Chapter 300 – Increased investment in Lehaha
Although Feng Yu had painted a beautiful picture, Li Dafu still felt that it was unrealistic. He did not agree or disagree. He just told Feng Yu that he needs some time to consider.
Feng Yu also understand him. If it were him, he would also be suspicious. Why did you choose me? Are you telling the truth? The picture you described, is it even be possible?
Feng Yu was also not anxious. All the factories had not even started construction, and the negotiations with the local government had not yet begun. He also wants to monitor Li Dafu for a while and see if he was worth the conditions he offered.
……
Feng Yu was looking at the sales report at Lehaha’s headquarters. Zhong Qingxian also tells Feng Yu about the company’s current circumstances. Lehaha’s development was much better than Feng Yu expected. Their products were too popular, and the demand had outweighed the supply by too much. They were already raising funds to expand their operations.
Feng Yu only glance through the reports. He had people in Lehaha’s financial department, and there were no problems with the reports. Zhong Qingxian was honest with him.
“Manager Feng, this is the company’s current situation. There are many orders, which we dare not accept. We did not anticipate that the sales will be so good after we had built up our reputation.” Zhong Qingxian sighed.
Feng Yu laughed and said: “This is normal. The parents had lived in poor conditions for a long time, and when they are young, they suffered hardships. Now, their lives got better, and naturally, they do not want their children to go through what they had gone through. They want to give the best things to their children. I had suggested building more branch factories previously, but now, we are still not too late.”
These two years was the golden period for health supplement products. Although Lehaha oral health supplements were targeting children, they had become the market leaders. There were no other competitors.
The health supplement market was divided among a few brands. King of Hearts was targeting the elderly, Ants Wine, were targeting grown men and only Three Pearls health supplements for the women was the product of Giant Corporation. Shi Dazhu will accumulate lots of funds within these two years, but after that, they will be burdened by financial troubles because of the new Giant Corporation’s building. That will be the time for Feng Yu to invest.
The future health supplement’s industry will be controlled by Shanghai Goldpartner Biotech Co Ltd. (a subsidiary company of Giant Corporation), with their best-selling product “Naobaijin”. The researchers that developed “Naobaijin” had said that the cost of 1 box was only about 2 RMB and the retail price was a few hundred RMB! The returns were huge!
But now, Shi Dazhu will never allow Feng Yu to invest in Giant Corporation. He had too much money now!
Feng Yu was now thinking of ways to let Zhong Qingxian to not only develop Lehaha this product but also develop other types of beverages products like carbonated drinks, etc. In the future, the beverages market will be huge.
In Feng Yu’s past life, there will be a Xurisheng Group appearing in two years’ time. Their ice and warm tea beverages were popular throughout China. Within a few years, this company grew from a small factory worth 30 million RMB to a company that had more than 3 billion RMB annual sales!
But that did not last long. Because of mismanagement, after the millennium, this company did not do well and was even bankrupted. Their brand was also sold.
Zhong Qingxian discussed with Feng Yu about his development plans. He planned to set up 3 branch factories in the next 3 years, and their primary market will still be the provinces in the Southeast region. These provinces were developing the fastest and had the most purchasing power.
Lehaha could easily afford to set up a branch factory every year with their current situation. But Feng Yu felt that Zhong Qingxian’s plan was too slow. By the time Lehaha finished their development plans, Xurisheng Group would appear. They would miss the opportunity to capture the profitable tea beverage market.
“Mr. Zhong, have you ever considered increasing the variety of our company’s products?” Feng Yu suddenly asked.
Product diversification? Zhong Qingxian frowned. Now their company could not even cope with one product, and they still want to develop more products? He also knew that the company’s growth would be limited if they depend on one product. But will it be too early for them to diversify their products now?
“Manager Feng, we did have the intentions to diversify into products like dairy products for children. But this will be after we have controlled the market.”
“Seems like Mr. Zhong have already thought about the future. Children’s dairy product is good. This will be in-line with our company’s direction. But think about where our factory is located and what is the most famous beverage in this area?”
Where is the factory located and the most famous beverage in this area? Hangzhou was famous for Longjing tea! Feng Yu wants to develop Longjing tea?
“Manager Feng, there are already lots of tea merchants for Longjing tea, and they are already in this line for many years. It will be hard for us to enter the market.” Zhong Qingxian frowned. He felt his idea of children dairy products was better and this will be his future plans for the company.
Feng Yu shook his head: “I am not talking about Longjing tea. I am talking about tea beverages. We can combine tea and carbonated drinks together, just like Jianlibao. Have you ever thought of this?”
Jianlibao?
Zhong Qingxian thought for a while. Jianlibao had appeared out of nowhere a few years ago and had captured the Chinese market. Leveraging on the sports arena, it was even exported to the western countries. There was also a nickname “China’s Magic water” for Jianlibao.
Last year’s Asian Games, it was the official drink for China’s team. There were rumors that Jianlibao will be setting up a company in the US and will be buying an office at the Empire State Building.
He had studied Jianlibao before, and that’s only carbonated drinks with electrolyte added. It was not as magical as it claims. But the market responded quite positively.
But Feng Yu was suggesting to tea into carbonated drinks. Isn’t that just adding tea into the carbonated water?
“Manager Feng, will people be buying carbonated tea beverages?” Zhong Qingxian asked.
“Of course. I can guarantee that! During the summer, everybody likes to drink cold soft drinks. If you do not believe me, you can let one factory to test it and see if this type of drinks will be popular.”
Zhong Qingxian frowned: Manager Feng, although the new factory we planned will be bigger if we are to produce Lehaha health supplements and beverage, the workers, materials, machinery and other costs will increase. If we fail……”
Zhong Qingxian also wanted to try. Maybe it will be possible. But they need sufficient funds. He had plans for children dairy products, and it had not even started. Where would he get the funds to start on this carbonated tea beverage project?
“Mr. Zhong, are you worry about the funds? Why not I will invest more money in the company and increase my stake to 49%. With my money and the company’s current funds, we can set up two factories at the same time. If the negotiations are smooth and with the help of loans from the local districts, we can even set up 3 factories at the same time. One factory can manufacture the oral health supplement and the carbonated tea beverage at the same time. Another factory can start on your children’s dairy products. If the market response is poor, we can switch all the factories back to manufacturing oral health supplements. What do you think?”
Zhong Qingxian hesitated. Feng Yu wants to continue to invest and wanted 49%. This meant that he will not interfere with the company’s operations and this additional fund was crucial for the company’s growth.
Should he accept this investment?