Volume 7 Chapter 54 – Rise In Cost

The news of the new continent naturally stirred the appetites of all the countries, but they also understood that without the ability to travel on the seas, all discussion was meaningless.

Compared to this, consolidating their own development was more important because only by doing this would there be a chance to grasp the chance to develop the new continent.

If they fell behind before this, then there was no need to mention anything.

So once the news of the new continent was released bit by bit by the Frestech Chamber of Commerce, the other countries started investing more and more into developing their magic machine industries.

The companies under the Frestech Chamber of Commerce received many applications to cooperate every day from the various companies and countries of the continent. It had caused all the workers of the Frestech Chamber of Commerce to be swamped.

Actually, the busiest and the most popular was without a doubt the Frestech Household Magic Machine Chamber of Commerce led by Ankhto.

Household magic machines had already entered the hearts of the people, so everyone understood that household magic machines would make their lives more convenient and comfortable. There was more and more investment into household magic machine companies being made.

Just in the first four months of the year, there were over a hundred companies that made applications to the Frestech Chamber of Commerce to purchase household magic machine technology. Among them included applications for all the current technology the Frestech Chamber of Commerce released.

In order to satisfy this large demand, the Frestech Chamber of Commerce agreed with the appeals of countless people and announced at the beginning of the year that they would be releasing another thirty seven household magic machine technologies. Among them would include technologies like the Magic Air Conditioner, the Magic Refrigerator, and other high end magic machines that they had never released before.

Like this, all of the Frestech Chamber of Commerce’s current household magic machine technologies were released. This made it so that all the other companies could produce the household magic machines that only the Frestech Chamber of Commerce could produce before, causing them to lose their monopoly.

Of course, the Frestech Chamber of Commerce still led all the other companies when it came to technology and craftsmanship. Even if they had the same things, the quality of the Frestech Brand was still better than the brands of the other companies.

Then adding the fact that the Frestech Chamber of Commerce had already become the symbol of magic machines in the minds of the people, having a high fame and prestige, so no matter which country it was, the Frestech Brand was always the most popular product and never lacked sales.

Once June came, this advantage had shown itself just like in the past years.

According to the report from the Frestech Household Magic Machine Chamber of Commerce, their sales had increased once again compared to last year. Just in the month of May alone, their sales had reached one million and seven hundred thousand gold coins.

But through detailed reports, they found that compared to last year, while the profit of the Frestech Household Magic Machine Chamber of Commerce had increased, it didn’t increase as much as their sales.

The reason for this was that as more and more household magic machine companies appeared, the price of raw materials kept increasing, as well as the cost in manpower. It had increased the base cost of these household magic machines, which had decreased their profits.

In the years that the Frestech Chamber of Commerce had been formed, the profit margins of the Frestech Brand household magic machines were at lowest 50% and were as high as a shocking 80%.

But as the household magic machines became more and more popular, the Frestech Brand household magic machines’ profit margins kept dropping.

Based on the stats this year, among the Frestech Brand household magic machines, the one with the highest profit margins, the Magic Air Conditioner only had 30% profit margin. As for the lowest, the Magic Lamp, it only had less than 10% profit margins.

Based on this, one could say that the period of explosive profits from household magic machines had already passed.

Although Xu Yi had already expected this, he never thought that it would come so quickly.

It had to be known, on earth, the household appliance industry had to develop for several decades to reach this level.

On the Sines Continent, it had only been sixteen years since the household magic machines had appeared.

But if he thought about it, Xu Yi could only admit that he was the one that created this situation.

Because he always had the idea of promoting the magic machine industry, he didn\’t keep the household magic machine technology at all. There were many companies that could produce household magic machines, so they shared the market with the Frestech Brand, creating competition that reduced the profits of the Frestech Brand.

And when it came to the increase in materials and manpower, it couldn’t be said that it was unrelated to him.

First when it came to manpower.

Before the Frestech Chamber of Commerce, although there wasn’t a fixed value for the companies hiring their staff, for most staff, most companies wouldn’t give them a high wage.

Seventeen years ago, when the Frestech Chamber of Commerce was formed, the highest wage in Banta City was only around ten gold coins a year.

When the Frestech Chamber of Commerce was formed, they actually started off by giving their workers five gold coins a month.

This was over sixty gold coins a year!

This salary for most people in the Banta City and the Lampuri Kingdom that could barely fill their stomachs was an extremely large amount. Almost all the people of Banta City had thought that the Frestech Chamber of Commerce and Xu Yi were crazy.

