Chapter 33: Celestial Star Phone

Just a day ago, Huang He never would have imagined that a trip to DW, an encounter with a taxi driver, and a late-night barbecue would result in him dropping a million yuan to purchase a mobile phone factory called Tianxing.

Though this factory, from start to finish, including its owner Liu Nian, had fewer than twelve people, and produced fewer than twenty phones a day, Huang He still invested a million yuan, acquiring a 70% share and becoming the de facto controller of Tianxing Mobile Factory.

To outsiders, this might seem utterly irrational, but to Huang He, it felt as though he had once again grasped the pulse of the times!

Shanzhai phones—knockoff mobiles—may be all but forgotten in the memories of those born after 2000, but for those born in the '80s and '90s, they are unforgettable.

Back then, mobile phones were incredibly expensive luxury items. In 2001, the cheapest Nokia, which could only make calls, still cost 2,000 yuan—far beyond the reach of ordinary people. Although Xiaolingtong, the wireless local loop phone, appeared later, its limitations were severe and its signal terrible; it never replaced the mobile phone. In the end, it was the shanzhai phone that truly brought mobile prices below a thousand yuan.

No one can say exactly when the first shanzhai phone appeared, but from 2003, they emerged in Huaqiangbei. Vendors from across the country flocked there for stock—a shanzhai phone bought for 400 yuan could sell for 800 at the local electronics market, while a branded phone with the same features wouldn’t go for less than two or three thousand.

Naturally, shanzhai phones swept the market.

And now, the birth of the shanzhai phone was just beginning. Liu Nian seemed to be the very first pioneer of the shanzhai phone in China.

Yesterday, upon learning that the taxi driver had access to shanzhai phone supplies, Huang He ignored his exhaustion and arranged to meet Liu Nian that night at a street food stall. Over midnight snacks, they talked.

Liu Nian’s story could only be called unfortunate.

He had been a promising university student at Xidian University in Xi’an. But in his freshman year, he built a bugging and tracking device, sold it for pocket money on the black market, got caught by the authorities, and spent a year in jail. When he got out, everything was gone.

Fortunately, Liu Nian was highly capable. He returned to Shenzhen just as his family’s house was demolished for redevelopment, netting them a compensation building. Liu Nian sold the building for half a million yuan and decided to go into business.

At first, he tried making tracking devices—they worked, but no market existed for them, so he failed. Next, he entered the MP3 market, but by then, competition was cutthroat. Though his products were good, he couldn’t control costs or market effectively, so he failed again.

At last, Liu Nian went all in on making mobile phones, believing the profit margins would be higher. Even if his costs weren’t well controlled, he could still turn a profit since there were no domestic mobile brands yet and little need for marketing. He invested everything he had and, remarkably, managed to produce a phone.

But the phones still didn’t sell. Even producing just ten units a day, he was losing thousands of yuan daily, with a stall in Huaqiangbei costing tens of thousands a month. If not for Huang He’s intervention, he wouldn’t have lasted much longer.

Having heard Liu Nian’s story, Huang He didn’t mock him as others might. Instead, he keenly realized that Liu Nian was a true genius. Though he’d failed three times, it was always on the business side; his research and development never faltered. Relying solely on his own equipment and skills, he’d built a tracking device, an MP3 player, and now a mobile phone—three entirely different products. That was nothing short of extraordinary.

Especially the mobile phone—could one person really accomplish that?

Later, through Liu Nian’s explanation, Huang He understood. Three months earlier, MediaTek in Taiwan had launched the MTK mobile chip and its accompanying open platform.

The MTK chip was like a smartphone’s NDA; after purchasing compatible components, and with some manufacturing and design ability, one could assemble a brand-new phone.

Because MediaTek had plenty of suppliers, the necessary parts for the MTK platform could be found easily in the market. There was little difficulty involved. According to Liu Nian, anyone could learn to build a phone in a year under his guidance.

This was why the shanzhai phone industry would later explode in China: thanks to the open MTK platform, the difficulty of making phones plummeted. It became less about full-scale engineering and more akin to assembling building blocks.

Once the domain of big companies with patents, it became a business even guerrilla teams could do.

But Liu Nian was still being modest. The real era of mass-produced shanzhai phones was only after 2004. By then, Guangdong alone could boast over fifty thousand electronics factories producing mobile parts.

At this moment, options were still limited, and Liu Nian had to craft many electronic components himself to build a phone. His skills were formidable, prompting Huang He to immediately invest a million yuan for 70% of Tianxing.

The discussion between them stretched past one in the morning, and still wasn’t finished. So the next morning, Huang He brought Leng Zhimeng along to continue negotiating with Liu Nian.

That one meeting stretched into a week.

In the end, the two sides reached a final agreement: Jiangnan Group would pay a million yuan to acquire 70% of Tianxing Mobile from Liu Nian. At the same time, Jiangnan Group would inject 700,000 yuan into Tianxing Mobile for working capital, and Liu Nian would invest a further 300,000 yuan, ensuring the company’s cash flow.

Liu Nian, for the next ten years, would not be allowed to leave the company without Huang He’s permission.

Liu Nian would take full charge of production and R&D, while all market and sales responsibilities would be handed over to Jiangnan Group, with Liu Nian forbidden from interfering.

This contract was reached quickly; the real trouble came with all the legal procedures that followed. For that, Leng Zhiruo brought the company seal and other documents to Shenzhen to handle the paperwork.

Soon, however, Leng Zhiruo discovered a problem.

“Brother-in-law, our company is Jiangnan Leather Factory, not Jiangnan Group. You signed the contract wrong!” she said.

“Oh, then we’ll just register a Jiangnan Group Holdings Company!” Huang He replied with a grin. A mere leather factory could never satisfy his ambitions.