Chapter 109: Lei Zong, I

“Good morning, Chen Zong!” He smiled and stepped forward as Chen Yansen entered.

“Li Zong, sorry to keep you waiting. Shall we discuss cooperation first, or take a tour?” Chen Yansen greeted him.

“Let’s finalize the game joint venture first—Lei Zong is in a meeting and will join later,” Li Wanqiang explained.

“Alright.” Chen Yansen nodded.

The group stepped into the elevator and rode straight to the marketing department floor.

They then entered Li Wanqiang’s office, where he asked his assistant to bring a staff member responsible for channel coordination and showed Song Yuncheng Xiaomi’s revenue-sharing data for third-party promotional channels.

Xiaomi acted as the distributor; the spreadsheet listed hundreds of popular games, each negotiated individually by the marketing team. Some games offered revenue shares of 70%–80% of user spending, with a commission of 5–12 yuan per registered user.

Of course, FoxTao wouldn’t get such a high rate, but Li Wanqiang offered a baseline of 40%–50%, clearly valuing FoxTao as a channel.

Settlement occurred every half-month—highly sincere.

Chen Yansen didn’t dwell on the revenue split; he gave Song Yuncheng a slight nod and sent the electronic contract to legal for review.

If there were no issues, they’d sign the same day.

“The R&D center is upstairs—shall I show you around, Chen Zong?” Li Wanqiang suggested.

“Then I’d be grateful for your trouble,” Chen Yansen smiled, walking with Li Wanqiang toward the elevator.

Song Yuncheng stayed behind to follow up on the cooperation process.

*Ding!*

The elevator doors opened!

A hundreds-of-square-meter office area appeared before them; Li Wanqiang pointed ahead: “This is the MIUI development team—we update the system weekly based on user feedback.”

Chen Yansen understood only the basics of development, but he knew that to build a phone system, he needed to know what talent to hire.

He asked extremely detailed questions; when Li Wanqiang introduced core R&D staff, Chen Yansen pulled them aside to ask what programming languages and system frameworks were required for the job.

He even found out what programming languages and development tools they used.

Li Wanqiang looked suspicious—he couldn’t understand why a e-commerce guide entrepreneur like Chen Yansen was asking these technical questions.

If Lei Zong were here, he’d recognize on Chen Yansen’s face the same expression he’d worn when visiting Meizu.

After pondering a while, Li Wanqiang assumed Chen Yansen was just curious about technology and didn’t press further.

He then showed him Xiaomi’s industrial design sketches, but the information obtainable was limited to appearance, materials, and color.

At this stage, Xiaomi was still integrating its supply chain; core components like screens, processors, and batteries hadn’t been finalized yet, so Chen Yansen learned very little.

Still, after this tour, Chen Yansen gained a clear understanding of phone manufacturing: from industrial design, structural design, hardware design, and software development, to supply chain management and finally building sales channels—there were many steps.

Sales was Chen Yansen’s strength—he didn’t need to worry about that.

But in technology, Li Wanqiang was the expert; Chen Yansen listened carefully and took rough notes on everything from software to hardware.

He concluded: if he wanted to build a phone, he’d truly need to poach an experienced insider to have any chance of success.

Both product and procurement needed reliable people in charge for the project to move forward smoothly.

Otherwise, if the supply chain failed, the project would collapse.

Only at eleven did Lei Zong arrive, accompanied by a thin, bespectacled middle-aged man; after introduction, Chen Yansen learned he was Xiaomi’s co-founder—Lin Bing.

The group sat in a conference room for detailed discussion.

Midway, Lei Zong specifically mentioned that once Xiaomi phones launched, they’d hold a brand-exclusive event on FoxTao.

“Jun’er lacks confidence in himself.”

Chen Yansen thought to himself, finding it amusing.

After all, when Xiaomi phones launched, pre-orders reached 300,000 units in just 34 hours—far exceeding Xiaomi’s current production capacity.

“Lei Zong, why not sign the contract first?” Chen Yansen suggested with a smile.

Phone profits were limited, but they’d boost FoxTao’s revenue and help raise the next round’s valuation.

“But Xiaomi hasn’t even released an engineering prototype yet,” Lei Zong chuckled, warmed by Chen Yansen’s enthusiasm.

“No problem—I trust you, Lei Zong,” Chen Yansen waved his hand, giving Lei Zong no time to hesitate.

When Chen Yansen left Xiaomi, he took with him a marketing contract worth ten million yuan: four million for hard advertising, six million as phone commissions. The contract stipulated Xiaomi must provide 100,000 units in inventory within six months.

Lei Zong calculated: the return on investment was at least 20 times.

He felt guilty, as if he’d taken advantage of Chen Yansen; as he saw Chen Yansen off, he kept calling him “little brother.”

“If Jun’er can’t deliver the phones later, I’ll hold him to the contract—I wonder if he’ll turn on me.”

Chen Yansen squinted and waved goodbye to Lei Zong.

After the two left, Li Wanqiang suddenly realized something and whispered: “Lei Zong, this morning when I showed Chen Yansen around the R&D center, he asked extremely detailed questions.”

“Do you think he’ll build a phone?” Lei Zong replied, not taking it seriously at all.

The phone industry was vastly different from guide e-commerce; it was capital- and technology-intensive, while guide e-commerce was asset-light.

Just the industrial design and supply chain integration alone typically took a full year.

An outsider like Chen Yansen had neither technical expertise nor supply chain resources—not to mention building a smartphone, even making a knockoff phone with flashing lights would be extremely difficult.

In 2011, China’s phone market was an era where knockoff phones and branded phones coexisted.

Chen Yansen remembered brands like Tianyu, Boda, Newmine, Dakele, Dapine, and Duowei—even the singing god Zhang Xueyou endorsed a domestic phone called Gaoxinqi.

But very few ultimately succeeded; most collapsed into obscurity, forgotten by time.

Sitting in the car, Chen Yansen pondered Xiaomi’s path to success: unlike other phone makers, Lei Zong never planned to profit from hardware.

He focused profits on pre-installed apps, the app store, and game joint ventures—earning from software.

For example, each pre-installed app cost 0.5–2 yuan; if a phone had dozens installed, it could earn 20–50 yuan.

Revenue from ads and splits in the app store was also substantial.

Game joint ventures were even better—some games took 70%–80% cuts.

A 2,000-yuan smartphone, assuming a three-year lifespan, could generate over 200 yuan in software revenue alone—far easier than hardware profits.

After all, if phones were priced too high, users would notice.

“Too bad—I don’t have any money!”

After thinking for a long while, Chen Yansen sighed and muttered self-deprecatingly.

(End of Chapter)