Chapter 11: Huang He Shares Insights from a Past Life

The appearance of the leather jacket completely ignited the entire market. The child who opened the box containing the jacket was embraced by his father, showered with kisses until his face was drenched in saliva. The surrounding customers were like wolves, their eyes fierce with desire—they truly hadn’t expected that these boxes would actually contain leather jackets.

In 2001, leather jackets were still considered expensive. The cheapest one cost over five hundred yuan, and in many people’s minds, a leather jacket was synonymous with luxury. This was evident from the fact that its production cost was forty yuan—a remarkably high cost. In truth, apart from garments made from natural animal materials, the production cost for any piece of clothing rarely exceeded ten yuan. This included brands like Chanel, Louis Vuitton, and Dior; even their most affordable items, costing thousands, had production costs of less than ten yuan.

Of course, what’s being discussed here is purely the manufacturing cost. If you factor in marketing expenses, the cost certainly rises above ten yuan. Moreover, since leather jackets are rarely worn and have low sales volume, their price must continue to climb. Only by making the unit price higher can the cost of the production line be spread out.

In short, everyone assumed leather jackets were very expensive. To buy one for ten yuan was like reclaiming your grandfather’s burial savings! In an instant, the crowd erupted. The spectators stopped watching and rushed forward to join the line, waving their cash.

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“Brother-in-law, do you really think those workers can sell off all our surplus goods?” After forcing Huang He to sign numerous unequal agreements, Leng Zhiruo finally stopped fussing over her little sister’s issue and instead asked curiously.

She always felt that this blind box scheme was a bit unreliable. If the goods didn’t sell, the company would lose another million, and her own apartment would be forfeit as well, since all the costs for the boxes, the workers’ train tickets, and so on came out of that million.

“Don’t worry. Not only will we sell all the backlog, but within a few months, the factory will be up and running again!” Huang He replied confidently; he knew customers’ psychology all too well.

In his previous life, Huang He had been an employee of a multinational—Bandai China’s operations manager. His main task was running Bandai’s official stores on Taobao and JD.com.

He worked at Bandai for three years and discovered that unless extremely rare limited-edition items were released, the stores’ daily sales were dismal—sometimes not a single order would be placed in a day; it was painfully bleak. However, on several fixed days each year, Bandai’s stores would rake in fortunes, selling tens of thousands of items in a single day. Sometimes, products would be snatched up in less than a minute after launch.

These fixed days were Bandai’s anniversary, Lunar New Year, Singles’ Day, and other major events. During these times, Bandai’s official stores would sell their blind boxes or lucky bags. Tens of thousands of these would sell out in minutes, completing half a year’s sales targets in one go!

Why did Bandai’s blind boxes sell so well?

The secret was simple: Bandai’s blind boxes and lucky bags never lost money. Every single box was profitable—and not just a little. A blind box priced at two hundred yuan could contain products worth at least three hundred yuan at official prices, sometimes even up to a thousand yuan. Of course, only one in ten thousand boxes might contain such a prize.

This drove customers wild; whenever Bandai launched blind boxes, they would sell out instantly—no exceptions.

Meanwhile, Pop Mart, once the pioneer of the blind box craze, was declining; sales dropped and its market value halved.

Comparing these findings, Huang He realized a principle: for blind boxes to truly sell, they must contain products whose value exceeds the price paid—so every box is a winning deal, resulting in huge profits.

In his previous life, when Huang He shared this insight, he was mocked—not because he was wrong, but because it sounded like common sense. Of course blind boxes that guaranteed profit would sell well; but wouldn’t that mean the business loses out? Wouldn’t the merchant be a fool?

Huang He himself thought it was naïve and set the idea aside. Until now, a week ago, staring at the warehouse full of unsold goods, he finally understood.

He really was foolish to believe those fools.

Profitability in blind boxes isn’t determined by selling price, but by actual production costs. Take Bandai’s most popular Gundam model as an example: a card-backed Sazabi sells for five hundred yuan on Taobao, with an official store price of nine hundred. So, when a four-hundred-yuan blind box yields a Sazabi, buyers feel they’ve struck gold. But in reality, the Japanese retail price is 7,500 yen—about 440 yuan—but Bandai China’s wholesale price is only three hundred yuan... and the actual production cost is reportedly less than thirty yuan.

So, putting a five-hundred-yuan Sazabi into a four-hundred-yuan blind box—does Bandai China really lose out? Huang He remembers that last year, Bandai made nearly four hundred million yuan in lucky bags during Singles’ Day, with at least three hundred million in profit. Yet the ruthless capitalists didn’t give him a raise, even though he’d been working overtime since October 15th for Singles’ Day.

The same principle applies to Jiangnan Leather Factory. Wallets, belts, shoes—their lowest retail price is twenty yuan, customers’ psychological price is twenty yuan, but the actual production cost for each is less than ten yuan. Putting these items in blind boxes never loses money!

The only loss is the forty-yuan leather jacket—one blind box loses thirty yuan. But Boss Huang decreed that only one in a hundred boxes would contain a leather jacket, which means you’d have to buy a thousand yuan worth of blind boxes to get one costing forty yuan.

Sixty boxes would contain wallets, thirty belts, nine pairs of shoes. The total cost is 340 yuan. Add in train tickets and other expenses, the total doesn’t exceed four hundred yuan. The remaining six hundred yuan is pure profit from the blind boxes.

Tsk tsk, our Boss Huang is really losing money so badly he could spit blood!