But it was also because of this that the Frestech Chamber of Commerce was able to quickly recruit enough workers at that time, quickly increasing their production capacity. The Frestech Chamber of Commerce in the beginning didn’t even face the problem of not having enough production capacity.

At the same time, because of the Frestech Chamber of Commerce’s sharp rise in fame, it indirectly helped the Frestech Chamber of Commerce’s speed of growth.

From this perspective, for the Frestech Chamber of Commerce, the benefits outweigh the disadvantages.

But for the companies that entered this industry after the Frestech Chamber of Commerce, the salary standard that Xu Yi had set in the beginning was the biggest crime.

Because the Frestech Chamber of Commerce had cast pearls before swine and set the standard, the other companies couldn’t give a lower wage when they wanted to enter the magic machine industry. Otherwise, it was impossible for them to recruit people and it was even more impossible for them to poach skilled workers from the Frestech Chamber of Commerce.

So after all these years, because the various companies competed with each other, the salary kept increasing.

Right now, the Frestech Chamber of Commerce’s salary wasn’t the highest and could be considered low among the magic machine industry companies. The salaries that the other companies gave were much higher.

This had affected the Frestech Chamber of Commerce in turn.

Before the household magic machine department separated, they still followed Xu Yi’s standard and no one complained.

After the Frestech Household Chamber of Commerce was formed, Ankhto wanted to increase the morale of the workers, establish his fame, and because of other considerations, he had raised the standard salary. The standard salary of the Frestech Household Magic Machine Chamber of Commerce had been raised to a relatively high salary compared to the other companies.

So the Frestech Household Magic Machine Chamber of Commerce’s labour costs had increased. In just the month of may, the labour costs had reached six hundred and thirty thousand gold coins. This was a large increase compared to before and it had greatly increased the costs of the Frestech Brand household magic machines.

And then there were raw materials.

When the Frestech Chamber of Commerce had just been formed, no one on the Sines Continent attached importance to the raw materials needed to produce magic machines. So out of the Frestech Chamber of Commerce’s material costs, the biggest were the magic materials needed by the magicians to draw the Magic Arrays.

As for the iron ore that they used the most, although the Falcao Chamber of Commerce controlled it, their price wasn’t that high.

As the most important Magic Crystal, because it was all over, it didn’t take any money at all.

As the magic machine industry became more and more important, the countries all cared more and more about the magic machine industry related materials in their borders.

Naturally, the price of these materials kept increasing.

Take the highest demand iron ores. The Frestech Chamber of Commerce bought them for two gold coins a ton from the Falcao Chamber of Commerce in the beginning, even the smelted iron only took ten gold coins a ton.

Now, based on the Falcao Chamber of Commerce’s newest June price.

The iron ore had gone to six gold coins a ton and the smelted iron was suddenly raised to twenty seven gold coins a ton.

Compared to before, it was more than double!

Even the Magic Crystals that were worth nothing unless they were special products that no one cared about, now because they had become the energy source of all magic machines, their prices had soared.

Take the standard medium sized Magic Crystal the Frestech Chamber of Commerce bought from the Candra Empire, its price had reached ninety three silver coins per ton.

Moreover, because of the high demand of Magic Crystals, this price continued to quickly grow.

Last year, it was only seventy six gold coins a ton and now it reached ninety three gold coins a ton this year.

With this speed, there was no doubt that it would reach one gold coin a ton within the year.

The demand for these materials increased with the price which naturally created a series of problems.

First, the countries of the Sines Continent strictly controlled the resources in their country. Headed by the Candra Empire and the Marlow Empire, most of the countries no longer exported materials.

Even the Candra Empire only exported materials to the Frestech Chamber of Commerce alone. The only reason was because the Frestech Chamber of Commerce were the only ones that could smelt the steel, the non-ferrous metals, and refine the Magic Crystals.

Then adding in the fact that the Candra Empire had many cooperation deals with the Frestech Chamber of Commerce, the Frestech Chamber of Commerce was able to buy materials from the Candra Empire without limits.

However, even if they had received preferential treatment, the prices of the raw materials still increased, which had increased the cost of their magic machines.

The Frestech Chamber of Commerce was already like this, so one could imagine what it was like for the other companies and countries.

It was fine for the countries that had enough materials, but the countries that didn’t have the materials had to find another way to solve this problem.

The most common and the most frequent method of this was warfare.

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