call.

“Hello?”

[Hyung, it’s me.]

“Maru, what’s up?”

My expression hardened as I listened to him. Kim Yong-tae, although unable to hear the conversation, sensed something was wrong from my expression and looked at me anxiously.

“What? Are you serious?”

[Yes, I’m telling you! What’s going on?]

“…Wait, I’ll look into it. Consult with a lawyer and start an investigation. Leave no stone unturned.”

I hung up, trying to suppress my anger, and closed my eyes.

Kim Yong-tae said cautiously, “Is something wrong, sir?”

“…”

I didn’t answer. I couldn’t trust myself to speak calmly.

After about ten minutes, I regained my composure and said,

“Mr. Kim.”

He tensed up when I addressed him by his name, not his title. “Yes?”

“Your previous mobile phone company. It was called Shinjin Tech, right?”

“Yes, but why…?”

“I bought all your debt, and you shut down Shinjin Tech, correct?”

“Yes, but…”

I glared at him. “Then why did we receive a complaint from Shinjin Tech, accusing us of stealing their design and product?”

His face turned pale.

“I doubt the court would accept a complaint from a company with the same name… Mr. Kim, you did shut down Shinjin Tech, didn’t you?”

“Well, that’s…”

“This is ridiculous. Are you playing games with me? Let me ask you again. You didn’t shut it down?”

He just stood there, sweating profusely, and my anger flared again. I slammed my hand on the table.

“Answer me! Did you shut it down or not?!”

He flinched and mumbled, “…No.”

I stared at him, dumbfounded. “I bought all your debt! All you had to do was file the paperwork! Why is a dead company suddenly coming back to life and accusing us of stealing their product?! Were there… other creditors?”

“…”

That son of a bitch.

If all the debts had been cleared, he could have shut down the company with a simple filing. And Shinjin Tech’s intellectual property rights would have disappeared. I had launched the Edge Phone without any concerns.

But if Shinjin Tech was still alive, the situation was different.

Since Shinjin Tech had developed the original model of the Edge Phone, it would look like we had stolen their product.

“Why didn’t you shut it down?”

“I-I’m sorry.”

“Do you think an apology is enough?! Answer me!”

He said, his shoulders slumping, “There were some other creditors…”

“Continue.”

“It was only about 1 billion won. The creditor was an acquaintance, and he said I could repay it slowly, so I didn’t want to burden you, CEO Park.”

You’ve got to be kidding me.

So he hadn’t told me about the other creditor because he felt bad, and he had kept the company alive, at least on paper?

“Is that creditor the one who filed the complaint?”

“…There must be some misunderstanding. I can explain it to him. I’ll go back to Korea right now.”

“Bullshit…”

He had already filed a complaint. Did he think he could resolve this with a simple explanation?

I had invested hundreds of billions of won, and now I was being held back by a 1 billion won debt.

I would never work with a debtor again.