Chapter 567 – No Choice but to agree Part 2 of 2
Deputy Mayor Liu stared at Feng Yu: “Is what Secretary Zhang said real?”
“What’s there to lie to you? I owned these brands. Initially, I just wanted to have an electric fan, but I ended up creating the Wind and Rain brand. I felt that Japan’s AIWA is a good brand, so I bought it and change it into Aiwa. I wanted to build a motorcycle for myself, but the motorcycle I produced became popular. Next year, my motorcycles will be China’s best selling motorcycle brand. But I thought it would be meaningless once I became first. So, I started to manufacture saloon cars. I also did not expect the Chief Architect to visit and praise me. Actually, I did not do much.”
Feng Yu replied in a “modest” way, but he pointed out the success of his companies. He was telling Deputy Mayor Liu that he could and have the capability to manage Quanjude well!
But Deputy Mayor Liu shook his head: “Although all those companies you mentioned were doing well, we are able to set up restaurant chains ourselves. We don’t really need your help.”
“Mayor Liu, Quanjude currently have 6 branches and all of which are located in Beijing. How long do you think it will take before Quanjude can set up branches all over China and even overseas?”
“We have the time. Since we had converted this restaurant into a company, we will have our plans.” Deputy Mayor Liu retorted.
“What about the funds? If you are going to expand, you need a lot of funds. The City will issue the funds or are you going to get a bank loan? How much money can the City issue and how much loans can you get from the banks? When all of these are ready, do you think you still have the opportunity to expand?”
“Why not? Even if we do not have so many funds, we can take it slow. We can use the company’s profits to grow.”
“Time. After the reforms, the standard of living has been increasing rapidly. Even food tickets were obsolete. Now, there are restaurants opening every day in China, and there are also restaurants closing down everyday. When you raise enough funds, all the good locations will be taken up. How are you going to expand? Location is crucial for a restaurant.”
Feng Yu starts to brainwash Deputy Mayor Liu. Before Deputy Mayor Liu could retort, Feng Yu continued: “You should that chain outlets model is from the western countries, but do you know that the western chain restaurants are starting to open up restaurants in China?”
“Are you talking about those western restaurants?”
Feng Yu shook his head: “Those western restaurants still have not established their brands. I am talking about fast food restaurants like Kentucky Fried Chicken and McDonald’s. Simply put it, it is the deep fried chicken and hamburgers.”
“I know about these restaurants. We have some of them in Beijing. But their restaurants are not big.”
“But have you ever thought about their profits? Because it is fast food and the restaurants are opened 24 hours, the sales of one such restaurant are much more than a traditional Chinese restaurant, and their cost is less than half. With such high profits, what do you think these companies will do? Will, they not expand their operations in China? Even if they had to invest a vast amount, they would also want to take over the market share. Furthermore, they are also using the franchising model. This means that they do not need capital. The franchisees will still have to pay them and be restricted by their policies.”
KFC and Mcdonald’s had interesting management models. You pay the franchising fees, and they will help to pick the location, train your staff. But you have to pay them a proportion of the money profits. Of course, they will promise that the restaurants will be profitable as they will pick the locations of the restaurants.
These two fast food chains were able to expand quickly and become one of the few leading international fast food restaurants. All this was done without having the capital of setting up restaurants all over the world. This was a successful model, and it can be replicated.
Of course, Quanjude has their secret recipes, and KFC and McDonald’s model is not suitable. They must have someone to roast the ducks. The safer bet will be those restaurants that will be selling Quanjude roast ducks must be part of Quanjude Holdings, and Quanjude must own most of the shares of the restaurants!
It will be like Coke. Their recipe is their top secret. They claim that no other beverage companies will be able to replicate Coke’s taste.
“You are telling me that those hamburger shops can affect our Quanjude?” Deputy Mayor Liu felt Feng Yu was joking with him. These were two different products. He had never heard of a shop selling bun being affected by a shop selling cakes!
“Will not affect? Do you know that before KFC and McDonald’s there are also other hamburger restaurants and all of them lost to these two companies? This is because of their chain restaurants model. Those hamburger restaurants could not expand as fast as these two companies. The one who captures the market share will be the final winner. In Beijing, is Quanjude the only restaurant that sells roast ducks?” Feng Yu smiled and asked.
“What do you mean?”
“I like roast ducks, and that does not mean that I must pick Quanjude. Bianyifang seems to have a longer history than Quanjude? Do you think Quanjude will be able to expand if I invest in Bianyifang?”
“You are threatening me! But Bianyifang is also a state-owned enterprise!” Deputy Mayor Liu replied proudly.
Feng Yu paused for a while. Bianyifang is also a state-owned enterprise? But there should be other brands of roast ducks.
“No, I am merely stating the facts. Even if Bianyifang is a state-owned enterprise, there will be some private entities. McDonald’s is a good example of an imitator beating the creator. If you talk about funds, there is no way Quanjude can compete with me. Anyone of my company is worth much more than Quanjude. If I really want to start a roast duck brand, even Bianyifang will not stand a chance. It is up to you whether to believe what I said.”
“How can you be so sure that you will win? We have the backing of Beijing City Government.”
“Mayor Liu, have you heard of Lebaishi’s yogurt drinks? It was formerly China’s top yogurt drink brand. At their peak, they own more than 70% of the market share. But I own some shares of a rival company, and now, both companies own the same amount of market share. Lebaishi is left with only a 40% market share. We also own 40%! Oh, the company I am talking about is Lehaha.” Feng Yu replied.
Zhang Han’s father was surprised. He did not know that Feng Yu was also a shareholder of Lehaha. What was more shocking was the way Feng Yu speaks to Deputy Mayor Liu. Feng Yu was saying that if you don’t let me invest in Quanjude, then I will stop Quanjude’s expansion!
“Lebaishi yogurt drinks are affected by their Energy of Life products. What has it got to do with you?” Deputy Mayor Liu smirked.
“Then do you know who is the one that exposes those fake health products? What is the product that took over the market of those health products?”
Deputy Mayor Liu narrowed his eyes: “You have something to do with this incident?”
“The one who exposed these fake products is a CCTV program. I am the one who provided all the information to them. Maybe Mayor Liu still does not know that I am the one who started CCTV’s New Year’s Day Gala dinner and I am the sponsor for this program. I am also the sponsor for the Spring Festival Gala night. That’s why CCTV is willing to help me do this. The medical products which replaced the fake health products market currently occupy 60% of the market share. It is Bing City Pharmaceutical Enterprise, and I happen to own some of the shares.” Feng Yu pointed to himself.
Deputy Mayor Liu took a deep breath. How many businesses does this Manager Feng own? How come he owns shares of companies in so many industries?
“Mayor Liu, I wonder if you have heard of Tai Hua Supermarket Enterprise? It is registered in Beijing recently. Soon, there will be over 150 million USD of funds wired into the company and will set up supermarkets in cities all over China at the same time. I am the major shareholder of this company. We can announce that we set up our headquarters in Beijing because of you.”
150 million USD? How much will be taxes that will be generated from this company? The scale of this company is massive. If he was the one who set up this investment, then it will be a huge political achievement.
“Manager Feng, I need to consider this.” Deputy Mayor Liu said.
“Fine. I will be waiting for your good news.” Feng Yu smiles and raise his glass.