Liu Jun had no heart for vacation. The next moment, he sat across from his father, opened his laptop, and calculated the profit and loss statement for this R&D and outsourced processing cycle with his father. The accountant brought six thick volumes of vouchers from the past six months. The three of them went through each item to confirm whether it belonged to the R&D project, with Liu Jun entering each one into an Excel spreadsheet. Most items were handled by Liu Jun himself, such as materials and venue fees for the Shi Yiji testing center. Some items Liu Jun found abnormal just by looking at them, such as temporary labor costs, unexplained travel expenses, and business entertainment fees. Liu Shitang explained that items like red envelopes couldn’t be expensed openly, so they had to exploit tax law loopholes by creating some accountable items that could preferably be listed as pre-tax deductions to extract cash for a slush fund, which could also reduce some income tax. This was the benefit of being a general taxpayer.

Liu Jun couldn’t help but think of Qian Hongming’s reminder to request invoices everywhere, thinking to himself how chaotic it all was. But without doing this, under what pretext could they withdraw cash? If withdrawn under personal income, although Liu Jun didn’t know the tax rate here, he somewhat knew that personal income tax wouldn’t be low. Then this expenditure for company business purposes would be very disadvantageous. But if they followed laws and regulations, didn’t set up private slush funds, and didn’t stuff red envelopes, there would be no business and no income. It was a tangled mess – what was reasonable wasn’t legal, and what was legal wasn’t reasonable.

But he thought that technological innovation should be encouraged in every country. Weren’t there also tax incentives domestically? The accountant thought for a long time and said no. Liu Jun didn’t believe it – the country shouldn’t be so short-sighted. The accountant couldn’t argue with the prince, so he had to bring all the practical manuals on income tax for the prince to see for himself. Liu Jun flipped through them and finally found relevant financial and tax decisions promoting enterprise technological progress. Just as he was about to proudly show the accountant, he unexpectedly found at the end that this decision only applied to state-owned and collective enterprises – private enterprises like theirs had nothing to do with it. Looking at this short line of small print annotation, Liu Jun’s face became as colorful as when he heard Yang Xun brazenly act like a scoundrel.

Then Liu Jun saw so many strange things. The materials he used for testing had to pay value-added tax in full detail, with nowhere to deduct it, resulting in very unfairness. The profits they earned had to pay disability security funds and conscript preferential treatment funds according to certain proportions when paying income tax, funds that should be national welfare expenditures. There were even education surcharges and urban maintenance and construction taxes extracted based on income tax amounts. He had originally been full of confidence, believing his substantial R&D and production investments shouldn’t cause his father to lose money. Seeing these expenditures, he became somewhat uncertain.

With all expenses listed item by item, his calculations showed that indeed, they were losing money. Fortunately, it was a small loss, and fortunately, other products in the series could still make money in the future. He looked at his father with guilt. Liu Shitang sent the accountant away and smiled, “What are you worrying about? We’ve only done three batches and can barely break even…”

“We didn’t break even – it’s a small loss. If we further allocate the factory’s daily management costs and my expenses, ugh, it’s too horrible to look at. I need to economize greatly in the future.”

“Don’t worry, Dad was prepared for a big loss. From the current situation, the momentum is very good. If you produce one more product, we can be profitable. Don’t look at the present – look long-term.”

Speaking of long-term, Shi Yiji has started investing in trial production. Just now, I called to question Yang Xun, and he shamelessly said he was investing 200,000 yuan in R&D. I don’t think it’s only 200,000 yuan. He’s already seen us taste success with products selling at high prices. He’ll invest a lot – he’s a shrewd businessman. If I make one item there in the future and they blatantly imitate one item, what long-term future do we have? Such little profit doesn’t match the funds and brainpower we invest in R&D. Should we make a large capital investment and start upgrading our processing capabilities?”

“If we process ourselves, won’t they take the finished products and reverse-engineer them? They only need to crack one heat treatment process.”

“I have other R&D projects! And we need to earn high profits from precision processing. Even though we’re taking small losses, Shi Yiji made good money this time using their good equipment to make our products. Dad, are you reluctant to invest? You can sell the house I’m living in and the car I’m driving, and invest in equipment upgrades. We can’t keep drilling into low-level processing without prospects. I can live at your place and ride a bicycle.”

Liu Shitang’s face twisted like he had a toothache. “We’ve calculated before – this is a very substantial investment. We can’t afford it.”

“Step by step, you can’t catch a wolf without sacrificing the child. You know that just now I told Yang Xun I was applying for a patent, and from the application date, I already have priority rights and am protected – he can’t produce this product without authorization anymore. Do you know what he said?”

“He must have said this was their invention, unrelated to you. What patent, what patent?”

“Right, just that legally ignorant, fearless in ignorance. He won’t stop infringing.”

Liu Shitang hesitated, then said, “Don’t take infringement seriously in the future – no one cares.”

“Impossible, there are laws – I’ve already studied them in black and white. It’s precisely because you all think no one cares, don’t believe in law, don’t pursue it, don’t appeal, that you’ve condoned Yang Xun and those people’s wanton infringement.”

Liu Shitang frowned at his son, but he didn’t have examples of anyone suing for infringement. He reminded his son, “There’s no smoke without fire. Don’t think only you know, while others don’t. Now, many college graduates manage companies – they also know about patents, but they’re still desperately counterfeiting. You’d better not count on it.”

