harleyscars Chapter 67 Opportunities Brought by Patents
Chapter 67 Opportunities Brought by Patents
Less than half a month after the air fryers from the Chung Wah Industrial Park appliance factory began mass production, a "healthy cooking" craze swept through the Hong Kong market. The first batch of 10,000 units, with their unique selling point of being oil-free and crispy, their simple and durable design, and their slightly higher price than traditional deep fryers, were snapped up by curious citizens as soon as they hit the market. Long queues formed in front of department store shelves, distributors' phones were ringing off the hook with calls urging them to deliver, and even high-end restaurants in Causeway Bay and Tsim Sha Tsui placed orders to use them to create low-fat meals to attract customers.
So this craze swept from the West to Hong Kong, and further spread to Southeast Asian countries through foreign trade channels. At that time, a healthy eating trend was emerging in Western countries, and consumers were becoming increasingly resistant to traditional fried foods that were high in fat and calories, yet they couldn't give up the crispy texture. The emergence of Zhonghua air fryers precisely hit this market pain point. As a result, in the past few months, inquiries from countries such as the United States, Germany, the United Kingdom, and France have piled up on Lin Zhou's desk like snowflakes.
Initially, these overseas merchants only hoped to obtain exclusive distribution rights in their home countries. However, when they discovered through patent searches that Zhonghua Home Appliances had registered more than ten key patents in major countries and regions around the world for the core technologies of air fryers, such as the "hot air circulation heating system" and "precise temperature control," their attitudes immediately changed.
The first to visit was Robert, the Asia representative of General Electric (GE). Dressed in a sharp suit, he came with a translator and a lawyer, heading straight to the office building in the Zhonghua Industrial Park. In Lin Zhou's office, Robert got straight to the point, handing over a thick letter of intent for cooperation: "Mr. Lin, your air fryer is a groundbreaking invention that will revolutionize cooking in kitchens worldwide. GE is willing to purchase the exclusive global license for this patent for ten million US dollars. We have the channels and funds to make it a global phenomenon."
Lin Zhou took the letter of intent and quickly flipped through it. Ten million US dollars was undoubtedly an astronomical figure in 1967, enough to buy half a street of property in Hong Kong. But he knew in his heart that the patent was the foundation of Zhonghua Home Appliances. Once it was exclusively licensed to General Electric, the factory, which had just been built, would become a factory without core technology. Whether it could grow stronger in the future was another matter, but Zhonghua's future development would definitely be completely controlled by others.
"Mr. Robert, thank you for GE's recognition." Lin Zhou put down the letter of intent, his tone calm but firm. "However, exclusive licensing means we will lose control over this technology, which is not in line with Zhonghua's development philosophy. We prefer a non-exclusive licensing cooperation model to promote this product together with more excellent companies."
Robert was clearly taken aback by Lin Zhou's refusal of such a generous offer, a flicker of surprise crossing his face before he tried to persuade him: "Mr. Lin, you may not understand the complexity of the global market. General Electric has branches in over a hundred countries, enabling its air fryers to cover the globe in the shortest possible time. Your company, on the other hand, is just starting out, and neither its funding nor distribution channels can support international operations. An exclusive license is the best option for both parties."
Lin Zhou smiled, stood up, walked to the window, and pointed to the busy production line downstairs: "Mr. Robert, as you can see, our factory has already achieved large-scale production capabilities. Moreover, our technology is constantly being iterated and upgraded, and we will launch more and more powerful products in the future. If we only sell exclusive licenses, these potentials cannot be fully realized."
Seeing Lin Zhou's resolute attitude, Robert had no choice but to temporarily abandon the idea of exclusive licensing and instead explore the possibility of non-exclusive licensing. However, the two sides could not reach an agreement on licensing fees and cooperation terms. In the end, Robert left with regret, leaving behind the words: "Mr. Lin, you will regret this. Without the support of General Electric, your patents will find it difficult to gain a foothold in the global market."
But Lin Zhou's judgment was correct. GE's visit was like a signal; soon, more large Western conglomerates and companies followed suit. Representatives from well-known companies such as Siemens (Germany), Philips (Austria), Cybernaut (France), and Panasonic (China) appeared at Zhonghua Industrial Park, some with higher licensing offers, others proposing joint ventures, all with the aim of obtaining patent licenses for air fryers.
For a time, Chung Wah Home Appliances Factory became the focus of Hong Kong's business community. Media outlets such as the Chung Wah Daily and Sing Tao Evening Post reported on it, saying that "a kitchen revolution from the East has attracted the attention of global giants." The entrance to the industrial park was crowded with reporters and businessmen seeking cooperation. Even officials from the Hong Kong government's Industrial Development Department personally visited, hoping that Lin Zhou could seize the opportunity to drive the upgrading of Hong Kong's manufacturing industry.
Faced with a barrage of cooperation offers, Lin Zhou remained calm. He convened an emergency meeting with core team members including Su Wanqing, Zhao Jianguo, and Zhou Minghui.
"Everyone is aware of the current situation: major companies worldwide are eyeing our patents." Lin Zhou sat at the head of the conference table, looking at everyone. "They either want to pay a high price to buy the licenses, or they want to form a joint venture to build a factory; essentially, they all want a piece of the pie. How should we choose?"
Zhou Minghui spoke first: "Mr. Lin, I think we can choose to license our products to several well-established companies with extensive distribution channels. This way, we can obtain substantial licensing fees and leverage their channels to open up international markets and enhance our brand awareness."
Zhao Jianguo, however, is more focused on production: "Although our production lines are already in mass production, their capacity is not yet fully utilized. If we only license patents, our factory may face insufficient orders. After all, the Hong Kong market has limited capacity, and the domestic market has not yet fully opened up; the factory cannot be idle."
Zhao Jianguo's words struck a chord with Lin Zhou. He had invested heavily in building the industrial park and introducing production lines precisely to achieve large-scale production. If he only sold patent licenses, the factory's capacity would be wasted, which was something he absolutely could not accept.
"Director Zhao is right, the factory can't be without work." Su Wanqing had just taken over the management of the entire industrial park. If there were no orders, all the workers in the upstream and downstream industries of the entire industrial park would have to leave.
Lin Zhou nodded and shared his thoughts, "My idea is that we can grant them patent licenses, but on one condition—they must let us do the contract manufacturing. In other words, after they obtain the patent licenses, they must outsource a portion of their product manufacturing to us. This will ensure that the factory's capacity is fully utilized, and it will also allow us to accumulate international production experience through contract manufacturing."