Thread: Zongshen 宗申产业集团有限公司
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#11 Re: Zongshen 宗申产业集团有限公司
05-19-2016, 11:52 AM
Even I expect to live another five years, God willing.
They are an engine OEM, they sell the engines to others.
Bringing an engine to production cost money, allot of money, that cost gets recovered within each sale. If you made only one engine the entire cost of the one engine would include all the research and development costs, if you sell 10,000 engines each would include 1/10,000 of the costs. Research and development costs are recoverable, the more sold the faster the cost recovery.
Once the research and development costs are fully recovered, after that the engine costs less to produce. At that point if the product continues to sell and even better increases it sales each year then its costs to produce are lowest. It becomes a cash cow as it generates profits.
When they put the engine in their own models the results are lowered production costs and in that a much more profitable model and also since the engine has already been vetted that only feeds the sales.
If they only used the engine exclusively the costs would be higher, the units produced lower and the time to recover slower and the development of newer offerings slower as well. Since once the R&D is fully recovered that portion of the cost becomes revenue at each point of sale, much like equity as in positive equity from the investment once the principal is paid off.
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