“With one possibility, make one effort. Dad, I’ll give you a development plan based on funding later. First, I must start looking at construction land for a new factory. And it seems I need to study tax law well – just now, when the accountant mentioned reductions and exemptions, he was hesitant, clearly not familiar with regulations. But now, I need to call Mr. Wang to find out Yang Xun’s actual R&D investment and progress. I’m a bit worried they’ll succeed by accident.”

“About the new factory, let Dad think it over carefully. I’ll discuss with some old friends.” Liu Shitang was experienced. He was very clear that capital investment in R&D could be cut at any time with some foundation, but building a new factory… without reliable guarantees, without understanding how policies might change, who would dare make such a large investment? Even though he loved his son very much.

Liu Jun certainly wouldn’t force his father to make such a major decision immediately. He made a disappointed-to-death face and went back to his office, immediately calling Mr. Wang. But when Mr. Wang answered the phone, he rambled about sometimes thinking it was feasible, then sometimes saying he didn’t approve, then humming “good, good, good” and hung up. Liu Jun was completely confused and thought Mr. Wang might be inconvenient.

Sure enough, after work Mr. Wang called his mobile phone and went straight to the point, “Little Liu, you heard the news too?”

“Yes. Mr. Wang, how do they plan to proceed? This is infringement.”

“I’m not responsible for this matter – Mr. Yang probably doesn’t trust me much. But based on principles you told me before and looking at roughly what their R&D team has done, I estimate they want to figure out the path, but they have a lot of exploring to do. It’s not so easy to find the right approach. Not like you, who found the general direction from the beginning.”

“Mr. Yang told me he’s prepared to invest up to 200,000 yuan.”

“Looking at Mr. Yang’s enthusiasm level, it won’t be only 200,000 yuan. But given his personality, don’t expect it to exceed 500,000 yuan by much. Little Liu, don’t get entangled in these things. I think you should focus more on your development. After all, your development is primary – dealing with those messes comes in spare time.”

“But if I’m constantly being infringed upon, how can I continue?”

“You stay ahead at all times… sigh, I’m being idealistic.” Mr. Wang sighed long and was speechless for a long time on the phone.

“Yes, I’m still unwilling – they’re essentially trampling on my hard work.”

Mr. Wang was silent for a long time, then said, “I have to remind you, Little Liu, the country currently acquiesces to a certain degree of intellectual property infringement – this is a development necessity. Otherwise, with patents all held by foreigners, we’d be unable to move forward.”

“But… there are laws. And not respecting intellectual property means domestic R&D will also be infringed upon. For example, I’m being infringed upon right now. I’m already being affected in my R&D enthusiasm and possibly in my R&D results, directly affecting my future capital investment in R&D. If I’m experiencing this, others must be similar.”

“The country should have made this decision after weighing options, sigh. Honestly, from my perspective as someone who’s been through this, we’re investing too little in technology now, less each year. It’s tragic.”

Liu Jun was very speechless. “Unfortunately, Mr. Wang, our factory lacks scale, otherwise I’d definitely poach you.”

Mr. Wang laughed happily, “Don’t poach me. I can see our thinking styles are already very different. I’d only be a stumbling block for you. Just let me observe – I’ll provide experience anytime.”

“Mr. Wang, every conversation with you fills me with confidence in human nature.”

“Silly child, hahahaha.” Mr. Wang was even happier. After ending the call, his mood remained very good. Seeing Liu Jun was like seeing his own younger days. For many years, it was rare for him to be so frank with someone else, not using interests as a prerequisite.

Getting intelligence from Mr. Wang, Liu Jun felt much more at ease. He turned back to focus on designing new products. Liu Shitang started going out to negotiate business again.

But good times didn’t last long. Two weeks later, Mr. Wang called Liu Jun after work again, telling him the R&D team had produced samples with mechanical performance almost identical to his specifications. Hearing this, Liu Jun felt like he’d been struck by a club. “How is that possible?”

“It’s already certain, not possible. Think back – was there any spying during the heat treatment process?”

“There was no way to spy. Only I could see the temperature display on site, and only I knew what rare earth materials were added. At most, they could record time. Or is Shi Yiji’s leader an expert?”

“I know how capable he is. Getting results this quickly has only two possibilities: first, he got extremely lucky, or second, he got clear clues from you. I think it’s only the latter – the probability of the former is too low.”

“It’s not that the probability is too low – it’s simply impossible. I used different treatments for different components. He couldn’t hit several at once. That probability can’t be calculated – astronomical numbers. Could it be…”

“What did you think of?”

“I can’t be certain. I need to deduce carefully and can’t draw conclusions without evidence. Mr. Wang, regardless, they’re very despicable. This is theft – blatant theft.”

“I’ll provide you with another clue. They used over 3,000 finished sets in their experiments, quite a substantial investment. Calculate the permutations and combinations – what information leaked from you would require this number of combinations?”

“Yes, yes, thank you Mr. Wang. This clue is too important. Mr. Wang, as long as I can prove it, I’ll sue. I can’t sit by and watch.”

Mr. Wang sighed, “My original intention in providing clues was to let you find the leak point and remedy the situation to avoid future theft. As for legal procedures, can you afford the energy and financial resources? Fighting economic lawsuits is about financial power, financial power, financial power!”

“It shouldn’t be this way. I can’t sit by and watch.”

“Young man, learn to endure, learn to swallow your anger, even swallow blood.”

No, no, no. Liu Jun strongly rejected this in his heart.